Ladies and gentlemen, thank you for standing by and welcome to Ball Corporation's second 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 August 2, 2018. I would now like to turn the conference over to John Hayes, CEO. Please go ahead, sir.

Thank you, Malika, and good morning, everyone. This is Ball Corporation's conference call regarding the company's second quarter 2018 results. The information provided during this call will contain forward-looking statements, including estimates related to the impact of the U.S. Tax Cuts and Jobs Act. 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 the company's news releases. If you don't already have our second quarter earnings release, it's available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the notes section of today's earnings release. The release also includes a table summarizing business consolidation and other activities, as well as a reconciliation of comparable operating earnings and diluted earnings per share calculations. Now joining me on the call today are Scott Morrison, Senior Vice President and CFO, and Dan Fisher, Senior Vice President and Chief Operating Officer of our Global Beverage business. I'll provide some introductory remarks. Dan will discuss the global Beverage Packaging performance. Scott will discuss key financial metrics, and then we'll finish up with comments on our aerospace business as well as the outlook for our company. Momentum continues across our businesses. Comparable operating earnings were up 11% year over year, as we continued to execute our strategies of achieving better value for our products through higher returns for our standard products and higher growth for our specialty products, aggressive cost-out programs in both our fixed and variable costs, and completing several large growth capital projects. Our comparable operating earnings improvement was despite a number of headwinds, including higher U.S. freight rates, an 11-day Brazilian trucker strike…

Thanks, John. Our global beverage business operating earnings were up 9% year to date. As John mentioned, it was a busy and rewarding quarter across global beverage. Our team completed two plant startups on time and on budget. And we kept up with strong demand for beverage cans across Europe, Russia, and Brazil during World Cup, despite a few transitory hiccups outside of Ball's control like transportation strikes and brief CO2 shortages. Our global specialty mix remains at approximately 40%, and network optimization activities to balance standard can production and geographically position the broader specialty can portfolio in the U.S. are right on schedule, with Birmingham ceasing end production at the end of the quarter and Chatsworth and Longview slated to cease production by the end of the third quarter. All of this is possible given the successful startup of Goodyear's two lines in the first half and the ongoing startups of lines three and four by the end of August. Note that the U.S. network optimization just described results in no new net capacity, and Scott will address the CapEx to fully scale out the Goodyear plant. European process transformation projects to further improve our cost structure continue. And additional network optimization through the closure of one-line Cuiabá, Brazil plant will allow us to leverage equipment elsewhere in the South American network. Ultimately, we are aligning with the right customers and markets, expanding into new products and capabilities via our ever-expanding offering our specialty can sizes, leveraging our technical knowhow around predictive maintenance, light-weighting, and process improvement, and positioning our products as the most sustainable in the world. The economic value creation the can brings our customers is real and growing. Moving to the individual segments, Ball's North American segment profits were up slightly despite shipments being down just…

Thanks, Dan. Comparable second quarter 2018 earnings were $0.58 versus $0.53 in 2017. Second quarter diluted earnings per share reflect solid operational performance across our packaging businesses and lower corporate costs, offset by higher taxes and slightly higher interest expense. Details are provided in the Notes section of today's earnings release, and additional information will also be provided in our 10-Q. Net debt ended the quarter at $6.8 billion, $200 million lower than first quarter and after a net share buyback of $175 million through the first six months. For 2018, we expect CapEx to be in in excess of $700 million, as excellent progress on major projects allows us to bring spending forward. The increased CapEx along with the timing of the sale of the U.S. steel food and steel aerosol businesses at the seasonal peak of the working capital build will put our free cash flow in the range of $800 million for the full year. Full-year 2018 interest expense is now expected to be just above $300 million. The full-year effective tax rate on comparable earnings will be approximately 24% based on our current estimates of the impact of U.S. tax reform, and corporate undistributed will be just under $110 million for the full year 2018. Keep in mind that due to the sale of our steel food and steel aerosol assets versus the timing of using the proceeds to repurchase shares, it will be slightly dilutive to the second half earnings, likely in the range of $0.05. Prospectively, on a full-year basis, the transaction will be neutral to slightly positive relative to diluted earnings per share due to the incremental share repurchase and definitely positive to EVA dollar generation in 2019. The cash flow was strong, and year to date through yesterday we have repurchased 8.34 million shares or $318 million worth of our stock, just over a 2% reduction in diluted weighted average shares outstanding. And by year end, we expect our stock buyback to approach $700 million in addition to paying out roughly $140 million in dividends. It's exciting to be able to ramp up our return of value to shareholders. With that, I'll turn it back to you, John.

Great. Thanks, Scott. Our aerospace business reported higher revenues and slightly lower second quarter operating earnings results, driven by solid contract performance and the continuing ramp-up of new contracts, offset by incremental labor costs while we rapidly scale up our labor base. Our staffing levels continue to increase, and year to date we've hired approximately 540 new employees and anticipate adding another 200 to 400 employees over the next 12 months. The aerospace team has done an excellent job managing this large onboarding process without taking their eyes off the execution of our business. We continue to leverage our unique capabilities, world-class technology, and the best talent in the industry to further grow our aerospace business. With contracted backlog at record levels and our won-not-booked backlog at $4.3 billion, the future looks bright for aerospace for the next three to five years. And as I mentioned earlier, the compressed timing of onboarding such a large number of new employees temporarily compressed second quarter earnings, but we expect significant and material operating earnings improvement over the coming quarters. Now, as we look forward for our corporation, we are on track to achieve our targets. We are actively managing and oriented our asset base within an EVA-accretive approach. We are leading the charge to ensure aluminum packages for beverage and aerosol are the most sustainable packages on the globe. And our aerospace business is operating from a position of strength as we ramp up and scale out our people, processes, and infrastructure. It's been over two years since we closed on the largest acquisition in our company's 138-year history. We've delivered through some pretty interesting global economic and political dynamics. It's time to look beyond 2019. And with that in mind, we are having our investor field trip in Colorado on October 1 and 2. So please reach out to Ann Scott if you're interested in meeting our broader team and learning more about the "and beyond." For now, our balance sheet leverage is where we want it. The capital investments have been made. We are taking seriously the opportunities afforded us through our commercial, manufacturing, and supply chain activities. The outlook is on track. And we're a buyer of all stock. There's probably not much more to say. So with that, we'll turn it over the Q&A. Malika, we're ready for questions.

Thank you, sir. Ladies and gentlemen, thank you. And our first question on the phone line is from George Staphos with Bank of America. Please go ahead, your line is open.

Hi, everyone. Good morning. Thanks for taking my question. Thanks for all the details. I'll ask a few questions and turn it over and try to come back. I guess in terms of the outlook and guidance in relation to the transaction with Platinum, I think you mentioned, John – or Scott, that the back half of the year will be diluted about $0.05 just because of timing, and yet you're maintaining your outlook for 2019, recognizing I'm shifting gears a bit here. What within your ongoing fundamentals, your integration of Rexam is going sufficiently well that you can maintain the guidance even though this is a somewhat dilutive transaction initially anyway to earnings and to cash flow?

George, why don't I take 2019, then I'll turn it over to Scott to give more color on the 2018? But when we started a couple years ago, we talked about the $2 billion and $1 billion in 2019. And that included our tinplate business, as you know. As part of the transaction, it was announced that for the fiscal year 2017, it reported EBITDA of about $78 million. And as you know, 2017 was not a good year in that business, so there was some growth. So embedded in the $2 billion was somewhat south of $100 million of EBITDA that we just divested. But despite that, things are going well. We are accelerating some of the capital that we're going to be able to generate that incremental value in 2019. And so we think we can close that gap and still maintain the $2 billion of EBITDA guidance and $1 billion of free cash flow, despite losing just under $100 million of EBITDA and equivalent free cash flow from the food and aerosol business.

And the dilutive nature of the transaction is really just timing because we'll start buying stock. We've got a lot of stock to buy in the back half of the year. And once we get to the end of the year, it should all be trued up. So on a full-year basis, it we really won't be dilutive going forward.

Okay, I appreciate that. I think next question I want to just review is contracts, commercial efforts, and the like, and there are a couple more I think references to value-over-volume in this press release. I know you can't go contract by contract or give a lot of detail. But can you give us a little bit more in terms of the undercurrent in terms of your progress there? And I think you mentioned in EMEA, you have a bit more in the way of contract renewals. Did I hear that right, and how are those related? And then lastly, if you can, Scott, back to the CapEx question going up $100 million, can you comment at all, other than the amount of spending increment, where you're putting that capital? Thank you.

Thanks, George. This is John. I'll start. That was a mouthful, I think. But first, with respect to our commercial strategies, for the past couple years, we have been very consistent, that said that the returns that are generated on the standard containers do not, for us, meet the hurdle rate to continue reinvesting in that. And so we have talked for a while now about our value-over-volume strategy. We also talked over the last couple conference calls that we have a couple of rather larger contracts coming up in Europe at the end of 2018 and in the United States at the end of 2019, and nothing has changed at all. We are in execution mode. And I will also say, though, that you also know it's Ball's policy that we don't negotiate nor talk about customer contracts in a granular level on investor conference calls. So the only guidance I can give you is we are right in the throes of what we've said for the last two years we'd be doing.

And on the CapEx front, our teams have done – all of these things were planned, George. It was just a matter of the timing of them. But our teams have done an excellent job of executing on the big projects that we have going on so we're able to accelerate the later phases of these programs. So Dan mentioned bringing up lines three and four here in the back half of the year in Goodyear, adding a second line to the Spain plant. We're adding a warehouse in Monterrey to support the growth in that business; and to support our aerospace backlog, moving up some of the build-out of some of our test facilities. So these are all above-average return projects. And frankly, I'm usually a capital curmudgeon in terms of spending, but the faster we can do these things, the faster we'll get the returns and the longer we'll get to enjoy them.

And maybe I can add some color to the capital just for the beverage piece, and then I'll address your EMEA contract question. Goodyear, just to scale it, Goodyear is approximately $250 million. Cabanillas, our Spain facility, is approximately $150 million. We put up a fourth line, mega-line to support our 24 and 25-ounce growth in Conroe. That's approximately $60 million to $70 million. And then you've got ongoing M&R in the range of $100 million to $125 million. So it's obviously some significant one-time capital throws but it's been contemplated. It's being executed against, and obviously it's going to allow us to qualify customers sooner and get after some of the fixed cost savings maybe a quarter earlier than we had anticipated. So, I'm really pleased with all of that. And then in EMEA, George, I would frame EMEA similar to contract lengths in North America. Our EMEA business, as you know, is principally Egypt, Turkey, India, and Saudi. And those contract durations are somewhere in the neighborhood of two to five years, so they don't turn over as frequently as, say, a China. And there are really no substantive changes in that market. It's consistent with where we entered the year and what we had contemplated a couple years ago in the guidance that we gave.

Thank you very much.

Thanks, George.

And our next question is from the line of Brian Maguire with Goldman Sachs. Please go ahead, your line is open. Brian Maguire - Goldman Sachs & Co. LLC: Hi. Good morning, everyone.

Good morning.

Good morning. Brian Maguire - Goldman Sachs & Co. LLC: Just a question on the trends in North America. A lot of the volume headwinds have been well documented. It seems like your comments imply a little bit of an improvement. I think even July you said things are improving there. I just wonder if you could expand on that. What are you seeing heading into 3Q and what gives you confidence that we might flip to growth at some point in the near future in that segment?

Sure, you heard correctly. We saw strength in June and then that's followed through in July. And it's essentially April and May there wasn't a ton of promotional activity by the major customers. You've seen a lot of innovation in terms of new products and new categories being pushed, especially in the mega beer customer. And so we're seeing those, and so we think there's probably a shift of Q2 softness into Q3 strength. So I think it's just a timing issue if nothing else. Brian Maguire - Goldman Sachs & Co. LLC: Okay, that makes sense. And then one question about the announcement on the can plant in Brazil you had to shut down. The volumes have been really strong in that region. I'm just wondering why they need to close it. I know it's just a one-line plant, so I'm guessing some of it's efficiency gains, but any impact of that to overall volume? Do you think you'll be able to house those customers from other plants, and any color on any fixed cost savings or margin shift from it?

You've hit it on the head. Really, what we're doing is we're taking a one-line can plant, taking the fixed cost out of it, and moving that equipment into other facilities, so we're not necessarily losing any capacity. And we are taking out fixed costs. In the grand scheme of Ball Corporation, it's not a huge deal. But anytime you can take fixed costs out, that's what we look to do, and that's what we're doing here. Brian Maguire - Goldman Sachs & Co. LLC: Okay, thanks very much.

And our next question is from the line of Tyler Langton from JPMorgan. Please go ahead, your line is open.

Good morning, thank you. I just had a question on South America. I guess it seems, at least versus our estimate, to have been a little bit better in the second half, especially when you take out the strike. Just when you think second half and I guess the full year, is it doing a little bit better, I guess, than maybe you previously thought, or just still in line?

I think it's largely in line. Q2 was so disruptive because of the 11-day trucker strike in terms of volume dynamics. But I would say volumes were better in Q1, hard to distinguish what actually happened in Q2 from a volume trend perspective. But based on what we're hearing from our customers, we think the can will continue to win, and we should do well in the second half. I would just reference my comments relative to the INS manufacturing agreement in the second half for year-over-year comps. I'm just speaking of volumes here.

The only other thing I'd add is let's not forget that there's an election in Brazil this fall. And elections when they happen down in Brazil, they tend to create more volatility. So I think the caution you hear from us is really just more about an unknown than anything other than what Dan said that we know. It's just that these elections just create greater volatility. And it's not until the beginning of the fourth quarter that we're going to have this election.

Okay, that's helpful. And I think, Dan, you said, with the startup in North America, startup costs were $5 million to $7 million this quarter and then freight was $7 million. Do you have a sense of – I know you think it will get better – but in the second half, are just higher freight rates going to cause any pressure? I would think actually startup costs go down, but just any details around that would be helpful.

June was definitely a spike in freight rates. I would expect to see some of that continue. In that $7 million out-of-pattern freight number that I indicated, probably $2 million to $3 million of that was self-induced really because of the startup costs. So I think that that number would be mitigated somewhat, but we'll continue to see headwinds on freight for the foreseeable future unless there's any kind of underlying changes. We should get the fixed cost savings like I identified. The startups are going extremely well. Some of the competitors I think have recently said they're looking to broker additional cans. We'll be the beneficiaries of that hopefully as a result of an excellent startup phase. So freight rates will continue, probably in line with what we've seen, but we've got a lot of tailwinds heading our way in the second half of the year in that business.

Got it, thanks, and then just a final question for Scott. Do you have – I know you're actually pulling forward some CapEx. And I know you had always used $500 million roughly as a placeholder. And I know it's early, but have you looked into 2019? Just do you have any thoughts on what CapEx could look like?

I think we've been able to accelerate some of these programs that we had planned quite some time ago, so I think we'll see a meaningful drop in CapEx as we get into 2019.

Got it.

I think just to amplify that Dan did a good job of laying out the really big projects on the beverage side, and that added up to well in excess of $550 million. Layer on we're spending $100 million a quarter in aerospace alone this year on building out our manufacturing footprint here, that's where you can see how we're getting to the $700 million. And when you think about, as we sit here today, those big projects that are going on in 2019, most of what Dan referenced will not be there. Aerospace will still have some elevated expenditure, but not to the level it is now. So it should come down meaningfully from where it is this year.

I would expect it to be lower than depreciation next year.

Got you. Okay, thanks so much.

Thank you.

And our next question is from the line of Adam Josephson with KeyBanc Capital Markets. Please go ahead, your line is open.

Good morning. Thanks, everyone. Dan, just one question on your North American commentary, you mentioned your system is tight at this point. The segment was down 3% on volume in the first half of the year roughly. So I know you said July was better, but what exactly is causing the tightness given the volume decline you've experienced thus far?

I would say reference my comments just previously. But in April and May, April and May was just a function – it's promotional spend. You see significant declines in April and May on promotional spend by really the big customers. That spend has come back in conjunction with them pushing candidly a number of different new innovative products. All of that needed additional time to be marketed, and that's all selling through. And we've seen the benefits. Both in June we saw it, and thus far through July and into early August. So I think it's more of a timing issue, 2% to 3%, than anything just because of the promotional activity.

And don't forget going forward, Dan also mentioned about the closure of Chatsworth as well as Longview, Texas.

Right, the capacity actions will be neutral to your overall capacity, right?

That's correct. That's correct.

And then just, John, one more on I think what George was asking with the 2019 EBITDA. So if you're selling almost $100 million of EBITDA, I know it was a $78 million in 2017 and I don't know what it is now. But call it $80 million – $90 million. You referenced a number of external headwinds that the company has dealt with since you closed the Rexam deal, yet you're, it sounds like, effectively increasing your underlying EBITDA guidance by almost $100 million despite all these headwinds. So I'm just trying to better understand where that's coming from exactly, if there's a particular region that's been going markedly better than expected, just a little more detail there would be helpful. Thank you.

I think it's excellent execution across all the regions. When I think off the top of my head, Europe is still on its journey but is delivering above what we initially expected. I think in North America, we still have a lot of on-the-come opportunities in terms of the fixed cost savings that Dan mentioned, but things are going well there. I think in South America, I think our sourcing strategies is above where we were. So there's not just one or two specific buckets. I think across the board, our business has been executing quite well. That combined with the aerospace business is growing faster than what we expected as well. So yes, we have some headwinds. Yes, we're selling off $80 million to $100 million in EBITDA. And yes, we still think we can make the $2 billion of EBITDA in 2019.

Thank you.

I think another point that we've commented on but maybe gets lost in this is, and maybe we should be tooting our own horn a little bit more, the project startups in Goodyear and Spain, six lines in greenfield facilities have gone remarkably well. And if those had not gone well, we would be having challenges and out-of-pattern freight qualifications with customers. And I think as we sit here today, we're much more on our toes with regard to those two projects, which we banked a lot on in terms of fixed cost savings in 2019.

Thank you.

And our next question is from the line of Anthony Pettinari with Citi. Please go ahead, your line is open.

Good morning. In the North American business, it seems like you might be set up for a good second half. When I think about last year, you had the hurricanes and then related freight and supply chain costs. Is it possible to size how much of a benefit you could get from the non-repeat of hurricane and hurricane-related costs?

What we said last year and then it's really playing out and what we're anticipating as well was about we had a $30 million headwind, out-of-pattern freight, lost sales, inefficiencies from a production and absorption standpoint. Based on what we noted and what we're seeing out of the North America business, we should recover all of that. And hopefully, if things continue to go well from an execution standpoint and volume comes through, we'll see that year over year.

Okay, that's helpful. And then just switching gears, John, you talked in your prepared remarks about the environmental benefits of cans. And I'm wondering with regard to some of the regulatory and media scrutiny on plastics, maybe especially in Europe, is this something that big customers are proactively coming to you about and you think could really drive incremental volumes this year or next year, or is it more of a general observation or something that you think could gain traction further on? Just any kind of color you could give there would be helpful.

I think it has both short-term and long-term implications. I think the opportunity is probably greater in the long term because in the short term, inner material substitution you don't see a lot of. But this does play into our commercial strategy that we said we're trying to anticipate and really push from a retailer perspective, an NGO and government perspective, a customer and consumer perspective, the benefits of the can. But we also have to be in a position to be willing and able to invest in it where the returns are good. And on the specialty, we've been doing a very good job there. And so, we need to get the standard up. But I think in terms of specifically what you're talking about around inner material shifts, I think in the short term that it's incremental, but I do think there's long-term benefits here if we play this right. And I encourage you to come to our October 1 and 2 Investor Day because we're going to be talking a lot more about the commercial reasons of why this is in our great interest to be pushing this.

On the long-term front, specific to the major customers, I can add just a little color. What we're doing now far more than we've done even a year ago is we're sitting down with our major customers and we are collaborating with them on science-based targets. And some of the targets have to do with 100% recycled packaging substrate. Now the targets these customers are putting out are 2025 and 2030. That's why we're saying longer term. Absolutely, we know we're putting programs in place. How quickly that manifests itself, we need to just continue to push the message in work because ,especially in Europe, as you indicated, right now it's happening and the conversations are shifting. And just to give you a little teaser come early October, we've looked at every major region in which we operate. And whether it's on the soft drink side, the beer side, or the other categories which is energy and sparkling waters, et cetera, we've looked at what a 1 percentage point share shift from another substrate to the can means, and it's meaningful bottom line improvement to our company. And that is why the economic case of trying to create these greater profit pools for our customers by using cans can be good for them and good for us.

Okay, that's very helpful. I'll turn it over.

Thank you.

And our next question is from the line of Scott Gaffner with Barclays. Please go ahead, your line is open.

Thanks, good morning.

Good morning.

Good morning.

Scott, I just wanted to go back. I didn't quite catch all of your comments on share repo year to date, or I don't know if you gave it at the end of the quarter. And would your expectation on a go-forward basis be to go back to the – I call it the old methodology where you did most of your share repurchases in 1Q on a go-forward basis?

So what we've purchased, what's in the 10-Q is $175 million for the year, but we purchased heavy since the end of – I'm sorry, for the six months. Sorry, for the six months. But what we purchased year to date as of yesterday, so we put a program in place. We were blacked out for much of the quarter because of the food transaction. So once we were out of that, we repurchased heavy. And so as of yesterday, we repurchased $318 million worth of our stock or 8.3 million shares, just over 2% For the rest of the year, we plan to approach $700 million, so it's another 3% of the shares or 10 million shares that should come out between now and the end of the year, as we basically spend the proceeds of the food transaction and our cash flow. Going forward, we will orient – our leverage will be down to a point – we're almost there now. I think we're at 3.6 times at the end of the quarter. We said when we're at 3 to 3.5 times that we'll turn all of our free cash flow to buy back our stock and our dividend. So that's a lot of stock to buy over the course of the year, and we'll be opportunistic and we'll see how that plays out in terms of the timing early in the year versus throughout the year. You could probably count on more in the first half of the year but buying throughout the year.

Okay. And maybe splitting hairs a little bit, but when you had the announcement on the steel food, steel aerosol JV, it sounded – you made the comment that the guidance for 2019 was going to be more challenging to achieve, but I would say you sound extremely confident today. Is there anything that changed in the last, whatever, month and a half that would give you significantly more confidence than you had at that point in time?

No is the short answer. I think when we put together two years ago the $2 billion EBITDA target for 2019, there were a lot of unknowns. We have derisked those unknowns, and we feel more confident. But having said that, when you're taking $80 million, $90 million, $100 million of EBITDA off the table through the sale of the food and aerosol business, you have an $80 million, $90 million, $100 million gap you need to fill. We have confidence that we have game plans to fill that, and that's exactly what we're doing. But there still is incremental risk. We still haven't realized the $50 million net savings here in North America around the three plant closures. That's still on the come and there's still other programs like that, but we have a line of sight to what we need to do. That's the important part.

That's a big EBITDA hole to fill, so good luck filling that with some of these improvements. Just lastly for me, on the exclusion from the aluminum tariffs, is that an industry issue, or is that something Ball-specific that you were discussing there?

That was Ball-specific. The industry cannot petition the Department of Commerce for exclusion. It has to be company by company, and we received last week the news that we received an important exclusion.

Okay, thank you.

Thank you.

And our next question is from the line of Edlain Rodriguez from UBS. Please go ahead, your line is open.

Thank you. Good morning, guys. A quick question on beer consumption in the U.S. For a while, Mexican imports were offsetting production in the U.S. But you saw the article yesterday in The Wall Street Journal regarding how Americans were drinking less beer, with younger people preferring cocktails and wine. Like how do you position the company for a sustained decline in beer consumption, and that would include imports and everything else? So how do you position the company for something like that?

So, I guess the data that you're referencing is nothing new over the last decade. I would say that, number one. And number two, you're talking about beer literage. You're not talking about the can. The can has disproportionately won share over that period of time. Craft beer continues grow, in the quarter up 35%. I think we look to things like seltzers, waters, wine we're getting into in a big way, energy. You've got to win in the categories that are winning I think is the answer. But the can continues to win from a substrate standpoint, and overall can volume for beer has grown slightly over the last five years. And if we continue to win in the markets that we're participating in, that's how we'll hedge our bet.

The only thing I'll add – this is John – is in reference to the article you mentioned. It was describing a slow decline of traditional beer, and that's correct. But as Dan just pointed out, spiked seltzers and all the alternative categories that the beer makers are really pushing, we can tell you with great certainty that the spiked sparkling category this summer is growing faster than anyone anticipated. And so yes, that is taking share from what I would describe as traditional beer. It's still a malt beverage, which is the important part. And the can by far is disproportionately winning in that. So when Dan talks about focusing on wine and focusing on these new categories, spiked seltzer is a great example of that.

No, that makes sense. And also, in terms of the profitability of the different products, does it matter to you whether those customers are selling more seltzers and other products versus beer?

Yes, the short answer, they're going into specialty cans, number one. And number two, they're being sold in many instances in single-serve at higher profit pools. And if our customers are selling at a higher price, we have the opportunity to sell to them at a higher price. So the economic equation works really well on those introductory new beverage categories.

Okay, thank you very much.

Thank you.

And our next question is from Arun Viswanathan with RBC Capital Markets. Please go ahead, your line is open.

Great, thanks. Good morning.

Good morning, Arun.

Just a question following up here on that same issue. I guess first off, have you noticed any changes? You referred to increased promotional spending. Is that a structural shift amongst your customers? I imagine that they're not happy, the large brewers, with the volume trends. Have they increased their spending at a sustained level from here on, and do you think that's going to have a material impact on master volumes? And similarly, I think we've noticed something similar on the CSD side. So, A), has that actually happened, and do you think that's actually resulting in improved volume recovery? Thanks.

I can't comment on the long-term promotional spend, if it's going to be more in social media, if it's going to be different outlets, if it's going to be a different dollar spend or a different target. I will tell you that the largest brewer in the world has made a comment that they want to shift their product mix from 80% traditional to 20% alternative. In that 20% space, it will overwhelmingly be new products and it will overwhelmingly be cans. And so, I'm more interested in those new products candidly winning and us winning at a disproportionate rate, than I am concerned about the promotional spend activity on the core brands. Another major brewer, just to add context, in North America recently made wholesale changes in their marketing department. That marketing department was not concentrated on core brand innovation over the last handful of years and their core products declined. And so, I think there's some rethinking going on, different thought in some of the major brewers, and we will be there to help them from an innovation standpoint, and they will be knocking on our door first. But what happens going forward and where they spend their money is yet to be determined, I think.

Okay. And then as a follow-up, are there other mechanisms you can take on the pricing side to offset any of the inflation that you're seeing, whether it be non-metal but like freight and so on? And then what's the appetite for that kind of initiative? Would it be more challenging given soft volumes in North America and Europe, or is it a potential likelihood that you could actually achieve something like that? Thanks.

We've talked about this a lot in past conference calls. And when you're talking about your commercial strategy, it's just not price. It's everything from terms. It's who bears the freight and how that mechanic worked. It talks about call-off and having call-off windows that if you're in a 72-hour window, it's at one price, and then there's a surcharge if you want to move it inside of that. And so there's a whole host of various things going on. And as I said, we're not going to negotiate or talk about any individual conversations with customers on our conference call, but I also said that we are in execution mode as we sit here right now.

Thanks.

And our next question is from the line of Ghansham Panjabi with Baird. Please go ahead, your line is open. Ghansham Panjabi - Robert W. Baird & Co., Inc.: Hey, guys. Good morning. I guess going back to the second quarter, I know we've talked quite a bit about 2019. And specific to Europe, how much of a benefit do you think you realized from the World Cup? How should we think about volumes in the region for the back half of 2018? And also, was there any sort of mix impact during the second quarter that was unfavorable? I'm just trying to reconcile the 6% volume growth with the reported 5.7% sales increase.

I would say there was definitely some benefit to us, and I think it had more to do with the fact that it was in Russia, and we have a very strong footprint in Russia. So that had more to do with it. And the other thing that happened in Europe, Ghansham, that you're probably aware of is in the north the weather was remarkably good. So there were a couple elements that really furthered that strength. I think the overall European market was probably closer to 4% – 5% growth and we were closer to 6%. And so I think that benefit had to do with our footprint, candidly, in Russia and the benefit of the World Cup.

And, Ghansham, I'll just point out on the volume versus revenue line, remember that we talked about in the first quarter that we still have a couple of contracts where it's year-over-year price declines that we inherited, and those end at the end of this year. Ghansham Panjabi - Robert W. Baird & Co., Inc.: Got it, that's helpful. And then since you last reported, the foreign exchange environment has changed dramatically, particularly as it relates to the emerging markets, some of the countries you operate in, Argentina, Turkey, et cetera. Can you just help us think through any sort of risk in the back half of the year? Are you seeing anything different than the underlying trend in the first half in those few regions?

No, it was definitely more volatile. The markets, and John referenced this on his comments from an operating earnings standpoint, we had some headwinds definitely in Argentina, in Russia, and Turkey in the second quarter. We had some offsetting things as it relates on the corporate side. So the net impact when you get down to the earnings per share wasn't very much. Going forward, volatility seems to be a little bit less. But we're pretty well positioned to be able to deal with the currencies.

I'll just add one other thing. Obviously, any time currencies relative to the dollar devalue, it makes our product more expensive because our products are typically dollar-priced. So you never like to see that. Having said that, when we think about what we see right now in the places Scott just mentioned, Russia, Turkey, and Argentina, can demand continues to be very strong there. Now, Russia was the World Cup. Turkey, it still has good economic growth. And even in Argentina, there's package share mix that's favoring the can there. But we keep our antenna up pretty closely to see if there's any adverse demand impact related to this, and we haven't seen anything yet. Ghansham Panjabi - Robert W. Baird & Co., Inc.: Okay, just one final one. Going back to the comments on beer on the U.S., clearly it has been impacted by changing consumer preferences in the U.S. Perhaps it's had some parallels with what soft drinks went through over a decade ago in this country as well. How do you think more broadly about portfolio risk, specifically the U.S.? What's your beer exposure? I know craft beer has been growing. But if the category does start to slow more broadly, including craft beer, how should we think about your ability to perhaps do what you've been doing with tiering your customers on the soft drink side with specialty cans, et cetera? Is that an opportunity for you?

Absolutely, the specialty can and the new categories. At the end of the day, the major brewers are going to have to figure out how to sell products that the end consumer wants, and I think they're learning that pretty quickly. And I think your correlation to CSD is a good one. Just looking behind innovation pipelines and what we see and what we're working with those customers on, it looks a heck of a lot like five, six, seven years ago with the CSD folks. The other comment, and some of it just has to do with our exposure to the core brands that are declining, we have a lot less exposure to that just from a structural standpoint in North America because the two major brewers are vertically integrated. And so a lot of that they're feeling on the backs of their system, so we felt less of it. And the folks in the customers and the categories that we're dealing with, the craft side, et cetera, those continue to do really well. So we've gotten out ahead of that aspect or this aspect that we're talking about, and we've got the vertical integration buffer, if you will, just because of the North American market and how it's structured. Ghansham Panjabi - Robert W. Baird & Co., Inc.: Thanks for all the detail.

You've got it.

Thank you.

And our next question is from the line of Anojja Shah with BMO. Please go ahead, your line is open.

Hi. Good morning, everyone. I just wanted...

Good morning.

...to go back to that aluminum tariff exclusion. Does it cover your entire portfolio? And is there any financial impact to you, or is it more to your customers that you would pass it through to?

First and foremost, we pass it through to our customers. So it's about making sure that the beverage can is competitive. It is related. It doesn't affect all of our – because the majority of our metal we acquire here in the United States, but there's not necessarily enough capacity to acquire 100% of it in the United States. And so we procure metal from a particular supplier in the Middle East, and that is what we were given an exclusion for.

Okay, thank you. That makes sense. And then my other question is the Brazilian trucker strike, do you expect any carryover impact in 3Q or 4Q?

I'll quickly handle that. No is the short answer. One of the things just to watch out generally is with these elections coming up, there's going to be a lot of labor issues. We can't tell you what they are, but it always happens this way when you have the economy in Brazil as it is and the political disruption as it is. Many of the unions put forth their strong views on certain things, and that's just to watch out. We know nothing specific, but those things can happen from time to time.

And I think for full disclosure, it was a – the agreement that was reached was a temporary one, 90 to 120-day. So this all plays into the new election and what happens there. So based on what we're seeing right now and how we're operating, we don't foresee any additional disruptions. But there's always that lingering event out there with the election and the fact that this wasn't a permanent agreement.

All right, okay. Thank you very much.

All right, thank you.

And our next question is from the line of Gabe Hajde with Wells Fargo Securities. Please go ahead, your line is open.

Good morning and thanks for taking the questions, just one on the Middle East. I guess notwithstanding a lot of geopolitical volatility over there, can you talk about just underlying demand and as we start to lap the sugar tax over there? And any response in the competitive landscape that you can speak of?

Sure. Just to reiterate, our EMEA region is Egypt, Turkey, Saudi, and India. And Saudi, I would say it continues to be incredibly weak. And I would have anticipated a little bit more of a surge back to growth via innovation, and that hasn't come to fruition probably as fast as we've seen in other markets. So that continues to be a challenge year over year. But in Turkey, Egypt, and India, those three regions are all growing and approaching double-digit growth for us. So they're very positive, and the team is doing a great job cultivating can growth and new customers there. But Saudi continues to be a very challenging environment for us and more importantly our customers.

Okay, and then one just on Brazil, I guess bigger picture, your thoughts around underlying demand. I know there was a lot of volatility with the trucker strike and World Cup. But maybe just looking out in 2019, it seemed like the economy down there was on an improved trajectory. Do we still think about a, call it, 2% to 4% growth environment down there, or is there anything that's changed from that perspective?

Yeah, I think, and that 2% to 4% is probably like 6% to 8% on beer and probably continues to decline on CSD to get to that 2% to 4%, to give you more color. The can continues to win. The majority player in that market continues to push cans because all of their competition is going after them with cans. So from a can perspective, I feel bullish. Obviously, John's comment around the election, the uncertainty there, but from our business, in the can and the beer segment, things continue to look positive, and we're seeing continued investment by our customers in that region. So, I think your number is a pretty good one.

All right. Thank you, good luck.

Thank you.

Malika, we'll take one more question if there's any more.

Okay. And we do have a question from the line of Chip Dillon with Vertical. Please go ahead, your line is open.

Yes, good afternoon almost for us and good morning, Scott, Dan, and John. The question I have is on – I noticed that the equity income line, which is usually pretty material, $8 million – $10 million, was zero this quarter. Was there anything new there that we should take into account?

No, it was exclusively the result of one-time mostly timing issues in one of our Asian JVs that will normalize going forward. The only delta for the full year will happen in the second quarter, nothing to be concerned about on an ongoing basis.

Okay, so that was part of the one-time takeaways that made that go down?

Yes.

Okay. And then I think it was great the detail you gave us on some of the CapEx. I believe you said the Arizona project was $250 million. And maybe I'm just rusty on my recollection. And of course, there's a specialty component. But I thought a can plant was – you build the first line, it was probably under $100 million, and then the second line would be maybe $50 million or $70 million or something like that. Could you just help reconcile those two perceptions?

Sure. I think I also – this is Dan – I also referenced the Camarillas plant, two-line plant, $150 million. This is four-line plant. This is a four-line plant for $250 million.

Okay, that is definitely very helpful.

If you reference – if you go back to even – the Goodyear plant is more in line with what we would have done in Monterrey too, if you referenced some of that a couple years ago.

Yes, exactly. And that's still holding at three lines that are running pretty fully now.

Correct.

Okay. And then, the last thing probably...

Plus a significant end investment is the difference down in Monterrey.

I got you. And then looking back at Aerospace, you mentioned hiring a lot of people, and it should improve in the second half. Would you expect the EBIT margin to get back into that 10% – 11% range in the second half?

I think 11% is probably a stretch, but certainly 9% to 10% is not unrealistic at all.

Okay, that's helpful. Thank you.

Okay, thank you. Malika, are there any other questions?

Yes, sir, we do have two more questions in the queue. Would you like me to go ahead and introduce them?

Why don't we quickly go through them?

Okay, and our next question is from the line of Debbie Jones with Deutsche Bank. Please go ahead, your line is open. Ms. Jones, your line is open, please go ahead. Please check your mute function or pick up the handset. We are unable to hear you. Ms. Jones, we are still unable to hear you. We'll continue with the queue, a follow-up question from the line of George Staphos with Bank of America. Please go ahead, your line is open.

Hi, guys. Thanks. I know it's late and I feel bad coming in now. But the one-way glass volume growth that one of the obviously largest glass companies was talking about in Brazil, are you seeing that have much effect on industry can demand in Brazil? It didn't sound like that was the case given your prior comments. That was my follow-up question. Thanks and good luck in the quarter.

George, I haven't – and I would just point to the fact it was such a disruptive quarter with the freight issues. We do continue to see the customers push cans and especially the major customer that does have returnable glass infrastructure. They're continuing to be forced into moving to cans because of retail outlets, et cetera. That's the best info I have right now.

Okay. Thank you, Dan.

You bet.

And we have no further questions at this time.

Okay, great. Thanks, Malika, and thank you, everyone, for participating. And again, as I mentioned, October 1 and 2 we're having our investor field trip out here in Colorado, so please be in touch with Ann Scott if you'd like to participate. And we look forward to seeing you all then. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.