Good morning and welcome to Crown Holdings’ First Quarter 2017 Earnings Conference Call. Your lines have been placed on listen-only mode until the question and answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Thomas Kelly, Senior Vice President and Chief Financial Officer. Sir, you may now begin.

Thank you, Annie. Good morning. With me on today’s call is Tim Donahue, President and Chief Executive Officer. On this call as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including in our Form 10-K for 2016 and subsequent filings. Earnings per share was $0.77 in the first quarter compared to $0.57 in 2016. Adjusted earnings per share were $0.72 compared to $0.69 in 2016. Net sales for the quarter were flat to the prior year but up 3% at constant currency exchange rates due to 2% growth in beverage and food cans, 3% in aerosol cans and the pass-through of higher metal costs. Segment income of $228 million at actual exchange rates, improved 3% over last year's amount. From the beginning of the year through April 18, we have repurchased 3.6 million shares of company stock for $193 million. As previously communicated, we expect to use available 2017 free cash flow for share repurchases and to maintain 2017 year-end net leverage at or near the 2016 level. Also, during the first quarter we refinanced our revolving credit facility and term loans through new five year agreements maturing in 2022. As outlined in the release, we are maintaining our full-year adjusted earnings guidance of between $3.80 and $4 per share and project second quarter adjusted earnings of between $1.05 and $1.15 per share. These estimates assume a full-year tax rate of approximately 26% and exchange rate at current levels. We are also maintaining our full year free cash flow guidance of $425 million after $450 million in capital spending. With that, I'll turn the call over to Tim.

Thank you, Tom and good morning to everyone. I'll be very brief and then we'll open the call to questions. As reflected in last night's release and as Tom just discussed, we had a good first quarter. Sales unit performance across the major product lines, that is food beverage and aerosol cans, was firm with all being 2% to 3% ahead of last year's first quarter. We have reviewed the progress on the major projects we have underway or recently completed in the release, all of which are on the same timing as we described in February. As has been our practice recently, we have included the currency impact on sales and income in the release by segment, so my comments will focus on currency neutral performance. In Americas beverage, sales units advanced 3% in the quarter as a strong performance across Latin American operations bolstered the 1% gain we experienced in North America. Segment income improved $3 million as a result of the volume gain, partially offset by start-up costs in Monterrey and Nichols and the inflationary impact we have discussed before. Sales volumes in North American food advanced mid-single digits in the quarter and is reflected in the segment’s improved income. Unit volumes in European beverage increased 1% over the prior year as strong performances across the U.K., Benelux and Turkey more than offset continued softness in Jordan and Saudi Arabia. The conversion of our French plant from steel to aluminum has been completed this month with two aluminum lines now running in the plant in time for the high summer season. Segment income in European food was leveled to the prior year as the benefit from 1% improved unit volumes was offset by mix. Beverage can volumes in Asia Pacific also advanced 1% as a strong performance across Southeast Asia offset the impact of the closure of the Shanghai, China plant. Adjusting for the Shanghai closure, volume in China was levelled to the prior year and pricing has firmed and remained stable currently. As noted earlier, global aerosol volumes improved 3% in the quarter and is reflected in the $3 million advance in non-reportable segment income. So in summary, a solid start to the year but as we have said before, the first quarter is a seasonably small quarter and it is far too early to comment on the various food packs. So with that vein, we are now ready to open the call to questions.

[Operator Instructions] Our first question comes from the line of George Staphos of Bank of America.

Yes. First question I had -- can you comment a little bit on how the start-ups at Nichols and Monterrey have gone? It sounds like in aggregate it's on track but were there any differences between the two? And then as we think about the volume that's coming on with your various projects, can you comment about your ability in your view for these projects to really improve return and earnings? You know, obviously you’ve been facing a number of headwinds over the last couple of years, and I had a couple follow-ons.

Yes. So Nichols versus Monterey, I would say in total they came up as expected. One a little better -- one a little behind what our expectation was but on balance about as we expected. To answer your question, you're going to ask later Tom -- Tom tells me that the startup costs -- look like they impacted the quarter by about a handful $5 million or $6 million, something like that. Obviously, George, the goal is to, not just build plants, make more cans, it's to improve overall returns for the organization and earnings. I think we -- as I said in December I think we've done a fairly good job of that the last several years. Obviously it takes a little bit more effort perhaps and certainly more time to do this on a greenfield basis than on an acquisition basis. We’ve had two very good acquisitions in recent memory, but the build-out of the platform plant by plant takes a little more time but we are starting to see that, that benefit. But I'm not sure if I’ve answered your entire question.

Well, you did in part, I guess the other element -- again you've been facing a number of headwinds the last few years, currency being one of them. I guess the question I was asking is, how do you gauge your ability for your new investments to hit the bottom line relative to those headwinds maybe stabilizing at this level – if you would characterize it that way or frame it however you would?

Yeah, well I think you know what our outlook for 2017 is, I think -- I think as we sit here today it is certainly far too early to comment on 2018, but as we sit here within in our building for 2018 we feel quite confident as we look at 2018 given a stable environment around currencies and political issues as you described. We do see the capital that we have put on the ground recently and that we're doing now are contributing in that regard.

[Indiscernible] the last two quick ones and turn it over. One, again when you look at projects, how much more accretive are they, or are they in your view relative to buying your stock back at current levels? I know you're not going to get into necessarily the pennies here but you know some directional commentary perhaps would be helpful. And then as you look at recent trends in Turkey and Syria and the Middle East more broadly, again how do you assess your ability to manage through that volatility and frame it relative to your guidance? Thanks guys and good luck in the quarter.

Thank you. So just on -- running your business, investing in your business versus buying back stock, let's be clear buying back stock is pretty easy, right? You call upon your -- one of the people who works in your bank and I want to buy back stock and you can buy back stock all day long. It doesn't take anything other than the will to do it and the cash. So yes, we're able to do that. I think I said on the last call that currently the acquisition environment is quite expensive. We don't see a lot of value there. We see much more value in buying our stock than buying somebody else's company. However all you do is buy back stock, you're going to wake up several years from now, if not properly investing in your business or properly investing where there are good growth opportunities and wake up with a business you don't like a whole lot. So we've been mindful of the fact that, that growth is the driver and obviously we want profitable growth. We've all had experiences where we've misjudged markets or the competitive environment and some of the growth we've had has not been as profitable as we liked. But on balance we think we've been pretty successful for the last ten or fifteen years with the growth strategy which I said is a greenfield strategy, takes a little time but you are starting to see some of the benefits of that. So I think that it's incumbent upon us to run this company for the future of the company, for all of our stakeholders, not just the stakeholders who are here today maybe gone tomorrow. And we're continuing to try to grow the company. So on balance, where we have opportunity,…

Thank you. Our next question comes from the line of Phil Ng of Jefferies.

Hey guys. Margins were very strong in Europe despite the impact from start-up costs and some of the weakness you called out in the Middle East and Custines, what's driving that improvement? Did you see any benefit on the commercial front that aided margin?

So Phil, we had -- I just mentioned one thing, so while volumes were down in the Middle East, our profitability was flat to marginally up. So obviously that implies margins were better, that has to come from one of two things: price and/or mix, -- or third thing, we ran better. Hard to believe we ran a lot better given that utilization was lower, volumes were lower. Hard to believe you’ve improved price a lot when margins are down -- when volumes are down. So we've been able to determine that it was mix. So where we did lose business was customers that we don't do quite as well on. So mix is one reason, we don't have any -- we had a little bit of start-up in Custines but it is similar to the startup we had in Custines last year in Q1. If you remember last year in Q1 we were just completing the conversion of the first line from steel to aluminum; this is the second line. So that's kind of a wash year on year. The installation of the second line in Turkey is behind us, so we're through the startup there and the plant’s running quite well. And as I said Turkey was very strong after a weaker Q4. So I think just on balance we had some good mix and we're running well in Turkey and we had a good performance in Turkey and the market was good in Turkey as well as the U.K. and Benelux we did as well -- we didn't -- if I was to characterize our customer portfolio across continental Europe, I'm hard pressed to think we pick up any business on balance, we might have lost a little business here or there.

So most of the mix improvement was isolated in the Middle East or was that Continental Europe as well?

No, I think the mix improvement was in the Middle East. Overall volume in Continental Europe was up but that includes for us Turkey -- and most of that is Turkey.

Switching gears to Americas, top line was pretty strong. Appears that you may have gained some share, whether it's Latin America or North America; can you provide a little color on that front and how you're thinking about the outlook for Brazil because the market is a little choppy right now?

Well, so I knew the Brazil question was going to come up. I had our Brazilian folks send us a pretty detailed review of Q1. What I can tell you, as best we can tell in Q1 the overall beer market was down a half a percent in Q1, that’s blast cans, draft et cetera. Cans were up 3.1% in the first quarter in Brazil, that spans soft drinks and beer. But most of the cans we sell are beer. So the mix again has improved from glass to can in the first quarter. So we're anticipating that the can share – can share of the beer market goes up a half a percent this year and takes it directly from glass, so and that's been a trend we've seen for several years now. So I think the – in large part if you look at Brazil, I think we're starting to see some increased confidence. The inflation rate is lower, or the projected inflation rate is lower. GDP is projected to be a slight positive this year after being about 4% negative last year. Interest rates are about 5% lower currently. Unemployment while still high around 10% or 11%, looks like it’s stabilized. So I think all signs point to a more or improving confidence level on the consumer. Some of the larger beer guys recently have reported some softness in Brazil but that could be mix among the beer makers themselves or the brewers themselves, the overall market is as I said only down a half a percent. That's kind of a rounding error but I think within that you've got some of the brewers doing better than others. So I think our performance in Brazil was up just like the market. We picked up 1% in North America. North America continues to do well -- we don't have CMI numbers yet. The only thing I can tell you is looking at information from the American Beer Institute is it looks like total beer shipments in the first quarter were down 3.5% but that's across cans, glass and draft. And we do know that at least in 2016 the can picked up another point to point and a half percent of share in beer versus glass. So it wouldn't surprise me again, if when we see the CMI data that we don't see some improvement in cans which implies a continually shift from glass to can. So as it relates to the can market, Phil, we're – the can market continues to do well despite some underlying softness in some of the markets we may be serving. But again this is just the first quarter, I wouldn't read too much into it.

And just one last one for me, on Europe too, top line was a touch lighter than we were expecting, were there any like weather related or one-off issues? And I know you said it's too early call in terms of the vegetable pack, but any color in terms of how you’re thinking about demand trends in your food?

Oh, you're talking European food?

European food.

The volumes were up 1%. And when I say mix, that means we sold more smaller cans or less big cans, so that'll be -- that's not only sales value mix, that's also a profit mix that’s kind of in the wrong direction for us. So just mix.

Thank you. Our next question comes from the line of Mark Wilde of BMO Capital Markets.

Thanks and good morning. Tom Kelly, question for you; just with all of the kind of foreign currency moves that we continue to see, I'm just curious about how those kind of played into your current view on guidance. Because I might have thought given the rally in the Mexican peso that you might have actually moved the guidance up a little bit.

Yeah, the peso, Mark, is -- it's a tough one to get a handle on, because we have dollar cost and dollar pricing. But generally what we've said is about a 10% move in the peso off of current levels would be worth a few cents. So as Tim said, it's a first quarter, yes, a stronger peso will help us a little bit. But it's not that big at this point and there are other currencies involved as well. So we didn't make a specific adjustment just for that.

Mark, not to be a smart aleck about it but when we get good enough to adjust our guidance for the small move in the peso since January 1, that means we're probably -- we should be doing something other than working on a can company. So as Tom said it's pretty early, we've got a lot of currencies, we're dealing with some volatility in the Middle East. The Turkish lira is also very volatile right now. So it's isolated to one currency; clearly we're happy that that currency is moving in the right direction. We were somewhat surprised and certainly happy to see the article yesterday that the folks at Goldman Sachs who obviously are never wrong decided that they don't want to any longer be bullish on the dollar, they see the dollar weakening; that was in The Wall Street yesterday. So well, depending on how they position themselves or either telling you the truth or not when they make that statement. So that would be a good thing for us, obviously if the dollar was to weaken further against the Sterling and certainly start to weaken against the euro. But it's just too early for us to make that into any numbers at this point.

Okay. Tim, I wonder if we could get any just general thoughts on M&A. You mentioned that you thought the market was pretty expensive but I'm just curious, in other points you have also talked about maybe looking at other related businesses. And I wonder whether that's still on the table and again just how you're thinking about the market generally right now?

Well, I think we're a packaging company, we're a rigid packaging company that currently makes cans [ph] metal and decorates metal and sells it to large consumer marketing companies, whether they be regional or global. We are focused on providing the highest level of service and quality that we can to do that and continue to build our brand and help our customers build their brands. Obviously there are things that change over time, Mark and so that comment was made -- reflecting on that comment is made under -- understanding that things change over time and over time companies have to change if they want to survive. We used to be a bottle cap manufacturer, we make very little bottle caps anymore in relation to the overall company. So things do change over time and we have to be flexible enough ourselves to change if the needs arise, and we always have our eyes out for what we believe are our trends and opportunities that would be beneficial to our stakeholders. But at this point as I’ve said earlier things are really expensive. I saw the news came across my desk the other day that -- and I'm sure it's a very good company but I think they traded it fourteen times, big number. So we're mindful of value. It's hard to understand how we could generate value for the shareholder who are paying a price like that. So we're kind of watching things right now. As said, we're happier to buy our own stock and to play at those levels.

All right. Last question I had is, just from a bigger picture perspective, has the consolidation that we've seen in the beverage side of the business -- is that driving any more inquiries from kind of big beer, big softdrink companies about working with Crown as an alternative?

Well, I think when you talk about customer consolidation, it accelerates their desire to drive their cost base even lower. From where we sit we think we provide them a very highly economical package. But that's not going to stop the pressure that they're under and the pressure they're going to try to put us under to reduce cost. I would say that, they have purchasing departments that have gone to college and they take purchasing 101 where the first three rules are beat your supplier and when the first three rules don't work, you go to rule four: beat your supplier. So we understand that; our role is to, as I say, provide a quality product with the highest level of service and try to remain as low cost as we can to be competitive against our competitors and satisfy the customers when they want that. I think we do a pretty good job of that. But so – In regards to customer consolidation, no, that's not going to stop. That's something that we're accustomed to. There's been a lot of customer consolidation recently in the beer industry as you point out. However much of that consolidation did not happen in North America, right? The big acquisition that just happened to require the acquirer to spin off the North American piece of the business to a Canadian company. So there is consolidation but in some regards it's a balancing out of competition among the brewers as well in certain regions. As it relates to can industry, there's been consolidation and it's incumbent on everybody to continue to be as low cost as possible, innovative where it's required and when I say required, where it's required by the consumer or desired by the consumer. But it's all about staying low cost, Mark.

Thank you. Our next question comes from the line of Debbie Jones of Deutsche Bank.

Hi good morning. You mentioned the mix shift continuing from glass to cans and I was wondering if you could give us a sense -- if you look over kind of the last year, what's really driving that? Is it the mega beer producers continuing to shift towards can slowly, or is it kind of the new brewer entrants moving over? I mean craft brewers – what really do you think is ultimately going to drive that going forward?

So I think it's both of what you just described and in addition to that, -- I’ll be little careful how I say this -- let's just say that my father drank beer out of a can; my generation thought it was more fashionable to stand around the bar holding a longneck bottle. And I think the generation behind me, or two generation -- maybe I am old enough, two generations behind me now, I think they're more receptive to the can. I think they understand the benefits of the can, that it holds the flavor and the chill, much longer than competing packages and I think they are far more engaged as it relates to sustainability and recycling and they understand they have a desire and they understand the role they play in helping the environment. And I think they're completely engaged with the 100% closed loop recycling of the metal can as opposed to some of the other substrates which have very little recycling value, if any. So I think there's -- there are a lot of factors, the overriding factor has to be again cost and when we talk about cost, that goes from the procurement of the package through the filling process, warehousing, shipment et cetera. And as we know cans fill at much higher speeds than competing packages, they chill quicker, they stack better, they don't break in the lines et cetera. So I think it's a combination of a lot of things, Debbie, and I think whether you're talking to Crown or you're talking to our competitors, I think we all agree that we're very fortunate that we're in the can business and we have a package that stands up whether it's just to sustainability, recycling and increasing consumer demand for it, so.

Second question, Jerry Gifford is coming back over to the U.S. as COO. Can you just talk about what he is going to be focused on having spent time running Europe for a while?

So Jerry will have responsibility for our Americas division and European division, all products as well as our equipment division out of Shipley that makes beverage can equipment and our tooling shops which make tooling for beverage and food cans. He's going -- and also our project management engineering, the group we have internally that actually builds our factories. Jerry’s focus is initially going to be on manufacturing improvement, manufacturing excellence and as I said to Mark in a question before, it’s incumbent upon us to keep our cost as low as possible and find ways to drive cost even lower. And that's going to be the focus initially and it hopefully frees up some of the other folks here in corporate to look at some more strategic alternatives but don't read too much into that statement, Debbie. But it's largely about manufacturing excellence and Jerry is a seasoned engineer that’s has been in the can industry for over thirty five years, predecessor of Crown, and then with Crown since 1990 when his company was purchased by Crown, and highly respected within our organization and I believe across the industry certainly. So we're looking forward to it. And it will be a great addition – it will be a great help to me because I am not an engineer by training. So I do a lot of this without the knowledge that Jerry has. So we fully expect -- we fully expect this to be extremely positive for the company.

And just one housekeeping one on corporate expense, it’s just a little higher than I had expected. I don’t know if that was the case for you as well –

That's largely due to timing, we think and we would expect the costs to come down in later quarters, although not necessarily even across each of the next three quarters. And for the full year we're looking at about $150 million to $160 million for corporate items, probably somewhere close to the middle of that range.

Thank you. Our next question comes from the line of Arun Viswanathan of RBC Capital Markets.

So I just had a question on, first off on the margins, again, definitely slightly above us. Maybe you addressed the issues in Europe. Maybe you can just reiterate if there's anything else there. And then in the other segments, Asia was also ahead. Any thoughts on if you ran better there or mix helps, or start-ups were lower than expected. Thanks.

So in Europe I think we've talked a lot about -- the two things I will mention additional in Europe and I didn't say it earlier, so I do apologize. Turkey, the second line is up and running. So last year at this time we only had one line in the Osmaniye Turkey plant, now we have two lines. So I think you've heard us all talk, whether it's Crown or competitors talk about the economic benefits of running two lines under a roof compared to one line and the plant’s running quite well. We have a real seasoned workforce that does a tremendous job and the market was pretty strong. So that's two lines in Turkey versus one last year. The other -- while we were converting Custines, the second line in Custines -- or not converting -- installing a brand new aluminum line in Custines. We did the same last year, so that installation disruption, if you will, year on year has no impact but what we do have an impact is line one in Custines has been in service now for a year. So through its learning curve, it's running quite well and we're making aluminum cans, not steel cans and we make aluminum cans faster and certainly in Custines, the new line makes them much faster and much more efficiently than we were making on the old steel line. So I would point to those two factors. Beyond that I don't have any more answers for Europe for you. Asia, I think, you've all been disappointed in our Asian results over the last several years. I think if you go back and you start plotting our Asian segment income performance over the last five or six years, you're going to see some nice growth and we continue to have that. The markets continue to grow in Asia; there are a lot of people in Southeast Asia. China was stable, we actually had a fairly good performance in the first quarter in China. Pricing has stabilized. I think in the last call I said there's light at the end of the tunnel and I'll say it again, I don't know how long the tunnel is but there does appear to be some light. Now somebody might turn off the light but for now things are going quite well; demand is firm and pricing is stable in China. And it's not offsetting the positive performance we've been experiencing in Southeast Asia, which continues through Q1.

And then as a follow-up. So given that you do you have Nichols running now and then there are other startup expected through the year, Jakarta, Vietnam, so on. Your segment income also for Q1 was well ahead of us. So if we were to include that, we do get to the upper end of your guidance range on EPS. So maybe you can just give us some swing factors as to why you're still guiding to the $3.80 to $4. And I understand it's early in the year, but is there anything else as far as concerns that you're watching for?

Well, I think the first quarter is a smaller quarter, as we've said. I think if you go back over the last several years we've probably done quite well in the first quarter. Perhaps our first quarters relative to the prior year have been better than the succeeding three quarters. Again it's early in the year, we have no reason to even guess at how the food packs are going to be this year. Now having said that, the food packs are very -- generally very stable. So when I'm hesitant to talk about the food pack, we're talking plus or minus 1% or 2% here; we're not -- there's not a wild swing we expect but the 1% or 2% is the difference between an average year and a good year or an average year and a not so good year. So we're waiting on that, we've discussed with you for several calls now the volatility in the Middle East and it’s really hard to predict at this point, from quarter to quarter things change rapidly in the Middle East. And but it’s early in the year, Arun. I would caution you that we feel quite comfortable around the midpoint of the range. As we said in February, we were bracketing -- with that range we were bracketing 2016 performance, I think we felt very good about that -- if everything works out right for us, yes, we could be at the top end of the range. But it's too early for you to get me there right now.

And just as a follow-up then. On cash flow, also given that you potentially had some mix improvements and maybe that there are some benefits from a further down the learning curve in certain facilities. Would there be any possibility for increased source of cash from working capital or anything that would push you to a higher range on cash flow?

No, Arun, I think we're pretty comfortable at this point saying working capital movement is going to be pretty minimal on the cash flow statement for the year. Yes, to the extent we do better on operating income, yes that would flow through but we're not expecting anything meaningful on working capital.

Thank you. Our next question comes from the line of Adam Josephson of KeyBanc Capital Markets.

Thanks, good morning everyone. Tim, hope you’re feeling all right. One on North America food, I think, Tom, you said you're up mid-single digits there, obviously that market has not been growing at anywhere close to a mid-single digit rate. So can you just help us with what happened in the quarter and what you expect volume to be for the full year there?

Adam, I'll take that. I didn't realize I sounded that bad on the call but thank you -- we were up mid-single digits. Again it's a small quarter for food. There could have been some pull ahead, I wouldn't read too much into it. I would largely anticipate that for the full year in North American food that we're going to be flat to up to 2% to 3%, I don't think we're going to be mid-single digits for the whole year. Especially as we get into the to the third quarter, the harvest quarter, it's hard to believe you would maintain that kind of percentage through the high season, so. As we sit here in the first quarter it's certainly better to be up and down and there could be a little customer pull ahead that -- it's still too early in the second quarter; I can't tell yet if we're losing anything in April but we'll obviously know –

Sure, thanks for that. I just wondered on the continental European beverage can market, you were up this quarter, I forget by precisely how much. You said on the last call that the market had slowed in recent quarter, just on account of the weak economy there. Do you still think that, or do you think the market is still growing at that 2% to 3% rate that you used to grow at in years past?

I think -- I am trying to remember what I said -- I think my concerns I guess last time were around the economy as a whole and the confidence of the European consumer, and I probably characterized -- as you just said we have been quite fortunate in European beverage to see growth rates of 2% to 4% every year for a decade. And I was a little worried that maybe we could only see one or two. It does appear that at least from everything you read in the papers, I don't live in Europe but from what you read in the papers that there seems to be a little bit more confidence that the economies are starting to turn the corner. And if that's true, hopefully we see a step-up in spending. I will tell you -- the only thing I can point to right now and Tom Fischer is sitting here with us. Tom used to run the aerosol business in Europe for us. The aerosol – our aerosol performance was quite strong in Europe in the first quarter and usually increased aerosol can sales are a precursor to an improving economic environment. Again what does it really mean to you guys -- but we were up mid-single digits in aerosol cans in the first quarter which is not something you see very often. We are also up in the United States, so it could be a harbinger of better things to come for the economy. So I think I feel a little better about -- two months later what is 10 weeks but certainly 10 weeks later, I feel a little better -- a little bit better about the economies in continental Europe than I did back in early February.

Sure. Thanks, two others; one on, your competitor announced a capacity plant closure in Germany, obviously there are capacity additions occurring elsewhere in Europe. So do you expect the closure to have any discernible impact on supply demand there or do you think it's just going to be more of the same?

Well, we don't participate in the German market. Other than to a very small –

Right, just the broader continental European market.

I would tell you that I think that plant closure that was announced was contemplated by the seller of the business before the business was transferred from -- that's my understanding, it probably got held up because they had to get through European Commission and they don't want to be viewed as taking up capacity but I think it was always contemplated as coming out and it can hurt that capacity is out of the market, I don't think it changes anything for Crown. And as you say there is capacity, there's a new plant that's coming online in Hungary state sponsored, it sounds like. And as we know there was a plant built by a small manufacturer in the western part of Germany recently. So albeit they're having large start-up problems but over time they'll figure that out. So the market continues to grow, that's the good news; 2% to 4% growth in a market that has 60 billion to 65 billion units is a billion to 2 billion units a year and that requires one or two can lines per year or incredible efficiencies among all the other lines. So as long as we have growth, we can handle that. So on balance it's a good thing the capacity came out.

And just one last one on CapEx, I know -- it's come up quite a bit, your CapEx in the last year or two has been higher than it was in years past. So you've got these conversions going on and other projects I think as George referred to earlier. If you had to guess what a more normal CapEx level would be compared to the $450 million to which you're guiding this year? Would you say perhaps it's something more like $400 million to $450 million, whatever whenever normal happens?

What I think we'll say is that if we had to run the company on maintenance capital only, what do we think, Tom? 150? Let's say, maintenance capital $150 million only, everything above that we view as growth. So it's largely dependent upon the growth opportunities that we see and I don't want to describe normal -- I don't know what normal means but -- I don't know if we're in an abnormal time with the opportunities we have, I hope not; I hope these like -- I hope we continue to have the opportunities. I know if we continue to have these opportunities out of them, we continue to spend $450 million a year, that $450 million is a lower number proportionally of our cash from operations as the cash from operations expands. And I'd rather have a company that is growing than a company that’s not growing.

Thank you. Our next question comes from the line of Scott Gaffner of Barclays.

Just a quick follow up on the Middle East. Tim, you mentioned earlier, I don't know if you said uncertainty or volatility, but sounded like more of an end market commentary on the Middle East. But what about the competitive dynamic there? Are you seeing any shift with maybe new capacity coming online that’s causing a shift in market share?

So I think the new -- there is new capacity that comes online occasionally, from time to time in the Middle East; it's largely brought on by fillers who decide that not only do they fill beverages they want to get into the can making business as well. So that happens from time to time. Overall we believe the Middle Eastern market will continue to grow or will resume its growth trajectory that it's had for the last thirty years. But there is -- that does happen, people do bring capacity on. But as I said on Europe, as long as you have growth you can handle that. It’s when you don't have growth where you have periods of extreme volatility, like we've experienced in the Middle East for the last several years, since the Arab Spring really started all of this three or four years ago. So now the volatility is largely end market related in that our customers have trouble moving their product around. And if our customers can't move their product around they don't need our products. So that -- borders closed, borders open, it's just volatile. So we're managing through that like the other can companies, like our customers, like other companies in other industries, and -- I don't want to over-do it too much because we continue to do well in the region, it's just -- it's hard to -- it's hard for us to sit here and project from quarter to quarter with much greater precision than using the term volatile at this point.

And then on Mexico, if I look at the Nielsen data, looks like Mexican beer imports into the U.S. slowed in the first quarter. But I know that business you've got there is both domestic and imports, so can you tell us how much is domestic versus import? And are you seeing anything in your business that would suggest a slowdown in import of Mexican beer into the U.S.?

So I would tell you that I don't want to say -- I don't want to say that – let me back up a second. I don't think -- we don't export any cans -- empty cans from Mexico to the United States. I think -- I can almost confidently say the answer to that is zero cans that we shipped from Mexico to the United States. Do our customers ship cans from Mexico to the other states after they fill them? Yes but I don't think it's a large proportion of the cans that we ship. I think some of that Tom Fischer is telling me, he thinks Heineken and the other ship about 10% to 15% of their Mexican fill in the United States. So not a great proportion -- I don't think we've seen any impact from that. Obviously there is -- under license there is a U.S. company that manufactures product in Mexico for distribution only in the United States, and when you talk about Mexican beer come to the United States they have a large proportion of that. So -- but that is not our customer.

Last one from me, Tim, when you were talking about M&A before you mentioned the shift in the markets or the products that you've made over the years, and sort of got the sense there from that, that you might be open to alternate substrates. I mean you've got the glass business now in Mexico. Is that the case -- I mean would you consider Crown a metal beverage or metal packaging company in the future, do you think –

This is a great lesson in “keep your mouth shut and don't even say anything” because I think you're reading far too much into it. What I think -- what I was trying to say was that things change over time and if you want to remain relevant you may need to change. I don't think we see anything in the metal packaging industry right now that requires us to change. I think from time to time we may decide to look at opportunities that may happen and not be in metal but you're not going to do it at the valuations that you see out there now. So we're having a discussion right now about something that might happen in five or ten years. I think that's probably my fault -- I should have said or somebody brought the question up, I probably should've answered a little bit more directly at that point. But we used to make bottle caps, we make some now but not anymore. We have the largest company in our industry used to be a glass bottle manufacturer they don't make glass containers anymore. So yes, companies change over time because times require you to change if you want to stay relevant. Unfortunately it's a throwaway comment that we've now generated some questions on.

But last one real quick, just on the capital returns, you're buying back stock to start the year but you also mentioned obviously maintaining or reducing leverage ratios, I didn't quite catch what you said there but what about coming back to the discussion on the dividend; is that something that you're contemplating as well or not?

But I think we said in February that we probably won’t have a dividend paid in 2017. We'll have at least four more board meetings this year and at, at least one or two of those board meetings we will bring up the issue of capital allocation or the board will require a review of capital allocation and the notion of a dividend will certainly come up. And you can be sure they’ll be discussed.

Thank you. Our next question comes from the line of Ghansham Panjabi of Baird.

Hey guys, good morning. Just given the increase in steel cost this year, can you just update us on your pricing initiatives for the products that use steel template and was there any sort of pre-buy you think that perhaps benefitted either aerosol or food cans in the first quarter?

Ghansham, we had some pretty significant steel increases this year, high single digits in the United States and low double digits in Europe. Our goal was to try to fully recover the metal increase that we're experiencing. I think we've done a pretty good job. I think it's probably little too early to say if we've been able to do that in full. I don't -- I don't think we've seen any buy ahead by the customers ahead of that because we’ve endeavored to try to pass through the steel as it was given to us. Perhaps we've had a couple instances where we have customer contracts that that are not January 1 but they are April 1 or May 1, but nothing -- nothing material that I'm aware of in terms of buy ahead.

And then just in terms of China, you called out pricing as I guess, firmer; can you just sort of give us some more color on that? Is it just that the pricing is firm at a very low level or are you actually seeing maybe improved behavior in the market?

I wouldn’t say firm, I think I said stable -- volumes are firm, stable -- stable at a low level, clearly not at levels that that anybody is satisfied with but we had -- we did see price increases to customers this year on the back of higher aluminum costs. They use the Shanghai futures exchange there, not the LME, so aluminum did go up and we did see – 2017 we did see almost all of the can makers, including some of the smaller can makers raised price in relation to higher -- what we call SHFE – S-H-F-E aluminum whereas in prior years we hadn’t seen that. So we'll see where that takes us over time but there is a talk of further consolidation among some of the Chinese and we'll just see where it takes us. We do know some people are really struggling in China. So -- and let's be clear if our can plants were owned by a large multinational, they'd be struggling too, right? Because nobody would be satisfied at the levels you're making right now.

And just one final one, in context of the sugar tax in certain jurisdictions in the U.S. and talk of other ones also implementing sugar taxes. Did you -- can you give us a sense as to how CSDs performed in North America versus non-CSD, beer, sparkling waters et cetera for your portfolio?

I don't have any of that information for Q1 yet, Ghansham. We haven't seen the industry data. In total we were up 1% but I don't have a breakdown by soft drinks versus beer, although my sense is that if we're up 1% in North America we're up in carbonated soft drinks. And that’s customer mix. I think you're right though that the sugar tax is having -- will have an impact over time. I want to say carbonated soft drinks were probably down another 1% in 2016 versus 2015, although it was offset by increased sparkling water and beer, juices and teas. So as an industry we had an up year last year but sodas were down. Yeah, we'll see where it takes us. At some point it gets to a level where, okay, there's a higher tax, and you’re paying more for it, you either decide you want to keep consuming that because you enjoy it and you'll pay the tax, or you don't consume it any longer and the people that implemented the tax don't make any tax revenue from, all they've done is kill jobs. So we'll see where it takes us.

Thank you. Our next question comes from the line of Tyler Langton of JP Morgan.

Question on Asia Pacific, I think, Tim, you mentioned volumes were up 1% for the region. Could you just break out what the volume growth you saw in Southeast Asia?

So I think Southeast Asia, we're probably up mid single digits. I know China we were down about 9% or 10% and that's all do to the Shanghai closure. Without the Shanghai closure, we were flat in the quarter but I think they are probably numbers right there.

And just one follow up question on CapEx. Can you just talk a little bit I guess about from new products, how your pipeline looks now say versus like a year or two, though. I guess should we expect some sort of like tapering in some new project announcements as these -- the current ones come on line, are you still seeing the decent number of opportunities out there?

I think it's probably too early to say, so it wouldn't be appropriate for me to comment. Just it could develop very quickly and so what I say now could be irrelevant tomorrow, so I prefer not to say.

Thank you. Our next question comes from the line of Chip Dillon of Vertical Research.

Hi good morning, Tim and Tom, and Tom. Tim, it’s easier for me to speak to you this April than it was this time last year.

So just assure me that all those young student athletes at your university are actually going to go to classes that exist here.

We're working on it, we're working on it.

I'm waiting on the probation by the NCAA.

Well, we’re hoping for mercy but time will tell. Hey, I just had a quick question about -- first of all, on that, you mentioned that one of the startups was going kind of according to plan, maybe one wasn't. Is it fair to say -- is it Nichols the one that's out of the gates a little better or do I have that backwards?

Nichols has come through startup quite well and when we characterize startup we talk about each of the piece of the line -- the copper on the front end, the decorator and a lot of times a start-up to decorators is very challenging, we've had – it’d inappropriate for me to single out why but we've had a real good startup on the decorator -- decorators in Nichols. Monterrey is getting better -- Monterrey came up in late November, early December and it was a little disappointing, it was a little bit slower than we'd hoped for but they are rapidly improving now.

And then just as a quick follow up on the – as you look around the world, if anything you're detecting in terms of the changes in mix -- I mean we've seen standard versus specialty. Obviously we've seen, even in some emerging markets the standard can volumes actually go down, while overall it's gone up because specialty is taking share; is that -- is there any change that we can point to in any region where maybe either specialty share is not growing as fast as it was or maybe it's accelerating?

It's a great point and question you're making. Largely as we look around the world and a lot of the regions where we're expanding, I don't want to say that they're exclusively nonstandard cans but largely the growth is being driven by the marketers’ desire to go to sleek or slim cans for marketing purposes and we are seeing exceptional growth in those packages across Southeast Asia, Middle East, South America, Southern Europe and even more so now into Northwest Europe. So we would expect that trend to continue and we'll see when it comes to the United States. Specialty cans are a growing percentage in the United States but they're nowhere near the levels that we see in the other markets and it's been pretty exciting for us and hopefully the marketers continue to view it as a positive feature of promoting their packages or their products and cans.

Our next question comes from the line of Chris Manuel of Wells Fargo.

Good morning everyone, I know it’s towards the end of the call, so I just really have – I mean I have a couple questions but there is just one I really want to focus on. Tim, you mentioned earlier that everything beyond the 150 is growth capital or return oriented capital, perhaps maybe a better way of saying it, or I think about it. If I look back the last two years, you had pretty significant expenditures, it would be $600 plus million that you spent on what I’ll call return oriented capital project. But if I were to look at segment income, so not ex-ing out the corporate component of it, segment income has been relatively flat, maybe up to 10 million if I use the midpoint of Tom’s corporate expense number. Is something different perhaps with the returns you're generating from capital investments and return projects you're doing or is there something that perhaps maybe takes a little longer to realize those? I mean you've been spending money the last two, three, four years, so I’d expect some flows through but –

Are you taking currency adjusted or are you expecting us to overcome currency that you're not expecting other companies to overcome? Because I think we've discussed in detail the amount of currency headwind we've had, and even with the currency headwind we've had tremendous growth. And if you put the currency aside, like a lot of companies like to report we've had even better growth. But you don't -- we put a -- we spent $400 million this year and $250 million of it is growth capital; you're not going to see anything in 2017. So it does take a year or two for that to come through. But I think your point -- you're not happy with the results you're seeing. Hopefully we can do better.

Tim, I'm not judging the returns. I mean the question is more around, has something perhaps changed? And I will go back and take a look at the currency adjustment as well. But has something perhaps changed with the return characteristics of the projects, maybe it takes longer to get a return out of some of these projects or something of that nature? More new lines versus adding a line.

Well, I would say you don't have the information that we have but if you were to look at, for example, the Asian division, and over the last three years all the money that we've spent in Asia has gone in the Southeast Asia but if you had available to you, our performance China versus Southeast Asia, if you strip out China, you’d see tremendous growth in Southeast Asia, because China has gone the other direction for everybody. But I think there are a lot of things that happen in an organization. There are a lot of things that happen across an industry and we're not the only guys that spent $400 million a year and have had earnings that you would describe as not up to what you were expecting. So there are other things that happen, currency you got a bad market like China, for example, for a couple of years and -- but but all in all we've been -- I think we've been moving in the right direction for the last several years.

Thank you. Our next question comes from the line of Brian Macquarrie of Goldman Sachs.

Hey good morning, Tim. I am glad to see you're enjoying our currency strategies work.

Yes, I am always curious as to what side you guys are playing when you make those announcements. No comment on that, Brian; there is no upside for you.

I'll take your word for it, Tim. I will take your word for it. Just wanted to follow up -- not to beat a dead horse too much but just a little bit on the Americas beverage volumes; a pretty strong considering the Nielsen data which had come in a little bit weaker. Just wondered if you -- it's harder to segregate this but any sense that the weather might have had an impact or any pull forward in volumes, any customer mix, anything you could kind of call out to attribute the strong results to?

So as I said, the Brazilian can market in total was up 3% in the quarter. Carnival was a little later this year in February versus January last year, so we get an extended Carnival season compared to last year by three to four weeks. So that certainly helped. Easter was in mid April this year, not March so that would have helped as well to the extent that there were cans continuing to be sold to fillers who were trying to stock store shelves ahead of Easter. So -- but other than that I don't have any reasons but for all the negative news you're hearing out of Brazil, the Brazilian can market was up 3%, so it's going in the right direction for the can makers.

And just one -- I was late in the call, just one last one on Nichols, just trying to get a sense of when that will flip to positive on the EBIT, I know you probably have a D&A drag from a lot of the CapEx there. But just thinking about the contribution from that, is it through the rest of 2017 and then into 2018, when that would flip to positive and then it would seem down the road you'll get some logistics savings from not having to ship up from the south?

So we are -- we just brought the second line up in the last week or two. But I would say that for the large part of 2017 that we're going to be -- we will have logistic savings this year but for the large part of 2017 we're going to be working through startup on a very large plant with two new lines. So but we fully expect 2018 to be positive.

Thank you. The last question comes from the line of Anthony Pettinari of Citi.

Good Morning. On the project startups, I think on the last call you referenced a $0.06 full year hit from the Americas projects. I just wanted to confirm you're still on track for that and if it's possible to put a finer point on the startup costs associated with Jakarta, Vietnam and the other Asian projects.

So we said $0.06 on the last call, it is six or eight, I can't put a finer point on that. But I think it's close to that. We didn't call out a number for Jakarta, Indonesia or Danang. And I think the answer I gave last time, Anthony, was we've had projects every year for several years now in Asia. So I think year on year there is no real difference where -- whatever startup we have this year in Asia will be similar to the startup costs we had last year, so it's probably inappropriate to call it out as we're looking to bridge year on year. But as you think about Nichols and Monterrey, yes, we said $0.06 last time and it could be six, it could be eight or nine; I don't know but -- I think what we're trying to do is get the plant -- plants running properly and service the customers properly with not worrying too much about that number.

And then maybe just the last one on price; is it correct to say your full year guidance assumes sort of flattish price cost -- price cost is basically neutral for the company, or are there any regions or businesses where you'd expect pricing to be net benefit or headwind for the year?

I think it's fair to say that based on the guidance we gave you in February and then reiterated today that we expect price to be firm throughout the rest of the year from where it is today. That doesn't mean that it hasn't changed from last year. There are competitive features in a lot of markets. Some may be a little better some may not be but it would be -- again that's not something I want to get into discussing on this call but – it is where it is.

Understood. I’ll turn it over. End of Q&A

So then, I think that was the last caller. Thank you for running the call today, to everybody that joined us, thank you for joining us and we look forward to speaking with you again in July.

Thank you, and that concludes today’s conference. Thank you all for participating. You may now disconnect.