N.A. Chems & Pkg’g "Field Notes: Chicago Packaging Bus Tour" Shah

Research evidence excerpt

N.A. Chems & Pkg’g "Field Notes: Chicago Packaging Bus Tour" Shah

owlzan said boxboard utilizes a very different go-to-market

strategy from corrugated, and it would be far afield from their current operations.

Crown Transit plant in Roselle, IL and beverage can plant in Kankakee, IL

Over two days we met with VP of IR Tom Fischer, SVP, Strategy & Business

Development in Transit Michael Watts, EVP & COO of Asia Pacific and Transit John

Rost, and various members of plant management.

The Transit facility was dedicated to the Equipment & Tools business. This

business is 25% of Transit sales but is the highest margin business within Transit.

We saw a variety of automated tools including autonomous forklifts and an

automated warehouse management system which is currently in use in Crown's

Peterborough UK beverage can plant. This system fully automates all warehouse

functions and end of line logistics systems.

Considerable FCF in the Transit business. Unlike Crown's beverage business,

Transit is highly diversified in terms of customers. Roughly 30% of revenue goes

through distributors. The Signode brand is still widely used and is recognized to be

#1 or #2 in its markets, with no real large national competitors. Crown noted that

the business is a high FCF generator, producing over $2B in FCF since the

acquisition in 2018. The significant FCF comes from low capex requirements: ~

$40M/year on a sales base of ~$2B.

Improvements since the 2018 acquisition. The Transit team outlined some of

the changes made since the acquisition in 2018, including removing significant

cost, integrating the back office and adjusting the go-to-market strategy. They also

changed the sales incentives to be based on profitability, not volume (in some