Please standby. We are ready to begin. Good day, and welcome to the Silgan Holdings Third Quarter Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kim Ulmer, Vice President and Controller. 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 today, 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 belief 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 2015 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 third quarter earnings conference call. The agenda for this morning will focus on the financial performance for the third quarter. And then we'll review our outlook for the fourth quarter of 2016. After the prepare remarks, Bob, Adam and I will be pleased to answer any questions that you may have. As you saw in the press release, we delivered adjusted earnings per diluted share of $1.23 for the third quarter, which was in line with our expectations and slightly lower than prior-year adjusted earnings per diluted share of $1.26. We remain on track with our footprint optimization plans. The qualification process in the Burlington plant is going well, which allowed us to shutdown LaPorte plant earlier this month. We've completed our internal startup processes and are well underway with commercial qualifications. A majority of the customers, who will be supplied from this plant have completed commercial qualification, and most others are in receipt of cans or preparing to make qualification runs. Our plastic business is proceeding according to the revised footprint optimization plan. We completed key incremental line moves during the quarter, allowing for the closure of the Cape Girardeau plant at the end of September. This is the second plant closed this year, as we continue to rightsize this business. Volumes in our metal container business were flat for the quarter as compared to the prior year as a result of stronger sales for pet food, offset by a weaker than anticipated seasonal harvest in Europe due to unfavorable weather conditions across the region. Our closure business experienced strong volume growth due to demand for single-serve beverages in the U.S., partly offset by softer demand in Europe as a result of poor weather conditions. As anticipated, operating performance in our plastic business continued to improve sequentially as we move through a critical stage of the footprint rationalization program. Based on our year-to-date performance and our outlook for the remainder of the year, we're narrowing our full-year estimate of adjusted earnings per share to a range of $2.70 to $2.80. This estimate is within our previous range but is to the low end reflect the completion of the pack seasons in both the U.S. and Europe by the end of the third quarter. With that, I'll now turn it over to Bob to review the financial results in a bit more detail and provide additional explanation around our earnings estimates for fourth quarter and 2016.

Thank you, Tony. Good morning, everyone. As Tony highlighted, we delivered quarterly results in line with our expectations. While there's still work to be done, we are making good progress on our footprint optimization plans that will allow us to better serve our customers in 2017 and beyond. On a consolidated basis, net sales for the third quarter of 2016 were $1.140 billion, a decrease of $63.9 million, as sales in each of our businesses were negatively impacted by the pass through of lower raw material costs. Net income for the third quarter was $69.8 million or $1.15 per diluted share, compared to third quarter 2015 net income of $70.3 million, or $1.16 per diluted share. Results for 2016 and 2015 both included rationalization charges of $7.8 million and $9.1 million respectively for a total increase to adjusted earnings per diluted share of $0.08 and $0.10, respectively. As a result, we delivered adjusted income per diluted share of $1.23 in 2016 versus a $1.26 in 2015. Interest and other debt expense and the effective tax rate for the third quarter were largely in line with the prior-year quarter. Net capital expenditures for the third quarter of 2016 totaled $39.7 million, compared with $53.1 million in the prior-year quarter. And year-to-date, net capital expenditures totaled $142.6 million versus $151.2 million in the prior year. Additionally, we paid a quarterly dividend of $0.17 per share in September with a total cash cost of $10.5 million and repurchased shares under the stock authorization plan during the quarter for a total purchase price of $7.2 million. Share repurchases for the year-to-date period were $9.6 million. Turning to the specifics of our individual businesses, the metal container business recorded net sales of $797.4 million for the third quarter of 2016, a decrease of $48 million…

Thank you. We'll go first to Chris Manuel with Wells Fargo Securities.

Good morning, gentlemen.

Good morning, Chris.

Hey, Chris.

I wanted to start if I could and maybe just kind of think a little bit about the – I know you're not excited right now to talk about 2017, but we're kind of wrapping up here in 2016. If I look at a lot of the USDA data, it would suggest that plantings and food that was packaged/processed in North America were really big the last couple of years. And perhaps that inventories of finished goods that your customers have sitting already canned or ready to be canned are pretty heavy. I guess is our interpretation of that is that perhaps, plantings might be down the next year or two to kind of get things in balance. If I look at Europe, it's almost the opposite impact. How would you think about – maybe any discussions you've had with your customers or whatnot, as to what plantings, and thoughts regarding that for 2017 are – kind of appreciating that most of the stuff's done this year, so they're already kind of thinking ahead to what they have to do next year to get to where they want to be.

Sure, Chris, Tony. I'll respond first on that. A really good question. As to conversations, I would say, that's been pretty light. We have not gotten a lot of specific guidance from our customers on what they're thinking there. I think, on general trends, what you say is probably about right. The pack in the U.S., broadly, was a pretty good pack. We had a couple of customer-specific things that made it a little less than we had been expecting, but there was nothing about the growing season in the U.S. that was anything other than what we would call normal. So, I think, generally, customers have the inventory that they want on the U.S. side. I think you're absolutely right on Europe which, of course, is much smaller to us, so they'll have less impact when you think about 2017. But it was pretty soundly a bad pack in Europe everywhere. And certainly, when I speak to the markets we serve, I'll say everywhere, it was just off across the board. So, I do think inventories are low for our customers. I would expect that they would be planning on more pack next year. So, definitely in Europe, I agree with you completely. U.S., I think a little bit more to be seen. But your question is – it's very possible to answer that as yes, that you would see a little bit less on the plant for next year in the U.S. because of inventories.

Okay. That's helpful. Second question I had was if we were to kind of – I'm sure you're going to get a lot of the plastics business. But if we're kind of taking a look at the – I know over the last few years we've often talked about lumps being where you had business that was planned, going to be kind of in-out, move stuff around, that wins would take a little while to materialize. But seemingly, over the last two years or so, all the lumps have been pretty big and pretty down this quarter, again, following that trend. Do you feel we're close to the business losses that you've kind of planned in there being done? And when do we kind of hit an inflection point perhaps that we see some of your new business wins and hard work begin to materialize?

Hey, Chris. It's Adam. Good question. I think the 6% unit volume decline versus prior year, it's about where we expected and is very similar to what we saw in Q3. So, I would say, we're essentially kind of at the bottom point of our – or balancing of the portfolio – rebalancing of the portfolio activity. So, as we talked previously as well, we had sort of pulled back a little bit on our sales effort, as we were going through some of the operational challenges. We're now out in the market actively selling and winning business today. So, I think that we're just cycling over a period of time where we did decide to walk away from some business. And as we go forward, you will start to see some growth in our plastics business.

Okay. Thank you. Good luck, guys.

Thanks, Chris.

We'll go next to George Staphos with Bank of America.

Hi. This is Victoria Martin (13:30) standing in for George Staphos. So, I have a couple of questions going back to the plastics. We're wondering if the 6% volume decline that you're seeing is purely driven by the rebalancing work that you mentioned, or is there any kind of volume attrition that you would have rather not had?

No. It's almost entirely attributable to the balancing of the portfolio. Again, as we've talked about in the previous calls, we've spent a great deal of time and energy this year insulating our customers from some of the challenges that we face. And those customers have stayed with us. We've done a nice job on the customer service side maintaining our relationships, and in some cases, strengthening them. So, really, it's about that rebalance in the portfolio and the balance of the business is in fairly good shape at this point.

Okay. Great. Thank you for that. Also, how do you stand on your inventory, heading into 2017? We're you able to produce at a level maintained cushion for the remaining integration and on-boarding work with new plants and customers?

I'm going to assume that question goes to all parts of the business. So I think I'll start on the can side and say that the – certainly, in Europe because the pack was shorter than we thought, the inventories are a little high, so we probably need to work some inventories off. That's part of what we're thinking about in our fourth quarter numbers for Europe. In the U.S., inventories are high, because you can recall, as we were getting ready for the Burlington plant, we had to drive up inventories of fair amount. So, that will be a little bit longer process for us to work off those inventories. And probably into and through all of next year, we'll be slowly working inventories down in that business. In the closure side, because volumes have been so strong, inventories are actually quite light. We'll need to work on inventory balance, particularly, in the plastic side of our closures business. And then on plastics, I would say, there's really no significant shift around that. As we had to move lines, we did build some inventory for those line moves. That's a pretty select part of the market, so I don't know that there's a big inventory story there, perhaps a little bit of work off as we get that ramping back up.

Okay. Great. Thank you.

Thank you.

One more, and then I'll hop back into the queue. Sorry. What are your thoughts on steel prices for tin plate and where that's headed, as well as on resin?

Okay. Great. We'll take that one and then, we'll move on.

Okay.

On steel price, we're definitely – everywhere, all markets, we're hearing a fair amount of effort towards inflation, the costs. A lot of the underlying costs have inflated. I will say, this is very early. We are not through our negotiations, so we really don't know the answer. But I think, there's no question that steel's going to be up. It's going to vary a bit by region. Beyond that, I would just say, if you take what we know right now, it would sound sizable numbers, mid-single digit, all the way up to perhaps double digit, again, depending on region. So, that's sort of what we're up against at this stage, and we're working that as we can. I'll let Adam on the resin side.

Sure. And just starting with Q4 on resins, there are price increases that are in the market right now for our primary resins. We'll see how that plays out through the fourth quarter. So, it could be a slight headwind for Q4. But as we look out into 2017, the expectations are that our primary resins will be essentially flat. There is additional capacity that's slated to come on board in 2017, and we'll see how that is on-boarded and participates in the market for next year. But at this point, we're assuming essentially a flat resin impact for 2017.

Great. Thank you for that.

Thank you.

We'll go next to Adam Josephson with KeyBanc.

Bob and Tony, good morning. Thank you.

Good morning, Adam.

A couple on the tender. Can you just, Tony, talk about the timing of it? You had – obviously, you announced it a week before earnings. I think the last tender in early 2015 was after 4Q results, so after you generated the cash at year-end that you always do. So, can you just help us understand why now in terms of the announcement of the tender?

Sure. Although I wouldn't read too much into that. I think, basically, there's kind of narrow windows of time that worked for us. We have to have a pretty good sense around earnings, so there are no surprises on that. We have to have pretty good sense around free cash availability. In this particular case, because our leverage is to the low end of our range, there's a little bit more room in any case to do it. So, it seemed to us that was the right time that we – the leverage was low, the cost of capital is pretty cheap. And it seemed like the right decision for us to do, to return some cash back to shareholders. Again, it shouldn't be read as anything more than that about what do we view of acquisition opportunities, et cetera. This fits very well in our overall capability in terms of borrowings for the growth we want to do for the business. So, it's just we've got multiple levers, as we've always said. And we're pulling this one at this stage, because it really doesn't get in the way of acquisition or organic investments that we want to make.

Yeah. Adam, this is Bob. What I would add to that, you benchmarked it against the last one. But in fact, if you look back over the course of our history of doing share buybacks, we've done them at the end of the year in previous situations as well. So, I think, it's exactly what Tony described, it just sort of married up a bit from a timing perspective, where it made sense.

Thanks. Just two related to that. One on the leverage comment. So, I think, your range is 2.5 times to 3.5 times, right? And as of the end of 2Q, I think you were at 3.8 times. But presumably, you're expecting to get to 3-ish times by year-end, right? Am I in the right ballpark here?

Yeah, that's pretty typical, 2.5 times to 3.5 times is the range that we talk about often. We do lever, as we go through the year, for working capital kind of we're sort of right at the height of that peak right now, so to speak, and all the free cash flow gets generated in Q4, so we'd come back. And even with the impact of the tender, assuming that it got fully subscribed, we'd be well in the stated range.

And I will – let me just add. This is Tony. I just want to add one thing that that 2.5 times to 3.5 times has always been meant to be a bit dynamic. And I'm not trying to say we're leaving that number completely behind. But that was always established based upon the balance between what we thought the equity market could stand that leverage versus a business that is highly predictable, highly strong cash generative. So, we've always said that the business itself could sustain much higher leverage numbers. It's a question what is the equity market willing to bear on that. I think on balance, the equity market is obviously more willing to accept leverage right now at low cost capital. So, my own view is that you'd want to be a little bit higher in that range now on leverage, and that you get pretty inefficient as you drift down to the low end of that range.

Thanks, Tony. Just one more related to that. So, if you end the year at, call it, 3 times, right, post the tender, you're saying that would not, in any way, impede your ability to do large scale M&A, if you felt compelled to do so? Is that – would that be a fair characterization?

Couldn't have said better ourselves. Absolutely.

Okay. And so the tender says nothing about your view of M&A at the moment it seems like.

That's correct.

Okay. And just one on back to 2017. Bob, can you just remind us what you've said in terms of the cost takeout opportunities in metal container or plastics for next year? What kind of EBIT benefit you're expecting next year from those cost improvements as well as any offsetting impact from potentially higher pension expense next year?

Sure. I'll – It's Tony. I'll respond to that. The – what we've said primarily is around the Burlington investment, which is kind of the most important discreet item on the can business. And what we've basically said about that is that we've spent $100 million. We expect our kind of returns on that, which would be something in the range of $20 million, I think, is a reasonable EBITDA kind of expectation from that. And so, that's our expectation, but you got to consider what we've already experienced in 2016. So, I'm going to take it back for a minute and say that we had basically inefficiencies that came into our system for a variety of reasons, the some $20 million that we talked about in 2015. That number, we have said will be more in the range of $15 million in 2016, right? And that $15 million includes start-up costs, et cetera. So, if you ignore a start-up, you kind of had inefficiencies of $20 million and $15 million that moves to $10-ish million range in 2016, plus the $5 million of start-up. So, the increment you'd expect on the EBITDA line from the line would be something in the range of $15 million in 2017 as compared to 2016. Now, that's not – that's EBITDA, that's not depreciation. Take depreciation off it, you're looking at something like $9 million of EBIT. And those numbers – nothing is new in any of those numbers. So, that's the one thing we talked about. I think obviously, against that, we're always trying to be more efficient and find ways to take costs out. What we also know against that is that we will have – it looks right now like we'll have – PPI Index will be down again for next year so that creates a little bit more of a price headwind for us in the way our contracts pass that through. So, we know we'll have to overcome that. And then pension, I think, is sort of a who knows right now. You look at discount rates and how low they are, and it's a little unclear which way pension will cut at this stage. So, I think, that's kind of the broad view of what's in front of us.

And just one – thanks. Thanks for that, Tony. Just – and on plastics, so if you're talking, call it, $9 million up in metal containers, you got some price headwind from PPI Index going down; pension, who knows, and just close the – finish it off with plastics?

Sure. Sure. I'll let Adam do that.

Sure, Adam. As we've stated before, we're looking for a $15 million year-on-year improvement on our plastics business. And as we sit here today, we feel very confident that, that is the number that we'll be cycling to for next year.

Thanks to all of you and best of luck in the quarter.

Thanks, Adam.

We'll go next to Ghansham Panjabi with Robert W. Baird. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): Hi. This is actually Matt Krueger sitting in for Ghansham. How are you guys doing today?

Doing great. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): Great. Thanks. Just want to touch on the sustainability of the margin improvement in the plastics segment. Can you break out the improvement between kind of operational performance, and then any market-driven demand improvement that you (24:17)

Sure, Matt. It's Adam. Just to squarely focus that conversation on the operational improvements. It all came from our operational improvements. Our volume was down 6%, as we talked about before. And what you're seeing is we still have some duplicative plant costs that we carried through the quarter. But really, this is getting back to the basics of blocking and tackling in our business and good executing across our platform in plastics. And we're not where we need to be yet, but we're taking the right steps, and we're going down the right path. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): (24:54-24:59) basically, you're driving the strength across the U.S. beverage market.

You broke up there, Matt.

(25:04) some of that broke up. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): Oops. Sorry. Yes. Can you talk a bit more about the strength that you're seeing in the closures segment? And then, what specifically is driving the strength across the U.S. beverage market?

Sure. Actually, it's – I think the answer might be the same for both of those questions. So, what's driving growth in the U.S. closures market for our particular business is on the hot fill side, again. As we've talked before, kind of ready-to-drink teas and sports drinks are growing faster than other segments of the beverage market in the U.S. We also had a very long, very hot summer for most parts of United States. So, our customers started filling early this year into the first quarter. And honestly, have been running hard all the way through I'll say mid-October. So, it's been a very long selling season for the U.S. So, we would expect that to continue for next year as well, as we look at our customers winning in their markets and our markets outperforming the overall beverage market. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): Great. That's really helpful. And then switching back over to kind of the plant closures, how did the timing of those closures compare to your own internal expectations? And then can we expect any further rationalizations moving forward?

Well, we're always looking to rationalize costs wherever we can. We think that's the only way for long-term sustainability of the business. So, on a long-term scale, absolutely. In the near term, I think you've seen the bulk on the plastic side at this stage. In terms of the timing, clearly, the Cape Girardeau close was much later than originally planned. That sort of speaks to the entirety of the slowdown of the process. But it was very much on time with our recent reconsidered plans. And so I think we're quite pleased we got through that. There were a lot of lines in motion to get that done this quarter. We had talked about at last quarter call that, that presented real risk to us again, even though we have had some issues in last year. We had to get the inventory built and get these lines moved. So, it's definitely an important step for us, and it was sort of on the revised plan. The LaPorte plant was a little later. We had talked last quarter about being kind of a month behind on the new Burlington plant, so it was within a relevant range. There was a little bit of hope that we'd get it done in time that actually the Burlington plant could generate a little bit of income off can supplied for this busy season. That was a wish, if you can, and we didn't quite get to that. But it was within a month or so of what we had expected. Matthew T. Krueger - Robert W. Baird & Co., Inc. (Broker): Great. That's it for me. Thanks a lot for taking my questions.

You bet.

We'll go next to Chip Dillon with Vertical Research Partners.

Hey. Good morning, gentlemen.

Good morning, Chip.

(27:50)

Hey. Question is – drilling in, excuse, me, a little bit on the food can business. And you mentioned the expected $9 million EBIT contribution from the new Burlington plant. But there are other moving parts, and I just want to kind of get a feel for this. That is, if we have the more normal season in Europe next year versus this year, and I guess, you also not have some of the restructuring costs. So, if we kind of ballpark everything, I mean, can we be looking at a $20 million or $25 million EBIT improvement when you look at all of 2017 versus 2016, just assuming some of the things that you saw this year don't repeat next year.

Well if your number there is just on the food can side, I'd say, that seems pretty high to us. So, one point of clarification I want to make is the $9 million entitled for next year is not the entirety of the value of the line. It's only the increment over what was embedded in 2016. So, just a point of clarification.

Right.

But as to your question about what does 2017 look like versus 2016, $9 million is the right number to think about. You're right that Europe should be better. I think that – it's hard for me to imagine that won't be the case, or that certainly, we have a very bad pack year on the side of Europe. I think, against that, if you look at what else is going to happen in the U.S., again, the cost savings that we're talking about from the Burlington line are essentially getting rid of those costs that you're referring to. So, the benefit is taking out all of that friction cost that came into our system in 2015. So, there's really nothing beyond that, that we pick up out of the new lines coming on. We will continue to try to do things better more efficiently. So, there will definitely be some other operational improvements that we're going to make on that side. You may have a better pack. And, really, that's about our customers. So, it's not really about the growing season. I don't think we should expect much better than this year. But perhaps, the customer that we had who worked down inventory this year will be back to building inventory next year. I think Chris' question is relevant on that, which is what's the broad background of inventories and consumer demand for fruit and vegetable. So, again, I think all of that probably nets to a slight positive perhaps but not a big number. So, I declare your number's a little high-end containers now. If you add in the benefit that Adam talked about on the plastic side, I think you're getting into the right range.

Right. And what I mean to say is you have a $9 million swing from Burlington. And it would sound to me that you would be disappointed if you didn't see the whole segment up $10 million. And if you got more than $15 million, you'd probably be pretty happy with that.

Yeah, if the $15 million you mean there is on the plastic side. Yeah, I think you're on the right range for that.

No, no, no, no, no, no. I'm talking food cans. You got $9 million of improvement from Burlington. But I guess, what I'm saying is if everything else might add $1 million to $6 million, you'll be happy with that kind of range?

Yes. I think that's true. I mean, we got a lot to work through here and pensions, that would affect that. But I think what you're – that sounds right, that if you saw $15 million total improvement in that business, that certainly seems like a reasonable performance against our expectation as we sit here.

Okay. That's very helpful. Thank you.

Thanks, Chip.

We'll go next to Anthony Pettinari with Citi.

Yes. This is actually Randy Toth sitting in for Anthony. Just quickly, can you just parse out volumes by segment regionally?

Sure. Are you talking about in the fourth quarter?

Yes.

Yes. So – sorry, in the third quarter...

Yes.

I'm getting hand signals here. In the third quarter, the – so we were basically flat on the food can side. We were down 6% on the plastic side, and we were up a couple of percent on the closures business.

Okay. And then just following up on resin. Can you just remind me of the pass-through mechanisms you have in place for your plastics business?

Really the pass-through mechanisms are industry standard. So, they're customer by customer, so I don't think we'll go into a lot of detail here. But typically, it's just a lag pass through of some short window of time. And so, again, just the impact in Q3, really, we didn't have any impact from resin as it was relatively stable throughout the quarter. So, no impacts in either plastics or closures for the quarter.

Okay. That's very helpful. I'll jump back in the queue.

Great. Thanks.

We'll go next to Mark Wilde with BMO Capital Markets.

Good morning, Tony. Good morning Bob, Adam.

Hi, Mark.

Hi, Mark.

Hi, Mark.

I wondered – either Tony or Bob, can you just help us with both the plastics improvement and the metal improvement next year, just thinking about how that might cadence as we move through the year?

Sure. The – again, I'm going to caveat. I've already said it once. But we have not done detailed budgets. And we do always have learnings as we do that. So, I would caveat all of that. But I think the cadence – certainly the improvement that we've seen on the plastics side, we do believe is sustainable. And so that should begin to sequentially flow through the numbers as we go into the year. So, I would expect that to be kind of in the numbers by Q1 and going forward. In the can business, I think because of the seasonality of our business, I think it's bound to be that you're going to get a little bit of – more of that in the mid part of the year. You'll get the benefit of the Burlington line making cans and going into inventory, but again, the bulk of that's going to be ending up in inventory. So, I think you'll see more of that in kind of mid part of the year.

Okay. Fair enough. And then, Tony, over on the M&A side, I mean, this closures business continues to perform so well. Are you seeing more opportunities out there to expand that franchise or maybe even to move it a little bit horizontally and then maybe some adjacencies?

Well, are we seeing more opportunities is a different question. Do we see that as an opportunity? The answer is yes, we do. I mean, again, it was predominantly a vacuum closure business when we first got into it. Actually, it's predominantly a metal vacuum closure when we got into it. We went, a bit of adjacency to plastic vacuum closures. And then, we've moved a little bit more in other areas around beverage, cold fill, et cetera. And then, we moved into the dairy side through a few acquisitions. And so we have certainly moved vertically. And yes, we do. We think we've got a really good team. We think we have an excellent footprint kind of around the world. And so we would very much like to find other closures, acquisitions that could help us. And we would move vertically on that.

Okay. All right. And the last question I had, Bob, can you quantify the impact of FX, if anything, in the third quarter, and what you're thinking about in the fourth quarter?

Yeah. Basically, there was a very de minimis impact. And that's typically the case for us. Without very significant rate movements, FX has not much impact either on the top line or on the bottom line. So given where our rates are today, we would expect much the same for Q4 as well.

Okay. That's helpful. Thanks a lot.

Thanks, Mark.

We'll go next to Debbie Jones with Deutsche Bank.

Hi. Good morning.

Good morning, Debbie.

Debbie.

I wanted to talk a little bit about pet food, and that's clearly been a positive for you. How are trends in that going kind of versus what you're seeing a year or two ago. I guess I'm trying to get a sense of how sustainable this growth is for Silgan, if there's anything also about your footprint that makes you kind of the main beneficiary of pet food growth.

Good question. Pet food continues to grow – and again, we're primarily here on the wet pet food versus dry pet food. So, some of this could be mix shift between the two. The can is basically wet pet food. So, we're seeing that growth across our business both in the metal side and in the plastics side. We also do pet food packaging, and so – and that has been sustained for some lengthy period of time. So, we do view that as kind of a sustainable trend from the consumer.

Okay. And then just moving on to plastics. Just to focus on one word, I think you said you had a critical point in the opening statement. Is there anything there that's different kind of coming up in the fourth quarter in terms of the optimization? And then two, just once you do get to the point where you gotten things where you want them to be, what should we expect the growth rate for your plastics exposure to be?

Well, the – to be clear, what I had said in the front comments is that we went through a critical stage. So, that's everything I was just referring to, that we have several lines that were pretty important to a few customers in motion in Q3, and so that was very important to us. And so to be clear, we're through that critical stage. Now, we're on ramp up, so yeah, I shouldn't overstate that. But the most risky part of that is behind us. There are a few more lines within Q4, so it's not as if there are – isn't still some important work to be done. But what I was trying to convey is that we – it was a very important third quarter for us, and we did get ourselves through that. As to the growth, again, the markets that we're in – historically, our plastics business was heavy in personal care. It's also on house chemical. What we've been doing of late, to some extent, is moving a little more towards food. None of these are particularly high-growth markets, and so I would not describe it as a real high-growth opportunity. But there are big customers in there that Silgan has long relationships with that present opportunities for us in the future to capture share, if you will, of – as those customers move forward in various markets. And so we do see opportunities. But, again, it's going to be kind of modest on the growth side. We're much more focused on our cost picture right now and getting the right footprint. And then, in time, we will drive that growth stronger, but that's more of 2018 and beyond. 2017 is much more about holding the gains that we've got and being sure that we get the $15 million that Adam's talking about, which is primarily out of the cost side.

Okay. Thanks very much. I'll turn it over.

Thank you.

We'll go next to Brian Maguire with Goldman Sachs. Kia Pourkiani - Goldman Sachs & Co.: Good morning. This is actually Kia Pourkiani sitting in for Brian.

Good morning. Kia Pourkiani - Goldman Sachs & Co.: The first question I had was could you provide us with an update on how the competitive dynamics have changed in the U.S. food can business over the past quarter?

Sure. Really, not much has changed over the last quarter. We continue to have some excess capacity. As you know, capacity was built in excess of what was needed for a particular customer contract. That capacity still sits there. It's still kind of moving around the market. But again, the scale, that's something like 1 billion units capacity, maybe 1.5 billion units capacity against a nearly $30 billion market. So, I don't want to over-portray that, but nothing really has changed around that. Kia Pourkiani - Goldman Sachs & Co.: Got it. Okay. And then in the press release, you said that the mix in metal containers was a little bit less favorable. I was wondering, what's driving that? Is it mostly just the pass-through, or is this something that's a little bit more – might have a little bit more across (39:10) into 4Q?

No. To be clear, when we talk mix there, we're talking about dollars of contribution per unit of volume. So, it doesn't – it sounds like it's meant as a derogatory concept of mix. It's really not. It's just that if you sell a small can, like a pet food can, versus a large tomato can, there's a lot less dollar contribution per unit sold. So, that's really what's happening, is you're seeing growth in pet food, which is a good thing, but on a per-unit basis, that's not as good as if you have bad pack and you don't sell large cans to the pack region. And that's really what's going on. And just a point of clarification, we had talked in Q2 about the fact we had good mix in Q2. So, it's not – most of it is not a surprise that the mix was a little less positive in Q3. Kia Pourkiani - Goldman Sachs & Co.: Got it. Thank you. That's helpful. I'll turn it over.

Great. Thanks.

We'll go next to Tyler Langton with JPMorgan.

Good morning. Thanks. Just in metal container, can you just provide a little bit more detail just on, I guess, what's driving the unfavorable pass throughs (40:14) from the index inflation?

Sure. This is not new news. Essentially, the way our contracts work is we have a pass through for steel or metal pretty much as we experience it. We have pass through for labor, which is based upon indexes, and we pass through on that. And then we have pass through, in many cases, for other costs on something, an index, generally, the PPI. And so, really, all this is happening. Historically, you get PPI, and if you do a good job, you can keep your inflation down below that, and you improve profitability through the contract over time, which, we've always said, is essentially what we give back to the customer at time of renewal to get renewals. And so that's a long, long story of sort of how our contracts have worked. What's new is that we're in a deflationary time. And so, when you get deflation in the PPI index, it's not so easy necessarily to get actual deflation in your costs. And so that maybe around coatings, compounds, rents. There's a variety of things that don't necessary deflate as the PPI does. And that's what's happening is that we've got contractual pass through of deflation in excess of what we can necessarily get through our cost. And that – as long as PPI deflates, we will suffer a bit of that. And when it inflates, we opt to get that back over a period of time. In either case, they tend I think to reset when the contracts renew.

Okay. And so, this carry forward sort of into Q4 early 2017 or kind of just depends on a quarterly basis?

No, it'll keep carrying forward until you see inflation in PPI and get to a year reset of contracts where you get to pass that through.

Got it. Okay. And just final question. With the – I guess at the midpoint, like the $0.05 reduction in the guidance, can you just talk about what sort of rank order the factors that are driving that?

Sure. I think they're basically three – so, this is really what are we a bit surprised by, remembering that we're staying within our range. So, even surprise is the wrong word. It's just where are we seeing more of the negative of what we were thinking versus the positive. And the answer there is basically that in one case, in the U.S., we had a particular pack customer who we were hoping and believe would take a little bit more than they chose to do. They're doing inventory management, that's one. Two is the pack in Europe, which we talked about in the second quarter call is being negative was decidedly more negative than we thought. So, less can shipped in Q3, less cans will ship in Q4, packs are done in both places, which tapering up the third point which is that raises an inventory question. So, in the case of Europe, there's probably an opportunity for us to burn off some inventory which has negative impact on us as we have absorbed the cost that are sitting in that inventory. So, those are basically the three things that are – take us to the low end of the original range that we had out there.

Got it. Great. Thanks so much.

Great. Thanks.

Our next question is a follow up with Chris Manuel with Wells Fargo Securities.

Good morning, gentlemen. It's actually Gabe real quick.

Hey, Gabe.

Hey, Gabe.

If you guys continue to see the type of growth in the pet food business, might that necessitate some sort of an investment? I'm not sure how interchangeable some of the equipment is to make those cans. I mean, appreciate the mix shift in terms of profitability or profit per can. But just relative to where filling capacity is, sort of that stuff, and how it gets packed, would you guys have to invest if it continues to grow or...

Yes. You do have to invest as it continues to grow. I think the question about attracting capacity is more of a broad can question. Essentially, you still have can assets that can convert around. So, the question is if you bring that in, you're just creating more excess capacity into the can market? And is that a good idea for the overall can market that already has excess capacity? So, we would certainly hope that it does not attract more investment of capital. But do we have to invest as it grows over time? We do and we have. Those are relatively small investments, because you've already got the plant in the location you wanted. And so, is there fairly efficient investments on the growth.

Makes sense. Thank you.

All right. Thanks you.

This does conclude today's question-and-answer session. I will turn the call back over to Tony Allott with any closing comments.

Great. Thank you all for your time, and we look forward to talking about our year-end and a bit of outlook on 2017 in more detail in the end of January. Thanks.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.