Kim Ulmer - VP & Controller Tony Allott - President & CEO Bob Lewis - EVP & CFO Adam Greenlee - EVP & COO.

Adam Josephson - KeyBanc Capital Markets George Staphos - Bank of America-Merrill Lynch Chip Dillon - Vertical Research Partners Chris Manuel - Wells Fargo Securities Debbie Jones - Deutsche Bank Al Kabili - Macquarie Anthony Pettinari - Citi Alex Ovshey - Goldman Sachs Mark Wilde - BMO Capital Markets.

Thank you for joining the Silgan Holdings First Quarter 2015 Earnings Results Conference Call. Today’s call is being recorded. At this time, I’d like to turn the conference over to Kim Ulmer, Vice President and Controller of Silgan Holdings. Please go ahead..

Thank you. Joining me from the company today I have Tony Allott, President and CEO; Bob Lewis, EVP and CFO; and Adam Greenlee, EVP and COO. Before we begin the call today, we would like to make it clear that certain statements made today on this conference call may be forward-looking statements.

These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and, therefore, involve a number of uncertainties and risks, including, but not limited to, those described in the company's Annual Report on Form 10-K for 2014 and other filings with the SEC.

Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements. With that, I'll turn it over to Tony..

Thank you, Kim. Welcome everyone to our first quarter 2015 earnings conference call. Our agenda for this morning will focus on the financial performance in the first quarter, a review of our outlook for 2015 and after our prepared remarks by Adam and I, we’ll be pleased to answer any questions.

As you saw in the press release the first quarter results are in-line with our expectations as we delivered record adjusted earnings per share of $0.54 and continue to advance our footprint optimization plans in each of our businesses.

We also completed the tender offer buying back approximately 2.8 million of our shares and increased our cash dividend by 7%. Well, our consolidated results are in-line each of our businesses experienced their own unique set of challenges.

Our metal container business continues to anticipate volume growth for the year along with shift in some customer fill locations which present significant logistical challenges as a result of capacity constraints at certain production locations.

Our closure benefitted from improved volumes and favorable resin costs and have done a nice job integrated portal operations and shifting the manufacturing footprint to better serve each of their end markets.

Our plastics business continues to make progress in their footprint optimization program but also experience negative effects from softer market demand and delays in implementing cost reduction programs intended to mitigate certain contract price concessions. Based on the impact from the significantly stronger U.S.

dollar and fewer shares purchased in our Dutch tender offer, we’re adjusting our earnings guidance to arrange $3.10 to $3.30 per share. On the operational side our overall expectations remain unchanged.

With that I’ll now turn over to Bob to review the financial results in more detail and provide additional explanation around our investments for the remainder of 2015..

Thank you Tony, good morning everyone. As Tony highlighted each of our businesses are underway with their respective footprint optimization plans and continues to deal with market specific dynamics. In the face of these challenges results for the first quarter 2015 were in-line with expectations.

On a consolidated basis net sales for the first quarter of 2015 were $816.6 million, a decrease of $39.2 million or 4.6% as revenue declined in each business largely as a result of unfavorable foreign currency translation of approximately $34 million and the cessation of operations in Venezuela with reduced sales by $4.4 million year-over-year.

Net income for the first quarter was $33.3 million or $0.53 per diluted share compared to first quarter of 2014 net income of $31.5 million or $0.49 per diluted share.

Results for 2015 included rationalization charges of 700,000 and a net loss from operations in Venezuela of 100,000 for an aggregate impact of a penny per diluted for 2014 included rationalization charges of 1.6 million a loss on early extinguishment of debt of 1.5 million and a net loss from operations in Venezuela of a half million for an aggregate impact of $0.04 per diluted share.

As a result we delivered adjusted income per diluted share of $0.54 in 2015 versus $0.53 in 2014.

While we continue to be insulated at the net income level from swings and foreign currencies having finance the international businesses in their local currencies and maintaining a business practice of balancing our cross border activity to help mitigate the effects of currency on our earnings, we did experience a slight earning shortfall given the significantly stronger U.S.

dollar during the quarter. At this point we do expect this to be the case for the remainder of the year and have revised our earnings estimates accordingly.

Interest in other debt expense $3.7 million to $16.5 million for the quarter primarily result of the loss on early extinguishment of debt of $1.5 million attributable to the repayment of approximately $300 million of term debt in 2014 lower weighted average interest rates, lower average outstanding borrowings and the impact of favorable foreign currency translation.

Capital expenditures for the quarter totaled $48.8 million compared to $27 million in the prior year quarter. As we continue to advance our footprint optimization programs across each of our businesses and seek return oriented investments within our businesses, we anticipate capital spending for the full year to be approximately $250 million.

Additionally we paid quarterly dividend of $0.16 per share in March for the total cash cost of $10.3 million. I will now provide some specifics on each of our three businesses. The metal container business recorded net sales of $458.9 million for the first quarter of 2015, a decrease of $9.5 million versus the prior year quarter.

This decrease is primarily a result of the impact of unfavorable foreign currency translation of $12.7 million partially offset by the pass-through of higher raw material and other manufacturing cost and approximately 2% higher unit volumes principally due to the recent acquisition of the Van Can operations.

Income from operations in the metal container business increased to $40.7 million for the first quarter 2015 versus $40.5 million in the same period a year ago. The increase in operating income was primarily result of the larger inventory build in the first quarter of 2015 as compared to the prior year quarter.

Foreign currency transaction losses incurred in the first quarter of the prior year and higher unit volumes.

These benefits were partially offset by higher manufacturing cost due to logistical challenges from changes in customer demand patterns and the absorption of new volumes associated with the Van Can acquisition and a less favorable mix product sold.

Net sales in the closure business decreased $15.7 million to $198.1 million for the quarter primarily due to the impact from unfavorable foreign currency translation of $17.2 million.

The cessation of operations in Venezuela at the end of 2014 resulting in a $4.4 million impact on sales and the pass-through of lower raw material cost partially offset by 2% increase in unit volumes.

Income from operations in the closure business for the first quarter increased $3.8 million to $21.6 million primarily as a result of higher unit volumes and the favorable impact from the like pass-through of lower resin costs partially offset by the impact of unfavorable foreign currency translation.

Net sales in the plastic container business decreased $14 million to $159.6 million in the first quarter of 2015 primarily as a result of weaker demand in market serve resulting in a 3% decline in volumes.

The unfavorable impact from recent longer term customer contracts, the impact of unfavorable foreign currency translation of $4 million and the pass-through of lower raw material cost. Operating income decreased $3.6 million to $9.2 million for the first quarter of 2015.

This decrease was primarily related to lower volumes, the unfavorable impact from recent longer term customer contract concessions as well as delays in implementing certain mitigating cost reduction programs and the impact of unfavorable foreign currency translation.

These items were partially offset by the favorable impact from the light pass-through of lower resin costs. Turning now to our outlook for the remainder of 2015 based on the impact from a significantly stronger U.S.

dollar and fewer shares repurchased in the Dutch tender offer we are adjusting our earnings guidance to a range of $3.10 to $3.30 per share. To be clear we continue to believe our operations will perform within our original range and are only adjusting for fewer shares purchased in the tender and the impact of foreign currency.

This estimate includes the impact of rationalization charges and compares the prior year adjusted net income per diluted share of $3.17. We are also providing a second quarter 2015 estimate of adjusted earnings in the range of $0.65 to $0.75 per diluted share which excludes rationalization charges.

Consistent with our year-end guidance we continue to forecast free cash flow generation to be approximately $100 million largely a result of incremental capital spending in 2015 directed at optimizing our manufacturing footprint along with the construction of three new operating facilities. That completes our prepared remarks.

We can turn it over for Q&A and I will ask Katie to provide the directions for the Q&A session..

Good morning Tony and Bob, hope you’re well.

Bob on resin can you quantify the benefit you experience in the quarter and talk about any future benefits that you might be expecting?.

Sure Adam and this is Adam and for the quarter resin in our plastics business was about $2 million favorable in the quarter.

As we look out into Q2 and beyond right now there are market increases in our base resins for Q2, so we anticipate increases in our resin costs and therefore no real benefit, in fact a headwind as we look at our plastics business going forward into Q2..

Thanks Adam. Just couple others one, in terms of the California situation are you, to what extent are you guys concerned about the potential impact of the drought on the process that made a crop this year acknowledging that the crop last year was tremendous.

And along those lines anything in terms of early indications about the Mid West crop?.

Yes obviously, there is a lot of press about the drought situation out in California so we’re obviously watching it pretty carefully and talking to our customers. I think one thing to note is that the tomato crop in California is irrigated and they’ve underground wells that they have access to.

They utilized those last year and as you indicated we had, they had a pretty good growing season. I’ll point that doesn’t always necessarily translate to Can volume, what that means is they typically fill the Can volume first as that’s the high value product line for them and everything else kind of goes into the bulk market.

So our view right now unless anything legislatively changes around the use of water that we’re expecting the tomato crop to be okay.

As we look at the broader pack situation, early indications are that – is probably down a little bit and the rest of the vegetable pack seems to be puts and takes across the board, seems to be reasonable in terms what our customers are expecting.

I’ll add to that many of our customers have increased the acreage that they’re planting so that gives us some edge against the weather if you will..

It’s early days on all that..

Thanks Tony. Just one Bob on M&A, can you characterize your M&A pipeline at the moment and the multiples you’re saying and more specifically can you comment on your potential interest in beverage can assets if they were to become available as a result of a pending acquisition? Thanks a lot..

There is a lot of questions in that question. But, no question that M&A continues to be an important part of our strategy, we continue to look at all opportunities that are out there. We do keep an active pipeline and look at pretty much any packaging asset that’s going to trade, you should expect it that we’ll at least take a look at.

The activity seems to continue to be pretty robust some of them are of size, some of them have been pulled more recently as well. I think that there is no question that the valuation expectations continue to remain high as perspective sellers kind of look at the public multiple as comparisons.

I think the flip side of that is that we continue to be at a very low interest rate environment. So, as we’ve said in the past multiples are only one metric, we kind of focus on a discounted cash flow aspect of it and so where we have synergies and can finance a property at longer term low interest rates.

We believe we can be competitive and would look to take advantage of that. We do have plenty of capacity on our balance sheet should those opportunities come about. That said we would be very comfortable within our discipline of doing bolt-on acquisitions or returning capital to shareholders where that makes sense.

So, I don’t think there is really much of a change in terms of what the landscape looks like from what’s out there and what’s available to the one property that you ask specifically we’ve said pretty readily that our interest is in rigid packaging for consumer goods.

There is nothing about beverage cans that we think are problematic or don’t meet that criteria.

But remember the second part of our investment criteria is that we look for opportunities where we can earn a good return and create shareholder value so price will be an important part of whatever it is that we are looking and that would be the case for that asset as well..

Thanks a lot Bob. I really appreciate it. .

We will take our next question from Ghansham Panjabi with Robert W. Baird..

Hi, good morning this is actually [indiscernible] sitting in for Ghansham.

How are you?.

Hi thanks..

Hey good, good. Can you provide some additional details on the larger inventory build that you guys called out in the metal container segment. Why the larger build and how significant of an effect that it have in the quarter, also you referenced changing consumer demand patterns in the segment as well.

Can you expand on that?.

Sure. Two parts to that. On the inventory side it had some $2 million to $3 million of net impact in the quarter. The reason for the bill there is some similarities in two answers. The reason that we are building inventories we are going to be very tight on capacity this year.

We had talked in the year end conference call about the fact we had some customer shift their field locations and that has resulted in us having to shift obviously where we make cans for our customers. So that's tightened up our system in certain locations.

That part is what’s driving the higher cost that you see in the quarter offsetting to some degree the inventory benefit and so to answer both your questions we got the shift going on in terms of where we were filling.

It has tightened up our capacity and the way w deal with that partly is we have to make the inventory in the first quarter so we were ready for our busy seasons in Q2 and into Q3..

Okay. That makes sense. Also next question.

Given the pending IPO of orders metal packaging business what you guys are seeing in terms of the competitive environment both in Europe and North America?.

Yes, I think competitively what we are seeing is really not a lot has changed in terms of what and I am speaking more to the European environment right now.

I think as we have talked about before we are focused more on the eastern market so we don't necessarily see as much competitive activity from the more western European competitors so for us it’s been more of the same business there has been performing well. Volumes have been pretty good.

Our core customers in central Europe are seeing positive results around fish and pet food which has been helpful. Jordan valley has been improving largely as that becoming more and more of a bread basket for the broader Middle Eastern market and Russia continues to do okay from a volume perspective.

So right now we are pretty pleased with the overall performance of the European business and I think just speaking to the U.S. business obviously we are tight on capacity as Tony just indicated so our other competitors are in the same spot and indoor wrapping up volumes for particular customers.

So there has not really been a lot of change to the competitive activity in that business either..

Okay. Great thanks. That's it from me..

We will take our next question from George Staphos with Bank of America-Merrill Lynch..

Hi everyone. Good morning. Thanks for the details on the quarter. Good luck on the upcoming quarter.

I guess couple of things first of all can you talk about what was driving the delay and some of the cost mitigation efforts within the plastic business Adam?.

Sure. When you look at really what happened in plastic again is you heard on the prepared remarks in the press release. There were couples of things happening at the top level of the business. We had our volumes softness in the organic business. The good news there is that the new business awards that we have been awarded did come through as planned.

So it was really the base business again without any loss of customer or loss of business, the base business was down by about 3%.

The second thing is you had the price concessions that we talked about at the year-end call was really three of our largest customers and those price concessions George go into effect January 1, so that is an important point because those cost mitigation efforts against those price concessions that's where we are delayed.

And we didn't get the cost out on January 1, when the price went down. So the good news is we are making progress towards getting those fully implemented here in the second quarter, we think we will be at the run rate by the end of the quarter and therefore you will see a back half saving as we had expected.

But, really the issue was amongst all of our cost reduction program that we normally have in place we just were delayed in getting that the specific programs to offset the price concessions..

Okay.

Adam, the fact that volume is little weak and maybe you didn’t get quite the operating leverage from this cost reduction programs or is this something else so is off from the timing standpoint?.

Mostly it’s volume weakness again you got a pretty fixed overhead across the platform when you take volume out there is pain that’s felt across the network with lower volumes and it is not absorbing those costs appropriately..

Okay. Now, going to the metal container business a little bit your profits were relatively flat, slightly up year-on-year you went through a number of factors that are affecting you eventually have lot of the logistical problem and you called out this quarter and obviously last quarter as you look at 2015.

You also enumerated a number of factors that seem to be driving a good performance thus far recognizing it really in the European food can business, so would it be safe to say that U.S.

metal container profitability will be down this year, is it way to size broadly with percentages again recognizing almost of just logistics and you should also have this result by 2015?.

Yes, George. The answer to it is, the simple question is no. It’s not our expectation that it would be down this year. It is our expectation that it won't be up lot in the U.S. even though volumes will be up. So lot of what we’re trying just make sure everyone is prepared for that fact that you have got lot more volume coming in.

By the way a lot of that volume came from a Van Can acquisition that we have made for a relatively low purchase price because that is – as was losing money when we bought it.

So it came in and it wasn’t you get the volume effect but you don’t get a lot of drop through until you drive the costs out of the acquired business and then you have what we talk about which is the inefficiency of the shift of our customers that tightens that’s creating our system which we saw coming at us.

So really what we are saying is that it could be kind of flattish on the U.S. even though you will see up volumes and that’s sort of more the dynamic..

Okay. Tony thanks for that. One thing I had the question again mostly around the metal packing business but to the extent that it relates at all to the other businesses I’d be interested in your answer and I will turn it over after this.

Have you seen any significant change in co-packing trends and are there any positive implications or not for the growth of your business specifically are you seeing more co-packers getting into the market where perhaps they will do filling in can or filling in plastics or filling in other substrate and how in turn does that relate back to your adjusting business? Thanks..

Thanks George you got Bob and I are looking each other see if another thought no we are not I mean there could be one offer you think about but basically we are not seeing any kind of cross trend of shifts in that.

Our fill again just to be sure we have been clear our fill location shifts that we talked about containers was very specifically about customers, big customers moving where they are doing their fill.

But really there has not been much change in terms of whether the customers are using co-fill or they are doing their own fill throughout all of our businesses.

Okay. No that's helpful. I was relating to the mid west project but that was more broad question really most on the metal containers. Thanks I’ll turn it over..

Thanks George..

We will take our next question from Chip Dillon with Vertical Research Partners..

Hey good morning.

Looking at the plastic business where you had the contract renewals were those split between sort of the legacy plastic businesses and operations acquired from Rexam or really titled more toward one or the other?.

They actually were all relating to our legacy plastics business..

Got you. Okay that's helpful. And then, looking at the you mentioned the pressure is obviously from the shift in where companies are filling their cans, your cans I should say, they buy from you.

When we sort of see this taper off as we go through the year or is it sort of going to be step function where we will see your, I guess cost come down once you have done the realignment of your footprint I guess next year?.

Yes, it’s the later. It will not taper off this year in fact recall the way our business works is that we can't – we don't even have the capacity for our peak season. So we are suffering some now but that inefficiency will really be on us as we get into our peak season, if in fact we haven't built all the right inventory in the right spot.

So we are viewing that as a full year affect and it really won’t lessen much until the new capacity is on stream..

Okay and then just last one its sort of big picture but I believe it’s been about three or four years since you developed a can vision 2020 program and can you sort of tell us where you feel what the progress has been so far and sort of what you expect as you go forward?.

Sure. Thanks. I think its little less than that although in truth internally probably had that kind of light – I am not sure we came out publicly on it that quickly but we still feel very good about where its taking us. I think I have talked before there is different components of it.

There is really kind of basic logistic side of it which partly led to the new plant that we were building in Iowa and so that's where we look hard to kind of where do we fill cans, where what cost of freight, how do we optimize that system and we don't – that's one example. There is warehousing example.

There is light and freight system changes come from that.

So there is pool there, there is a pool around taking technologies that we already have and know and then making sure that those are employed at every customer possibly can and so that means we got to go through the process customer by customer of convincing them it’s worth the time because they have to make change and we have to make change.

And so some of it is just the hard work of getting that through customer by customer and we are making good progress on that and that will go on for some period of time. Then there is part of that’s light weighting of cans and its little broader than that. It’s changing the geometry of the can or the chemistry perhaps of the can.

So that's there is a bit of technology component to that. We are pleased with the progress of that side but that is more development in nature and so that is going to be slow and we slowed the rollout to the market and get commercial acceptance of it.

And so those are kind of the broad categories I would put on it and I would say that we feel very good about the progress so far it was named Can vision 2020 for a reason which is we knew this was going to be a very long term effort in order to get at it. So far so good..

That's really helpful.

So the way to think about it is that the light weighting and the [indiscernible] in geometry is more of the back end of that process?.

In terms of technologies around all of that as opposed to we may have light weight capabilities today that not employed at every customer. So you get some benefit just by getting that into more customers. And then if you talk about technology changes around what a can is capable of doing that will be further out..

Okay. That's helpful. Thank you..

We will take our next question Chris Manuel with Wells Fargo Securities.

Good morning gentleman.

If this has already asked I apologize I jumped on the call few minutes late but when you are thinking about some of the stuff that’s happening in the plastic business, you are getting some cost saves and some more coming through is that something that you can offset the pricing in the other work the put and takes there that takes one, two, three quarters or might this take kind of a year to get back to where you want to be there?.

A couple of comments, one, the price concessions that were made the cost mitigation efforts that we have against those specific price concessions were going to offset just large chunk of it, it won’t offset all of it.

So obviously, we have other cost mitigation efforts that we have going to the system and really any given time but the specific ones against the price concession only offset a portion of it.

As I mentioned earlier we are probably not going to see the run rate achieved on those cost savings for those specific projects until the third quarter towards the end of the second quarter so we will get a back half affects of those savings..

Okay.

So just for background purposes, where you have seen the most price concession is that centered in certain areas personal care is that in food, is that in where have you seen that?.

Really these are three if our largest customer contracts in our legacy plastic business so it covers health care, it covers food, it covers personal care.

So it’s more about customers in market I would say and again those price concessions were in exchange for significantly longer term contracts and as we talked about the strategy of our business one of the items was to focus on specific target markets and partner with our customers that either we secure our own business whether we have significant opportunities for growth and that's exactly what these contracts allow us to do..

And sort of to be clear in two of those cases, they were giving us future volume opportunities for longer term growth with customers so we saw strategic for our future and that was part of it, it’s not reacting to a market situation so much of it is looking forward and saying where do I want to be, who do we want to it west in the future and to some degree what's the right footprint to service that business..

Okay. That's very helpful. Thank you Tony. Okay so two last questions.

One, I think you kept your free cash flow guidance but any adjustments within working capital given few of the changes in material cost or how you might think about that little differently is kind of the puts and takes within there, you lowered the earning number a little bit but kept your free cash flow guidance?.

Yes, I think as we indicated coming into the year we expected there to be a little bit of friction of working capital just because of some of the inefficiencies we have across the system that we would probably build some inventory.

So no real change to that from that perspective I think what's offsetting the reduction in the income level is tax is coming in a little bit lower than we expected and we may have an opportunity to manage capital by just a little bit. But those are all outputs and take.

So there is really not much that's changed about our free cash flow guidance right now..

Okay that's helpful and just last kind of housekeeping question.

The Venezuela being discontinued does that kind of $10 million to $15 million on the revenue side?.

Yes that's probably about right. It’s about $4.5 million in the quarter so by the time you extrapolate that across the year that's right. I will just give you a little more detail there. We have seized operations there all employees have exceeded what’s essentially left is the building, the building is listed with the broker for sale right now.

That's got a total book value of less than a million dollars. We would expect to be able to sell it for more than book value that remains to be seen obviously that's a pretty difficult market. So we are not really looking at any future volatility around Venezuela as we sit here today..

Alright. That's helpful. Thank you. Good luck..

We will take our next question from Debbie Jones with Deutsche Bank..

You guys get the drought question a lot and I know it’s already been asked, I just thought it would be helpful could you quantify or get some idea of what your west coast or California exposure is within your metals business.

And has does that changed over the last call it two or three years as your customers have kind of shifted their footprint?.

Yes, I think as we have said several times the biggest exposure for us in California is going to be in the tomato market that's some fivish percent of what we do.

So not unimportant but not critical to the business and I think as I said earlier on, given the irrigation and the wells that many of our customers deploy there and the fact that typically what goes into the can, they get to that first because it’s high premium. We’re feeling cautious but a little bit protective..

Okay and then part of that changing over the last few years I was just wondering if you had – some of your customers shifting their footprint?.

Probably changed modestly, largely driven by and this wouldn’t necessarily be pack related but change to little bit with Campbell exiting this sacramental facility. So down versus prior years a little bit..

Okay, thank you.

And then, my next question just on the facility consolidation North America it has been a big focus in the metal food segment I’m just wondering if you look out over the next three to five years should we expect that this is kind of a direction that you or the industry will be going in or do you see other opportunities for investment in kind of single facilities, what would kind of generate the best return for you kind of as you’re looking at these projects?.

When we look at this all the time, so you look at our food can business I mean, for every kind of two plants we’ve today, we’ve shot a plant down. So this has been a continuous process for us. I think we said, as we talked about the announcement of this line this is a little unique, right.

We had customers moving to the Mid West we had what was already a pretty tight system. We had some BPA coding cost we could avoid by putting a new line in versus investing in and existing line and so there are a couple of things that aligned here that create an opportunity on building this size of a new two piece can plant.

So the first thing is, in terms of other consolidation, we’ll keep looking I wouldn’t imagine there is a lot more of that. In terms of what you see more new lines being built and taking out other capacity, it doesn’t seem obvious to us there is a good return on much of that at this point in time..

Okay, thank you that’s helpful. I’ll turn it over. We’ll take our next question from Al Kabili with Macquarie..

Hi thanks, good morning.

I just wanted this question on outlook it seems like this year the earnings is a little bit back half loaded to get to the 320 then we normally see in a little bit and is that just savings on the cost mitigation on activities in plastic containers ramping up, driving out or is there you’re assuming some assumptions in pack timing etcetera that drives that? Thanks..

Mostly it’s driven by what you said that we had a lot of operational items to get through for the year, we had some, as Adam talked about price we needed to mitigate in the plastic side to get cost out on that.

So it’s really just the process by which we get through the cost saving effort, it begins to benefit us as we go through the year as kind of the largest piece of that..

Okay that’s helpful. Alright, and then on the plastic containers business if the volumes being a little weaker than we anticipated, can you just help us, how the trajectory of that was through the quarter, are you seeing improved trends sort of exiting the quarter and into the second quarter? Thanks..

Sure, good question Al. I think through the quarter volumes were fairly consistent January and February fell off a little bit in March and have recovered in our plastics business in April. So, our anticipation is that volume recovers kind of back to a normal level if you will for plastic containers in the second quarter.

New business awards as I said earlier coming on stream as we had expected, so we’re anticipating volume growth in the business for the year and we anticipate that you’ll see a recovery in the volume in the second quarter..

Okay, great I appreciate it.

And final question is just for Bob, it’s just on, if you can just help us size up sort of what you’re thinking for the FX impact this year on the bottom line and the new guidance and then also interest expense, how that pace you for the full year?.

So FX for the full year I think as we talked about when we provided guidance we were already starting to feel the headwind and I think what we called out at that point was that we could see some exposure that was called a $100 million or so on the top line and that we were thinking at the time that was kind of $0.03 to $0.05 headwind to the bottom.

Obviously, there has been some change in rate since then so if we look at where rates are today that top line headwind is probably looking more like a $140 million or $150 million and we’re talking mostly about Euro and Canadian dollar here.

And that translates to the bottom line caught somewhere in the neighborhood a $0.07 in the way that would break out is obviously we saw a modest impact in Q1.

We would expect Q4 to kind of be pretty similar to that one size of quarter is pretty similar and as we go through the year there would become less of an issues with Q2 and obviously Q3 being the big periods of time where we would feel that affect. So again, kind of a $0.07 impact in the call down and revision to the numbers.

Correspondingly what we will see as an interest expense benefit as a consequence to that given that we are financed in local currencies as well. So to narrow that is we are probably a couple of million dollars better on the interest line as we go through the year..

Okay. That's very helpful. I appreciate it. I will turn it over and good luck..

Thanks..

We’ll take our next question comes from Anthony Pettinari with Citi..

Good morning. On the plastic container side I was wondering what the strategic contract renewals, is it possible to give kind of order magnitude how much longer these contracts are then the previous or kind of standard contracts you have in plastic containers.

And then with the two new facilities that you are building just wondering if you can give any commentary on how those are going and with the new facilities my understanding is that metal containers would be sort of neutral from a capacity standpoint but with the plastic container facilities you might be going after some incremental business is it possible to size the additional volumes that you might be seeing once those two felicities are online next year?.

Sure let me start back at the beginning. So, the longer term contracts that we were able to execute last year that went into effect on January 1, our normal contracts in the plastic business are somewhere between three and five years. Five is the outer kind of limits of what our normal contracts were. These range anywhere from 6 to 12 years in length.

So they are significant investments by other ourselves and our customers and kind of our strategic relationship going forward. And as you mentioned part of it does allow us to invest in new facility and get the returns that we’re looking for and also lower our overall manufacturing footprint cost.

The two new plants are actually coming along well the one in north east Pennsylvania will be operational sometime in the third quarter, everything is on plan and in budget there. The St. Louis Missouri Facility in Hazelwood will be right at the end of the year.

So those facilities as you said support existing customers but they also will allow for growth opportunities with those customers and with our target market.

So I can't really scale what that opportunity looks like from a capacity standpoint because certainly the Hazelwood Missouri facility will have the opportunity to expand that as growth comes in, but both are built with the idea that we will grow with existing costumes and in certain instances our target markets..

Okay. That's helpful.

During the quarter obviously we had the announcement of a larger merger of two big package food companies, just wondering if that if you expect that to have any impact on your business and just generally how you dealt with customer consolidation in the past?.

Yes, I don't think this is not particularly new. It’s been maybe new in last couple of years but it’s not new this quarter.

So, we have seen a lot of it across the food industry and we are not thinking it has huge impact, I think we are so used to deal with large consumer goods packaging company any other fact that they get bigger it’s not really going to change the balance of kind of why they do business with us.

It could create some opportunities I suppose if we have very strong relationship with a particular one of the two that combine. But mostly I think it’s not going to change a whole lot. Those companies are going to go for synergy, they are going to go for price, we totally understand that. We did the same thing when we acquired businesses.

But we feel so good about the value of proportion that we offer that if any puts us in a better light..

Okay. That's helpful. I will turn it over..

We will take our next question from Alex Ovshey with Goldman Sachs..

Alright, thank you. Good morning everyone.

I wanted to go back to plastic so the contract that you entered into starting January 1, did those largely also covered the incremental production that will be coming out of the two new facilities that you are currently building?.

For the most part yes. One of them absolutely one of them is near site facility. The other will support one of the contracts in addition to other business and also future rationalization as we again take cost out of our manufacturing footprint..

Got it.

That's helpful and then do you have any business in plastics that's coming up for renewal at the end of 2015?.

What I would say there is always a normal turn of business that we have particularly when you are talking about contracts and that kind of three to five year time range so we are sure there are nothing that I would say it here today and say that we are concerned about on a go forward basis.

We have done a really good job here over the course over last couple of years rebuilding kind of the silicon plastic brand and getting ourselves closer and more aligned with our customers. .

Got it and then just question on the metal cans can you talk about the competitive landscape for the metal for the metal can in the U.S.

relative to other substrates, are you seeing in roads from plastic and to any key and uses right now that the metal can participate and may vice versa is there anything that the metal can is taking share from and in regards in terms of other substrates?.

Yes, I would say same old on that. There is really nothing that happened, the growth of food can has and continues to be something less than the overall growth and consumption.

So overtime consumers are moving less share of stomach to can and it’s going somewhere else but that seems to be more in terms of where they consume fresh and grocery stores etcetera. There is really not much new to talk about alternative packaging.

And again, we have talked before but if you look at where food can is today, it’s so heavily focused now on the – part of the world where the food is cooked in the can in an high speed commercial process and that is just so difficult for alternative packages to meet the regular standard.

Many say they can do it, but they can only do it in very limited where there is overriding pressure or something that makes it a much more expensive process etcetera.

So most of where the cans are consumed is such a unique package much lower cost, both the package itself and the filling that is very alternative packages to kind of make any movement in there..

Got it Tony I appreciate the color. Will turn it over..

We will take our next question from Mark Wilde with BMO Capital Markets..

Most of mine has been answered, I just Tony, it sounded like you were pretty happy with the performance over in the European food can business I wondered if you could just update us on how much slight capacity still exist in that European business?.

Sure. First I would confirm your point that I think we are reasonably pleased with our European operations in total both cans and closures. So despite what we read in the paper about the economy etcetera, right now our businesses feel reasonably strong, certainly our team are doing really good job on the cost side etcetera.

so that is the broad picture I would still remind everybody that in the can side we have such a good pack last year, there is still a top comp to come but we certainly do like the beginning against what we had expected in Europe thus far. In terms of capacity it’s different in our can business and Europe versus US Can business.

In that we are much more local player in individual country markets, so you got to have capacity to meet the needs of that market which are smaller, smaller customers, smaller markets, and so you definitely do have capacity there but it’s not capacity it’s going to be turned to a country a long distance away.

Its capacity it’s going to stay in that spot and if we can find out opportunities to fill it great. If we can't then as long as the returns look good, we’re perfectly satisfied where we are..

Okay alright. Very good. Good luck in the second quarter and through the rest of the year. .

Thanks Mark..

We will take a follow-up from George Staphos with Bank of America-Merrill Lynch..

Hi everyone. First question just in terms of the 2Q guidance versus last year's number.

I am assuming most of it can be foreign exchange but would it be possible to bridge last year's figure out on EBITDA or EPS terms with which you are guiding to this year, obviously you have more volume, it’s going to be less profitable volume this year in food cans and what are some of the other factors there?.

Yes, I think you touched on those two factors from an operating standpoint.

I think the other things that are different year-over-year and certainly different versus the expectations that we brought into the years that FX is a headwind of a couple of sense in the quarter, the impact of the fewer shares is probably another penny and again that’s to both prior year and to expectations.

I think against our expectations we have got a little bit of the plastics cross lag as we were expecting we get to them early and have the full run rate for the second quarter it doesn’t quite checkout that way right now as Adam had kind of gone through in his previous discussion that’s probably another couple of cents.

And then on the closure side there’s probably a couple of cents or so there largely we had really good Q1 volumes and we ramp pretty well. So, we view that as a bit of an early build to the fill season from our customers and we are kind of expecting that we will see a combination of volume and inventory correction as we go into Q2.

So net, net neutral for the year, but a little bit of timing between the quarters..

Okay Bob. So FX is a negative year-on-year you mentioned cost lag in plastics but I would have directionally guess that resin would be a positive there, again you got the mixed factor in food can and the operating cost in food cans.

So are you expecting then the volumes and closure down year-on-year as part of again the year-on-year bridge?.

Yes, that’s certainly possible..

Okay..

Modestly but it’s possible. I mean as we sit here right now the weather hasn’t been overly warm and that does tend to have some impact on closure volume..

No, that make sense, I appreciate that. And then two last ones, it’s been a while since we have talked about at least that we recall on easy open end what’s the latest in terms of opportunity to drive that further both in your mix and your customers’ mix.

And then if you look back over the last year or so certainly resin price have declined but steel doesn’t look like it’s going up anytime soon anyway.

So do you see the current raw material trend that is more favorable for food cans or detrimental to the food cans in terms of again maintaining its share of the pack mix? Thanks guys and good luck in the quarter..

Thanks George. So the open end, what I would tell that it continues to grow, it continues penetrate more and more of the market as we have said several years ago that going to be much slower, more gradual now you don’t have to cold markets to tip over anymore.

But we do still, we see opportunities still there probably will be some more investments as we go, there have been marginal investments where we’ve optimized what we have in place but so the expectation is that it will continue to grow and we think them already majority market is in the open end and that will –.

Go ahead. I’m sorry..

Okay that’s okay, and that will go to predominant portion of the market will be easier is our review..

Tony with 70% of our mix, is it open now 80%..

Yes, it’s very close to 70%..

Okay. Thank you. Sorry about that..

Not a problem. On the raw material side as you point out, we are kind of seeing now on the steel side is we have flattish modest increase depends by market somewhere in that range, I guess we could all speculate on where it will go from here.

I think what I would believe is unlike the resin that are so volatile and volatility creates its own problem for customers what is, is good is that the steel industry and the way we deal with the steel cost is much more consistent for our customers overtime unless there is a major market disruption which we have seen from time to time what we offer is a pretty steady cost situation for our customers on steel and I think that has its own value.

And so, today the can against competing the materials is lowest cost solution for our customers. And as you recall the whole thing about Can Vision 2020 is for us to go at all the other costs around the business included by the way taking steel out where we can if we can light weight it.

So, our feeling is that it’s more about what we’re doing Can Vision 2020 will help us continue the grow the advantage that the can already has..

Okay, thank you Tony, thanks Bob..

Thank you..

That concludes our question-and-answer session, at this time I would like to turn the call back over to Mr. Allott for additional or closing remarks..

Great. Well, thank you everyone for your time today and we look forward to talking to you about our second quarter..

That concludes today’s conference, we appreciate your participation..