Thomas Kelly - SVP and CFO Timothy Donahue - President and CEO.

Mark William Wilde - BMO Capital Markets George Leon Staphos - Bank of America Merrill Lynch Adam Josephson - KeyBanc Scott Gaffner - Barclays Arun Viswanathan - RBC Capital Markets Ghansham Panjabi - Robert W. Baird & Co.

Anthony Pettinari - Citigroup Tyler Langton - JPMorgan Debbie Jones - Deutsche Bank Clyde Alvin Dillon - Vertical Research Partners Philip Ng - Jefferies LLC Brian Macquarrie - Goldman Sachs Chris D. Manuel - Wells Fargo Securities.

Good morning and welcome to the Crown Holdings Third Quarter 2016 Earnings Conference Call. Your lines have been placed on 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. Thomas Kelly, Senior Vice President and Chief Financial Officer.

Sir, you may now begin..

Thank you, Jen and good morning, everyone. With me on today’s call is Tim Donahue, President and Chief Executive Officer. I will first take you through the numbers, and Tim will review the operational performance. On this call, as in the earnings release, we will be making a number of forward-looking statements.

Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including in our Form 10-K for 2015 and subsequent filings.

Earnings per share of $1.31 in the third quarter of 2016 compared to $1.01 in the third quarter of last year. Adjusted earnings per share were $1.33 in the quarter, compared to $1.34 in 2015.

Net sales for the quarter were down 5% at actual exchange rates, and down 2% at constant currency rates, primarily due to the pass through of lower raw material cost. Segment income of $333 million in the quarter, improved 2% or 4% at constant currency levels, due primarily to a strong performance in European beverage.

The adjusted tax rate of 25.9% for the quarter was in line with our expectations and we expect the full year rate of between 26% and 27%. We currently estimate fourth quarter adjusted earnings of between $0.66 and $0.72 per share or a range of $3.87 and $3.93 for the full year.

At this time we are maintaining our estimate of full year free cash flow of approximately $425 million with approximately $450 million in capital spending And with that I will turn it over to Tim. .

Thank you, Tom. Good morning, everyone. I’ll be brief and then we’ll open the call to question. As reflected in last night’s release and as Tom just discussed, performance was solid in the third quarter. Global beverage unit volumes improved 4% over the prior year, offsetting $5 million in new plant startup cost and 2.5% lower global food can volumes.

The impact of foreign currency on sales and segment income is once again shown in the release, so the following comments regarding third quarter segment performance will be on a currency neutral basis.

In Americas Beverage, segment income advanced 6%, primarily as a result of a 3.5% increase in North American sales unit volumes, which more than offset $5 million in startup cost reported in the United States and Mexico. Central and South American volumes advanced mid-single-digits over last year and we expect the fourth quarter to be firm as well.

To remind you, we have three beverage can projects currently underway in the America’s; the first, a one line plant in Monteria Mexico with commercial shipments expected to commence in early December.

The second, a two line plant in Nichols New York with the initial line expected to be completed in mid-January and the third, an expansion of production capacity [indiscernible] Colombia with completion expected in the second quarter of 2017.

In North American Food, segment income was level to the prior year as the results of prior year cost reduction activities mainly the closure of two plants offset a mid-single-digit decline in sales unit volumes, the result of an earlier end to the Eastern corn pack and a lower overall fish catch.

Unit volume demand throughout European Beverage advanced 1% over the prior year, positive sales mix, improved operating performance and $3 million in lower aluminum premiums resulted in segment income improving 15% over the prior year.

The installation of the second beverage can line to the Osmaniye, Turkey plant is nearing completion and we expect to begin shipping cans next month.

Additionally we have commenced the dismantling of the steel lines and the installation of the new aluminum line to the Custines, France, plant, which will complete that plants full conversion to aluminum by April of 2017. Segment income in European food was firm to the prior year despite a 2% overall volume decline.

As we discussed with you in July, the main producing countries of Northern Europe experienced exceptionally heavy rains in May and June. This was then followed by drought conditions in July and August and has resulted in yield losses of 20% to 30% depending on the crop.

Not all crops affected our can, but include beans, carrots, peas and spinach among many others. Fortunately our European food can business is very diverse geographically and in end market applications and this combined with ongoing cost reductions almost fully offset the impact of extreme weather on fruits and vegetables.

Looking ahead to 2017 we would expect fueled goods inventories to be low, which should lead to a strong planting season next spring. Beverage can unit volumes in Asia Pacific increased 2% over the 2015 third quarter as growth in Southeast Asia once again offset selective volume declines in pricing in China.

And Jen with that we’re now ready to open the call to questions..

Thank you. We will now proceed with the question-and-answer session. And our first question comes from the line of Mark Wilde from BMO Capital Markets. Your line is now open. .

Good morning, Tim, good morning, Tom..

Good morning, Mark. .

Tim I wondered if you could first just talk about any impact from the weaker British pound on your UK business? And I'm thinking not only about cans, but whether it has any effect on the machinery business over there?.

The main impact Mark as we sit here today we would view it should be a benefit that is it makes products produced in the UK more competitive as they leave the UK primarily to continental Europe, but other parts of the world, but I don’t think we’ve seen any impact of the weaker pound or of Brexit to-date.

We did have lower sales in our non-reportables as you see and lower segment income, some of that was specialty packaging volume related and the balance would have been the lower equipment sales, but those lower equipment sales were forecasted at the beginning of the year coming off a real strong year in 2015.

So the answer is not to-date, but we would expect as with any fairly highly automated or highly industrialized country that experiences a weakness in their currency, they do have an advantage going forward. So we would expect to see that going forward..

Okay, alright.

And then just the second question I had is the entry or expansion of kind of the number four cane producer Can-Pack in the both Brazil and the Netherlands does this have any impact on the markets do you think?.

Well I think that remains to be seen. They are a very qualified and well equipped can manufacturer who has a model, which is perhaps a little bit different than the public companies you follow.

Europe continues to grow, so the entry into the Netherlands perhaps sponsored by one customer we’ll be focused on that customer, we don’t happen to supply that customer in that region, or not to a big extent. It will have some effect.

In Brazil our hope is that Brazil continues to improve, it looks like it’s firming up a bit, certainly the confidence in the country it looks like it’s improving post some of the political turmoil that they are currently sorting out and hopefully we see a return to growth in a market that’s as large as Brazil is.

But in the interim without growth obviously any new capacity entered into a market without growth would have an impact that you’re not too crazy about..

Okay, alright.

And final question I had is, do you have any view yet Tim on your capital spending out in ‘17?.

I think what we said last time at least $400 million, we’re running a little behind right now this year as Tom said, we still project $450 million in capital spending for ‘16 and we’re running a little behind now that’s not to say that we’re not going to spend a lot of money in Q4 we have a number of projects underway and nearing completion, but if we fall short in ‘16 and obviously falls into ‘17 it’s going to at least be $400 million we do see a number of opportunities on the horizon, not all of which we were committed to but depending on our ability to be successful commercially we would certainly commit to those if they make sense.

So a little early, but the good news is we still have a lot of opportunities and that requires spending from time-to-time. .

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

Thank you, Mark. .

Thank you. And our next question comes from the line of George Staphos from Bank of America. Your line is now open. .

Morning, thanks for the details.

I guess the first question I had is on the level of start-up cost Tim and Tom, Should we expect this run rate really through say the first quarter call it $5 million-ish per quarter and kind of the related question there, with the momentum that you are seeing in global beverage how should we look at that in relation to guidance for the fourth quarter, which is relatively flat is it just the startup cost that are creating a headwind or are there any other things that we should be mindful of there?.

Well, I think we had a -- you probably remember George we had a pretty good back half of the year in ‘15. So the comps are little more comparable in Q3 and Q4 than they were in Qs 1 and 2. One of the reasons being aluminum premiums they annualized and then currency as well.

But on top of that we do have startup cross from time-to-time, we don’t know we call them out, we thought it was interesting enough to call them out this time because they happen to be someone larger than we’re accustom to. And frankly the reason is nickels Nichols plant is a really large plan to start with.

So, what we have is the plants obviously not in startup, but we have startup cost which happen to be the salaries and the training expenses with the people that you are hiring to run the factory, once it’s ready to go and that’s not an any significant number.

But we will have startup cost from time-to-time, we were certainly going to experience some modest startup cost in Cambodia not only in the third quarter that just past, but for the next couple of quarters but not really necessary to call it out, it’s kind of -- just kind of what we do and if I think we are going to tell you we have good opportunities and we are going to continue to have opportunities to grow and it’s going to require capital, we are going to have those and we are going to have to deal with it.

But one thing I’d point out Q4 this year in European Beverage, we certainly will have some headwinds, we’ll have the startup cost from the second line in Turkey, but more importantly we are going to have the disruption in France as the steel lines are down and we are installing the second aluminum line.

So, that I wouldn’t call that startup, just it’s disruption and its lack of sales because the two steel lines are down and you’re putting a new line in. So you only have one line making sales now not three lines. So, but that’s as I said George just part of our business..

Sure..

And need to deal with it..

Tim on that later point and clearly sudden making investment decision in Crown Holdings is one way or another, but is there way to call out how much that effect in Custines might be in the quarter?.

Well there probably is I don’t think it’s necessary to do it. I’m not sure what….

Understood..

I’m not sure what any one gets from other than we’ve thrown numbers out there that we somewhat have to try to validate internally before we put them out there..

Okay. No I thought it was worth a shot there but we appreciate the candor as always, can we talk a little bit about looking out just one of our topics over the years return on capital.

So, return on capitals remain relatively flat the last number of years you’re continuing to progress with your capacity expansions which you have said in the past are earning you well above cost of capital.

When would you expect return on capital to inflect to the upside relative what’s been the trajectory the last few years and do you get more of it do you think from the new capacity or do you get mortgage from buyback and/or other capital allocation decision how would you have us consider that?.

So, I saw your recent page to origin and you highlighted some of reasons why capital turn down and then flatten over the last couple of years and what I would argue is if hadn’t been so aggressive with what we thought were two very good acquisition and a number of capital projects, we wouldn’t be flat in return on capital, it would have continued to decline.

And the declines are attributable to one or two features of the portfolio, which have experienced trouble at different points over the last couple of years and that’s going to happen from time to time.

So, I think as we look forward we are not just throwing any project we think up against while hoping couple of them stick and they work out, we analyze each one of them and we turn a number of projects down.

But I think going forward the hope is that if we can get some stability in some of the areas where we turn down over the last several years that the benefits of the new capital, and the new projects as well as return of capital to shareholders would all result in improving return on capital going forward..

That’s fair.

And then within return on capital turned over from here, do you think you’re considering dividends to greater degree than in the past or still to be determined then for the minimum at the moment just focus on if you advise us buyback and or dividend at this juncture?.

Yeah George, we have a Board of Directors and so being a bit premature for me to comment on that. It’s something we review from time to time with the board and perhaps we will review it at the upcoming board meetings.

But I do think if you look at our leverage, we are going to end this year at about 3, 3, 3, 4 we have always said that our target is 3 times as Tom has said, we can clearly see the path to getting to free time by the end of 2017 and then the question becomes as we’ve said before do you really need to get the free times before you begin the share return to shareholders or once you see the clear path there you would start your return scenario before you get to the 3 times knowing that you are going to get there over two or three year period as suppose to a one year period.

I think that’s a decision we’ll certainly -- we’ll make after consulting with the Board. .

Okay, that’s for the answers. Tim I will turn it over. Thank you. .

Thank you, George. .

Thank you. And our next question comes from the line of Adam Josephson from KeyBanc. Your line is now open..

Thanks, good morning Tim and Tom hope you’re well.

One on the guidance increase, Tom can you just elaborate on the $0.025 increase at the midpoint just specifically what drove that?.

There is a lot moving pieces Adam, we just tightened the range it is a smaller quarter to last quarter. But I don’t think there is any one specific item it’s a number of moving pieces..

Okay.

One on CapEx guidance for this year for 450 I know Tim you said you might be running a little shorter of that, but can you talk about line conversion how much of the 450 whatever that ends up being are line conversions and how much more you expect to spend on line conversion in the next few years just so we have a better handle on it?.

So the only line conversion we’re undergoing is ‘17 is the not really conversion, in fact it’s the complete dismantling rip out of two old steel lines and the installation of a brand aluminum line in France. But having said that let’s characterize that as a conversion from steel to aluminum.

And so the spend in ‘16 is I would say at least $50 million; I don’t have any exact number.

Post France we then have only two steel factories in European beverage or put in other way two steel factories globally and they’re both in European beverage and they both happen to be in Spain one is a three line plant, one is a two line plant, one of those plants is newer it will be conversion of lines, the other is older it will have to be dismantling and installation of new lines and it will be something where we would go from five lines to four lines it’s not going to be inexpensive and it will happen over the next several years does it start next year, does it start in ‘18 I don’t know.

But it will be at least couple of hundred million dollars and it’s just something that has to be done..

Got it, thanks for that, Tim.

Just couple of others, one on the working capital Tom any reason to expect working capital to be a source or a drag beyond this year, I know you had previously said it would be $50 million sourced this year?.

No Adam I would say, sitting here today looking to next year I would say about flat in working capital next year that’s both on the receivable side, payable side inventory, it’s all in. So no I would not expect today a big movement next year..

Thanks Tom. Just one last one on operating rates in U.S., Europe and Brazil, can you just give Tim some sense of roughly what they are -- not necessarily your, I guess yours would be -- obviously, that’s what you can talk about.

Where -- any update from what you’ve said previously about operating rates in those regions?.

I think in Europe you never want to say you’re sold out, but we don’t have a whole lot of spare capacity in Europe and certainly over the next two quarters with the situation in France where we are putting a new line in and taking old lines out will be very tight. And the industry is somewhat tight in Europe as well.

There is not a lot of open capacity in Europe. Brazil has been certainly softer than the industry would have liked over the last couple of years we’re fairly well utilize I would say we are in the high 80s and 90s and I would expect that the industry is as well. And as I said earlier there does seem to be some confidence returning to the country.

So the hope with that is that we reenergized the great growth that we’ve all experienced over the last five or seven years. But operating rate is generally pretty healthy in Brazil.

And then in the United States we’ve been sold out for quite a long time and as we’ve discussed with you before it’s kind of limited our ability to grow more quickly in specialty cans because we’ve been unable to convert standard 12 ounce lines, which has led to the construction of the Nichols facility.

Certainly when Nichols comes up as we’ve said before, we’re not contemplating a share shift in the market and it’s largely for specialty cans and overall system cost reduction.

So that will depending on how many cans we convert to other sizes and downtime for size and diameter changes will lead to a little bit of open capacity for us, but it might be something we need to properly service customers.

But in large part I would say that for the industry in North America utilization rates have to be in the low 90s at least there’s not a lot of open capacity. We don’t have any, but there’s not a lot of open capacity..

Thanks a lot Tim, best of luck. .

Thank you..

Thank you. And our next question comes from the line of Scott Gaffner from Barclays. Your line is now open. .

Thanks. Good morning, guys.

Just focus on European Beverage for a minute here, the margins there were extremely high in the quarter at about 20% is that do you think that’s -- was there may be some production that’s ahead of the Custines disruptions that are coming up or anything abnormal that would say that margin is not sustainable?.

I’d like to tell you it is sustainable, but I don’t really know, time-to-time I couldn’t say week-to-week what’s sustainable sometimes but there are a couple of things that happened in the quarter, we had $3 million of aluminum premiums compared to the prior year as we said.

And then I mentioned in my comments positive sales mix and that really was strengthened what you would characterize as the Middle Eastern countries, which offset about a half a percent decline in Continental Europe.

And that I can’t forecast is the Middle East going to continue to recover, it recovered in the third quarter, it did not recover in the second quarter what’s it going to do next week or in the fourth quarter I don’t know.

It’s been somewhat volatile given the situations there at a number of the borders that are closed, which prevent cans from shipping from time-to-time and sometimes for long periods of time. But largely it had to do with sales mix and then cost reductions.

We have taken a lot of cost out of our system in Europe not just in beverage but in all the product lines and you see that in food as well, where despite volumes being down the margins are still pretty healthy 20% I don’t know.

Again as I said in the past we like when the percentage margin goes up, but we’re more concern with absolute margin given the impact of the pass through of raw materials on the denominator, the denominator effect on margin, sometimes is a little bit misleading, but we’ll see where it takes us. .

Okay. Just to clarify on Europe I think in your prepared remarks you said Europe was up plus 1% positive sales..

Yeah plus 1% which is about a half a percent decline in Continental Europe and maybe 3% increase in Middle Eastern countries. .

And you said Turkey was down 2% though so was that….

I did not say Turkey was down 2%. .

Okay..

I said food, food was down 2%, but I did not say Turkey, Turkey is part of what we call Continental Europe, Turkey would have been up in the quarter I'm sure I don’t have it in front of me. .

Okay. If I just go back to the return on capital question George was getting out I mean I think a few ways you can improve your returns on capitals one, as you mentioned putting capital on some of these growth markets and leveraging volumes there.

Another would be I guess taking cost out of the system and the last would really be pricing when you look at those three, where do you think the most opportunity is from a return on capital perspective?.

Well, I mean the one you have the most control over is taking cost of your own system.

To the extent you have opportunities to expand in markets that you think are good markets and I think we’ve done a fairly good, we have got -- we certainly got a bit example of a market we did not do a good job of evaluating didn’t work out well that’s China obviously but the others have worked out well.

So we’re going to continue to try to do that, we’re not so discouraged by one bad result that we’re not going to continue to try to find other opportunities. As for price, well price is the one that have the biggest impact, how likely is it to happen, in most of the markets we’re in where we’re either the number two or number three.

So we’re not really in a position to effectuate that as well as some others are. So I’d believe leave you to ask that question to some others..

Fair enough. Appreciate all the color guys. .

Thank you, Scott. Operator- Thank you, and our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is now open..

Good morning, thank you. .

Good morning, Arun..

Good morning, Arun..

Hi. Just had a couple of questions, first off on the guidance, I know you’re tightening up the range here. I guess your implied number for Q4 is slightly below what I was modeling.

So I am just trying to understand where the changes are? Was there kind of maybe a larger impact that’s carrying forward on the spending or is it some flooding or just some seasonality, in line with your expectations or things maybe a little bit slower than we have seen then in Q2?.

I think the answer is Arun is your model was wrong..

Right obviously. .

Seriously I think, what we typically try to tighten the range as we get to the end of the year because obviously we have more confidence and as Tom said earlier there is only one quarter left and it’s a small quarter. So you have a little bit more confidence where you think you’re going to be.

We were I think all year we have been saying somewhat like 380 to 395, now we’re 387 to 393, hopefully we come in closer to the top end of that, but there’s some things that can always happened. So I am not sure there is anyone thing as Tom said, I think it -- there are lot of things that can happen and which kind of we where we’re at..

Okay. And then I guess in European Beverage, I know you called out some improvement in the Middle East you know and you may not necessarily be in a position to talk about pricing.

How much of that margin uplift I guess would you say was either from structural improvements you have made from the business or say some other market related issues?.

I think we are -- excluding currency we were up $11 million in the quarter..

Right..

$3 million premiums and I’d say the other $8 million was split equally between volume and maybe $5 million what we would call volume mix $5 million and $3 million cost reductions. So your structural improvements were $3 million.

The volume mix is the overall volume growth and the positive mix in selling more cans in the Middle East than in Europe, or parts of Europe where we were down, some European sales were better than others, it’s just the way it is.

But as I said earlier, it’s a little hard to characterize how sustainable the Middle East improvement is it could all change again next week, and it’s pretty volatile..

Right, that’s helpful. And then lastly just in Asia maybe if can you just help us understand where you kind of calling out some weaker business there or maybe some was trying continuing to be weak maybe just help us understand Southeast Asia versus China? Thanks..

We were up -- across the division we were up 2%, about 6%, 6.5% growth in what we would call Southeast Asia and then about 5% decline in China and as we have said all year, we purposely been pruning our activities in China around two things, we’re not going to make cans and sell them just for practice and we’re not going to expose ourselves to carrying receivables with customers who perhaps may not have wherewithal or the willingness to pay us in the future.

So we’re trying to be a bit responsible in that region. The pricing in that country does not warrant any extraordinary effort to go out and try to sell cans at this point. So we are trying to run the business as tightly as we can cut cost, stay responsible, service those customers whom we have and who we know are honorable and will pay their bills.

And we are focused on the opportunities and the growth that we have from a really an exceptional platform that we have in Southeast Asia. .

Great thanks a lot. .

Thank you, Arun. .

Thank you. And our next question comes from the line of Ghansham Panjabi from Robert W. Baird. Your line is now open..

Hey guys, good morning..

Good morning, Ghansham..

Good morning, Tim. Can you just give us a sense Tim as to the volume contributions in '17 year-over-year relative to your very strong run rate in 2016 from all your growth capital initiatives in beverage cans? How should we kind a think about that? I know it phases in differently during the course of 2017, but any color would be helpful..

So I’ll just start with Asia. So we have the new plant in Penn [ph]. So we fully expect Asia to be certainly at lease firm to -- in '17 at least firm to '16 despite ongoing challenges in China. We think that we're going to continue to make good progress in Southeast Asia.

And in Europe we got the second line in Osmaniye, which we expect to come up fairly well, Turkey is a pretty strong market. And we expect performance in the factory to do well through learning curve and that will contribute. Custines, again the first -- we had a pretty good experience with the first line that we put in.

We do have can makers in Custines they're just going to convert from making cans off of the crappy old steel lines on the brand new shiny aluminum lines. And so that makes the effort much easier and that line comes up in April and we have every expectation that we're going to do well in Custines and throughout European Beverage.

In North America we've got Monterey, Mexico we're going to be up I think we're going to start shipping cans in less than six weeks, five-six weeks here. And I think as we've said before that plant should be sold out from the start.

So really the number of cans that we sell from Monterey will have to do with have quickly we can come through learning curve. And we've been putting a lot of effort and to make sure we get everybody trained properly. And so we see contribution there.

And then in Nichols it's a large factory, we'll bring the one line-up first and the second line will come up several months later. And as I’ve said though Ghansham we're not expecting any share shifts. So this is about specialty cans and craft beer and cost reduction throughout the system.

And I think since it's a such a large plant we're going to have more of an impact in Nichols next year with startup than we would in any of the other factories I just mentioned..

Okay, that make sense.

So if you kind of sum that up with something in the 3 billion to 4 billion unit range, is that realistic for '17 year-over-year?.

No that's -- I think that's far too high. So you're not gaining any cans in the France it's a conversion from steel to aluminum. The line in Cambodia next year it’s sized for much more but perhaps next year you pick up a 0.5 billion cans.

Monterrey obviously sized for much more, but you pick up because you're in first year you pick up 500 million to 600 million cans. And then as I said at Nichols we're not expecting any share ship. So a lot of it's cost reduction freight, a lot of it's perhaps more craft and more slim and sleek cans.

So on the order of similar number of cans there that we've just talk in the other puts. So maybe half of the number you said Ghansham..

Okay, that's very helpful, thanks. And then just in terms of European Food, just based on your commentary last quarter on the flooding and sounds like it impacted 3Q as well.

Where are you on inventory relative where you'd like to be? In another words, should we expect the margins in fourth quarter to kind of reflect maybe a drawdown of inventory in that segment?.

So I took a look at the transcript to remind myself what I said about the flooding. And the one thing I got wrong as I said it's not going to horrible. I think 20% to 30% reduction in crop yields is horrible if you are a former and a food packer luckily for us it wasn’t horrible for us.

We did start drawing down can production in Q2 of this year when I looked at the transcript I reminded myself I think I told you guys in July we probably produced about 100 million less cans in Q2 in our European Food System in anticipation of this. So I think we are in pretty good shape with where food can units sit from an inventory basis.

Right now as we enter the fourth quarter and I would expect Q4 to be a real firm quarter for European Food..

Okay, perfect. Thanks so much guys..

Thanks, Ghansham..

Thank you. And the next question comes from the line of Anthony Pettinari from Citigroup. Your line is now open..

Hi, good morning.

Just to follow-up on earlier question on working capital, is the working capital benefit for 2016 still around $50 million and is that still driven mostly by payables? And then when we think about the full year EPS guidance is a little bit higher free cash flow guidance in kind of flat are there any offsets there or is it just the EPS guidance the increases is not substantial enough to really raise the free cash flow number?.

On the working capital, yes, the numbers remains about $50 million. You are correct on the impact of the earnings on the cash flow it’s kind of rounding really.

The component to the cash flow that we’re giving now are in total and in fact the components are pretty much the same as what we gave the last quarter, perhaps interest is a little lower on a cash basis because of the timing of interest payments on the refinancing we just did. And we think tax probably be a little higher to offset that.

So, not a big change from last quarter and yes $50 million still a good number..

Okay, that’s helpful.

And then just following up on LATAM specifically the Colombia expansion do you ship any cans between Brazil and Colombia and Colombia is obviously been a very strong market for you, but as the capacity expansion in Colombia have any kind of knock-on impacts in terms of Brazilian supply demand?.

We actually ship more cans from Mexico to Colombia than Brazil. So if you -- you can get your map out later, but you’ll notice that a lot easier to get to Colombia from the factory we have in Ensenada which is out by Tijuana than it is to goal around and through the canal from Brazil.

So more of the cans comes from Mexico where we have certain size requirements for the Colombian market, we may from time-to-time take them from Brazil, but we also have another factory in Mexico, which makes sleek cans, so we can bring those down from Mexico..

Okay, that’s helpful.

I mean is the volume impact meaningful for the Mexican market or in any way that you can quantify it?.

No, it’s not meaningful..

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

Thank you..

Thank you. And the next question comes from the line of Tyler Langton from JPMorgan. Your line is now open..

Good morning, thanks. First question on I guess CSD can volumes in the U.S.

obviously they’ve doing sort of well this year and specially well in Q3, I guess, Tim can you give us a sense what’s been driving it is it sort of non-soda category like tea is growing, is it soda consumption leveling off is it conversion just any thoughts there would be great?.

We’ve experienced as an industry growth in all the categories, all the nonalcoholic categories other than CSD for several years and that continues energy drinks teas, juices.

Carbonated was okay this quarter as well and no I haven’t spent a lot of time looking at the major soft drink company’s financials or their commentary in advance of this call and perhaps I should have.

So I can’t really comment on what their overall 8 ounce or k shipments are and because that perhaps it would tell us that they are shipping less in one of the other substrates and then more in cans.

But given where we have been trending over the last several years we’ll take it I mean we’ve always told you and we still maintain that for a whole lot of reasons that can should be the preferred package for our customers, the retailers and the consumers whether its sustainability, recyclability, cost per fluid ounce, feeling speeds the whole cost throughout the entire distribution system.

And so, it’s hard to say but certainly welcome news. .

Okay, great thanks. And then just [indiscernible] in the U.S. I think you said your volumes in the U.S.

and Canada were up 3%, 3.5% I think you said?.

Yes. .

Is that due to the strength in the customers that you’ve been serving or is there anything else there?.

Well I mean the market was up 1.5% and we’re up 3.5%. So I think it only be attributable to our good fortune in that, the customers we service are doing well at this point, I wouldn’t -- and that can always change next week, or next year or next quarter. So hopefully our customers continue to do well and if they do well, we’ll do well..

Great, thanks.

And just final question for European Food, I think you with the recent plant closure there are still some savings that you expect in the future, could you just remind us of what those could amount to and just the timing for those?.

Yeah, we closed a large end-center in Wales, I don’t remember to be honest with you I don’t remember what the cost savings are as we move those ends to France and Spain, Tom’s telling me about $7 million. So we’ll see the benefit of that hopefully through next year..

Got you, perfect. Okay, thanks so much. .

Thank you..

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

Hi, good morning. .

Good morning, Debbie. .

I was hoping you could talk about North America again you’ve provided a lot of color on Nichols, but once that gets ramped up do you think you’re going to be happy or content with your footprint in North Americas there are more capital that you need to spend there? And then number two, in North America could you just talk about your mix between kind of beer and CSD volume and how you see that kind of progressing overtime?.

Yeah, I think the mix probably and we say North America let’s just -- let’s confine that to Canada and the U.S. because if we put Mexico in there our mix in Mexico is close to three quarter’s beer, but let’s leave that to Canada and U.S.

for North America and I’d say we’re probably about 25% beer, 75% non-alcoholic and at least two-thirds of that non-alcoholic number would be CSD. Post Nichols, Debbie as we’ve said we’re not expecting any share shift from nickels.

What it does, is it gives us the ability to service our customers in another part of the country without recurring exceptional freight cost with specialty cans and perhaps pick up some more crap beer as we create a little bit more capacity in our system to deal with short runs.

Now one of the things -- so I don’t think we have any great aspirations to change our share in North America nor cause any disruption in trying to do that. One of the things that Nichols may allow us to do and as I said earlier we’ve had the inability to convert 12 ounce lines to specialty because we’ve been sold out on specialty.

We will pick up a little extra capacity. And so perhaps we’ll have the opportunity to convert one of the lines in the Mid-West, upper Mid-West so that we could produce specialty in the Mid-West, upper Mid-West and service those markets with a lot less free.

But that’s still to be determined, but it’s I wouldn’t characterize Nichols as aspirational or any indication as to what our aspirations are for gaining share in North America. We certainly have a lot of aspirations around the world, North America would not be one of them per say at this point in terms of share gain..

Okay, that’s helpful. I was actually mostly referring to more conversion opportunities on the specialty side so that’s more clear.

I guess even when I think about you spending more money on conversions and kind of your growth opportunities in Southeast Asia, it’s a little hard for me to kind of rub my head around elevated CapEx call it in north of $400 million range or even a scenario I think you’ve talked about potentially higher than that unless you’re adding some significant growth at CapEx in potentially areas like Europe or Brazil.

So I just want to kind of understand what the opportunity is maybe not next year, but over the next couple of years.

Where do you get the sense that kind of a can industry needs more capacity right now?.

I think one of the things we’ve tried to change here over the last year or two is when we’re ready to tell you what we’re doing we’ll tell you what we’re doing. So you know the projects we’re working on now and it doesn’t mean we don’t -- doesn’t mean we’re out playing golf the rest of the week right, we’re still looking for other opportunities.

And so when we are ready to tell you about those other opportunities we will. Now having said that and we having said that there is still growth opportunities I don’t want to say significant but there still are growth opportunities throughout the world.

Southeast Asia is one of them, but Europe is a growing market and we have a position in Europe right now, which is not as large as some of the others, but the market grows and if we want try to maintain where we are at m participate in that growth that will require some capital time to time. So there are opportunities. .

Alright, thank you. I’ll turnover..

Thank you. Debbie the other item I mentioned obviously the conversion that we are going to have to undertake in Spain over the next several years. And so again that’s not growth, but it’s required capital to spent..

Okay. Thank you. .

Thank you. .

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

Yes and good morning Tim and Tom. .

Good morning, Chip..

I don’t you gave us the overall segment volume change for America I know you gave us the two components, was that about 4% is that fair?.

Yeah I would say maybe 4.5%. .

Okay..

Between 4% and 4.5% not kind of in that range..

I think that’s close enough, thanks.

And when you look at this volume gain in North America I mean, at lease the perception I have is there is huge surge in consumption of like sparkling waters and cans and I always see your logo on those no matter where I am in the country and what store I got into and I guess I am also perceiving more craft beer adoption out of bottles into cans.

Would you say that’s really behind us or am I barking the wrong tree?.

No I think you’ve mentioned two end markets where the can is doing quite well and it’s not just Crown depending on the region of the country you’re in you’re going to see somebody else’s can in craft beer and sparkling and -- but they happen to be two areas I think teas and juices are doing well.

We happen to have carbonated do pretty well also here in Q3, so that was helpful.

But yeah I think the marketers understand the benefits of the can the graphics the integrity with which the can preserves the contents the contents that is protected from light and air and you maintain carbonation and you maintain flavor and then certainly sustainability.

We’re all really serious about the sustainability issue and it’s not just to check the box exercise I think overtime we’d all come back to cans before we go at any other substrate, but that’s a different discussion for a different audience..

Okay, that’s helpful.

And then just a follow-on and I don’t think you answered this but maybe you did, how long do you see -- do you expect it to take the fill up in Nichols plant I know you throw the switch I guess in the next few months, could that be running fully by the end of say next year? And if so would that mean you would slow back other facilities do you think the market absorbs it right away?.

Well the way can plant startup works Chip is it’s going to be running full from day one, full happens to be a real low number on day one and as we continue to get better and come to the learning it means more cans by the end of the first year are we going to be at 70% or 80% of what we would fully expect hopefully we are at 70% to 80% though learning curve at that point and at that point we’ll determine based on the number of cans coming out of Nichols what the portfolio needs will look like in the future given the other opportunities that we have and as I said some of those other opportunities could be moving standard 12 ounce capacity to more specialty can capacity as we see that needed in the marketplace..

Okay, then last one….

Far too early to discuss a footprint optimization I don’t think we’re contemplating that. .

Got you. And then just the last one, when you look at the food can business obviously some movement of customers’ year and half for so ago has had a big impact and still does. But as we think about next year, do you think you’ll -- is there any reason Crown would not grow in line or perform in line volume wise with the market overall.

Are there other moving parts maybe other contract that help or hurt you and do you have a comment about the way the pack was this year? And how I'm talking U.S. now I know Europe should come back. But should -- was the U.S.

would you characterize it as being an average year or better or worse this year? So therefore next year you might see some offset..

I would characterize it as depending on the region as it’s having some weather impacts. And certainly on the East Coast as I said the corn crop ended early. I think we stopped packing -- couple of stopped packing cans in August. And then there were some other issues in other parts of the country.

Now having said that pet food has been real good and it's kind of masking human food can consumption and I think we talked about this on the last call. It's been declining slowly not really big numbers year-on-year, but you look at it over an extended period of time, it's a bigger number. So you do have some concern there.

I would say that as we look at our customer base and where we're set up for next year that we should perform in line with the market next year. But I don't expect that we're going to have any huge bounce back North American Food next year compared to this year.

I think it's a market where there is far too much capacity in the market and there is a disruptive player in the market. We're doing our best to look at for ourselves here. .

Make sense, thanks so much guys. .

Thank you, Chip. .

Thank you. And our next question comes from the line of Phil Ng from Jefferies. Your line is now open. .

Hey, guys.

I think you called out Continental Europe bev volumes down about 0.5%, what's driving the weakness? And is that driven by some of the supply constraints that you may have on your end? And can you help size up the volume or size of the Custines France facility from a volume standpoint?.

Yeah I don't think we had any noticeable volume decline because of the Custine conversion that we're undergoing now. I just and I'm not -- it’s not clear to me how strong because I didn't go back and look how strong Q3 was. But it was we were down in a couple of locations and without doing a whole lot of work, I couldn't tell you why we are down.

It's a 0.5% and that can happen from quarter-to-quarter. But continue to do quite well I think for the year and what we would describe as Continental Europe were up several percent. So try not to get too worried about quarter-to-quarter.

I'm sorry Phil, what was the other question?.

Can you size up how large that Custine France line is from a volume standpoint? Just so we have a better sense of….

It will be instead of being three slow speed steel lines it will be two high speed aluminum lines. But we'll add a little bit of capacity to the European system. But the more important thing is we're going in aluminum, which is what the customers want in not steel can.

So it will be on the order of 2 billion depending on size can how many size changes we make during the year about 1.7 billion to 2 billion. So if we ran just one size 2 billion cans but we're not going to run one size we're going to move the sizes around. So you’re going to be around the 1.6 billion, 1.7 billion range. .

Okay, that's helpful. And then I guess switching gears to China pricing has been an obviously a headwind. Do you have any early read for next year? And I don't know you kind of throttle back on demand this year.

Do you expect volumes to kind of level off next year, how should we think about that?.

Well I think China is going to continue to be challenging. It looks like the market this year is going to grow somewhere between 5% and 10% depending on who you listen to. And sometimes hard to validate those numbers, because there are so many can producers now.

But it's going to continue to be challenging and we're going to do everything we can to offset that challenge with cost reductions in China and reasonable growth projects outside of China in the region. But China is going to continue to be challenging. .

Okay. And just one last one from me, on Europe Food margins have been pretty impressive despite weaker volumes this year.

What's been driving that improvement and how much more runway do you have next year? Is a big part of the cost takeout or there is more to like price mix?.

I would say the major part is cost takeout. It's not just a couple of factories that we’ve closed over the last couple of years, but also the adherence to best practices across the acquired Mivisa operations in Crown and aligning production and shipments to customers from factories that are closer reducing freight.

We've had a new team running food Europe now for four year, five years head of manufacturing and been the role for two to three years and he is doing an excellent job. So there has been real renewed focus on cost and performance in that division and frankly the guys have done a tremendous job.

I don’t want to describe it as a failing before, but certainly we saw the opportunity for improvement and this team has really stepped up and improved.

So looking ahead, you always hope there is continuous improvement in the operations and price, started to talk about price there is obviously, there is a bit of over access capacity across European Food, but we don’t really know where tin plates is going to settle out and we do hope for a much better harvest next year.

And as I said it feels like they should plant a much larger percentage of the fields next year just given on the -- given the real crop failure this year and the need to replenish filled goods inventories across their own system. So we are hopeful for an okay year next year. .

Okay, thanks a lot. .

Thank you..

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

Thanks for squeezing me in. Lot of questions asked this morning, just had a couple more hopefully quick ones before the end of the hour here.

We didn’t expect much impact yet but just figured out to ask if you’ve seen any impact from the Ball-Rexam merger or the divestiture any just kind of feedback you are getting in the market from Asia customers or any impact you think that might have on the industry at this point?.

Far too early to comment, we haven’t seen anything yet..

Okay, just tried.

Then I just want to ask about China, you obviously have been retrenching there doesn’t seem like conditions have improved can you just may size that as a percent of the overall company at this point what are we sort of down to?.

I think revenues are still in the $250 million to $275 million range. So 3%..

Okay..

It’s never been a whole lot more than 3% to begin with it’s just kind of got blown out of proportion here it’s a pretty small part, it remains a pretty small part of the company..

Yeah, okay makes sense.

And then I think I missed your comments on the aluminum premium outlook in the prepared remarks, can you just remind I think it was a modest benefit in the quarter at least in Europe just kind of what you guys are assuming in 4Q and I would guess in ‘17 it’s pretty flat, but just any impact in 4Q?.

We don’t expect any impact Brian in the fourth quarter, yeah it was a few million dollars in the third quarter, and as far as projecting beyond that we’re just assuming it’s going to be flat to where it is currently..

Okay. One last one if I could.

We had a meeting with the leading bottler a couple of months back in August, they said that they saw craft beer growth hitting a bit of a wall during the summer, I know you guys aren’t as leveraged there as some of the can guys, but just wondering if you saw any trends similar to that and anything that would change your mind about the potential for craft beer going forward?.

I wouldn’t say we are not as leveraged to some of the other guys, I think we’re probably if you take all the craft beer producers in Canada we’re probably as big as anybody in craft beer. One of the things that the craft guys have struggled with over the last couple of months is their ability to get hops what they call quality hops.

And so I don’t really know if they are hitting a wall there could be a slowdown in the rate of their growth, but they’re still growing. And so I think I am always hesitant to characterize slowdowns in the rate of growth is bad news as long as they are growing growth is good..

Got it. Okay, thanks very much. .

Thank you. .

Thank you. And our last question comes from the line of Chris Manuel from Wells Fargo. Your line is now open..

Good morning. Just a quick one I realized we’re late in the call.

Looking into 2017, Tom could you give us some thoughts on pension? I mean, I did know that you’re still little over two months out, but quick thoughts regarding what expense might do next year, what cash funding requirements , et cetera might do next year?.

Yeah I’d rather stay away from the P&L side of it, I think it’s just too early, we have to see where discount rates end up and what the market does at the end of the quarter here.

But I do feel little more comfortable with the cash number, it shouldn’t be altogether difference than what we gave in last year’s 10-K, which is about $80 million compared to little over $100 million this year..

Okay, that’s helpful.

And then Tim if I could kind of come back to a couple of spot this is going to kind of flip the script a bit about where you’ve been over the last say decade, but you’ve talked about to use your words maybe some misguided capital or some projects in China and retrenching a bit there, but as we’ve been discussed earlier in the call we’re seeing some expansion here in North America, at least for demand when we look at numbers year-to-date and even last year I think they were up marginally.

You’re sitting as you said in kind of a sold off position do you think there’s any opportunity here to maybe add a modest amount of capacity to kind of keep pace with growth or do you -- are you really in a sold off position that you just can’t ship much more than you’re here?.

Well I think we -- all of the can makers we create capacity every year just by what we learn by being in the business overtime and you’re always surprised as to how much so called low hanging fruit there really is to improve within the system. So each year there’s capacity creep as we say.

So one year you’re sold out, but you can actually sell more cans the next year and that comes from the creep.

I think it’s challenging to think that you’re going to add capacity in the North American market place and believe that any growth or somehow on a stable market you’re going to gain share it’s a very competitive market and it’s been plus or minus 1% over the last several years across all the end markets.

So I would say that unlikely that you’re going to add any capacity in the hopes to gain volume more to the point you’re going to -- but we’re ended up what we’ve done here is we’ve given ourselves the opportunity to convert some of the capacity we have to participate part of the market that’s growing while the other one is declining slightly. .

Alright.

And then with respect to just last part -- with respect to China, is there anything looking into ‘17-18 that changes the trajectory there? I mean when we look at the last two or three years it’s continuing to get incrementally worse, does that trajectory change, are there tools you have available to go in and rip more cost out or reorganize a little bit over there from a manufacturing footprint rooftops or have you to stabilize things or how do you have us think about that?.

The first thing I’d say Chris is we’re always back to -- we spend a lot of time talking about a business 3% of our sales globally. And we spend some capital there in 2009, ‘10 and ‘11 and it’s where it’s at but it’s a pretty small part of the company we spend a lot of time talking about the small part of the company.

But having said that the situation does not look like it’s going to get any better so we’re going to have to continue to try to keep cost as low as we can..

Okay, thank you, good luck. .

Thank you. So Jen I think you said that was the last question. So thank you and that will conclude the call today and we’ll speak with you again in early February to discuss the fourth quarter and full year 2016 results. Thank you very much..

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