Good day, everyone, and welcome to today's Silgan Holdings First Quarter 2014 Earnings Conference. Just a reminder, today's call is being recorded. At this time, I'd like to turn the conference over to Kim Ulmer, Vice President and Controller of Silgan Holdings. Kim, please go ahead.

Thank you. Joining me from the company today, I have Tony Allott, President and CEO; Bob Lewis, EVP and CFO; and Adam Greenlee, EVP and COO. Before we begin the call, we would like to make it clear that certain statements made today on this conference call may be forward-looking statements. These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and, therefore, involve a number of uncertainties and risks, including, but not limited to, those described in the company's Annual Report on Form 10-K for 2013 and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements. With that, I'll turn it over to Tony.

Thanks, Kim. Welcome, everyone, to our first quarter earnings conference call. As we typically do, I'll make a few summary comments at the beginning, turn it over to Bob to make some more detailed comments about the quarter and our outlook for the remainder of the year, and then, Bob, Adam and I will be pleased to take any questions that you might have. As you saw on the press release, the first quarter results are ahead of last year and right in line with our expectations across each of our businesses. As a result, we delivered record adjusted earnings per diluted share of $0.53, representing a 12.8% increase versus a solid prior year first quarter. We also increased our cash dividend by 7%, and we completed the refinancing of our senior secured credit facility. While it's still early, we're pleased with the respective performance of all of our businesses thus far in 2014. Our Metal Container business benefited from stronger volumes, particularly in pet food, over a fairly strong comparison in the prior year quarter. We also continue to make good progress towards our working capital goals in this business, as we further reduced comparative inventory levels. Our Plastic business performed well, and we continue to make headway toward rebalancing our portfolio, as a more favorable mix of products and lower depreciation were partially offset by lower volumes. Our Closures business is doing a great job with integrating the Portola acquisition and readying for what I think we all can hope will be a warmer season ahead. Based on our first quarter performance, the outlook for the remainder of 2014, we're reconfirming our estimate of adjusted earnings per share in the range of $3.10 to $3.30. With that, I'll now turn it over to Bob to review the financial results in more detail and talk a bit on our earnings estimates.

Thank you, Tony. Good morning, everyone. As Tony highlighted, 2014 is off to a strong start. Our businesses delivered results in line with expectations, and the integration of Portola is going well. As you'll note, in the press release, we have elected to carve out of our adjusted results the operations in Venezuela, since monetary policy in Venezuela continues to be challenging and there is no near-term solution to the ongoing issues with procuring steel or repatriating cash back to the U.S. On a consolidated basis, net sales for the first quarter of 2014 were $855.8 million, an increase of $60.1 million, or 7.6%, as net sales increased in each of our businesses. Net income for the first quarter was $31.5 million, or $0.49 per diluted share, compared to first quarter of 2013 net income of $25.4 million, or $0.38 per diluted share. Results for the first quarter of 2014 included rationalization charges of $1.6 million, a loss on early extinguishment of debt of $1.5 million and an operational loss in Venezuela of $0.5 million as a result of their inability to convert bolivar to a liquid currency in order to procure steel. The total adjustments to earnings was $3.6 million, or $0.04 per diluted share. Comparatively, 2013 included a loss in Venezuela of $4.2 million, including the re-measurement of net assets of $3 million; a loss on early extinguishment of debt of $2.1 million; rationalization charges of $1.4 million; and plant startup costs of $800,000 for an aggregate impact of $8.5 million, or $0.09 per diluted share. As a result, we delivered adjusted income per diluted share of $0.53 in 2014 versus $0.47 in the prior year. While we endeavor to effectively hedge our major currency exposures, foreign currency negatively impacted earnings by $1.8 million, or $0.02 per diluted…

[Operator Instructions] We'll go first to Chris Manuel at Wells Fargo.

Just a couple of quick questions, if I could. I mean, first, you gave some color regarding volumes by some of the segments. If we could get maybe a little more granular, could you give us a sense of maybe what food volumes were like, both North America versus Europe? And maybe by Closures, with respect to x acquisition or what, metal plastic and a few of the pieces like that?

Sure. Yes, Chris, if you talk container volume, as we said, they're up about 2%. That's true. Essentially, that's both in Europe and in the U.S. on that side. On the Closures side, we were obviously up significantly because of the inclusion of the Portola business. If you exclude that, you're more or less flattish on the Closures side. And Plastics, as we had already said, was down about 2%, and that's a continuation of what we've seen, where we're going through kind of a cycling of the business, so mix is better but the volume is down a bit.

Okay. With respect to -- I want to talk about European food for a second, if I could. What's the outlook there over the balance of the year? How -- I know you've had a few plants that are kind of in the crosshairs of some turmoil over there and some other new volume coming online and some plants in Russian regions, too, that -- the Ukraine, that seem to be potentially challenged. Could you give us maybe some thoughts as to what you are dealing with in the business, any challenges, issues? Is that getting better, is it getting worse? And what you might feel volumes might be like over the year?

Sure. It's a big question. I would start by saying that Europe, as you're probably seeing kind of around other companies, the weather in Europe was the polar opposite, if you will, from the U.S., where it was a much warmer season, and so I think Europe broadly, I'm mostly talking Western Europe and then I'll go east with your question, but I think Western Europe seemed a little bit better this year. I would not -- I don't think our view is that it's back to exuberant growth rates or out of the woods. But I would say Western Europe seemed a little bit better through there. And so, I think our Can business and our Closure business in Europe are feeling a little more confident around that side of what they're facing. As you point out, our Can business, particularly in Europe, is much more eastern-focused than that. To remind everybody, we do have a new plant in the Ukraine. We do have 2 relatively new plants in Russia. And so we have made investment into a somewhat volatile region right now. As we look at it, so the main answer to your question is we're going to watch and see. Our outlook right now is for -- is kind of reasonable flattish kind of a performance. But so far, it seems okay. The Ukraine clearly is a little bit soft. The bulk of the economy in Ukraine is ultimately export to Russia, is a big part of what happens in Ukraine. And so that they may not be our product but ultimately, our end-user, our customers' product often is going to be going towards Russia. And so that border is more or less closed right now. And so you're seeing some softness but, on the other hand, there is still business and we are still operating. In Russia, right now, so far, things seem pretty stable. Again, reminding everybody that our product is primarily around food, food tends to be pretty stable through volatile times. And so, as we sit here right now, there's no sign of any major changes there, but, obviously, like everybody, we're watching the economy and keeping an eye on it.

Okay. And last question, and I'll turn it over, is, there are some food can assets being divested or required to be divested over in Europe, particularly some stuff in Spain. Just wanted to get your sense as to -- I know you're not -- I don't think you're heavily involved in the Spanish market, as you sit today. But what do you think of that market? Is that one that is potentially attractive, does it have some reasonable growth characteristic to yourself? How would you gauge some of the different elements? We've talked a little bit about some of the more volatile pieces of Europe, but, seemingly, what might be a more stable piece?

Yes. Well, there's sort of 2 parts to your question. The Spanish market is a big food can market. So it's certainly one that is of some interest. We are there in Closures, of course, today. So if your big question is, is it a good and interesting market? It certainly is. If you're around particular assets being divested, at this point, we've not been invited to any process on that. So if that's -- if you're speculating around that point, I'll give you a direct answer on that particular issue.

Moving on, we'll go next to Adam Josephson at KeyBanc.

Bob, just one on Portola, how accretive was it in the quarter?

Yes. So for the quarter, it came in right around $0.02. As you know, we kind of came into the year thinking that we would get somewhere between $0.05 and $0.10 accretion for the full year. As we indicated in our prepared comments, the integration is going pretty well. So I think, we're gaining confidence on the ability to certainly be in that range and perhaps even to the higher side of that range before the year is out.

Just a couple of others. In terms of your second quarter guidance, you're guiding to about flat earnings. You were up about 13% in the first quarter. Is the primary difference there just the quarter you had in 2Q '13 in your metal containers business? Or is there something else at work there?

No, I think, that's the main point, is that we had -- Q2 was a pretty strong quarter in the container side. As you'll recall, the soup pole and pet food pole were very strong in that quarter. So I think that's the bulk of it.

Okay. And just one last one and I'll get back in the queue. In terms of lower depreciation expense, I think you said on your last call that you thought it would be a full year benefit of about $14 million, inclusive of the impact of the Portola deal on D&A. In the first quarter, D&A was down close to $5.5 million. Do you still expect about a $14 million decline this year? Is it higher than that now?

No, that's kind of right where we're anticipating we'll come in. Remember that there were a bunch of things that were driving that, right? We had been spending lower CapEx over the last couple of years. We've got some prior capital that is rolling off, and that will be -- or in some cases has rolled off, and that will be anniversaried on a year-over-year basis. And then, you had the impact of the change in asset lives, which is the primary driver, as well as the Portola acquisition and a higher CapEx estimate for the year. So you're right, kind of right around that $5 million number is the impact for the quarter. But I would say it's more front-end loaded across the year, and that will start to taper off as we go through the year.

Our next question today is from George Staphos at Bank of America Merrill Lynch.

Tony, the first question I had, recognizing that the geopolitical issues in Russia and the Ukraine kind of cloud the lens for you a little bit, can you see from your vantage point whether the tone in the broader European can market, realizing it's very regionalized, is better this year from a competitive standpoint? And if so, why? If not, why not?

Yes, George, I think you'd have to absolutely say the tone is better. I think we're going to be cautious around it. First of all, we're in a lot of markets, so there's a lot of specific things going on. But I think, you're asking for a broad tone, and broadly, the tone is a little bit better. I think, the volumes are a little bit better. That leaves the other manufacturers a little less desperate to go claim that volume. I think some of the geopolitical and economic issues of Southern Europe, for instance, are more stabilized and so, again, I think, more long-term decisions are being made rather than kind of short-term keep-my-plant-full-type decisions.

And then, within North America, not that you're going to see much, if any, variation and, again, the question is around the same theme, given your nature of your contracts and how much of your business is on a long-term contract, would you sense that the business from a competitive standpoint, say, in spot markets, is relatively stable this year, more competitive or less competitive? Any thoughts there would be appreciated.

Well, look, we've talked plenty on this call that you have some new capacity coming in, our customers can't help but hear that and think about that as well. So I would say that you're probably hearing a little bit more and it's a little choppier, but I would not say that we're seeing kind of clear evidence of a major change in behaviors in the market. I think that's clearly something we're watching very carefully and would react to if we did see that. But at this point, it's more choppiness than it is actual major changes going on.

Okay. And then, I guess the last question I had to start, broadly again, and if you mentioned earlier, I missed it, do you have any update on Can Vision 2020? Any sort of tactics or next steps in the process as you're rolling this out to your customers?

Sure. Thanks, George. Really, from our year-end call, not a lot more to say here. Again, our main point here is to try to drive costs out of the entire process to make the can even more competitively advantaged than it is. And I think, on the last call, I talked a bit about there being kind of categories to this. The first part of that are cost reductions that we already know how to do. We do it in one place and not another. They're fairly basic, logistical. Or you take a particular design from one customer, move to the next one. Those are the ones, when we start talking about capital being spent this year, that's going to be more likely around those types of projects. Then you move into more of the developing, bigger changes to the package, process, et cetera, and those will take longer. And then, the third set and there is sort of the integration of all the players in the market and kind of the entire supply chain, modifications and, again, those will take a little bit longer and be a little bit more subtle in terms of how they come out. But we are expecting increased capital this year around it, as I indicated at the year-end call. Our view is that, that could be some $50 million of capital in our U.S. can business that would be associated to the Can Vision 2020. Now that is not all incremental spend because we're always spending some cost reduction money and so some of that is incremental and some of that is just reallocation of what would normally be spent.

Moving next to Chip Dillon at Vertical Research Partners.

I just want to make sure I did not misunderstand, but did you just start -- I guess this was the first quarter you did start reclassifying sort of Venezuela on an adjusted -- taking out the results on the adjusted numbers, is that correct or have you done that earlier?

Yes, that is correct. And we obviously restated the prior year numbers to take it out as well. What we've done historically is we've taken out the remeasurement, the negative impact as a result of the remeasurement of net assets. But given the volatility and the uncertainty about that business' ability to get steel and/or repatriate cash, the view is that any earnings stream or losses, particularly given the fact that we're -- we have no intention of investing incremental capital into that market, it's just not relevant to the performance of the business and should have little to no impact on the shareholder. And perhaps maybe more importantly, even giving the shareholder visibility as to what it is.

Got you. And for the full year this year, I know you mentioned $0.01 in the first quarter, I think, and $0.03 in the second. Should that be -- $0.08, be a good guess as to what that would be for this year?

Yes, look, I think you're keying in on the challenge here. It is very difficult to predict when and if that business is going to get raw materials. Right now, we're sitting at a point where it's got very little production going on in that plant because it has not gotten steel. So I think, we'd be hard-pressed to guess what the back half is going to be. But I would say it's more likely than not that it's going to have pressure in the back half, for sure.

Got you. And then, I guess, shifting gears a bit, not that you all would necessarily be impacted that heavily by weather in North America, but was there anything remarkable, either in terms of how it affected your business, anything you could call out either financially or otherwise with the winter weather? Or do you think it may even have some impact on what the Can pack might be later this year?

Okay. Two parts. So obviously, in the first quarter, it must have had some impact. I mean, we definitely had some plants that were down. So we certainly know it had some impact in terms of our ability on inventory, production, et cetera. But by the time the quarter finished, we had kind of worked through much of that, so we really don't think it's a big deal as to the results. Add to that the fact you also have this shift at Easter, so the quarter sort of benefited from not having Easter in it this year versus last. So if you kind of put those 2 together, we don't see a huge point coming out of weather in terms of the results in the quarter. Your question then goes on to a much bigger one, which is around the pack. I think, the -- I'll answer that 2 parts. First, around weather, the cold in the Midwest is probably the only one that I think you're really pertaining -- relating to in your question. Certainly, what we're seeing is a -- it's been cooler and wetter. And so, I think the packs in the Midwest are going to be later. And so right now, it's probably just a question of the risk of late packs and, obviously, that just heightens our risk on the pack side. Separately from that, I'll go to the West Coast just to finish the thought process, which has less to do with polar vortex. But in the West Coast, I'm certain as to what we're seeing there, everyone knows there's been a drought, it's gotten a little bit better, I suppose, in that regard. Our feeling there is that, as to fruit on the West Coast, it looks like it's going to be…

We'll go next to Al Kabili at Macquarie.

I just wanted to drill down a little bit on the metal food business and if you could help us quantify the impact of the inventory, not as much inventory build as last year, what that unfavorable variance cost you in the quarter year-on-year? And also, from the new facilities, you mentioned Ukraine, Russia, some of the challenges there and what kind of a drag those are -- had on the quarter. And how much we should be thinking about continuing on throughout the remainder of the year there.

Sure. On the inventory point, it's a couple of million dollar impact associated with the inventory that we built less than last year. As to the new plants, you'll recall that we were kind of ramping those new plants up last year as well. So really, on a comparative basis, the only issue on new plants so far has been around the foreign currency exposure in Ukraine and Russia specifically, and that's about $2 million as well of impact just in the first quarter. Given what's happened to currency since then, there's probably a little bit more of a hit in Q2 that we'll take for that. And then, we'll have to just wait and see which way currencies go. In theory, if it stabilized, you'd have a benefit. I'm not sitting here waiting for that, but theoretically, it's true. So as we think to the rest of the year, I kind of go back to my previous comments. It's a little bit of a wait-and-see in terms of kind of how this whole geopolitical situation plays out.

Okay. And if we look at just the U.S. business, so I know if we just look at EBITDA for the segment, adjusted EBITDA for the segment, it's down year-over-year despite the 2% volume growth. And we talked about some of the drags there. Is the -- was the U.S. business, can you say if that was up year-over-year? And we've seen despite some volume growth throughout the past couple of years, pretty flattish earnings growth overall in metal food and what do you think we need -- what needs to happen to start to get the earnings in that business, the EBITDA, excluding the D&A benefit, to start to trend back up again?

Sure. It's a good question. I mean, first of all, we think kind of the absolute returns on that business are excellent. I think we've talked about our expectation. In fact, to make to our euro guidance, we have to see improvement out of that business, so our expectation is we do see improvement out of the business. So the specific answer to your question is yes, it is so that your EBITDA in the U.S. is down in the quarter. That is not a surprise to us at all because you'll recall that we talked about the fact that we did a fair amount of contract extensions and the impact coming from those extensions. So that is part of what's in that time period. Then you get into some mix issues, et cetera, which generally, in our business, kind of level themselves out through the course of the year. So our expectation, again, is continued improvement in that business. And then we think about things like Can Vision 2020 and other things under way and we're -- we feel quite optimistic about our food can business.

Okay. Last question. Just the Plastic Containers business, I may have missed it, if there was a resin impact specifically in that business. And is the first quarter earnings there kind of pretty normalized for what we should be expecting throughout the remainder of the year or maybe even a little better, with some seasonality factors to think about there?

Sure. Much like at the start of last year, in 2013, we did experience increases at our primary resins for our Plastics business. So there will be a minor impact on the negative side to Q1, something less than $1 million, and we will see that lagged pass through in Q2. But as we sit here today, we're also looking at slight increases in Q2 for resin and our primary resins as we go forward. If you think about it on a comparative basis in Q2 versus Q2 of '13, there were significant decreases in Q2 of '13 in our primary resins. So on a comparative basis, it will be a drag on earnings. But from a pure P&L standpoint, it will be a slight benefit or flat in Q2 '14. Just to finish off, I would say it was a solid quarter for our Plastics business. So from a normalized standpoint, I'd say, yes, we're getting there. We are getting traction in some of the initiatives we've talked about. Still going to be lumpy over time, but it was a good for quarter for the business.

And we'll move on to Anthony Pettinari with Citi.

I just had a follow-up on the 2Q guidance. I think it implies at the midpoint that you'd have sort of low single-digit EPS growth. And if I take away the accretive impact of Portola and some nonoperating help from pension income and lower D&A, would you expect organic EBITDA x acquisitions to be down year-over-year in 2Q, understanding that you had a tough comp?

Well, I think, that's the main point is that you're talking about a very tough comp. We had very strong volumes in the Can business in the second quarter. So I think, the answer is, yes, it's possible in that quarter. If you look at the kind of first half, second half of last year versus history for us, we had -- an inordinately strong portion of our earnings came out of the first half last year. So the fact that you'll get a little us out of this year is not so much about this year as it is about last year.

Okay. That's helpful. And then maybe just shifting to metal containers, the soup can volume data that we've seen from CMI in 1Q, I think volumes were down almost 10%, which came on, on the back of a double-digit decline in 4Q. And I was just wondering if you had any comments on what you think is driving this? I mean, the Nielsen soup consumption data hasn't been great but it's not down nearly as much. Are you seeing acceleration of substitution into other substrates? Or in terms of your business, I'm wondering if you could just give some color on soup?

Sure. Let me hit the most important question first, which is no we are not seeing any major change in substitutions, et cetera. As we've talked about, our customers certainly are testing other formats, and more importantly, they're testing other products to try to get newer consumers into soup consumption and we're totally supportive of that. But in terms of is there some kind of major break of substitution, our view is no, which goes to your question, then how do you have the volumes that far off on the can? And the answer is you got to remember that this time, a year ago, Campbell, our largest soup customer, was in the process of shutting down 1 of their 4 fill sites in the U.S., out on the West Coast. And so you had a lot of inventory disruption going on. And so you may recall, but in the first half of last year, we called out how much soup was driving the volumes and we were pretty clear in saying we did not believe that to be sustainable. And then in Q4, when that settled back down again, we said that's exactly what we were expecting. So our view is that the year, last year, settled out to what makes sense, like the Nielsen Data, and I think we're back at the same old question, which is, is soup, as a broad category, is it a couple-point decliner or a couple-point grower, and I think that's what Campbell is trying to work on and we're totally supportive of everything they can do to turn it into a couple-point grower.

And we'll go next to Debbie Jones at Deutsche Bank.

My Can-related question was mostly answered, but I'd like to know, based on feedback from your customers, are they now looking for more investment in innovation from Silgan in the industry for the metal packaging format, whether it be 2-piece, 3-piece, light-weighting or other types of innovation? Or do you think the focus is really just being on the lowest-cost manufacturer you can be with your existing footprint?

That's a good question. I think the bulk of the answer is still on getting costs down, and that's a big part of what we were trying to do, too, is to try to keep the competitive advantage the can enjoys versus other alternative solutions. But we do -- we certainly do talk to our customers about more appealing, innovative-looking packaging and we do have customers who are absolutely working on some versions of that. So I would not say that it's exclusively around cost. There definitely are projects going on that deal with shelf appeal and convenience, et cetera. So there's a bit of that, but when we talk Can Vision 2020, primarily we're talking about driving cost out of the system.

Okay. That's helpful. I guess I'd also just like to ask about the Plastic Packaging business and whether or not -- what you are kind of seeing on the M&A front there? I know you're still integrating Portola, but that still is an attractive business for you to grow on by M&A. What do you think of it by region, by end market, like what's attractive to you at this point?

Sure. We do still view it as an attractive business. As you know, we're going through, in our Plastic Containers side, our plastic bottle side, we are going through a bit of a change in terms of the markets we're trying to service, et cetera. And so we want to get through that before we necessarily would opt to jump into an acquisition. I'll stop there and say we're always opportunistic about acquisitions. So it kind of depends on what's available, price, opportunities, et cetera. But in the perfect world, you'd kind of like to let that have another year to run, and then you certainly, assuming the business is successful in repositioning itself, which early signs feel good about that, then you would like to support that with good acquisitions that help bolster what they're working on. Equally, around the Closures, the Portola business was predominantly a Plastics business, although Closures, we continue to think those kind of acquisitions would be excellent for us, and as evidenced by the early success of that integration.

Okay. Yes, I guess I meant Plastics and Closures. I was also just trying to understand if there was maybe some end markets in those businesses that you didn't have a lot of exposure to, maybe look on the health-care side or things like that, that you might be willing to venture into?

Sure. I think, all I can say to that is would we venture into it? We might. We always talk about sustainably competitive advantage business. So if we see an opportunity in those markets to be sustainably better than everyone else, then we would do it. But we wouldn't just chase in there because that seems to be the popular spot to go.

And moving on, we'll go next to Alex Ovshey at Goldman Sachs.

Would it be possible to quantify the impact on the U.S. metal food can business from the renewal of customer contracts in the quarter and what you think that impact will be for the entire year?

No, we're not going to go there. We never have before. It's big enough that it's worth us talking about. It's not so big that we don't think the business is going to improve over the course of the year.

That's fair, Tony. Okay. And then on the volume side, you guys were up 2%. I think, the industry was down 0.5 in the first quarter on the metal food can side. Can you just talk about the out-performance for your business relative to the industry?

Yes, it would just be kind of our position in markets, so that is not kind of share shifting of moving customers around, it's just which markets move and who's got the bigger position in those markets.

[Operator Instructions] And we'll go back to Chris Manuel.

One more quick follow-up to you. As I'm looking through -- I was hoping maybe we can kind of take a step back and talk through your last few acquisitions that you've done. I mean, as we look at kind of the off cash flow that you've generated in the business the last few years and we think about kind of how those have contributed, I'm sure that they have contributed, I guess, what I wanted to get a sense of is how do you look at those acquisitions? I mean, I know you do a lot of postmortem, different things of that nature, but it's not necessarily been evident when we look at kind of the operating cash flow over the past few years, it's been kind of relatively stagnant. When we look at kind of what's implied this year, free cash flow less your CapEx element that kind of suggests that might be this year. Is it more a function that maybe these acquisitions aren't doing what you thought they would do yet? Is it more that the base business has had some changes or how would you have us think about that?

Sure. It's a good question. It's one that we've touched on before. But first of all, the operating cash flow stagnant. I think, probably, that's one that we'd want to come back and talk to you more about, and I'm not sure that, that's exactly how we view that. But certainly, on returns, which is a little easier to talk about, we've acknowledged before that when you do an acquisition, it tends to drive your returns down and it gives you sort of the platform upon which you can build and make good investments. And so it's -- unless you can buy things that -- if you look at our typical returns, you'd be happy buying things sub-5 to not be hurting your returns with the acquisition. And so it's just not plausible for us or anybody with our kinds of returns to go buy something and enhance the return initially on it. So you've got to see something beyond that. And we have in each of our businesses. I think, the one that certainly is most heavy on the numbers right now, of course, is the European acquisition of Vogel & Noot on the Can side, and that's really just everything we've talked about, right? We bought it right ahead of a European acquisition, as we said. It's a long-term play. We were going to make fairly sizable investments in new plants. At the time, we didn't necessarily realize that those were going to be all-around kind of geopolitical hotspots. So without doubt, that particular business right now is underperforming any expectation that we had for it. But that doesn't mean we would necessarily score that one as a loss at all. We really do believe, at this point, that assuming the geopolitical situation settles a bit, that these are spots that should grow, should grow as Can consumers and so we continue to see those opportunities. But that one in the numbers is definitely a little bit heavier right now. If you look at the rest, I mean, and, again, we invested quite a bit, that drives down returns when you do it, but when we look at free cash generation of, for instance, the Rexam business that we bought on the retortable plastic containers, that's a business that has been very strong in terms of cash generation for us. And we're very pleased with its performance thus far. Portola, you've already heard from us we think that's an excellent acquisition for the business. So I think it'd be hard to say is there one answer to your question, but we would say that aside from the fact we made a long-term decision on the European food can, we feel pretty good about where we're positioned to enhance value with these acquisitions.

Okay. Maybe just a little different direction to the same question. In your view, has there been any erosion or changes within some of the other -- obviously, some in the Plastic, but within the base business? I mean, look, as I just look at strict off cash flow, it's been down the last 3 years in a row. I mean, not materially, $359 million down to $351 million. So it's not been a huge degradation, but yet, as you pointed out, there have been several sizable chunks added. So that's kind of where I'm coming at it that way. But maybe the answer, too, is some other elements within the base business, whether it's working capital that's been required or different things may have negatively impacted the base.

Sure. Well, operating cash flow will go down just if you're growing your business because you've got more working capital going in. So I'm not sure that's the metric I would use to judge the thing. But again, our view is that there's a lot of value that has been and can be created through good acquisitions and that we believe we've got some really good acquisitions that we've completed over time. Again, I'm being pretty transparent that in Europe, that one has got a longer way to go and so that one certainly hurts your -- and by the way, that is a place where we spent a fair amount of working capital as we ramped up new businesses, we spent on capital for new plants, et cetera. So that one does speak to your point. But broadly, if you want to talk about acquisitions in total, I don't think it supports the proposition you're putting out there.

And we'll go back to George Staphos.

Tony, 2 questions. First of all, within Can Vision 2020, is it possible to comment on what is embedded in your outlook for steel for -- in terms of how you're playing for CV 2020? So in the next 5, 10 years, do you think we're going to be in an environment where tinplate is more inflationary or more abundantly invaluable, and then that provides other ways for you to leverage the cost structure? And I had a follow-on.

It's a good question. I think, what we're thinking is that even if it's flat, it's such a high component cost to the package. So even if you just say, let's assume for a minute that steel is going to be kind of flattish over time, then these projects would all justify themselves. So it's not justifying on a sizable inflation assumption, nor are we making a sizable deflation assumption on it.

Okay. If you had to venture a forecast from your team in terms of your outlook for tinplate over the next 5 or 10 years, what are you expecting actually? Would you expect it to be flat to down or do you expect it to be flat or up quite a bit? Or something in between?

Yes, I mean, if you push me on it, I would think that you're going to see some inflation over time on tinplate steel, because you've got to -- it's not about the steel industry and the worldwide demand for steel, it's really about tinplate conversion of steel and capacity and reasons to make that investment, et cetera. And so my view is that, first of all, I'd like to see it fall off a little bit in the near term, but I think over some meaningful period of time it's going to be flat to somewhat inflationary from here.

Okay. And then, if we look at the North American market, it's been an industry that's been declining. I forget what the CAGR is, but call it 1% or so the last time we looked at it. Certainly, you've been doing a good job of repositioning or reducing costs, I guess, to put it that way, within the business as a way of managing your market and earnings. If you needed to reposition assets into other product categories, would you consider doing that within the 2-piece or 3-piece market in North America? Or would you have opportunity at all to take some of the assets you've got currently in North America and move them elsewhere as a way of managing supply/demand, if in fact you have to do that, assuming the market continues to decline modestly over time?

Well, look, first of all, we -- for every 2 plants we operate today, we've shut a plant down. So we have always been willing to take down capacity, as it makes sense, certainly to find opportunities to rationalize and get more efficient as we do that. So our footprint and our assets are always under consideration. I think there is opportunity around the edges to change a little bit of which technology serves which market customer, but there's not -- that's not a huge opportunity. We are primarily a 2-piece DNI supplier as it is. There's not huge changes there. As we're redeploying, it is something we look at a lot, but by the time you rip a line out, move a line, change the power needs for Europe, et cetera, there's quite a bit of capital investment on it. So it's not nearly as easy as that sounds. But like I said, if there's reason to take capacity out, we would do it in any case, and we have done so.

I would think that the cost of the metal would be sufficient to offset the change in the power and the drives, but are you saying that it's not the case?

No, I'm just saying it's not as easy and compelling as it might sound. Sometimes, it works. Sometimes, the newer capacity might be a more economic way to do it. So it's not a simple decision.

And we'll also go back to Adam Josephson.

Tony, in terms of pet food, you had a really good year in pet food cans last year. So you're lapping difficult comps, yet you outperform your expectations in the quarter. Can you just help me with what's going on there and what your expectations are in terms of pet food can volume for the duration of the year compared to what it was in the first quarter?

Yes. I think the simple answer is that can is the absolute best vehicle to deliver pet food and so it's winning market share and that ought to happen on a global basis over time. But really that's it. It's just basically the customers that are using that package are being successful with the package and we see continued growth. And our expectation is that will continue, and it has. That's been going on for some time. Like everything, it's not a straight line up. So that's part of when we came into this year, we said, look, we're thinking here there's going to be some relaxing of the pet food growth in '14. We didn't see that in Q1. We're probably less worried about it in '14, but nonetheless, it won't go up every year, it never does. And so sooner or later, there will be a bit of a relaxing. And then, our view is it will keep going over a longer-term period.

Got it. And then, Bob, just in terms of M&A, I would think multiples would have expanded in terms of what you've been looking at over the past year or so. How would you classify your opportunity set at the moment just in light of that?

Yes. I think there's no question that multiples have kind of gone up a bit. I mean, just look at the public comps, right, which is what any seller is going to look at when they want to come to market. And I think, a lot of that is also due to the fact that debt is still reasonably inexpensive. The credit markets continue to be pretty hot. I don't think there's anything about that, that is necessarily preventing us from looking at good opportunities or taking things off the table for us. Again, it's not so much about the multiple that we pay. It's about the cash that those operations that we acquire can generate, and do those returns make sense? So we've talked about this in the past. And until the credit markets get kind of silly with allowing private equity to put the wrong kind of leverage on businesses, we still think that there are opportunities, and as we sit here today, feeling okay about what the landscape looks like.

And you don't see any of that silliness in the market at this point?

Well, I wouldn't say any. That's probably too strong. I mean, there are always folks that will do things that don't necessarily make sense, for various reasons. But I think broadly, we're still in a market where we can be disciplined and find opportunities where we need them.

And there are no further questions at this time. And, Tony, I'd like to turn the program back over to you for any additional or concluding remarks, sir.

Right. Thanks, Lori. Thank you, everyone. We appreciate your time today and we look forward to discussing our second quarter. Thank you.

And once again, ladies and gentlemen, that does conclude our conference for today. I'd like to thank everyone again for joining us.