John Conway - Chairman, Chief Executive Officer Tim Donahue - President, Chief Operating Officer Tom Kelly - Senior Vice President, Chief Financial Officer.

Scott Gaffner - Barclays Tyler Langton - JP Morgan Chris Manuel - Wells Fargo Adam Josephson - Keybanc Philip Ng - Jefferies Anthony Pettinari - Citigroup Ghansham Panjabi - Robert W.

Baird Debbie Jones - Deutsche Bank Alex Ovshey - Goldman Sachs Chip Dillon - Vertical Research Partners George Staphos - Bank of America Merrill Lynch Mark Wilde - Bank of Montreal.

Good morning and welcome to Crown Holdings’ third quarter 2015 earnings conference call. Your lines have been placed in a 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. John Conway, Chairman of the Board and Chief Executive Officer.

Sir, you may begin..

Thank you very much. Good morning, everyone. With me on the call are Tim Donahue, President and Chief Operating Officer, and Tom Kelly, Senior Vice President and Chief Financial Officer. I will make some brief introductory comments regarding [indiscernible], who will take you through the numbers and give you some additional detail.

Tim Donahue will review carefully the performance of the various businesses and discuss our views as we look ahead. Let me remind you that 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 comments in the section titled Management’s Discussion and Analysis, the financial conditions and results of operations in Form 10-K for 2014, and in subsequent filings.

The company had an outstanding quarter, as all of you have seen. Constant currency revenue increased 6% over third quarter 2014, and segment income was up 13%. The strong performance was widespread but particularly so in Americas beverage and European food.

The former had a revenue increase of 39% with segment income up 68%, and although food Europe revenue was down 3.3%, segment income increased by 8.4%.

There has been a rapid integration of Mivisa in Europe into our food business, and Empaque in our Americas beverage group, and with both new opportunities for growth and cost optimization have exceeded our already high expectations.

In general, demand was very good globally in our beverage businesses, and most markets were equal to or up on prior year on a unit volume basis. Food unit volume sales were down somewhat in all regions, but our operations performed very well, either overcoming or offsetting the volume effects.

We have multiple growth projects and cost reduction initiatives underway, all of which are going well with results that will increase Crown’s income and return on investment.

We continue to look at opportunities to buy good metal packaging businesses at attractive prices, and we have confidence in our ability to manage and incorporate new enterprises as they are added.

We anticipate a strong closing quarter and consequently a strong performance for the year, in line with the plans we previously outlined for you and which Tom and Tim will discuss in more detail in a minute.

As some of you probably know, this will be my last quarterly earnings call as I move on to retirement and a different role here at Crown, so I thought it would be worthwhile to step back and briefly characterize the company’s position. We believe Crown has never been in a stronger condition.

We are a highly specialized metal packaging company focused on rapidly moving consumer goods, principally beverage and food. Globally, we are present in every attractive region as the market leader or among the leaders. Our control of spending and focus on quality and service are second to none. We believe the future is bright.

We have excellent people from top to bottom, including particularly Tim Donahue, who will be taking over as our CEO in January of 2016.

Our capability in the area of research, development and engineering is unparalleled in the industry, and we have a world-leading group of project and construction engineers who consistently implement major capital projects quickly and more cost effectively than anyone in our industry.

Finally, we are a global leader in the design and manufacture of machinery for the production of metal cans, which gives us a clear competitive edge.

In closing, our performance this quarter and this year validates our understanding of the global metal packaging industry and Crown’s strategy and execution, and of course our success has been and will be possible only because of an outstanding group of people with whom I have been so proud to be associated for the past number of years.

So with that, I’ll turn it over to Tom..

Thank you, John, and good morning. Earnings per share were $1.01 in the third quarter of 2015 compared to $1.76 in the third quarter of last year. Earnings per share before certain items were $1.34 in the quarter, or $1.51 at constant currency rates, compared to $1.36 in 2014.

Net sales for the third quarter were down 5% at actual exchange rates, but grew 6% at constant currency rates including contributions from the Empaque acquisition. Segment income at $328 million in the quarter was consistent with 2014 as improvements due to the inclusion of the Empaque results were offset by unfavorable currency translation.

Segment income at constant currency rates improved by $41 million over the prior year. Our comparable tax rate for the quarter of 21.2% benefited from local tax deductions in Brazil arising from foreign exchange losses on U.S. dollar borrowings.

This benefit partially offset pre-tax foreign exchange losses also resulting from weakness in the real and entirely accounts for the difference in the rate compared to our previous guidance. Assuming no further movements in the real from its current levels, we currently estimate a full-year effective tax rate of approximately 24%.

Lower net income attributable to non-controlling interests primarily reflects reduced earnings in Brazil compared to 2014. As you know, a decline in earnings in our joint venture operations results in a corresponding decline in a portion of those earnings attributable to the non-controlling interest.

Looking ahead, we currently estimate comparable fourth quarter earnings of between $0.65 and $0.71 per share, giving us a full-year range of $3.54 to $3.60, an improvement over the $3.41 in 2014 despite currency headwinds. We are estimating full-year free cash flow of approximately $550 million, with $350 million in capital spending.

This guidance assumes an average exchange rate of $1.13 per euro for the remainder of the year. I’ll now turn it over to Tim..

Thank you, Tom, and good morning to everyone. As both John and Tom discussed, our results in the third quarter were well ahead of the prior year on a currency neutral basis. Global beverage unit volumes improved 13% over the prior year with the acquired Empaque operations accounting for 8% of the gain.

The balance of the growth versus last year’s third quarter was primarily attributable to strong performances across the United States, Canada, southern Europe, and Southeast Asia.

Against our earlier guidance, the third quarter was ahead of our expectations mainly as a result of stronger than expected beverage can volumes, which more than offset the sharp devaluation of many emerging market currencies during the third quarter.

As Tom has provided the impact of foreign currency by segment in the earnings release, my commentary regarding segment operating performance will be on a currency neutral basis. Turning to the operating segments, sales unit volumes at Americas beverage improved 25% in the quarter due largely to the acquired Empaque operations.

Excluding Empaque, volumes in the segment were up 6% over the 2014 third quarter, reflecting 4% growth in the U.S. and Canada as well as strong growth in the company’s legacy Crown Mexico operations and in Colombia. Brazilian volumes also advanced in the quarter owing to a strong month in September, and we expect the summer selling season to be firm.

While we have yet to break ground for the new plant in Monterrey, Mexico, planning for the construction is ongoing and we now expect an early fourth quarter 2016 start-up. Also, during the quarter we reached a new secure agreement with our employees at the Weston, Ontario plant.

Returning employees who are represented by the United Steel Workers ratified the agreement, which now runs through August 2021, and we welcome them back.

In North American food, revenue and income again showed declines to the prior year, primarily the result of the previously discussed customer loss as well as an earlier than expected end to the midwest corn pack.

During the quarter, we announced the closure of two North American food can plants, one in Baltimore, Maryland and the other in Chatham, Ontario. Both were difficult but necessary decisions that more appropriately align our capacity with customer demand.

Unit volumes in European beverage increased a bit more than 1% in the quarter as strong demand across continental Europe - that is, France, Greece, Eastern Europe, Italy and Spain - offset continuing demand weakness in Jordan, where its proximity to Iraq and Syria make shipments very difficult.

The new aluminum beverage can line in our Custines, France plant continues to progress up its learning curve, and as expected, the impact from aluminum premiums was a slight positive. We have also announced the installation of a second beverage can line in the Osmaniye, Turkey plant with a commercial start date targeted for late 2016, early 2017.

In European food, improved efficiencies, lower spoilage, positive mix and the continuing integration of Mivisa all contributed to offset a 1% volume decline in the quarter, leading to an 8% income improvement over the prior year. The various harvests this year were actually very good, but just not at the high levels seen last year.

The third quarter provision for restructuring also includes charges for the closure of two European food facilities.

To right-size our food end making capacity, we have proposed the closure of an end plant in the United Kingdom and we have also announced the closure of a food can plant in Morocco as we merge that business into the acquired Mivisa facility.

Beverage can unit volumes improved 8% in the Asia Pacific segment on the back of strong double digit performances in Cambodia and Vietnam. Productivity improvements throughout the segment coupled with the growth in volume offset continued soft pricing in China.

In September, we commenced commercial shipments from the new second beverage can line in the Bangkok, Thailand plant, and also during the quarter we announced and began construction of our third beverage can plant in Cambodia with a late second, early third quarter 2016 start-up expected.

Performance across all operations in non-reportables was firm compared to the prior year with the decline in revenue attributable to the April 2015 divestiture of the industrial specialty packaging business which we have previously discussed with you.

In summary, we’ve had a strong first nine months and are about where we expected to be at this point. The acquisition of two very good businesses has allowed us to earn through most of the currency and other headwinds faced to date this year.

Importantly, while currency is affecting all multinationals, our underlying businesses remain strong, as evidenced by the strong demand for our products and our expanded margins.

We expect continued earnings growth through the fourth quarter which will result in EPS growth for the full year despite the significant foreign currency impact from a stronger U.S. dollar.

Lastly, before I turn it back over to John, on behalf of all our Crown employees and stakeholders, I want to acknowledge John for his tremendous leadership and vision as the company’s Chief Executive Officer over the last 15 years.

For those of you who have followed Crown over the years, you will recognize the strength from which we operate today versus 15 years ago. In large part, it was John’s resilience, determination and desire that transcended the challenges that the company faced.

His leadership allowed us all to work with a sense of possibility and has provided an invaluable learning experience to the entire Crown team, and for that we humbly say thank you. I’ll turn it back over to John..

Thank you, Tim, and so we are now ready to take questions..

[Operator instructions] Thank you, speakers. Our first question comes from the line of Mr. Scott Gaffner of Barclays. Sir, your line is now open..

Thanks. Good morning. Congrats, John, and congrats, Tim, on officially moving into the new role shortly. John, it’s been a pleasure. My couple of quick questions, first is Tom Kelly, you mentioned the $41 million year-over-year segment income improvement - I think you said that was ex-FX.

Can you walk us through that? I mean, obviously Empaque was a big part of that $41 million, but where was the underlying segment income improvement ex-Empaque?.

Are we talking Americas beverage, or in total?.

Well, I thought you said $41 million in total year-over-year segment income improvement [indiscernible]. .

Right, so you can see on the table on Page 5 of the release, if you just compare the 2015 and ’14 rates, you see the 369 versus the 328, which is the actual rate number. Going segment by segment, obviously in Europe it’s largely the euro. In Americas beverage, some of that is Empaque, also some in Brazil, a little bit in Canada.

North America food, obviously nothing; and Asia, very little. So it’s really laid out pretty clearly, I think, on Page 5 of the release..

Specifically Scott, think about a number--of the $41 million, if you wanted to attribute something to Empaque, about 60%..

In Americas beverage..

No, 60% of the $41 million, yeah, which is almost $39 million in Americas beverage, so..

Okay, that’s helpful. Then when we look at the 4Q guidance, before if you sort of took the full-year guidance and the midpoint of the 3Q guide, you got to about $0.70 on 4Q. You’re above that with the 4Q guidance at the high end. Obviously FX is a negative, aluminum premiums I guess would be a positive versus the prior guide.

Anything else that’s really changed versus that prior implied $0.70 EPS guidance?.

Scott, I think based on what we’ve provided you in July, I think the aluminum premiums are still roughly in the same area, so that’s about the same. It will be a positive, but it’s the same positive that we previously expected.

I think the--you know, obviously we had a better third quarter and we’ve kept the full-year guidance more or less the same at the midpoint, and we just shifted a couple cents earlier.

Perhaps you’re right - we might make a little more, but that’s the guidance, so I think we’re mindful of the sharp devaluation of the emerging market currencies that we experienced in Q3 and we’ll see where the rest of the year takes us..

Okay, thanks. Good luck..

Thank you..

Thank you, speakers. Our next question comes from the line of Mr. Tyler Langton from JP Morgan. Sir, your line is now open..

Yes thanks, good morning, and best wishes going forward, John. I think, Tim, you mentioned volumes were up 4% in the U.S. and Canada this quarter.

Could you just provide a little more detail on what’s driving that and how sustainable you think it is?.

Well, I think there is a couple of things. As you know, we settled the longstanding dispute with the workers in Canada, and although the plant was running last year, we were running much better this year so we were able to make more cans. I think the other thing is just customer mix.

From quarter to quarter, our customer mix versus others’ customer mixes will move cans around, and this quarter we just happened to be the beneficiary of good customer mix, but we do have a very broad customer base that we’ve worked on attaining over the years, and it’s paid off obviously very well in this quarter..

Okay, got it. I think in your opening remarks, you mentioned you were, I think, finding some new opportunities for growth and cost savings with both of the acquisitions.

Could you just provide a little more color on that?.

I think that was a comment that John made, and so as we look at certainly Mivisa in Europe, we believe with Mivisa we have the lowest cost platform across food Europe, bar none.

I would extend that around the world, bar none, just incredible opportunities for us to continue to reduce our system costs and use that lower system cost to deliver benefits to our customers and gain additional business over time.

Then in Empaque, as you know and has been well documented, the Mexican beer market continues to grow in absolute terms, and the transition from returnable bottles to either one-way bottles or one-way packaging, i.e. cans, is a phenomenon that we do not see stopping, and that will offer us further opportunities as well..

Got it. Okay, thanks so much..

Thank you..

Thank you, speakers. Next question comes from the line of Chris Manuel of Wells Fargo. Your line is now open..

Good morning, gentlemen, and congratulations John on a very successful career, and your steadying voice will certainly be missed..

Thank you, Chris..

Along those lines, Tim, you’re inheriting a well-oiled machine here.

Can you maybe give us some kind of early thoughts as to what you might want to do a little differently, or how you would view the world maybe a little bit differently?.

Well, there’s an old expression, Chris - if it’s not broke, don’t fix it. Now having said that, as I said in my remarks and John also pointed out, we feel really good where we’re at right now from the standpoint of the countries we operate and the products we operate in. We think we’ve been fortunate.

We work real hard at selecting, and I’ll say John worked real hard at selecting the countries where we wanted to be and avoiding a couple places where we didn’t want to be. We all have a challenge in China right now - we understand that, but the growth is tremendous and we’ll see where that takes us over time.

So I don’t--you know, I think it’s a lot more of the same. We’re going to continue to drive down costs and continue to offer quality and service to our customers to try to differentiate ourselves, and take advantage of the opportunities that are presented to us.

I don’t think we ever want to be the victim of consequence, right? There are very few times in a business like ours when you’re offered opportunity, and you have to take that opportunity. I think that’s something we’ve all learned well under John’s leadership, and we’re going to continue to do that. But any major changes, Chris? No.

It’s about keeping your costs down and selling more units and being responsible..

Okay, that’s helpful. Tom, I know you said this earlier, but I missed the free cash flow and the capex guidance for the rest of this year..

Well for the full year, about $550 million in free cash, and that would include $350 million in capital for the full year..

Okay, so it appears, though, you’ve got to do a pretty big chunk of capex in 4Q, and given where you are year-to-date, you know, working capital, it’d look like you’re going to be well beyond that.

Is there any other unusual factors we’re not thinking about, number one; and then number two, could you maybe help us walk through what the big buckets might be looking into 2016? Early thoughts, would capex be in a similar range, higher, lower, other thoughts for working capital, et cetera?.

Well on the capital for ’15, we did expect to spend proportionally more in the fourth quarter as compared to the rest of the year, and as you said, we’ve spent 176 out of $350 million, so that is in fact what’s happening.

We may have some slippage into 2016 - it’s a little early to say, but it wouldn’t surprise me on the other hand if we do come closer to 350, so we’re staying with that guidance. On the working capital, we’ve done better in working capital so far this year compared to last year, but that’s purely timing.

We’re staying with our guidance and working capital guidance we’ve previously given. Don’t look into the numbers through nine months and extrapolate, because it won’t work because of the timing. I don’t think I want to get into 2016 just yet. We’re going through that process now..

All right, that’s helpful. I’ll jump back in the queue. Thanks, guys. Good luck..

Thank you, Chris..

Thank you. Our next question comes from the line of Adam Josephson of Keybanc. Your line is now open..

Thanks. Good morning everyone, and John, all the best to you in your future endeavors. One on the midwest corn pack - you guys mentioned an earlier than expected end to it.

Can you talk about what weather patterns drove that and what impact that had on the segment’s volume?.

Yes, so we were--you know, when I say earlier than expected, I think the pack just came to a sudden stop about 10 or 12 days earlier than we had expected, and that was just early frost in the upper northwest--upper midwest, I’m sorry.

But--and that probably--you know, we were down mid double digits in volume, as we have been all year, and 85 to 90% of that is due to the loss of the large customer that we’ve discussed with you previously, and the balance would be just an earlier end to the crop. .

Got it, thanks. Just a couple others.

I know, Tim or Tom, I know you’re not giving guidance for next year, but aside from an extra month and a half of Empaque and a benefit from lower premiums, whatever that benefit will be, are there any other big items to be mindful of next year in terms of potential benefits or drags, assuming no acquisitions?.

Well, we continue to try to drive system costs down. You see that we’re in the process of removing four food can plants globally. We have a number of capital projects which have been obviously identified.

That will not contribute a lot to next year, but what will happen is the projects that we’ve completed in prior years will certainly run better and contribute more as they come up their learning curve. So again, it’s too early to comment, but as John pointed out, I think we feel pretty good about our position and we would expect further growth.

We’re just not in a position as we’re going through the process right now to comment further. .

Thanks. Just one last one on Brazil.

What are your expectations for the Brazilian beer market in what will be the seasonally strong fourth quarter, as well as next year, just given the uncertainty pertaining the economy, the Olympics, et cetera?.

Yeah. You know, it was a difficult campaign this year. Obviously they had a hard comparison just due to the World Cup in ’14, compounded by negative growth where they're at now. What we did see, the industry saw pretty good filling--increases in fillings in August and September.

We saw it in September, and we expect the fourth quarter and the first quarter of ’16 to be quite strong, as they usually are. We’ll see how--and they’re always strong. I’m sorry, Adam. So what we always see in Brazil is the high season being very high.

The question is always, how low does the low season go? And when we have a World Cup or an Olympics, that generally tends to raise the bar on the low season, so I think we expect a better 2016 than we had in ’15 in the low season. .

Got it. Thanks a lot, Tim, and congratulations..

Thank you..

Thank you, speakers. Next question comes from the line of Mr. Philip Ng of Jefferies. Sir, your line is now open..

Hey John, it’s been a pleasure working with you, and congratulations. I guess a question from me, you’ve talked about four food can plants shut downs, both in North America and in Europe.

Can you frame what the cost takeout opportunity could be, and how quickly would we see it?.

Well, I think the biggest cost savings will be achieved in the European segment, and I think we’ll also have significant savings in North America, and we would expect the savings in North America to be realized earlier than in Europe. We have a consultation process we’ll need to go through in the U.K.

and that will take a fair amount of time, so the factory won’t actually be shut down for several months. .

Okay. All right, that’s helpful. You talked about how in Europe bev, you know, continental Europe has been pretty strong.

Can you give us some color how volumes are tracking in the Middle East? I think you’re starting to lap some of your tougher comparisons, right?.

Yes, what I would say to you is that excluding Jordan, we were flat year-on-year in the Middle East. Jordan was down double digits, and it reflects principally, as I said, their geographic location next to Syria and Iraq.

The borders are rarely opened, and when they are, travel into Iraq and through Syria to the other countries you’re trying to get to is either not possible or extremely difficult..

Okay. We’re seeing a slowdown broadly in China, at least from the headlines we’re reading. Are you seeing any slippage in demand there, and any concerns in terms of pricing going into next year? I know it might be still early in the negotiations. Just wanted to get your thoughts on China broadly. .

Well, I don’t have any comment on pricing, other than pricing continues to be soft and we’ll see where that takes us as we go into next year.

The only comment I would make on China’s growth slipping is that I guess they’re projecting 6.9%, and that’s 6.9% off a much larger base than they were five years ago or 10 years ago when the growth rates were 10 or 12. I think I’d take 7% on a huge basis like they have, so I’d be a little careful.

You know, the headline, it’s a nice headline for somebody who wants to write a negative article about China, but 7% growth on a base that’s expanded that much is still tremendous growth and offers tremendous opportunity for companies that sell products.

Our challenge is not volume; our challenge right now is the pricing environment, and that’s something that will have to get worked out over time. .

Got you. Then just one last one for me - margins in Americas were pretty strong.

What’s driving that improvement? Was it mostly driven by just better execution and integration of Empaque, or is it just Brazil being off to a pretty strong start in 3Q?.

So it’s a combination of a lot of things. Empaque obviously, I will say, is responsible for much of that, and it has been contributing all year.

What you haven’t been able to see in the first and second quarters was the contribution from Empaque because the Brazil comparison year-on-year was down, whereas this year in the third quarter it was flatter, so you see Empaque coming through.

Coupled with 4% volume growth across the system like we have in North America, which is very low cost, is a lot of volume and it drives a lot of incremental margin as you push that volume through the system.

And then number three, as I said, we’re running much better in the Weston plant and we’re back--we’re almost back to what we would call full productivity and optimal efficiency, so we’re getting there and that’s driving improvement as well..

Okay, thanks a lot. Good luck in the quarter..

Thank you..

Thank you, speakers. Next question comes from the line of Mr. Anthony Pettinari from Citigroup. Your line is now open..

Good morning, and John and Tim, congratulations on your new roles and transition..

Thank you..

In North American food in 2Q and 3Q, operating income was down about $15 million year-over-year each quarter.

Do you expect kind of a similar impact in 4Q with the customer loss? And then just looking to 2016, are there further actions you can take in North American food in terms of capacity or conversions, or maybe new customers to get earnings back closer to a 2014 level? Can you just comment generally on the kind of competitive environment in North American food with the new competitor--.

Yes, so let’s just take a quick view. The first thing I’ll say is that the fourth quarter--if the second and third quarters were down $15 million year-on-year, we’re not going to be down anywhere near that much in the fourth quarter.

The fourth quarter is a much smaller quarter, and I’ll eat my hat perhaps, but I think we’re going to be much closer in the fourth quarter this year compared to last year than we had been in the second and third quarter, albeit we will be down a bit. We have an extremely low cost food can footprint in North America.

We now have two two-piece food plants.

The one plant that we’ve announced the closure of in Baltimore was a one-line two-piece plant which was not as low cost as we would have liked, and a significant amount of the volume we lost on that large customer were two-piece cans, we so remain extremely low cost in two-piece food cans and we only have, after the closure of the Chatham plant, on three-piece cans, non-specialized three-piece cans, three or four three-piece factories.

So we have a low cost footprint, and obviously with the closure of those two plants, we are taking cost out.

It will take a little time to recover volume, but what I would tell you is that the disruption that we faced in our food can business this year has largely been a result of the one customer loss, and there has been little to no impact on pricing this year.

It’s been really volume and the margins associated with the volume that we lost on that big customer..

Okay, that’s very helpful. Then just a follow-up for Tom on working capital. I think your previous guidance was $60 million. Looking at 4Q and the full-year free cash flow guidance, it seems like 4Q working capital would be a bit higher than that.

Do you give that back in 1Q, or can you just maybe give a little bit more color on working capital for the full year? Is it that $60 million still?.

Yes, it’s in the range of $60 million for 2015, and yes, it’s typical. We won’t give it back permanently, but it’s typical in the early quarters of any year that we do build working capital. But this particular reduction in the long term is permanent..

Okay, that’s helpful. I’ll turn it over..

Thank you, speakers. Next question comes from the line of Ghansham Panjabi of RW Baird. Your line is now open..

Hey guys, good morning, and just to echo some of the comments - John, congrats on your tenure with the company and what Crown has accomplished under your leadership; and obviously Tim, best wishes in your new role. .

Thank you..

As it relates to customer consolidation, if the InBev-SABMiller deal goes through, how should we think about the potential impact on Crown? Can you sort of remind us of how contracts carry over when the customer gets acquired, and also what impact you felt, if any, when InBev acquired ABI Anheuser-Busch a few years ago?.

I’m going to stay away from the specifics of our contracts with our customers. What I would say is that when you look at the footprint of ABI versus SAB, obviously they are going to have to get through a significant Competition Commission review in the United States, and it may be that there is no consolidation there at all in the United States.

I think the significant pieces of SAB that ABI acquires, notably Africa where we are not present in beverage cans, and eastern and parts of western Europe where we have a position with SAB and where cans are not used to the same level by the acquiring company as they are used in the United States, Brazil and China.

We do have a relationship with ABI, obviously in China; but again, it will be subject to competition review as to whether they can consolidate. They will pick up--ABI will pick up presence in Colombia and Central America. ABI is already in Brazil.

So as you go around the map, they are kind of complementary with the exception of China and the United States, where there is an overlap, and perhaps that will be subject to competition reviews, so we’re not expecting any large consolidation in terms of their buying as it represents what they are going to buy in cans from us.

What happened after they bought Anheuser-Busch? Well, I think clearly it was a complementary overlap as well in the United States, but one thing we have seen with InBev is they push cans aggressively in China, so it was generally good from the standpoint of volume in our business where they understand the benefits of the high quality, low cost can..

Okay, that’s helpful. Then on BPA Non-Intent, the technology seems to be picking up speed in terms of the rollout in both Europe and also North America, at least according to your suppliers.

Can you comment on where you are in the adoption rate across your portfolio and what customers are sort of thinking at this point?.

Well I think generally our customers, like us and like our competitors, we follow the science and we all believe the science is sound, and it’s been proven over and over again by almost every major recognized health body around the world.

Now having said that, there are some fringe elements that are promoting junk science, and that is driving perhaps a change in consumer demand, and our customers may move if and when they believe it’s appropriate. There are alternatives available.

Some of those alternatives are good alternatives; some of those alternatives aren’t good enough yet, so I think we’re all waiting for better alternatives, not only the can companies but the fillers, both food and beverage fillers, before we would make a switch from a coating which has been proved time and time again to be satisfactory and safe..

So is that a no, you haven’t seen any increase in adoption?.

There’s been very little at this point..

Okay, thank you..

Thank you. Our next question comes from the line of Ms. Debbie Jones of Deutsche Bank. Your line is now open..

Hi, good morning. John and Tim, good luck to both of you.

My first question - Tim, if you look around the world at your regional exposure, what are you most excited about in terms of growth opportunities for cans, either volume growth or trends in pack mix shifts?.

Well, I think we’re going to continue to see tremendous pack mix shift in China in beer from returnable glass to cans, so as I described earlier when Phil asked the question about Chinese growth, we’re not in any way worried about lower Chinese growth.

It’s still tremendous growth on a bigger base, and the opportunities for can growth are still tremendous. The issue there is capacity and pricing.

We do still see several opportunities in Southeast Asia, and as you know and as we’ve described, we’ve doubled the Bangkok plant and we’re opening a third plant in Cambodia, and we’ll continue to look for opportunities.

We’ve got four very good low-cost factories in Vietnam that we continue to grow into, and that market is growing, so I would say Southeast Asia, we remain very excited about the opportunities in Southeast Asia. I think the Brazilian population continues to grow.

I think in Brazil, you’ve seen the can as a percentage of the pack mix in beer grow to the mid-40s, creeping up to the higher 40s, and we would think that there’s no reason why that couldn’t get into the mid-50s, much like we have in North America, so that will offer opportunity in the future notwithstanding slower Brazilian growth, but I think can growth will be good.

And then Mexico, as John pointed out, the acquisition of Empaque has provided us with tremendous opportunity in Mexico as that market moves from returnable--as the market, I’m sorry, grows in absolute terms, but also compounding that moves from returnable glass to one-way glass and one-way cans..

Okay, thanks for that. That’s helpful. My last question is just you’ve had a lot of questions about American bev, but just specifically in North America, or actually the U.S.

and Canada, is there a beer and specialty can uptick that you experienced this year that you think is sustainable into next year, or did you kind of suggest that this is a one-time thing?.

You said specialty can, Debbie?.

That was just if you could actually separate them. I mean, it seems like you got a lot of benefit from--.

Well, we have two factories which make specialty cans, one in Texas--in North America, one in Texas and one in Mississippi. We see no reason why they shouldn’t continue to do well through next year, and growth for specialty cans continue to outpace our capacity in that regard.

Then 12-ounce cans have been exceptionally strong, and as I said earlier, from quarter to quarter that does change among the can companies based on customer mix, and we continue to have what we believe is very good customer mix that we’ve been fortunate in that regard. So I don’t think we--I think we’re pleased.

You know, through nine months, the industry is flat this year in North America in terms of beverage cans. We’re up about 2%, so we’re a little ahead of the market. We might have been a little behind the market last year - these things ebb and flow, but I think we feel pretty good about where we’re at..

Okay, thanks. I’ll turn it over..

Thank you..

Thank you. Our next question comes from the line of Alex Ovshey of Goldman Sachs. Your line is now open..

Thank you, morning guys. A couple of questions for you.

So first, the contribution from Empaque in the third quarter, was it similar to what it was in the second quarter or is there some seasonality in that business that we should be thinking about?.

There is seasonality, although I would say there is less seasonality in Mexico than as you go further north. But I would say if it represented 60% of what you saw the growth in Q3, it was probably a similar number in Q2..

Okay, so just--the strongest quarters, even though there is not that much seasonality, is it the second and third calendar quarter of the year for Empaque?.

Yes, but we expect Q4 to be quite strong, so one of the reasons why the Q4 earnings estimate is significantly above Q4 2014 is Empaque. As I said earlier, what you had in Q1 and Q1 this year was Brazil being soft relative to the prior World Cup year offsetting the Empaque. You didn’t see it come through.

Third quarter Brazil was comparable to last year and you saw Empaque come through, and you’ll have that again in Q4 and that’s why you have the earnings growth in Q4..

Got it, Tim. And then the Monterrey plant, so I think it’s getting pushed out from a May start-up to the fourth quarter. Let me know if that’s correct, and then just what’s happening there that it’s getting pushed out.

And then some questions around the plant - can you talk about how much of the business is contracted, how much is sort of dependent on being able to take share from two-way glass?.

You’re right - we’ve moved the start date to early October of ’16, and the reason for the move in the start date is because we’re not going to be prepared to construct the plant until we have business under contract. When we begin constructing the plant, you’ll know we have business under contract.

Until then, we continue to plan and develop plans for the plant..

Ah, okay. Got you. That’s helpful.

Just lastly, so aluminum premiums, I know you said no change to sort of how you’re thinking about it, but can we take a step back? Can you just remind us how you’re thinking about it, ultimately what the headwind was to you over the last couple years, how much of that we’ve gotten back so far, and how much is still on the common in terms of being able to get back in ’16 and beyond?.

Yes Alex, we came into the year with a cumulative headwind of about $30 million, and if you remember, we were predicting more headwind in 2015.

In the first quarter, we said the number was 9, second quarter was flat, we got a few million back in the third quarter here, and we’ll get even more in the fourth quarter so that on the full year 2015, it will be a tailwind of a few million dollars. I think it’s--again, we’re going through that process now.

I don’t want to get into the tailwind in ’16, but clearly there will be some..

Okay, excellent Tom. All right, well very good. John, best of luck to you in your retirement, and Tim, best of luck to you in your new role. Looking forward to working with you. Take care..

Thank you, Alex..

Thank you. Our next question comes from the line of Mr. Chip Dillon of Vertical Research Partners. Your line is now open..

Yes, thank you. Good morning, and John, all the best to you as you move on, and Tim, good luck..

Thanks Chip..

First question has to do with the Mivisa acquisition.

I know that when you did that deal, you were talking about cumulative synergies of $35 million, and I know it might be hard to keep score with all the operations flowing together, but as we look from the third quarter either backwards or forwards, how much do you feel you’ve gotten of that, and how much more is there to come?.

I would say where we’re at now, Chip, we’re about two-thirds of the way through that, and with the activities or the actions we’ve just announced, that will bring us to the full amount and we should recognize the full amount, just about the full amount through next year.

There will be a little bit that slips into the following year, but by the end of ’16 we’ll have recognized at least--you know, if it was 34, we’ll be, I think, 31 or 32 of that number on a cumulative basis, right? On a full-year basis, I’m sorry..

Got you. Then if you can say, when we look at the Monterrey plant, I know there’s a lot of expansion going on, both at the brewery level as well as the packaging level there.

Is the issue there, is it that there may not be enough demand for what you are proposing, or is it just basically coming to terms and the demand will likely be there?.

We believe the demand will be there, but we are not going to chase the demand without a contract..

Yes, okay. That makes sense. Then maybe Tom could talk a little bit about--update us on where we are in terms of the debt. I know there’s been obviously a lot raised and now you’re in payback mode, or certainly will be in the fourth quarter.

But how much of it right now is fixed versus floating, taking into consideration swaps and the like, and what’s the strategy there? Is there sort of a bias to try to fix more of it as it appears rates one of these days may start to go up?.

Yes Chip, we’re at about 40% floating debt right now, which is some term loans that we have. There are no swaps or anything overlaying the underlying debt. The ongoing strategy is as we generate cash, we’re going to pay down the debt we can pay down, which is typically going to be a floating rate debt, and we would change that math a little bit.

However, we’re always looking for opportunistic refinancing, and if we can get a 10-year bond at an attractive rate, we would take advantage of that as well. So we look at it all the time, and to directly answer your question, we’re at about 40% floating right now..

Okay. Last question, just to make sure I’m not missing anything, in addition to Mexico where you mentioned October of ’16, could you clarify, is your plan sort of to try to add a second line there at that plant a year later? And then the other two plants we should be focused on are Cambodia and Turkey.

Am I missing anything?.

So you’ve got second line in Turkey, new plant in Cambodia which will initially be a one-line can plant tied to a long-term customer contract, and then in Mexico--.

So like Thailand?.

Thailand is a second line that just came up, so that’s already in commercial production. In Mexico, the Monterrey facility will be a one-line plant, and a second line will only be added if and when needed for--as the market grows or we gain additional contracts. So we’re not going to put capacity in ahead of contracts or certain volume. .

Okay, good. Thank you very much..

You’re welcome..

Thank you. Our next question comes from the line of George Staphos of Bank of America Merrill Lynch. Your line is now open..

Hi, thanks for taking my questions. Echoing everybody - Tim again, as we discussed earlier, congratulations on your new role. And John, honestly, it’s been a pleasure working with you.

I’ve always enjoyed the dialog and you deserve a ton of credit for your stewardship of the company in the early 2000s when things were looking pretty dark, so congratulations to you and enjoy your retirement. It’s been a pleasure working with you. I guess my first question would be on Americas beverage.

Relative to our model, there’s been a lot of discussion on this on the call anyway, that 16% margin, I’m not sure I’ve seen in the past.

Recognizing there were a number of things that drove it, and you did a good job of calling out what the drivers were, how sustainable is that, do you think, for a third quarter margin and for a platform looking out over the next several years, or how would you have us contemplate that as we look out to our own forecast in the next two years?.

Well George, you’ve been around the industry a long time. You know the key to any successful beverage business is high utilization of the factories, and we certainly had that in the United States in Q4--I mean, Q3. We are running much better this year.

We’ve had almost a wholesale management change across our beverage division over the last 18 months, and we believe we’ve got a really good team now and things are running well. We are extremely low cost.

Demand has been very strong from the platform of customers that we have, so in large part that has allowed the benefits of the Empaque acquisition to come through, coupled with the fact that Brazil was comparable to last year at this point.

Keep in mind, we don’t talk about it a lot at Empaque because it’s a small piece of Empaque that we acquired, but there is a significant Crown cork business that was acquired at Empaque, and there is a very highly utilized and successful glass business, a three-furnace glass operation which is fully sold out as well in Mexico.

So there are a number of different drivers to that margin. I don’t really want to comment on whether ’16 is sustainable. I think we always look at absolute margin.

As you know, the percentages can move up and down dependent upon the pass-through overall material, but really the key thing, George, notwithstanding Brazil and Mexico, would be utilization in the United States, and we’re very highly utilized right now and it’s a good position to be in..

Tim, could you comment on what you think the average utilization will be this year in the major producing regions, so North America, Mexico, Europe? Asia, it sounds like you’re sold out, but whatever you could share there would be helpful. .

Yes, you can define capacity a number of different ways. The one thing I would tell you in the United States is we’ve been oversold this year, and we have had to turn some business away, which has been unfortunate because we’ve worked really hard to develop a lot of business.

But can demand has been very strong, so we’ll look to ways to increase productivity to meet that future demand. Mexico, we have also been sold out this year, not only in the Empaque operations but also in Crown Mexico, and we continue to believe, as we’ve talked about on this call, that future demand in Mexico will be strong.

In Europe, we are also sold out, more or less sold out in Europe, certainly oversold in the summer months. Certain regions like Turkey continue to grow, and that’s one of the reasons why we have the second line going in. Certainly there is softness in the Middle East, and that’s just going to have to be something that we work through over time.

The Middle East has been a region that, as you know and we all know, has been volatile for a very long time, and Crown has been present in the Middle East now either via Crown or its predecessor companies for 40 years, and it’s something we’ll work through from time to time. Southeast Asia, I wouldn’t say we’re sold out.

We continue to add capacity to take advantage of future growth opportunities that we see, but we are very highly utilized. We’ll be in the low 90s in Southeast Asia, and then in China we are--you know, the market is probably in the high 70s, 80% utilization range, and I would say that we’re at least five or eight points higher than that.

We’d like to be more than that, but it’s a challenging market right now. Brazil, the market was a little slower this year than we would have liked, but again we’re in the mid to high 80s, low 90s, and we expect that gap to close a little next year because we do see can growth in Brazil next year.

So I think all in all, beverage utilization around the world is quite strong for Crown, and I believe it is for our competitors as well..

That’s very helpful. Two quickies and I’ll turn it over.

One, if we think about Southeast Asia, and utilization rates there are fine, are you seeing any effect from China and its pricing weakness beginning to slip into Southeast Asia, or not really? Then the other question I had, just piggybacking on Chip’s question, you have, as I recall, some relatively large maturities coming in ’18 or ’19.

Do you anticipate basically taking care of those through just debt paydown from existing free cash flow, or do you think you’ll likely want to or have to refi any of that and term it out for a number of years? Thanks guys. Good luck in the quarter..

Okay, I’ll take the Southeast Asia and Tom will take the debt question. I think Southeast Asia--you know, we have not really seen any impact anywhere near the China phenomenon that we’re experiencing in terms of pricing. I think generally our customers are aware of opportunities, just like we’re aware of opportunities.

They want to have healthy, strong suppliers, and that’s what they have with Crown in Southeast Asia; but having said that, they are obviously aware of the pricing disconnect between China and other regions of the world.

We would characterize, and we do characterize that to them as an anomaly, one which is not sustainable for China and would not be sustainable at all for the balance of the world if customers are looking for high quality service and innovation.

That’s just not something that can be sustainable for very much longer in a place like China, or anywhere else in the world. So pricing is what pricing is. It is competitive, and we look to keep our costs down to remain as competitive as possible and keep our position. On the other one, I’ll let Tom take that question..

Yes George, the debt that’s due in ’18 and ’19 are the term loans in our revolving credit facility, and we would expect to term out a little longer at least some of that.

Just the pure amount of debt is more than we need to repay to get to our target leverage ratio, so there will be some residual borrowings out there that we would expect to refinance..

Thank you..

Thanks George..

Thank you. Our next question comes from the line of Mr. Mark Wilde of Bank of Montreal. Your line is now open..

Good morning Tim, good morning John. Congratulations John..

Thank you..

Just a few clean-ups. One, I wondered on the aluminum premiums, if you can address the issue that’s been talked about a little bit, about whether contract changes have reduced your ability to kind of recoup all of the headwind you’ve taken over the last few years..

Well without being specific, the convention in Europe was a little bit different than the convention in North America, and we have endeavored to try to harmonize contracts in Europe, or at least the function of the premium in Europe to the northwest contract feature, so that potentially reduces it a little bit.

A bigger impact in us recovering the cumulative costs that Tom described for you is the premium. A large part of the premium is denominated in dollars, and with the dollar strengthening against the euro, there will be less for us to recover, less for all of us to recover in the future just because the dollar becomes a bigger component of cost.

I think it is what it is, and there are other levers for us to pull..

Tim, that’s helpful.

Would you care to take a stab at how much of that $30 million, these two issues notwithstanding, you’d expect to be able to recoup, just ballpark?.

I think I wouldn’t. How about no, but I think as Tom said, we’re going through the budget process right now. I think we’ll give you a much clearer idea of year-on-year improvement due to the premium when we talk to you in February about 2016..

Okay. A second issue that’s been talked about recently is just sort of the impact of customers becoming more globally focused in their sourcing and in their analytics.

Have you guys seen any real change there?.

Well, there have been customers that have run global sourcing tenders. I will say that each region is still regional and there are different suppliers and different capabilities by region, and it does come down to regional ability, regional demand, regional capacity, and regional pricing. I’d leave it at that..

Okay. Then the last question I had is just--I think John in his comments mentioned that you were still interested in acquisitions, and I wondered how far you’d have to reduce debt before you’d be comfortable in looking at more acquisitions..

Well, I think from where we sit, and that’s not my position or John’s position - I think we have probably full support of the board, that given where our leverage is right now and our ability to generate cash and quickly pay down debt, that if there were opportunities right now, we would take advantage of those opportunities right now if we were so fortunate to be successful.

.

Okay. All right, that’s helpful. John, enjoy retirement. Tim, good luck..

Thank you, Mark..

Thank you, speakers. Our last question comes from the line of Mr. Scott Gaffner of Barclays. Sir, your line is open. .

Thanks for taking the follow-up. Just one quick clarification - on the Monterrey plant, the capex spend there--or I guess first, how long does it take to construct? I mean, obviously it seems like less than a year if you’re now targeting October 2016.

But the second part would then be, did some of that capex get pushed into 2016, and if so, was there another project that took its place in 2015?.

Well, we won’t have constraints of weather in Mexico, so we’ll be able to build rapidly through the winter months and we’ll have a timeline similar to what we’ve employed in Brazil, which is a more rapid construction timeline.

We would expect a very good start-up with the team there, considering that we already operate three beverage can plants in-country and the employees are quite mobile. Monterrey is a desired location to go to for many Mexicans.

Perhaps a little of capital has slipped into ’16, although if we get started in the next two or three weeks, I would expect the timeline not to have slipped that much..

Okay, last question just on North American food. I realize the competitive response to the new capacity going into 2015, you were able to lengthen some of your existing customer contracts in North America.

I was just wondering, on the margin, do you still have some contracts coming up for renewal into 2016, and could we see continued slippage there of customers?.

Yes, I think it’s probably too early to tell, but most of our large contracts have been extended and there are some shorter term contracts which will come due, but they are not large contracts. But again, too early to tell. I think we’re probably better off waiting until February to discuss that in a little more detail. .

Okay. Thanks a lot. Appreciate it..

Thank you, Scott..

Thank you..

Operator, I think that’s the last call. Thank you very much for listening everyone, and we look forward to speaking with you again in early February for the full-year results and the 2016 outlook. Thank you. .

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