Greetings and welcome to the Ball Corporation 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. [Operator Instructions] As a reminder, this conference is recorded today Thursday, August 1, 2019. I would now like to turn the conference over to Mr. John Hayes, CEO. Please go ahead.

Thank you, Lila, and good morning everyone. This is Ball Corporation's conference call regarding the Company's second quarter 2019 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 the 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 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 Global Beverage. I will provide some introductory remarks. Dan will discuss the global beverage packaging performance. Scott will discuss key financial metrics. And then we will finish up with comments on our aerosol and aerospace businesses as well as our outlook for the Company. Growth in our businesses continued at or reason above our expectations. Overall, global beverage volumes were up approximately 5%, and our aerospace revenues were up more than 30%. Across the globe can demand continues to increase as sustainability progresses from a special interest initiative to a mainstream lifestyle, and innovation and execution drive more customers to seek out solutions in all of our divisions. To say this is an exciting time to be at our company and we said before may be an understatement. With this strong growth, we've experienced short-term costs…

Thanks, John. Across our global operations, our team is navigating tremendous growth, complexity and incredibly tight supply demand conditions. Sustainability and new categories are fueling customer demand. And looking ahead, when existing products convert from single-serve PET to cans in 2020 and beyond given the recent announcements by two of the world's largest beverage brands, the growth for beverage cans will accelerate. In the near-term and until we have more assets up and running, costs to serve the surge in growth dampened in the North America's performance, given the U.S. aluminum scrap situation we called out last quarter, and pushing our existing plans and new lines to the maximum to keep customer in cans. Turning to growth. Our second quarter global beverage can shipments were up 5% and excluding declines in China and EMEA, global volumes were up 6%. However, comparable operating earnings were down slightly year-over-year due exclusively to the previously disclosed U.S. aluminum scrap issues and continued U.S. line inefficiencies. Completion of the South American [ENS] manufacturing agreement, macroeconomic issues in EMEA and some Euro FX earnings translation headwinds. All-in, these issues impact the comparable global beverage earnings 55 million in the quarter, with roughly 35 million in the North America business, 14 million in South America and 5 million in Europe. Across the globe, our teams kept pace with tremendous growth in Europe, Brazil and North America, which as John mentioned, is still experiencing operational and logistical inefficiencies given a tight U.S. industry and higher than anticipated growth in Brazil. The unfavorable impacts of U.S. aluminum scrap, logistics and customer ordering complexities have largely been addressed in contracts renewing in 2020 and beyond. Before I move on to the segment commentary, a brief update on some internal talent moves. After decades of successfully leading numerous Ball regions,…

Thanks Dan. Comparable second quarter 2019 diluted earnings per share was $0.64 versus $0.58 in the second quarter of 2018. Second quarter 2019 results reflect $0.04 comparable earnings per share diluted impact of the July 2018 sale or U.S. steel food and steel aerosol business. Details are provided in the notes section of today's earnings release and additional information will also be provided in our 10-Q. Second quarter comparable diluted earnings per share reflects strong global beverage can shipments and solid aerospace contract performance. A lower effective tax rate and lower corporate costs offset by the sale of our U.S. steel food and aerosol business and low lower year-over-year end sales in South America and U.S. scrapping startup costs as Dan just outline. Net debt ended of the quarter of $6.5 billion and reflects our typical seasonal working capital build and ongoing share buyback. We continue to anticipate year-end 2019 net debt to remain around $6 billion as the buyback stock and invest in our businesses and pay dividends throughout 2019. Close to 90% of Ball's balance sheet debt is a fixed rates and we've reached our post-Rexam target leverage levels. Ball's balance sheet is healthy and provides ample opportunity and flexibility to service growth and shareholder value return needs. As we think about 2019, our 2019 financial goals originally laid out in mid 2016 are largely intact. With the North American scrap and operational headwinds that we faced in the first half, that makes the full year $2 billion of EBITDA challenging to hit. Having said that, our second half expectations haven't changed as the scrap and operational headwinds begin to moderate and our unit volume growth continues to show strength. We'll exit this year on a $2 billion EBITDA run rate. Given all the excellent growth opportunities and…

Great. Thanks, Scott. In our aluminum aerosol business which is now reflected in other non-reportable results, and as I mentioned earlier, global volumes grew 1% in the quarter. Industry dynamics are beginning to change and we continue to see opportunities to broaden our global footprint either through bolt-on M&A or greenfield investment. These opportunities varied by geography. We are proud of the progress the team is making on innovation and sustainability initiatives. As I mentioned, our aerospace business reported 31% revenue growth and 58% operating earnings growth on solid contract performance partially offset by incremental labor costs. In addition, we welcome nearly 600 new aerospace employee year-to-date and we anticipate adding at least another 600 employees by year-end. Total aerospace headcount recently surpassed 4,200 people. Our focused remains firmly on on-boarding these new employees, further expansion of our Colorado facilities and executing on our strong backlog. Looking forward to the new two-year U.S. budget agreement further underpins the growth that we see, and aerospace now has the potential of growing its earnings in excess of 20% 2019 and with contracted backlog levels exceeding 2 billion and our won not booked backlog at 4.8 billion, the future continues to look bright for the foreseeable future. While we make great strides towards the 2019 financial goals originally laid out mid-2016, our longer term prospects have never been brighter. Ball is uniquely positioned to lead and invest in sustainable growth in a global aluminum packaging and aerospace while delivering significant value to our shareholders. We look forward to receiving our long-term 10% to 15% diluted earnings per share growth goal in 2019 and over the next several years. While we're striving in the short-term to manage costs and squeeze as many cans at our existing operations, we're completely immersed in our long-term growth plans and increasing value creation for our shareholders. Our ability to succeed is because of our people, our culture, EVA mindset, our healthy balance sheet and exceptional products and technologies. We will continue to responsibly invest in our businesses for the long-term and do what is best for Ball and our shareholders long-term success. And with that, Lila, we're ready for questions.

[Operator Instructions] Our first question is from the line of Anthony Pettinari with Citi. Please go ahead.

John, the view that you'll be able to grow earnings beyond the 10%, 15% EPS range over the next few years. I guess what kind of volume assumptions underlie that on the bev can side? And can you give us any detail on maybe customer commitments you secure that give you confidence that you'd be able to reach that volume number?

First, with respect to volume growth, as we said in the first quarter, historically, we always thought this business to be plus or minus globally about a 2% unit volume growth around the world and we think it's double that. We've been outperforming that relative and I think in the very short-term, we can continue to see that. But I think over the long-term, 4% unit volume growth is a good way to think about it. And if there's upside to that, we're going to be spending more capital, because we assume it's going to be good at EVA return projects to meet our customer's needs. In terms of specific customers in the contract, we don't get into anything. But for example, the new plant we're building in Brazil is secured by a new long-term customer. In North America, here we've been, as I mentioned in my comments, we've been leaving growth on the table because we haven't been able to serve incremental. So the demand certainly is there. We just need to get our supply caught up, so we can get a little breathing room and give our operational folks more opportunity kind of slowdown the conversions as they've been experiencing, which have been increasingly short-term, which happened increasing the short-term headwinds that we talked about.

And then, Dan, you talked about 55 million of headwinds in the quarter from operational inefficiencies, and you broke that out between North America, Europe and LATAM. Any view on what that number could look like in 3Q? And then just directionally, would you expect those headwinds to abate in all three of the regions that you mentioned? Or could they intensify or be relatively stable, say on that in 3Q?

I think we're very hopeful that the 35 in North America in particular will dissipate. And we've got plans in place on the metal scrap issue that will start to trend in a more favorable direction. It will still be a headwind year-over-year, but it'll be less of the headwind than we saw in the first half. The performance in our inefficient lines, we had two conversions that took place in the quarter. And then we still have, we're still a little behind on two lines and the Goodyear startup. We're seeing progress there. So I think that momentum will continue through the quarters. I don't know if it dissipates entirely in 3Q, but it will continue to progress in the right direction heading into certainly beginning of '19. And then really, Europe FX that we described, I probably can't give you much guidance there. And the 15 million that I quoted or the $14 million in South America is, that will dissipate in the second half the year the last as it relates to the [ORG] amortization.

Our next question is from the line of Ghansham Panjabi with Robert W. Baird & Co.

First off on the 13% increase in specialty can volumes in 2Q. John, can you sort of break that out by region? And then you also mentioned growth came in above your expeditions for the second quarter. And I am sorry if I miss this, but which region in particular surprise you to the upside?

Well, I think the momentum continues to answer your question. First, in North America, especially volumes were all single, upper single digits. As I said, they could have been higher, but we just didn't have enough cans to get out in the marketplace. I know, South America was very strong, was low 20% growth, in the specialty and even in Europe we're seeing a lot. What, fundamentally what's driving this, as you're seeing all these new categories and all these new products moving to the specialty containers and that's what we get most excited about. Ghansham, as you know over the past 5 to 10 years, we've really been a put a focus on putting supply of specialty containers into our system. And that only continues to accelerate. I think to answer your broader question about where were we surprised. I just think overall, global growth in a very seasonally strong quarter up 6% of you exclude China. And when you think about that and we left growth on the table for, we could have very, if we had the capacity, we very easily could have replicated the first quarter. But we did. And that's why you're we're talking about putting more capital in.

Okay, then just based on your current projects you know that you've announced including line speed, speed up and debottlenecking. How much incremental capacity will your footprint generate in the developed markets going into 2020? And then up the new categories that you're benefiting from, how is the filling location dispersion different relative to your legacy customers? I'm just trying to get a sense as to how logistics costs are different for these new customers. And also, it may impact your capital allocation plans willing to join the new capacity going forward?

Yes, I would say by mid 2021. What we're signaling here is somewhere between $4 billion to $5 billion of additional capacity. And the reason 2020 is a difficult comment for us is I think, in Texas specifically that is the most difficult environmental permitting area that we deal with anywhere in the world. So, you can't even start civil engineering projects until the permitting, is officially signed off and that could take as long as the year. So 2021, I've got good line of sight that the new facility the two lines and the speed ups that are all in process will be up and running. And we should be executed against those by mid-2021. Maybe 60%, of what I've described falls in the second half of 2020.

So, the best way to think about it, if you break it into line speed up versus lines versus new facilities, kind of a third, a third, a third is the best way to say it. Line speedups will -- that will be able to help us out for most of 2020, certainly in the summer selling season in North America. And as Dan said, the lines between the lines are putting in North America. One, we have a pretty good line of sight that should be able to help in the second half of next year. And then the other one in Texas is dependent upon the permitting. And then as we go into South America, thinks it's really more for 2021.

And just the new categories in the filling locations? Thanks so much.

Yes, definitely benefiting from new categories in North America. And the one of the investments will be targeted to a new filling location. The rest of the incremental investments will be falling into existing filling locations.

And Ghansham, as you know, we don't talk about specific customers, contracts and/or growth plans, but we are aware of a variety of specific customers that are adding, filling, can filling, capacity whether it's North America, whether it's Europe, and we're dovetailing our geographic investments with those. And so, there have been some customers that have been, having to buy cans from us, and one geographic location, ship them across [audio gap] country to another one where they fill it. We're aiming and looking to work with them on streamlining a lot of that. So, it will not only help us but it will also help them.

I think one last question on the new category expansion or one last comment is. We absolutely are looking at what products and what customers are winning in the market and which months we want to be with. And those definitely played into some of these expansions and investment call us.

Our next question is from the line of Edlain Rodriguez with UBS. Please go ahead.

John, question for you. I mean, you'll be adding new capacity. Your main competitor is adding more capacities, like gaining concerns that the industry may be attracting too much capital too soon, or do you feel that volume will be strong enough to absorb it all over the next couple of years?

We feel pretty darn strongly that the growth in the various markets is more than sufficient to cover that up. As I mentioned, just giving context here. In North America, it's approximately 100 billion can market has been growing at 4%. That's 4 billion cans right there alone in any given year. You multiply that over a couple of years and next thing you're looking at 12 billion of new capacity and that's 8 to 12 new line. That is why we're getting out ahead of me as you all know we've invested depends on where you look, but across our whole system globally, we've invested in 11 in line so we're last 18 months and we've been able to keep up with live growth, but not completely old. And so, what we're doing is this is just the next phase trying to get out ahead because I know we believe strongly that by 2021, that in given everything that our customers have been talking about that's in the pipeline right now that we see this growth continuing. And that's not even talking about the broader picture of this whole anti plastic sustainability and that continues to accelerate. This is where we're going to be talking about more capital as we go forward, also.

Okay, and in terms of capital allocation, so that new and all those investments you're making. Are they going to be coming at the expense of share buyback? Or do you think you can still do that $1 billion that you've talked about over the next couple of years share buyback?

Here is the way we think about it and I'll turn it over to Scott a minute, but when you talk about this growth, as we all know, we've talked about this. Our DNA is approximately $550 million. And we set our maintenance of no growth capitals in the range of $250 million. We've also said people have asked over time and how much does it cost for new line and it varies tremendously by region and what capacities you want to put in. But if you say up roughly, a new line is approximately $75 million. And you get anywhere from 800 to a 1 billion cans on it depending on how many swings you have in that. That means to keep up with this growth on a global basis. You're talking about a growth for us on a base of 105 plus 1 billion cans as growing 4%. That's about four new lines a year. And if it's a 75 million, that is about 300 million. So you later on top of that, you get 250 maintenance plus 300 of growth, that gets about DNA, then you layer on the growth that we have for aerospace. And then you grow on cups and other things even quickly see how we get the kind of 700 million. If that global beverage can growth continues, and we need to put more in, we have the capacity to because then I'll turn it over, Scott now. Even with all this elevated CapEx, we're still generating a tremendous amount of free cash flow.

Yes, I think we're going to continue to invest in our business on all these projects where we can grow EVA dollars grow our earnings, we're going to continue to be buying back or stock paying dividends. I think the 50% increase earlier this year is pretty strong evidence of that. And I think we'll be both kind of a consistent buyer of our stock, but also an opportunity to repurchase of our shares and take advantage of volatility. And so that means that any quarter to we may buy more or less depending on that volatility. But we're going to continue to invest in our business and return a lot of capital back to the shareholders.

Yes, let me just reiterate, over the last 20 years, we have done that exact same model. We've invested in our business. And we've generated a tremendous amount of our shareholder, value for shareholders by being consistent allocators of capital back to our shareholders. Yes, we have elevated CapEx, which is exciting, because that's going to provide the growth. And we also have the flexibility to be consistent, and over the long term and returning value to shareholders.

The next question is from the line of George Staphos with Bank of America Merrill Lynch. Please go ahead.

Hi, everyone. Good morning. Thanks for all the commentary. I just wanted to ask a question kind of a point of clarification to start. The additional 4 billion to 5 billion cans of capacity Dan that you said you think you'd get to on an annualized basis by mid 21. Does that include capacity, does that include within the number for aluminum cups or does it not? And similarly, I thought it would have, but given John's commentary earlier. Does that include anything for any of these still water conversions or not?

I would say cups. No, it's not in there. And still water conversions. That's it. We don't have much built into that 5 billion. And as you imagine, George, we're having very different conversations with the customer base. All the 3 major markets are incredibly tight. And so if there was going to be a move in the water, and there are certainly conversations about that. It will require some significant collaboration between us and our customers to make the supply chain, they'll have to invest in doing, they'll have to invest in potentially different logistics structures and warehousing, and we'll have to add capacity for him. And so those conversations would be in very early innings right now.

And I would take it probably not prudent to size what the opportunity could be either for cups or for still water, maybe not 21, but 22, 23, because it obviously, so you don't have a full agreement yet on the water side. You can't bring in permitting. You can't bring in CapEx yet. But is there a way to size what it could look like maybe in 22, or 23?

Yes, I'll let John comment. It would be difficult. It's a massive market. I think single-serve waters 500 billion units and global cans is 300. So, a 2% move, 3% move would require a very different investment pattern for us. On the cup side, we are commercializing the product. It will be in some sporting venues now. The thing that we're trying to get our head wrapped around is exactly the outputs that will come from a massive line or footprint, expansion. We're working through those and those details right now. So given you commentary on the specific volumes for the investment still a little premature, but we'll know that the next 60 to 90 days, I think.

Yes. George just amplifying, the cups are completely agreed on the water side. But just on the cups as I mentioned in my comments, around the world in terms of the addressable market for this, it's over 90 billion units, a third of which are in the United States. This will come at a premium aluminum's not inexpensive, but what we see is so far is a very strong willingness to pay a premium for a sustainable product, particularly as college campuses and professional sports venues go plastic free.

Understood. I thought that some of the investment and lines that you're talking about now would include some capacity for cup is that incorrect. So if, I know, you're commercializing, you're doing some pilots this coming football season. Am I mistaken that if you really go full force with this, that the investment really hasn't been lined up yet for that, those revenue streams?

Yes, that is correct. We have already put in a pilot line that we're currently serving for this fall, but to really scale it out. It requires a new investment that we have not announced yet.

Okay. Thanks for all the back and forth on that. Last question on investment and I'll have one shorter term one, and I'll turn it over just out of fairness. So, the return on capital that you're seeing out of these new investments, is there a way to say whether it's, perhaps a lesser rate than what you've seen, but you're getting so much growth, you're willing to take a lower return than what you've seen in the past? Are the returns on these new projects equivalent or above? What you've seen with returns on your last two or three year's worth of growth CapEx? And then separately and maybe shorter term, given all the growth you're seeing, what gives you confidence, which is the investor takeaway is why we should be confident that the startup costs and all the other variable expense that's been sort of a record has been something that will dissipate by 2020. Is it mostly in the contracts? Or is it the learnings that you're getting from all of the work you're doing right now? What would it be? Thank you guys and good luck in the quarter.

Thank you. I'll answer the return question. First, the conversations that we're having with our customers are very different. I think John indicated this. And that is resulting at least all the projects that we've approved thus far or at North of historical norms returns on these projects. In Europe, North America and South America, the markets are tight. And so the conversations are, in many of those markets that used to have excess capacity, they're just very different. And so we should be doing better from a returns threshold standpoint at this point. Fair question and I think when John indicated, the three buckets of capital investments or how will get units, the easiest units to get our speed ups and conversions, the second most difficult are our full line expansions and the third are greenfield. And where we have admittedly struggled, whether it's Monterrey or it's Goodyear or it's Cabanillas over the last couple of years, we generally had an 18 month time horizon on seeing the commercialization of the products and getting up to a run rate. And I think it's probably going to take a little longer than that. And we'll probably communicate that more explicitly. One thing that we do know that we have to spend a hell of a lot more time on training. And the other thing and some of these markets, these are the first -- in North America, Goodyear is really the first market where we built a greenfield plant in 30 something years. So, we will get better at it. And I think we'll hire better. I think we'll train better. And we're fully committed to that.

Thank you. Our next question is from the line of Tyler Langton with JP Morgan. Please go ahead.

Good morning. Thank you. I think you just mentioned from the sustainability, you really haven't sort of seen a benefit yet then you kind of mentioned just Northern Europe, you're starting to see some customers convert from PET to can. Can you just talk about how significant that move is? Or just provide a little more color on that?

Yes, well, this is John. Maybe I'll turn over to Dan. We didn't say we have got a better from sustainability. All these new products, I think are being driven by sustainability. What we haven't seen in any meaningful way, is existing brands that are already in existing substrates converting to aluminum. We -- there have been some public announcements by customers, we are obviously aware of other investments that they're making for those conversions. And that's what gives us some conviction as we look forward into it. I do think that many brand owners are struggling as their retailers are demanding more sustainable products, and a reduction of their footprints, both environmentally and from a greenhouse gas perspective, and they're turning to products such as aluminum, and that's what I was talking about. You're absolutely right. In Europe, you're seeing it. I think you're starting to see it in North America. I think someone asked a question earlier about, how big could that be? We're in early innings. So, it's too early to tell, but so far so good in terms of what we've seen.

And then in terms of the corporate expenses, Scott, I guess, I think 16 million this quarter having a low-20s. Is that 16 million a good run rate going forward? And is that mainly from sort of the shared services initiative?

It's a ton of different things, but our run rate should be pretty good. I said it it'd end up kind of just under 75 million for the full year. We're benefiting -- we're doing a lot of things whether it's restructuring, legal entities. Some of the things we've done in pensions, shared services, it's all those things that are adding to that, basically lowering our costs that will get the benefit, not just this year, but into the future.

Let's not forget a couple of years ago. We talked about over the 2018 release, latter half of how '17, we're going to actually be making investments in standing up shared services, and we should start to get the benefits as we get into the second half of '19. And that's exactly what we're seeing. But to Scott's point, that's just one of it. There're hundreds of different projects that all incrementally may not look that exciting, but cumulatively they start to add up.

Final question in terms of CapEx, most of these projects and most of that, in 2020, just kind of how to think about CapEx for this year?

Yes, I think CapEx, we initially set around 600 million for CapEx. I think it could be more than that. I think next year could be a little higher than this year. And all of these projects, we just approved at our board meeting a week or so ago, 350 million of capital to be spent over the next 18 to 24 months to add capacity across our beverage system and another 150 in our aerospace business to keep up with the growth in that business. So I think we could spend a little more than 600 this year, and I think we'll spend a little bit more than that next year.

Our next question is from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.

Just wanting to understand that the outlook statement of EPS growth of greater than 10% to 15%. It sounds like volume's potentially trending a little bit better than you thought. You also discussed contract renegotiation in the statement and the release, but you have experienced quite a bit of cost. So is it implicit in that statement that contract renegotiations and pricing improvements and mix is going to more than offset the logistics issues and the cost and that your inflation you're experiencing? Or is it a greater pivot to buybacks as well? Or maybe you can just sense what kind of goes of that segment.

Well, qualitatively, and I'm not going to hash through all the numbers because I think we've in one way shape or form talked about them already. But number one, we've had a variety of headwinds that we said, we're going to dissipate, certainly, as we get into the back half this year, but more importantly, going into 2020. So that's a source a year-over-year improvement. We also have unit volume growth that is much stronger than we historically have seen and/or anticipated. And the mix of that more specialty is a kicker on top of that. So that's a big data point relative to our historical 10% to 15%. You think about the growth and aerospace that we've been going it's been growing much stronger than we've historically have. There is other thing as well, but those and then you're talking about the new capital we're putting in and we're an EVA company, so we better darn well, we generating returns on that. So, you put all that together, and absence, just normal share repurchases, you can see your line of sight of why we feel bullish on the next few years.

Okay. And then just from another perspective, I'm just wondering South America, you guys experiencing very good growth there hasn't been some extra capital is coming there though. Any concerns that growth there could slowdown eventually and with new entrants and a little bit more capacity? Thanks.

Yes, we're probably less concerned about the new entrance just more concerned with the volatility of the region. But the reality is the movement and I think the things John, we've talked about this historically, but what you're seeing an accelerated growth rates in North America and in Europe is the sustainability impact. What you're seeing in South America, which is a real tailwind, and it should continue for some period of time obviously given the macro environment is remains somewhat healthy. If it's a shift from returnable glass, by the largest incumbent to cans meaningfully and they're making significant filling investments to support that. They have last year or the last two to three years in that marketplace by premiumization of beer and all of that going into specialty aluminum packaging. And so they have made a conscious decision to move away from returnable glass. And so that's why you're seeing these accelerated growth rates in that marketplace. And they're committed, as best we can sell to doing that for a long period of time. So we like the growth trajectory in that market in particular. And also further underpinning it over the last few years, we've actually seen very strong growth, but that was despite overall consumption of beverages to be down. I can tell you years in the second quarter 2019, beer, total beer consumption, irrespective of what package type it was in, was up by 2% software and was also up by 2%. That's the first time in a long time, those have been positive. And so we had good growth underpinning with negative overall volume. And now it's turned positive, then you layer on with and so that's why we feel constructive over the next several years.

Okay. And last follow-up on free cash flow. Assuming that you do grow EPS in the 10% to 15% or above range, given that your investments look like increasing your CapEx outlook, would you expect slightly lower free cash flow growth? And how should we think about that?

No, not necessarily because I think we'll get -- As Dan talk about, the projects that we're investing in and the mix of those projects gets better. And I think the earnings acceleration will offset some of the growth in capital over the next few years. So I don't necessarily seen free cash flow are going to be hit as we go forward.

Yes and the other thing I'd point out is actually, cash flow from operations is going to be growing quite strong. And when you really think about free cash flow is a function of the cash you generate from running your business, less the maintenance CapEx, you need to support that business and then plus or minus growth capital and that growth capital could be M&A, it could be Greenfield investments as we talked about. So, we actually over the long-term that growth investment is a one-time type of thing, and so yes, in 2019 or 2020 or '21, we may have elevated CapEx, but it's one time growth CapEx that's going to accelerate the free cash flow from operations.

Our next question is from the line of Kyle White with Deutsche Bank. Please proceed.

Just curious if you guys, what kind of volume impact you saw from the weather conditions in the quarter? And then what have you seen in July, any impacts from kind of the heat waves that we're seeing?

No issues in North America, I assume that's where the questions coming from, but we did see in the second quarter, kind of some dissipate about as good as our volumes were in Europe, the weather wasn't on our side and that is certainly turns so. But from a weather perspective, as long as it's not over 95 consistent, people are going to drink candy products. I mean, that's kind of the temperature range we usually see.

And then standpoint in Europe, we did get qualitatively, the volumes were quite strong. But we do think that they were more muted than they otherwise would have been because of bad weather. You go into July it's actually got incredibly hot. So, it's almost too hot for people stay indoors, but having said that volumes continue along the growth pace that we've always talked about. So there's for different reasons, it really hasn't impacted it over the longer term, we're going to have short-term dislocations because weather good and bad.

And then turning to aerospace continues to grow nicely. The won not booked backlog close to about 5 billion. Can you just provide some details on these backlogs and kind of the typical timeline that we should expect them to materialize into one contract and materialize into actual sales?

Yes, it's truly across the board when you look won not booked. We have things such as I'll just give you 2 book ends. We have on one hand, the shorter term in that is contracts we have one for specific satellites with specific customers in the classified arena that because the government didn't have a budget, they couldn't sign an agreement. Now that budget is behind us, it significantly improves the prospects over the near term that we will go on contract and that will move from one not booked into a funded backlog status. On the other stream, we do all the sensors that are on the fuselage and wings of the F-35. That contract will go out to 2030 or 2040 in the various lots that we have produced. Some of them will move in the short-term to from one not booked to funded backlog. Others will stay out there for a number of years as these planes continue to be built. So those are just two extremes. And there's hundreds of programs in it that have similar characteristics within those parameters I just laid out.

The next question is from the line of Neel Kumar with Morgan Stanley. Please go ahead. The line of Neel Kumar with Morgan Stanley is now open and interactive. Please proceed with your question.

Sorry, I was on mute. I just had another question on aluminum cups. Do you have a preliminary sense of what the receptivity of customers is to cups and aluminum versus plastic? And are there any other new revenue opportunities outside of beverage cans that you're considering?

Maybe I'll take the first one. We've done a bunch of quantitative and qualitative research that says. This could be very -- there could be a lot of upside here. I think what we've seen at a high level that people see the experience of the container as much better than all the existing alternatives, they see a colder, they see a sturdier, they see a willingness to pay more as a result of that. And so everything that we've seen says, yes, there could be a lot of interesting upside in here. And as it relates to other innovation innovations, we always have other innovations pretty consistently revolve around the markets in which we currently serve. And so this is for beverages. I would not anticipate us going into food, for example, which consciously made the decision to exit that, but we have a lot of things in the pipeline. Now, Dan, do you anything to add?

I would say, I mean, obviously, you're presenting this in kind of the entertainment space and food service space. And look, we are a 100 for 100 in terms of the percent of showing this cup to a potential customer and then wanting to place an order right now. We're turning down and we're allocating is what we're doing. But where you'll see this is entertainment venues, and you'll see the sports venues where there is a massive push to have a green facility.

Very helpful.

It further helps leverage us on the college campuses, for example, because when college campuses in terms of sustainability, that is probably the greatest area, when you think about demographics, you think about people 18 to 25 years of age. So those are probably the, those that are most conscious about sustainability. And when college campuses talk about going plastic free, yes, they can convert their soda. Yes, they can convert your beer. Yes, they are starting to convert their water, but they never had an alternative from us in terms of costs. Now they do. And so that's what we've been talking about them using this as an opportunity to accelerate going plastic free that their customers being the students are asking for.

Great. That makes sense. And I was just wondering if you can also update us on how sustainability conversations with customers have been progressing aerosol. I recall you mentioned those conversations started surfacing in the space in the first quarter of this year. So any update there will be helpful.

Yes, as I said in the first quarter and it kind of continues, there is discussion but it's further behind the beverage category. I think sustainability and recycling in the personal care space is more and more difficult. They have many more resins. They have many more colors within those resins. And so, as they try and think about how they're going to deliver their products in a sustainable world, it's just taking longer, it's much -- I won't say easier, but you can see a have a much more clear line of sign when you're talking beverages, and you see what you need to do. I think it's a little bit more challenging when you get to the aerosol side, but I still think there's great potential. It's just we cannot point to you right now any specifics like we can in the beverage. Any specifics in the aerosol sides that we said that is a direct result of sustainability.

Okay, and then just lastly. With specialty can growth of 30% and global volume growth of 5%, your portfolio make is about 43% seems to imply that traditional can volumes came down during the quarter. Is that generally a fair characterization that all the growth came in specialty cans?

Yes, overwhelmingly. I mean, relatively flat, some slight decline especially in EMEA and Asia contributed to that, but almost overwhelmingly all the growth came from specialty and that's what you, that's what was reflected in that mix.

Next question is from the line of Brian Maguire with Goldman Sachs. Please proceed.

Good morning everyone. John, back at the Investor Day, simply a long time ago now back in October. You've talked about just one of the challenges in adoption of the cans historically was just the difference in the price point at the retail level between the beverage bottles in PET for example versus aluminum cans. Just wondering, as you've seen this take off in growth, how you think customers are getting around that? And presumably input costs are up, you're doing an admirable job of renegotiating contracts to capture the value you guys create. Do you see customers being able to kind of price appropriately to maintain or improve margins on cans? And just a general kind of how do you see the growth and specialty helping customers with that price conversation?

This is Dan. Good question. I think this lends itself to, when I think when John describing this. He's really talking about kind of core brands shifting out of high margin packaging, and it was established, because higher retail prices as they put on those packages and plastic. The growth that we're seeing is coming in specialty packages, new products. Those are still being launched by the large CPG companies. And they're being launched at a far greater rate. And I think we've been touched on it's basically 2x, the amount of new product launches in both North America and parts of Western Europe that are going into cans versus the historical rate of about 35%. Those products are -- they're able to garner a higher price point, which is -- has not been much of a conversation because they are in some of these emerging categories like fitness energy, spiked seltzers. So, they're able to step into cans with new products at really nice margins. And although they probably won't say this, they won't say it publicly. They also don't want to compound an issue in their supply chain by putting more plastic into that supply chain. And that's why we're inferring there's absolutely a correlation to sustainability.

And the only thing I'd add on top of that is even with the existing grants, which I was specifically talking about. Dan's absolutely right. That's why especially growth is going so much. But let's not forget, there's many of our existing brands, they have put packaging and whether it's a 7.5 ounce here in North America or 250 ml or 150 ml in Europe. And they've been able to ride that price curve up to reduce and/or eliminate the retail price per fluid ounce delta between their plastic offerings and their specialty can offerings.

And your comments just about the forward look on can opportunity to, maybe take some share from other substrates in those traditional markets. Are we at the point where the concerns around customer perception on sustainability overwhelm more challenging retail price point or the fact that cans costs more than plastic? You mentioned you haven't seen much benefit today from such substitution, but the forward look sounded positive there. Are we just seeing your inner conversations with customers that really sustainability is trumping economics in these new decisions?

They won't necessarily say that directly, but what we do know is the investments in cans going lines are happening at a massively accelerated rate versus historical norms. And we also know that some of our major customers are putting in a lot more cans filling capacity over the next two years. So, the combination of those two would suggest that there's absolutely contemplation that they need to get out ahead of this for a potential move whether its regulation or they're willing to take a slight margin dilution by moving into aluminum. I think there's -- in addition to all, but I think there's a recognition of the consumers requiring it that's the most important thing.

So the final question is from the line of Chip Dillon with Vertical Research Partners. Please go ahead.

Yes, thanks for taking my question. I just had a quick one on the cup introduction that you're going to roll out. Obviously, the water bottle is very similar to an aluminum beverage can for beer, let's say, but the cup there is different concept, and I just didn't know if you were able to use similar machinery or if you had to go out and either put something together on your own or buy a different type of technology or set of equipment to make aluminum cups.

Yes, great question. What I'd say is there's parts of it's similar but a good chunk of it is very different. This has been in development for nearly seven years within Ball. And we think there's a lot of proprietary to this, that we'd rather not disclose. But, it's very easy to make cups when you're banging in about 100 or 200 per minutes, but the key is to do it at scale to get to a price point that actually opens up the market. We think we've done that and that's why we started with a pilot. We wanted to test it with three or four weeks in the pilot. Things are working well with brand new technology in parts of it. And so, I think it's a -- and that's what gives us a lot of hope, but it is it's similar but different than making a beverage can.

Okay, Lila. Well, thank you very much for everyone's participation, and we look forward to a great second half of 2019 and as we go forward. Thank you all for your support.

That does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your line.