Feb 1, 2012
Executives
Kimberly Ulmer – VP, Controller Anthony Allott – President and CEO Robert Lewis – EVP and CFO Adam Greenlee – EVP and COO
Analysts
Ghansham Panjabi – Robert W Baird Chris Manuel – Wells Fargo George Staphos – Bank of America/Merrill Lynch Phil Gresh – JP Morgan Chip Dillon – Vertical Research Partners Mark Wilde – Deutsche Bank Al Kabili – Credit Suisse Usha Guntupalli – Goldman Sachs Christopher Butler – Sidoti & Company Rob Kirkpatrick – Cardinal Capital
Operator
Thank you for joining today’s Silgan Holdings 2011 Year-End Earnings Conference Call. Today’s call is being recorded.
From the company today, we have Tony Allott, President and Chief Executive Officer; Bob Lewis, Executive Vice President and Chief Financial Officer; Kim Ulmer, VP Controller for Silgan Holdings; and Adam Greenlee, Executive Vice President of Operations. At this time, I would like to turn the call over to Kim Ulmer.
Please go ahead.
Kimberly Ulmer
Thank you. 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 impacts 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 2010 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 these forward-looking statements.
With that, let me turn it over to Tony.
Anthony Allott
Thanks, Kim. Welcome, everyone, to Silgan’s 2011 year-end earnings conference call.
I’m going to start by making a few comments about the achievements during the year, then Bob will carry on and review the financial performance for the year and the quarter, talk a bit about our outlook for next year and then we’ll be happy to take any questions that you might have. As you’ve seen in the press release, 2011 was another record year for Silgan as we delivered adjusted earnings per diluted share of $2.63, up from a very strong prior year in which we delivered an adjusted $2.22 per diluted share.
As expected, 2011 benefited from significant investments made in the latter part of 2010 and throughout 2011 as we deployed capital towards acquisitions and organic investments, improved our debt capital structure, repurchased shares and initiated several restructuring plans. Among the milestones leading to the successes in 2011, we achieved record adjusted earnings per diluted share of $2.63, an increase of 18.5% over 2010 results; completed the acquisitions of Vogel & Noot and DGS in March 2011; and successfully integrated them along with IPEC operations acquired in the fourth quarter of 2010.
We enhanced our market positions in the US food can industry by acquiring the self-make steel can operations from Nestlé Purina PetCare. We continue to invest in each of our businesses and took advantage of tax incentives in 2011 through capital spending of $173 million, including approximately $24 million for plant expansions into Eastern European metal containers markets.
We commercialized the new food can manufacturing facility in the Krasnodar region of Russia, a key agricultural area. We upsized the company’s senior secured credit facility to $1.9 billion and amended it to provide greater flexibility, additional borrowing capacity and extended maturities.
We increased the cash dividend by approximately 5% to $0.44 per share. We generated $359.6 million of cash from operations, despite an increase in working capital to support acquisitions, start-up operations and ongoing operational flexibility.
And we authorized further repurchases of up to $300 million of the company’s common stock, of which $15.8 million was repurchased in 2011. In summary, we remain committed to our discipline of building our franchise market positions through prudent investment and believe this discipline will allow us to continue to create significant value for our shareholders.
As you can see in our outlook, we believe we are well positioned for 2012 as we expect to deliver mid-to-high single-digit earnings growth from the existing business and enjoy a very strong balance sheet with available capacity to further enhance shareholder returns as opportunities arise. With that, I’ll turn it over to Bob.
Robert Lewis
Thank you, Tony. Good morning, everyone.
There is no question 2011 was another strong year for Silgan as adjusted earnings per diluted share increased 18.5% to $2.63, representing a $0.41 per share improvement versus the prior year. The strength of our business franchises really came through as 2011 was one of the more tenuous years in terms of the overall business environment.
We experienced volatile economic conditions across the globe, a historically weak US fruit and vegetable pack, volatile pricing of commodities, and ongoing operational challenges in our plastic business. These headwinds were mitigated by solid operating performance in our metal containers and closures businesses, the benefits of newly acquired and integrated operations and share repurchases in late 2010.
On a consolidated basis, net sales for the year were $3.510 billion, an increase of $437.7 million or 14.3% from the prior year as each business delivered sales gains for the year. We converted these sales to net income for the year of $193.2 million compared to 2010 net income of $144.6 million.
Interest expense before loss on early extinguishment of debt increased $8.9 million, primarily due to higher average outstanding borrowings in 2011 as a result of acquisition financing, the November 2010 share repurchase activity, and the incremental term loan associated with the refinancing of our senior secured credit facility in July of 2011. Our 2011 effective tax rate of 33.4% is generally in line with expectations and 140 basis points lower than the prior year as 2010 was negatively impacted by the non-deductible portion of the charge for the re-measurement of net assets in Venezuela.
Full year capital expenditures totaled $173 million, which is significantly higher than the 2010 spend of $105.4 million and modestly higher than our forecasted level as we chose to compress capital spending in 2011 to maximize the deduction for capital put into service in the year. And we deployed $24 million to support expansion in the eastern markets, particularly the new plant commercialized in Russia.
Additionally, we paid a quarterly dividend of $0.11 per share in December. The total cash cost of the dividend was $7.7 million.
For the year, we returned $31.1 million to shareholders in the form of dividends and an additional $15.8 million in the form of share repurchases during the year. As outlined in Table C, we generated free cash flow of $152.9 million in 2011, ahead of the prior year free cash flow of $89.1 million.
The free cash flow measured at December 31 was below our expectations as we deployed higher working capital than originally planned. The largest component is in trade receivables, primarily due to the timing and magnitude of our contractual steel true-ups and a few customers who deferred certain payments at year-end.
These generally relate to customer-specific causes and do not change our assessment of the collectability. In addition, we chose to carry incremental inventory balances through year-end, both to provide flexibility as a precaution to our 2012 labor negotiations as we ramped up the new – and as we’ve ramped up the new facility in Russia.
I’ll now provide some specifics regarding the financial performance of the three businesses. The metal container business recorded net sales of $2.210 billion, an increase of $347.4 million versus the prior year.
This increase was primarily due to the inclusion of revenues from Vogel & Noot and the effect of the pass-through of higher raw material and other manufacturing costs, partly offset by lower unit volumes in the US as a result of a weaker fruit and vegetable pack in 2011 and the impact of the 2010 customer buy-ahead. Income from operations in the metal container business increased $23.7 million to $256.3 million for the year.
The increase in operating income was primarily a result of the inclusion of Vogel & Noot, improved manufacturing efficiencies and ongoing cost controls, and the benefit of the timing of certain contractual pass-throughs of changes in manufacturing costs, partly offset by lower volumes and higher rationalization costs. Net sales in the closures business increased $69 million to $687.8 million, driven primarily from the inclusion of net sales from IPEC and DGS, higher average selling prices due to the pass-through of higher raw material costs, and favorable foreign currency of $15.8 million.
The impact of lower unit volumes in the single-serve beverage market partly offset these gains. Income from operations in the closures business increased $17.3 million to $75.9 million in 2011, primarily due to the inclusion of IPEC and DGS, $7.4 million of lower rationalization costs, the benefits attributable to the 2010 workforce reduction in Germany, and a favorable comparison due to the $3.2 million charge recognized in 2010 for the re-measurement of net assets in Venezuela.
These benefits were partially offset by the negative impact from the lagged pass through of significant increases in polypropylene resin costs and lower unit volumes in the single-serve beverage market. Net sales in the plastic container business increased $21.3 million to $609.9 million in 2011 as a result of higher average selling prices due to the pass-through of higher raw material costs and a favorable foreign currency translation of $5.3 million.
These benefits were partly offset by volume declines and a less favorable mix of products sold. Operating income increased $2.3 million to $12.6 million for the year, largely as a result of $8.3 million lower rationalization cost and the benefit of the prior-year cost reduction initiatives largely within the corporate headquarters.
These benefits were largely offset by a decrease in unit volumes, a less favorable mix of products sold, and higher costs associated with resolving operational issues from the restructuring activities. For the fourth quarter, the company reported earnings per diluted share of $0.53 as compared to $0.22 in the prior-year quarter.
The fourth quarter of 2011 included pre-tax rationalization charges of $2.9 million. The fourth quarter of 2010 included charges for rationalization programs, loss on early extinguishment of debt, and costs attributable to acquisitions totaling $23.7 million or $0.23 per diluted share in total.
As a result, adjusted earnings per diluted share increased to $0.56 as compared to $0.45 in the fourth quarter of last year. Sales for the quarter increased $124.3 million versus the prior year, driven primarily by the inclusion of sales from acquired businesses and higher average selling prices from the pass-through of higher raw material and other manufacturing costs.
These gains were partially offset by the unfavorable impact of the 2010 customer buy-ahead in the containers and closures businesses, lower unit volumes and a less favorable mix of products sold in the plastic business and declining single-serve beverage volumes in the closures business. Income from operations for the fourth quarter of 2011 improved to $70 million as a result of lower rationalization charges, the inclusion of acquired businesses, improved manufacturing efficiencies in our metal container and closures businesses, and the favorable comparison in the plastic business from the lagged pass through of year-over-year resin price changes.
These benefits were partially offset by lower units and less favorable mix of products sold in the plastic container business, manufacturing inefficiencies as a result of ongoing rationalization challenges in the plastic business, and lower single-serve beverage units in the closures business. The tax rate for the quarter was 30.9% versus 25.4% in the prior-year quarter.
This change in rate is in line with our estimates as 2010 benefited from the timing of recognizing certain tax credits, which were renewed by Congress in late 2010. Turning now to our outlook for 2012, our current estimate of adjusted earnings per diluted share for 2012 is in the range of $2.80 to $2.90, which excludes the impact of rationalization charges.
The midpoint of these estimates represents a 6.5% increase in adjusted earnings per diluted share over the prior year. Reflected in our estimate for 2012 are the following: we’re forecasting further improvements in the metal container business as a result of anticipated volume improvement, continued manufacturing improvements and other benefits from capital investments and the annualized impact of Vogel & Noot and Nestlé Purina PetCare acquisitions.
The closures business is expected to benefit from returns on capital investment, further productivity gains and improved volumes in the base business. We’re expecting gradual improvement in the plastic container business driven by better manufacturing performance.
However, we are maintaining a cautious approach to ensure better execution. We expect continued benefit from cost reduction and productivity programs across each of our businesses.
And in addition, we expect interest expense to be flat versus 2011, although higher in the first quarter as higher average outstanding borrowings are offset by lower average cost of borrowings as we get a full-year benefit of the lower grid provided by the July 2011 refinancing of our senior secured credit facility. We currently expect our tax rates to be consistent with 2011, but do expect to pay significantly higher cash taxes as we cycle over the large accelerated depreciation deduction in 2011.
Also, we expect capital expenditures in 2012 to be in the range of $115 million to $135 million as a result of the incremental spending in 2011 to take advantage of the accelerated deduction is somewhat mitigated by capital to commercialize continued growth in the eastern markets. We’re also providing a first quarter 2012 estimate of adjusted earnings in the range of $0.42 to $0.47 per diluted share, also excluding rationalization charges.
Given our current outlook for 2012, we expect free cash flow to be in the range of $200 million to $250 million as planned working capital reductions and lower capital expenditures are partially offset by significantly higher cash taxes due to the elimination of the accelerated depreciation deduction, which benefited 2011. Given our free cash flow generation and the strength of our balance sheet, we’re well positioned to continue to reinvest and grow our business through acquisitions or other deployments of capital to drive value creation for our shareholders.
That concludes our prepared remarks. I’ll turn it over to Alicia who can provide directions for the Q&A session.
Operator
Thank you. (Operator Instructions) We’ll go first to Ghansham Panjabi from Baird.
Ghansham Panjabi – Robert W Baird
Hey, guys. Good morning.
Anthony Allott
Good morning Ghansham.
Robert Lewis
Good morning.
Ghansham Panjabi – Robert W Baird
Hey, on the North American metal food can business, obviously, a tough gear from a fruit and vegetable pack level in terms of industry volumes, but can you help us think about where you are in terms of asset utilization and maybe where the industry is also?
Anthony Allott
Yeah. I think if you look across the platform, and we’re probably pretty well in line with the industry, there’s not a lot of excess capacity in the market and I would think – particularly speaking to us, we intentionally do not have enough capacity to meet our peak demand and that’s kind of why you see us use either cash or working capital or a revolver to build working capital.
But I think if you look across the broader platform, I’d say we’re probably 90%, 90-plus-percent utilized across the entirety of the year.
Ghansham Panjabi – Robert W Baird
Okay.
Anthony Allott
I would say largely the rest of the industry is kind of in that same position.
Ghansham Panjabi – Robert W Baird
Okay. And then kind of thinking about free cash flow, obviously, decent amount of cash expected in 2012.
By our math, the net debt to EBITDA in 2012 will be comparable to where it was in 2010 when you decided to do the big share buyback. But is it fair to assume that barring any sort of acquisitions that that’s something to look forward to in 2012?
Anthony Allott
Yeah. Look, I think we’ve always said that we’re focused on deploying that capital to either grow the business or otherwise return value to shareholders.
I think we stand in the same position that our preference is to find M&A activity to deploy that cash. But clearly, in the absence of those opportunities, we’ll kind of move to other alternatives, including share repurchases like we did in 2010.
Ghansham Panjabi – Robert W Baird
Okay. Thanks so much.
Operator
We will go next to Chris Manuel with Wells Fargo.
Chris Manuel – Wells Fargo
Good morning, gentlemen.
Anthony Allott
Good morning, Chris.
Robert Lewis
Good morning, Chris.
Chris Manuel – Wells Fargo
Couple of questions for you. First, if we could talk about the plastic business for a minute, you indicated there were some rationalization challenges, some manufacturing issues through the course of the year.
Could you maybe give us a sense as to how much in 2011 you’d estimate that hit would be and how that phases as we go through 2012 if that starts to go over?
Adam Greenlee
Sure, Chris. It’s Adam.
We had talked on previous calls about one of the very complicated rationalizations that we had undertaken in 2010. And again, it was just a little more challenging that we had anticipated.
It’s been a bit distracting for the business and we’ve been working hard to overcome those challenges. We also talked about the additional costs that we’ve incurred as we’ve kind of been working to resolve all of those issues.
My guess, in 2011, it’s somewhere around 5-million-ish kind of number as far as the costs that we’ve incurred with the resolving the issues around that rationalization.
Chris Manuel – Wells Fargo
So that won’t continue into 2012, is that...?
Adam Greenlee
No, it continues. And we mentioned on the last call, it’s going to be a gradual unwinding of those costs.
First and foremost, we’re absolutely focused on meeting our customer requirements.
Chris Manuel – Wells Fargo
Yeah.
Adam Greenlee
And in order to do so, we have incurred some operating efficiencies and additional costs to be able to do that. We’re going to make sure that we’re meeting all of those requirements before we fully start to unwind the higher costs that we’re carrying.
So it’ll be a gradual effect over the course of the year.
Chris Manuel – Wells Fargo
Okay. That’s helpful.
And if I think about over the last few years, you have made some investments into this business. How would you characterize some of the returns you got from those investments?
Or is there a point at which, I hate to say throw in the towel, but maybe this business – I think it’s still earning a return in excess of......cost of capital and such, but at what point do you take a look at the business and maybe consider if it’s a better fit in a larger platform or somewhere else?
Anthony Allott
Chris, it’s Tony. First of all, I appreciate you hitting my – one of the key points, which is, it is still getting return above cost of capital in what was an extraordinarily tough year for the business.
I think we’ve been really clear that we’re not at all satisfied with where the business is right now, albeit at a 10% EBITDA margin level. We believe it’s capable of much more, and so that’s kind of where we’re now.
And so why the answer I’m about to give you is that we remain focused on plastics as part of the overall rigid packaging universe, and so we continue to believe it is a good area to be. There are absolutely parts of that business where we have defensible, competitively advantaged businesses and then there are parts of it where we don’t.
And so part of what we have to do is make sure that we keep the focus and the investment on the parts where we do have that and to get the cost structure in line. And so a big part of what we’re wrestling with right now is our effort to get the cost structure in line.
We took the biggest and toughest rationalization first because you want to go at the big opportunity first. And that’s essentially, as Adam said, it didn’t turn out well.
We do expect ultimately that we will get those savings. It’s critically important that we protect the important customers and the important markets where we do have competitive advantage.
But when we’re done here, what we see is still a plastics business, rigid plastic where we do have a focus area on sustainable competitive advantage and good returns on capital.
Chris Manuel – Wells Fargo
Okay. I’ve got a couple of questions, but I’ll jump back in the queue.
Thank you.
Anthony Allott
Okay, great. Thanks very much.
Operator
We’ll go next to George Staphos from Bank of America Merrill Lynch.
George Staphos – Bank of America/Merrill Lynch
Thanks. Hi, guys.
Anthony Allott
Good morning.
George Staphos – Bank of America/Merrill Lynch
I was going to pick up on Chris’ line of questioning and not necessarily get into the strategies for now, but just as we look at the investments that you’re making within plastics and your continued efforts improve the operations, could you give us a couple of mile markers from an operational standpoint that would make clear to us that the plan that you have in mind is in fact working. Obviously, if the plan works, margin will head higher, earnings will head higher, I’m not talking about that for this call.
Really what tactics or mile markers from an operational standpoint could we see that would suggest that the plan is coming together as you expect?
Anthony Allott
Well, it’s hard. The margins is, obviously, a big part of it.
You’re going to see profits come back. You’re going to see – again, this is assuming we are successful here.
Let me be clear. You would expect to see returns on net assets come back up again.
Even though we are saying they are above our cost of capital, the spread there is not what it has been in the past. It’s not what we think the business is capable of.
So that’s what you’ll begin to see. And then I think the second part, and it’s a good question, is you’ll then see us investing more.
I should point out that the capital investment in plastic for this year was less than last year. That is not a sign that we’re satisfied.
And one of the things we always say when on the road is the best way to judge how we’re feeling about something is how much do we invest in it, right? And so I think it’s pretty clear that we’re holding back a little bit on the investment in plastics.
If you look kind of the acquisition side, we’ve been holding back a little bit on acquisitions around it because we aren’t satisfied. And so I think the first one is you’ll see some recovery in the margins, you’ll see some recovery in returns and then you’ll see us talking more about – more capital acquisition and putting more back into the business.
George Staphos – Bank of America/Merrill Lynch
And, Tony, from an operation standpoint, I guess, perhaps we’re not on a forum where you could enumerate a couple of things that we would see happen that would, again, suggest that the margin improvement will, in fact, occur, et cetera?
Anthony Allott
Yeah, I think in the short-term, you’ll see us – you ought to expect to see us continue to rationalize plants. You ought to expect to see volumes flat to down a little bit because, look, there is a certain element of refocusing ourselves and culling.
I think the thing that I’ll be watching, I know Adam will be watching is, if we see a lot of volume decline over a period of time that is intended that will be more of a warning signal that we haven’t been able to satisfy our market.
Adam Greenlee
That’s right.
George Staphos – Bank of America/Merrill Lynch
Okay, that’s great, Tony. I appreciate that.
Two last ones and I’ll turn it over. You mentioned as you normally do in your year-end review, we appreciate all the detail for that matter in your press release in the fourth quarter, a number of the risk factors that you see – of the ones that you went through, which one or two are you most leery about as you look out to 2012?
And said differently, how confident are you – I realize there are no guarantees in life, certainly not in our business, but how confident are you in the low end of the guidance given the risk factors that you see ahead of you? Thanks.
Anthony Allott
Thanks, George. I’ll start and then Robert, Adam can fix what I say wrong.
But I think the – you know (inaudible) that we feel pretty good about the low end of the range. It would have to be, as we understand, at least, quite a few negative factors will have to pile up on us before we’d slip out of the low end.
So we feel pretty confident to answer that part of the question. I think the risks that I would raise for you that are on our mind, we mentioned caution around Eastern Europe or Eastern markets and around Europe in general, I guess, more importantly.
I think that’s one – and we don’t have a lot to tell you about that. It’s not as if we’re seeing issues.
It’s more just the obvious. That’s a market that looks like it’s going to be slower coming out and you don’t really know how Western Europe is going to do and it kind of reverberates through Eastern Europe and Eastern markets.
So that’s probably the biggest one. I’ll jump off for you guys.
Adam Greenlee
I think those two are clearly the top of mind issues for us. And I think certainly plastics is within our control to kind of – to get organized and move the ball forward.
The European economy is an unknown for all of us, right, that do business there. I think the good news is we saw volumes hold up pretty well as we came through the year in the Vogel & Noot business.
So there weren’t any real surprises around volume. So we’re kind of optimistic as you look forward, but there is – I guess, I’d say cautiously optimistic around the economy in general.
Anthony Allott
The last one, I would say, is kind of normal for us, but it’s important, is that we have to keep taking costs out of our business, out of our packages, and continue to deliver a competitively advantaged product to our customers. And so that continuous effort always exposes you to some risk if you don’t do a good job at it.
Our history has been very good there. The recent plastics examples, one case where that continuous effort to take costs out sometimes blows up on you.
So I think – which all boils down to just good execution and getting it right and I feel pretty good we’ll do it, but there’s always a certain inherent risk.
George Staphos – Bank of America/Merrill Lynch
Okay. Thanks.
I’ll turn it over.
Anthony Allott
Thanks, George.
Operator
We’ll go next to Phil Gresh with JP Morgan.
Phil Gresh – JP Morgan
Hi. Good morning.
Anthony Allott
Good morning, Phil.
Phil Gresh – JP Morgan
Just within the guidance, I was wondering if you could share what the impact is expected to be from the start-up costs and the inventory reduction. And I assume that’s probably more front-end loaded in the year in terms of the impact to 1Q?
Robert Lewis
Yeah. Well, certainly to the start-up cost, I assume you’re referring to the plant in Russia.
That’s probably got an early year, largely first quarter related impact, with probably something about $1 million of cost coming through. I think as to the broader inventory reduction, that will happen more cycled through the year and we shouldn’t at all be expecting that that all happens in Q1.
Phil Gresh – JP Morgan
Okay. And is there a way to quantify the impact that you expect on the free cash flow from the inventory reductions roughly?
Robert Lewis
Yeah. I think we’d be looking for something – and this is broadly working capital statement now, not just inventory, although a big chunk of it will be.
We’re probably looking at some $40 million or $50 million of working capital improvement on a year-over-year basis.
Phil Gresh – JP Morgan
Okay. And then on Vogel & Noot, what were the sales and accretion contributions this quarter?
I think you gave that last quarter.
Robert Lewis
Yeah. I don’t know if we got to the sales number or not, but the accretion for the quarter was minimal, was a little bit less than $0.01.
I’ll point out that the fourth quarter is seasonally a very low quarter for us. It’s largely pack oriented, but the good news is that it performed right in line with our acquisition expectations.
Anthony Allott
And I think we did actually in the last quarter – the sales were about $65 million.
Phil Gresh – JP Morgan
$65 million, okay. Okay.
And then what is your outlook for that business for next year in light of what you’re talking about with a little bit more caution there?
Robert Lewis
Yeah. I think as we were saying, the volumes held up pretty well through 2011.
I think we would be thinking that volumes will be flat to up......a little bit kind of as we start to get benefit from the newly commercialized facilities. So, again, we weren’t – we’re not expecting a lot from that business other than the year-over-year impact.
And then some modest growth as we get year-over-year impact being defined as having it for a full year as well as modest growth as those new facilities become commercial, and remember that they are pack related, so a lot of that will be back-end loaded as well. So I think the better picture is around the volume story and slight improvement because of the new commercialization.
Phil Gresh – JP Morgan
Okay. Is there a point at which you would consider slowing down the expansions there as a result of end market trends or is it not really in that territory at this stage?
Robert Lewis
I don’t think we’re seeing anything that would suggest we should do that. And for the ones that we’re underway on, we’re feeling pretty good about those markets.
One of the things that we’ve talked about is that those Eastern markets have real growth opportunities for us, particularly as those markets expand their processed food markets and many multinationals, start to come into those regions. Obviously, that contrasts what goes on in the rest of our markets that are more mature where our growth opportunities are more structured around growth and successes at our existing customers.
But I think we’ve been pretty clear that we like those opportunities in those markets and that we’ve not seen anything that would steer us away from those markets right now.
Anthony Allott
I think it will be more – remember that these are kind of – the way the Vogel & Noot team has traditionally done this, these are relatively small footprint starts and then they grow from there. And so it’s not a case where you’re putting in a huge amount of capacity.
You really have to be sensitive to how fast is the rate of growth in those developing markets. What it would impair is the rate at which those plants then grow.
But as Bob says, what we’re focused on is the growth of those markets and being a player in that. And as long as there’s growth, we would expect to continue to take our piece of that.
Phil Gresh – JP Morgan
Okay. Thanks a lot for the color.
Operator
We will go next to Chip Dillon from Vertical Research Partners.
Chip Dillon – Vertical Research Partners
Yes and good morning.
Anthony Allott
Hey, Chip.
Chip Dillon – Vertical Research Partners
Looking at the cash flow statement, I can’t really decide for kind of what the cash tax is. I know you expensed $96 million.
What were the actual cash taxes in 2011? And kind of where do you think the increase, I guess, in terms of the cash tax rate will be from 2011 to 2012?
Robert Lewis
Yeah. We got a really nice cash tax benefit in 2011 because of all the capital that we sort of compressed into the year and got the accelerated deduction.
So cash taxes were somewhere in the range of $40 million or $45 million for 2011. It will be significantly higher or maybe 2, 2.5 times that next year.
Or actually maybe even a touch more than that.
Chip Dillon – Vertical Research Partners
And will probably approximate the book tax rate?
Anthony Allott
Yeah. It certainly will be moving closer to that.
Chip Dillon – Vertical Research Partners
Got you. And then when you look at the M&A picture and, obviously, you don’t want to show your hand on the call too much, but can you just give us sort of a feel, if you had to, at this point, in early February, do you think the opportunities that might be there are more of the DGS size, in the $25 million range or something in the Vogel & Noot range or somewhere in between as you look at the world today?
Robert Lewis
I would say that the opportunities that we’re looking at are any and all of those, right? We don’t discriminate against size here.
We’ve proven that clearly small acquisitions can add to the bottom line pretty effectively. So when we’re out on the acquisition hunt and we’re turning over every rock, as you said, it’s hard to sit here in February and make a definitive prediction as to what gets done, but clearly there’s a lot of things out there for us to look at.
We’re sitting on a really strong balance sheet that would facilitate that. The credit markets are pretty good.
I don’t know what all that means for activity in terms of others coming into the market to be competitive there, but we’re pretty happy with the pipeline that we’ve got going on right now.
Chip Dillon – Vertical Research Partners
Got you.
Anthony Allott
At the risk of being a broken record, though, again, we will be very disciplined. I think we’ve said before, we probably will walk away from ten deals for every deal done.
So I don’t want to over-skew this conversation either way. We’re going to – each one is going to have to pass a whole bunch of gates before we’re going to move forward on.
Chip Dillon – Vertical Research Partners
Got you. And one last quick one, I might have misunderstood you, on the volume side, can you give us any kind of direction in terms of what the magnitude was of the decline in the fourth quarter?
And then I think you mentioned something about a 99% utilization rate. Does that mean you could run out of capacity – I believe you are talking about food can there, but correct me – if the volume gains tend to be at or above what you would anticipate for 2012?
Robert Lewis
Yeah. I could only wish we were running at 99% utilization.
No, I think what I said was that we were closer to 90%, 90-plus-percent is what I said.
Chip Dillon – Vertical Research Partners
Okay.
Robert Lewis
So fairly well utilized. But clearly, as we continue to deploy capital against efficiency opportunities, we can wring some capacity out of that, which has been the history.
So we’re not at all capacity constrained in our core markets. Again, back stopped by the fact that we’re not expecting huge growth in those markets either so we’re pretty comfortable with that.
Chip Dillon – Vertical Research Partners
Okay. Thank you.
Robert Lewis
Thanks, Chip.
Operator
We’ll go next to Mark Wilde with Deutsche Bank.
Mark Wilde – Deutsche Bank
Yeah. Tony, good morning.
Anthony Allott
Hi, Mark.
Robert Lewis
Hi.
Mark Wilde – Deutsche Bank
Just to start off here, I was struck as I went through the release last night about the number of times that Europe got mentioned in there and I just want to be clear about this, you’re not seeing in either the closures business or the metal container business over there, anything that you’d see as a real downdraft in the business?
Anthony Allott
That’s correct.
Mark Wilde – Deutsche Bank
Okay.
Anthony Allott
All we’re saying is us reading the newspaper same as everybody else and thinking that even though we’re in quite stable markets that tend to do quite well in down conditions, nonetheless you have to be a little worried, particularly as a western problem drifts east, but we have not seen that.
Mark Wilde – Deutsche Bank
Yeah. I was going to ask about that.
It seems like the kind of concerns around places like Hungary and Poland have increased over the last two or three months?
Anthony Allott
But again, this goes right to the value package that we have, right, is what we make is so important to the food stream, it’s relatively the lowest cost means of delivery. And so, as you know, kind of around the world, evidence suggests that down markets do not necessarily hit us all that harder or all that directly and that seems so far to be holding up.
Mark Wilde – Deutsche Bank
Okay. While at the same time, you’ve got a lot of liquidity right now.
I’m just curious. Does it appear to you that questions around Europe may be opening up more opportunities for you over there in terms of acquisitions at attractive values?
Anthony Allott
Sure. I think that’s possible.
I think you’ve got to be careful to think you’re smarter than everybody else, right? There’s a reason people are worried too.
So, yes, it makes the opportunities better. And, yes, we are watching Europe and see it as a good opportunity in the future.
But, of course, there are real issues driving all of this too and it’s kind of figuring that balance out and getting the right answer out of that.
Mark Wilde – Deutsche Bank
Okay. Now the second question, can you talk a little bit about these labor negotiations in 2012?
Anthony Allott
Sure. There’s not a lot to talk about.
Essentially, our contracts are pretty well spread out over year-by-year. So we don’t have particularly heavy years on this.
I would say 2012 is a little bit more than 2011 was, but not a lot. And so we aren’t trying to signal any more than that.
Sometimes, as you come into negotiations, there are things you can do to plan for that that aren’t inventory based. And sometimes you need to think about inventory as part of the levers you pull coming into it.
And as it happened this year, as we looked at what was coming up, we used inventory as one of the ways to plan and prepare for negotiations that were coming up. So I wouldn’t read any more into it.
It’s just – it was really just a working capital mode.
Mark Wilde – Deutsche Bank
Okay. The closures business was a little bit weaker than we expected.
Any thoughts there?
Robert Lewis
No, not necessarily. It’s the seasonality of that business.
Fourth quarter is typically a weaker quarter for that business. On a full year basis, they were down a little bit.
Again, if we go back to the single-serve beverage, not only in the US, but really around the world, the single-serve beverage was softer this year than anticipated. So it’s really nothing more than that.
We do anticipate that recovering to a large degree next year in 2012.
Mark Wilde – Deutsche Bank
Okay. And then the last question I had is, can you just update us on BPA?
As I understand it, we may be hearing something from the FDA here during the first quarter.
Adam Greenlee
Yeah, that’s right. The FDA is, I guess, required to release their ruling on March 31.
While I think the scientific evidence is pretty clear, you never know what type of political fire storm is going to affect the ruling here. And I think......industry expectation probably points toward a reaffirmation of the safe finding followed by being prudent to continue to study it.
Who knows if that’s really where they come down or not. I think we’ve been working for a number of years now to make sure that we’ve developed alternatives in an effort to prepare for what is otherwise a political decision or a consumer preference issue to be able to shift away from BPA if that’s what our customers and the ultimate consumer decide to do.
I think where we sit today, majority of our products do have workable solutions identified. And we’ll continue to work with our suppliers and our customers on an orderly transition for those products as well as continue to develop for products where we may not be exactly where often our customers want to be.
I think as to the FDA’s decision, I think it’s unlikely that there’ll be an immediate and outright ban, although it’s not impossible, and that would certainly tax the supply stream if that’s what happens. But if it’s a more modest move, clearly, there are some shelf life implications for some products.
And quite frankly, there is a little bit of cost implication to certain products as well. So I would say, generally, we feel like we’ve done a pretty good job of getting out in front of this and being pretty prepared, so I’m feeling reasonable about where that might come down.
Mark Wilde – Deutsche Bank
Okay. How much of the business is actually in cans that don’t have any BPA in the coatings at this point?
Do you have any sense?
Anthony Allott
I think its 5-ish-percent, something like that,
Mark Wilde – Deutsche Bank
So pretty small.
Anthony Allott
I think it’s about 10% now, but yeah.
Mark Wilde – Deutsche Bank
Okay. All right, sounds good.
I’ll turn it over.
Anthony Allott
Thanks, Mark.
Operator
We’ll go next to Al Kabili from Credit Suisse.
Al Kabili – Credit Suisse
Good morning. Thanks.
Anthony Allott
Yeah.
Al Kabili – Credit Suisse
Just a question, I guess, if you could help us breakout the volume growth that you saw year-on-year in each of the segments.
Robert Lewis
Yeah. I’ll start with containers.
Essentially, if you look at the full year for food cans, we’re down low single-digits which is kind of as you would expect, given the fact that we had a fourth quarter 2010 buy-ahead and then follow on that with a historically low pack or weak pack. So we’ve kind of finished right in line with where we would have expected.
If you look at the European business, it’s hard to give you exact comparison because they had closures in their business. They didn’t exactly have a perfect reporting as to cans year-over-year.
But the view is that that business is probably flat to down a little bit which is right in line with kind of where we expected it to be, given some of the things that we knew about coming into the acquisition. So that’s kind of the outlook for the historical look at food cans.
And I’ll let Adam speak to closures and plastics.
Adam Greenlee
Sure. Starting with closures, a little bit of mixed bag.
In Europe, we saw slight growth in our white cap business and in the US we were down slightly as well. So down just a couple of percent in the US business and the organic business.
You add in our two acquisitions of DGS and IPEC and the volume growth is substantial. If you go to...
Al Kabili – Credit Suisse
And Adam, is this for the full year or is this just for the quarter?
Adam Greenlee
Full year. Thank you.
Al Kabili – Credit Suisse
Okay. And I assume the fourth quarter is pretty similar, down low single-digits?
Adam Greenlee
It was, yes. Maybe I’ll change that answer for you on plastics.
So plastics, on a full year basis, was down low-single digits; and in the fourth quarter, actually, volume suffered, we were down low-double digits.
Al Kabili – Credit Suisse
Okay. And any driver on the down low-double digits in the plastics business in the fourth quarter?
Is this some of the operational issues you talked about or is there something else going on that drove that sequential deterioration in the growth rate?
Adam Greenlee
Sure. Actually, it was not the operational issues that we had.
It was much more about our customers and their managing their inventories. So they shutdown selling lines throughout the fourth quarter to help manage their own working capital.
And for whatever it’s worth from a trend standpoint, we’ve seen good volume here in January as we started 2012. So our January unit volume was actually greater than any month of the fourth quarter.
So we do think it was inventory management in the fourth quarter.
Al Kabili – Credit Suisse
Okay, terrific. Now, you also mentioned that mix had an impact on the plastic containers business.
But at the same time, I know you guys are also looking to sort of refocus more on where you have a competitive advantage. So can you just talk a little bit about the – I guess what you’re seeing there in terms of mix?
Why is the difference there?
Adam Greenlee
Sure. If you look at mix going back to 2011, really it was kind of a technology platform basis.
We shipped more products off of lower margin technology than we did higher margin technology. So we had an unfavorable mix from that standpoint in 2011.
As we talked about mix management going forward, that will be a process that we kind of employ throughout 2012. So we’re just at the outset of doing that and don’t anticipate immediate changes there.
It takes some time to work through that and that will be part of our process for 2012.
Al Kabili – Credit Suisse
Okay. As you do that, does that have implications for your volume?
Do you lose? Is that a headwind to volumes as you’re going through this process or can you favorably sort of improve mix and keep volumes holding up?
Adam Greenlee
Well, I think in a perfect world, you do the latter. But I think the reality of where we are is that it will impact volume negatively in 2012.
At the same time, we will be refocusing kind of on our core markets and really focusing on our growth on those core markets that we serve and we want to grow. And so, ideally, we would be bringing in new business to help offset the business that we’re exiting, but there likely will be a timing mismatch as we do that.
Anthony Allott
And that was – when I gave George’s answer on risk factors, that’s why I was trying to say there would be a meaningful decline in plastics volumes because I think they are – the net of what Adam just said is you may have some modest declines. We’re not necessarily counting on it, but you might have that.
If everything works great, you might even pull off some modest growth and rebalance yourself, but it’s a little hard to know the answer to that ahead of the time.
Adam Greenlee
Right.
Al Kabili – Credit Suisse
Okay. And I guess the final question along these lines is, I know you expect gradual improvement throughout the year in plastic containers.
It seems to me, though, there is going to be a little bit of a resin headwind at least in the first quarter or so. Do you still see improvement in the first quarter sequentially, given the resin headwinds that are out there?
I guess you won’t have the destocking impact, but help us kind of work through the moving parts there. Thanks.
Adam Greenlee
Correct. And there were increases in December and then now in January for certain resin.
So we are bringing headwinds into the year. Despite that, we are expecting improved performance in the business for the first quarter.
Anthony Allott
But the one thing we know for sure, though, this won’t be – it won’t be steady improvement every quarter. This business has always had a certain amount of up and down to it.
Resin is still – does buffet the business. And while we are in the process of trying to improve pass-through timing, et cetera, that is a slow process.
We’ve got long-term contracts. You’ve got to work through those.
So the one clear thing is there will be up and downs here. So the word gradual, we try to pick carefully to imply that it’s not going to happen quickly, but we were not trying to convey it would happen every quarter a little bit better than last one because it just won’t be that way.
Al Kabili – Credit Suisse
Okay. All right, thank you.
Good luck.
Anthony Allott
Thanks, Al.
Operator
We’ll go next to Usha Guntupalli from Goldman Sachs.
Usha Guntupalli – Goldman Sachs
Good morning.
Anthony Allott
Good morning.
Usha Guntupalli – Goldman Sachs
I have a quick question. Could you provide any early read on January can volumes to the extent possible?
Robert Lewis
Yeah. The early read is that volumes in the quarter will be up and that’s largely attributable to the buy-ahead that we experienced in the fourth quarter of 2010, negatively impacting volumes in the first quarter of 2011.
Usha Guntupalli – Goldman Sachs
Okay. And then...
Robert Lewis
Add on to that that we also – we did the Alpo acquisition from Nestlé PetCare in the later part of the year. So that will also benefit the first quarter as well.
Anthony Allott
And there’s nothing about January that leaves us to change that view right now.
Robert Lewis
Correct.
Usha Guntupalli – Goldman Sachs
Got it. Thanks.
And a quick follow-up, could you also comment on your metal and resin cost outlook that’s built into your 2012 EPS guidance?
Robert Lewis
Sure. I’ll speak to metal.
As we came through 2011, we saw high single-digit inflation in the US markets, maybe a little bit more in the European......markets. As we fast forward to 2012, you know there is a lot of posturing and negotiating that’s going on right now about where steel price is going to land for the year.
We’re kind of right in the throes of that. So it’s kind of too early to tell exactly where it’s going to be.
I think you do expect that we’ll see continued inflation in the market. And in this case, the US will see a little more inflation than Europe does, largely because Europe has taken more inflation over the last couple of years.
So I would say in the next 30 days to 45 days, we ought to be through those negotiations, but that’s kind of the early look, is that we’ll see continued inflation.
Adam Greenlee
And jumping over to resin, again, I mentioned that we’re bringing some headwinds from 2011 into the early part of the year. The expectation is that resin won’t be as volatile as it’s been in the past and there is a chance for some stability in the risen market.
So we’re taking a cautious approach as we look at resin going forward and, again, are planning for more stability in the resin markets this year than prior.
Usha Guntupalli – Goldman Sachs
Appreciate the color. Thank you.
Anthony Allott
Thank you.
Operator
We’ll go next to Christopher Butler from Sidoti & Company.
Christopher Butler – Sidoti & Company
Hi. Good morning, guys.
Anthony Allott
Hi, Chris.
Christopher Butler – Sidoti & Company
Just a clarification on something Adam said earlier with about $5 million of added cost in 2011 on the plastics business. You’ve got about $4 million of restructuring, so is that $4 million plus $1 million of kind of miscellaneous disruption, is that the way to read that?
Adam Greenlee
No, it’s not. Those are actually separate items.
Christopher Butler – Sidoti & Company
I appreciate the clarification. And shifting gears, with concerns in Europe and the buildup of cash, are you where you want to be there or are we going to see more of a cash build just to protect against whatever may come?
Robert Lewis
No. I think what you’re seeing in our cash position at year-end is essentially enough cash on the balance sheet to satisfy our peak working capital demands.
And we kind of consciously made the decision to hold the cash as we came through year-end as opposed to paying down debt, largely about around just economic crisis and wanting to make sure that we could facilitate that build for the peak period. So I don’t think we’ll be looking to build further cash from where we are.
I think, quite frankly, we’ll be deploying what we have through the early to mid-part of the year.
Christopher Butler – Sidoti & Company
And just finally, on the acquisition front, can you touch on valuations and of prospective targets and how they may have changed since your last conference call?
Robert Lewis
Yeah. I would say they’re probably – at least from our perspective, in terms of the discipline that we deploy, there is probably not a lot of change going on there.
Who knows what people will do with credit markets doing what they’re doing right now. I think our focus as always is on the cash on cash return for the acquisition opportunity.
So no real change from where we sit today.
Christopher Butler – Sidoti & Company
I appreciate your time.
Anthony Allott
Thanks, Chris.
Operator
We’ll go next to Robert Kirkpatrick from Cardinal Capital.
Rob Kirkpatrick – Cardinal Capital
Just a quick one for Bob. You talked about cash taxes in 2012 heading up substantially, kind of approaching – or somewhere around your book tax level.
What about as you look well beyond that? Should you be able to have a cash tax rate that is less than your book tax rate or has something structurally changed?
Robert Lewis
Well, I think what we’ve historically been able to do is we’ve had some NOLs that we’ve burned through. We’re essentially through at least the majority of them, if not all of them at this point.
So I think as the business exists today, our cash tax will largely be pretty well in line with our book tax on a go forward basis.
Anthony Allott
What drove that is, obviously, capital. One of the big things that gives you timing difference is more capital expenditure.
When you take it all as a one-time write-off, you lose that benefit going forward, right? So we took a one-time benefit that’s going to cost us as we go forward here a bit.
The other one is acquisitions drove that quite a bit because you then – we recapitalized the depreciation base in some cases. And you might change your geographic, which would change both your book rate and, therefore, your cash rate.
Rob Kirkpatrick – Cardinal Capital
Great. Thank you so much.
Operator
We’ll go next to George Staphos from Bank of America Merrill Lynch.
George Staphos – Bank of America/Merrill Lynch
Thanks. Hi, guys.
One question, just as a detail, did you mention what your food can volumes were in the fourth quarter on a percentage basis? Earlier in the question, I think you were referring to your total year volumes, but if you could just clarify that.
Robert Lewis
Yeah, we were up slightly in the fourth quarter and, again, down low single digits for the full year.
Anthony Allott
(Inaudible) less than 1%, so really slightly.
George Staphos – Bank of America/Merrill Lynch
Okay. Thanks, Tony.
Thanks, Bob. Now, as we think about end markets, certainly there has been discussion in recent years about the metal can losing share in some application.
Are there any that you view as particularly troubling right now? And similarly, are there any markets where you think you have some opportunity to regain share or gain new share through the metal can.
Anthony Allott
Sure. This won’t sound particularly new to you, but the places where we feel most comfortable is mostly what we do, which is where there is heavily invested processing infrastructure.
And that’s mostly what we do, is heavy continuous (Inaudible) areas. That’s the bulk.
The fringe that you deal with are, if it’s a dry product, for instance, that will need to go through that, and we’ve seen most of that conversion, there are some areas where you get, like nutritionals, where we’ve seen that plastic – the reclosability is so important there that’s even worth the investment towards new technologies in that case. And so we’ve seen that to a pretty large degree.
There’d still be a little bit more risk there. But it’s not a huge part of what we do.
And then, yes, on the other side, there are other areas that you remember that one great thing about the can is it is – it’s so tamper proof, right? So anything that really worries about tamper, you think about some baby products, et cetera, it is logical for them to consider at least moving back towards metal and we have seen some cases of that.
But all of this is small, really small movements in terms of the relative percentages of the business either way on that.
George Staphos – Bank of America/Merrill Lynch
Okay. Tony, is there a way to, with your existing technology in tin ends to come up with a reclosability feature?
Obviously, you had the open ends, but do you have any kind of technology or does the industry have technology that would allow for reclosability on metal cans if, in fact, it would be applicable or useful, I should say?
Anthony Allott
The answer is yes that there is some technology and there is opportunity to enhance that technology. And so the idea of reclosable metal package is it works.
We can demonstrate it. You do get into a bit of cop point.
Now, you’re talking about a much more cop added to the package. So you’re going to have to probably have a little bit more of a reason to do it or kind of a specialized product you’re putting them into.
But the answer is yes. That is an opportunity going forward.
I don’t know how big, but it’s there.
George Staphos – Bank of America/Merrill Lynch
Okay. Last question, I’ll turn it over.
If you look at standard size can, and I realize that’s a broad statement, and I compared it to an equivalent package that had a white top closure, how much BPA is in that white top closure typically and is it fairly comparable to that which might be within the can on the coating side?
Adam Greenlee
Essentially the coatings are very similar, George, so it would be comparable to what we see in the can.
George Staphos – Bank of America/Merrill Lynch
Interesting.
Anthony Allott
But less overall exposure.
Adam Greenlee
Because of the surface area.
Anthony Allott
Yeah, less surface area.
Adam Greenlee
Yeah, less surface area exposure, but the coating itself would have the same type of BPA that the can does.
George Staphos – Bank of America/Merrill Lynch
Well, the answer I was getting at, if you adjust it for a surface area, and again, I haven’t given you any dimensions or specs, so I know it’s hard to do. Is it 2x (inaudible) that would be on a white top closure, 5x that sort of precision is what I’m looking for.
Anthony Allott
The problem we have here, George, is that all of this, we are measuring in levels that mankind could never measure them before. It’s part of the craziness of the whole debate.
So it’s hard for us to tell you exactly because you’d have to go do a bunch of sampling studies which always seems to get very disparate answers to it. So our belief is that it’s quite a bit less.
Is it half or et cetera, I don’t know. But the exposure is less.
All of this is very, very low exposure.
George Staphos – Bank of America/Merrill Lynch
Okay.
Anthony Allott
Which is why, there’s this raging scientific debate.
George Staphos – Bank of America/Merrill Lynch
Well, we look forward to you trailblazing as always, Tony.
Anthony Allott
Somewhere.
George Staphos – Bank of America/Merrill Lynch
Good luck in the quarter. Thanks.
Anthony Allott
Thanks, George.
Operator
We’ll go next to Chip Dillon from Vertical Research Partners.
Chip Dillon – Vertical Research Partners
Yes. And one more question.
I am sorry to beat a dead horse on BPA. But, Tony, I think you all have kind of suggested that maybe as much as 95% of your cans have some involvement here.
And so if we see the EPA – I’m sorry, the FDA come out with what’s......maybe viewed as an extreme ruling against use of this. I guess two questions.
Can you sort of give us a range of what you think it could do to your volumes? In other words, you mentioned that some products may move to – costs would go so up, so high to continue using cans, maybe you would lose that business, is that possible?
And I guess, more importantly, more importantly I just also would ask, if it is a negative ruling, can the industry do anything about it? Is there court remedies or other strategies you can take to try to forestall that?
Anthony Allott
Well, again, I think the – let me deal with the most important point here is, while there is some cost difference, we’re talking about relatively very small amounts of costs to the package and its competitive position versus other alternative packages. So I would not characterize it at all as being something that would be a very significant change to the competitiveness of the package.
But it would be more money. It could be shorter shelf life.
We think that would be for some indeterminate period of time while we can do more studies, maybe enhance the coating a little bit more over time. So it is manageable.
I think the point we’re trying to make is, but it does come at a cost to the consumer and it does come at a cost to society if you have less shelf life and more food waste, et cetera. And so it kind of leads to your last point, which is, I wish individually that you could have this kind of a dialog and say, this package takes so much waste off and then, therefore, is so good from a sustainability perspective, carbon footprint, et cetera, it brings so much and then we have this issue that laboratory – good laboratory practice studies don’t find a problem with, why are we going down this path.
But the final answer is politics and consumer sentiment. And at the end of the day, I don’t think there is a court that will ultimately help us deal with that.
So if the FDA comes out with something, that will just further the consumer impression that there is a problem here and our view is we’ve got to protect the can. And if people think there’s a problem, we’ve got to move it.
Chip Dillon – Vertical Research Partners
And maybe a silver lining, if you could view it this way, is that the inconvenience to the consumer might obviously create a backlash, but also if you have a shorter shelf life. If you’re like our family, you sometimes forget what you have in the cupboard, you’re going to be ending up buy more products and that could actually boost your volumes, which isn’t a good reason to see that happen, but could nonetheless happen.
Anthony Allott
I guess that could happen. You’re right.
I’m not sure it’s necessarily a good outcome because they might not get rid of it either and consume it when they shouldn’t. But anyhow, (inaudible) just the quantity of time on this call shows increasing awareness, et cetera, which kind of reinforces our view that as an industry we probably need to move on in due course here.
Chip Dillon – Vertical Research Partners
Thank you.
Anthony Allott
Yeah.
Operator
We’ll go next Chris Manuel from Wells Fargo.
Chris Manuel – Wells Fargo
Good afternoon at this point. Just a couple very quick tie-up questions.
Did you tell us what D&A was going to be for 2012?
Robert Lewis
We didn’t. It’s up.
I want to say it’s somewhere in the neighborhood of $165 million.
Chris Manuel – Wells Fargo
Okay. And if you were to take a stab today at what maintenance CapEx levels will be, you used to always be in the neighborhood $65 million, but you’ve added a number of components on to the business.
What was your estimate on maintenance CapEx is?
Robert Lewis
I don’t know. Your $65 million seems a little bit high for the historical business.
I would say that the $65 million probably covers what we have done today with the incremental acquisitions.
Chris Manuel – Wells Fargo
Okay. So when I think – the last question I have is, when I think about you guys normally getting a pretty healthy return on capital beyond maintenance and I think about what’s done here in 2011, that would normally imply a pretty nice pickup in earnings over the next few years.
Could you maybe tell us what – if you could put them in the large buckets, however is applicable, to where you spent the capital in 2011 and maybe what types of returns you would envision from that project?
Robert Lewis
Sure. If you look at the – at least the excess capital over normal spend in 2011, they kind of happened broadly across the businesses with the one exception of plastics where we deployed less capital on a year-over-year basis.
If you look at where the majority of that excess capital got spent, it got spent in two areas, both in the can business, largely in the European business to facilitate the build-out of the new facilities. And so that – we’ll start to see those returns yield through.
The one in Russia in the later part of this year. The other one is going to coming up in late 2012 and 2013 being commercialized.
So we won’t start to see those returns until late 2013. If you look at the additional increment, it was in the US food can business and a large portion of that was oriented toward easy open ends and we would expect to start seeing that yield benefits as early as 2012.
So all of those were good return projects kind of in line with our historical benchmarks. We didn’t drop our parameters just because we were looking to accelerate the tax deductions.
These were just all around good projects that we accelerated.
Chris Manuel – Wells Fargo
As I would expect. Was there any spent in closures as well?
Robert Lewis
There was.
Anthony Allott
Is there a spend or is there increased spend? There is...
Chris Manuel – Wells Fargo
Well, I think if I use this $65 million benchmark and you spent $173 million last year, let’s just call $90 million of return capital. And to kind of put it in big buckets, if two-thirds of that went towards metal, you’ve kind of ran through those, I’m guessing there were some into the closures and, as you mentioned, you under-weighted additional investment into plastics.
Am I characterizing that fairly?
Robert Lewis
Yeah.
Chris Manuel – Wells Fargo
Okay. That’s what I was looking for.
Thank you, gentlemen.
Anthony Allott
Great. Thanks, Chris.
Alicia, do you we have anybody else?
Operator
At this time, we have no further questions, sir.
Anthony Allott
Great. Thank you very much.
For those, that are still on the line, thank you for your time and we look forward to talking to you after the end of the first quarter.
Operator
That does conclude today’s conference. We thank you for your participation.