O-I Glass (OI) 29 Apr 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the O-I First Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is bring recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. of President Vice Manuel, Investor Relations. Chris ahead go sir. Please

to Thank quarter first and everyone you, welcome O-I earnings Glass JP call.

Today key Our discussion review and CFO. CEO; Andres and Lopez, will today will financial be John led outlook of Haudrich, results. provide developments and business by our our we a provide our

questions. Following your prepared remarks, we’ll take

materials. our Please Safe Harbor those comments materials call available are included the Presentation non-GAAP on the measures disclosure review of use for this website of financial at o-i.com. and in

of representing free be measures flow, appendix press earnings net Some we’re representative such operations. reconciliation as items in segment to and and of this release presentation. non-GAAP financials relate to not A certain of the today profit management in excludes adjusted cash debt, the can GAAP found our considers ongoing items that to earnings, which operating non-GAAP

over to like the turn I’d Now Andres. call to

Thanks, acknowledging people and Chris. Glass. these thank like O-I and people of many to would to extraordinary for the communities. in interest during times all support you your Good of so morning millions start across hard by I dedication work

coming for pandemic to The XX,XXX pain has created people for each hardship every support employees we employees the beverage our who true and O-I the of see team evidence during same essentially of products, and The every all to day is and at day challenging safety have other. are the these top work While many, significant together hard the our help make food priority. health we times. is sure of

COVID-XX mitigate some we highlight the and perspective touch are our business steps quarter, with and you aspects is taking John key on will of call, today's to impact. I having On on that the Impact the provide on

consistent the night last and XXXX, quarter of with the for provided back X. was first we of business seen, April share on our we you've in reported guidance line with update cents which earnings per $X.XX adjusted As

sales a and our higher progress expected performed price initiatives. well FX has safety, benefited solid in compensated our and turnaround benefits Earnings and strong on standpoint, mix These tax an on lower cost. reflecting quality and operating favorable efficiency, improvements operational business from volume slightly favorable performance, From a rate. with than for

executing we eight is includes playing important the viewed a complexity the food factories been and success largely impact beverage by turnaround us In in the improved This our operate to early manufacturing chain. affected containers enabling The performance the to role glass has portfolios of the at critical last in value essential pandemic. the which countries year. as navigate

reflecting markets on-premise taken a as at the chain environment. shift by remain the how as from to challenging virus to combat channel Yet the to worked together and food disrupted, have highly suppliers keep patterns. I've reasonably rapid beverage been have value impressed consumption actions a customers to and home despite well across governments the serve

will be as we navigate XXXX drivers. long-term on focus creation both value COVID-XX and a act balancing

advance We impact asbestos the in a time, we our turnaround legacy to liabilities. number and the of initiatives, of are a a cost to measures taking our pandemic. resolution of At including reduction financial continue mitigate number programs, same pursuing key of preemptive MAGMA the

not we providing guidance With second for earnings or quarter are uncertainty, the the significant full-year.

principles, reduction guiding a that and measures. implementing key maximizing we're cash some provide free cost using liquidity, flow will we However, including proactively maintaining strong effective

all has a stable end market spirits. O-I and food portfolio noted wine NABs, food, with lives. balanced COVID-XX categories, market our disrupted beverage Slide on Indeed, beer, serves a As of X, and of including

continue people to drink. eat However, and

from we pandemic the more do significant in a While time. we expect volatility anticipate the impact short-term, over modest

the XXXX. the consumption downturn. That through in spanning aggregate a worst X-year recession, about of a Americas to great period and total of X% declined back glass Europe XXXX Looking and represents an the

increased other this Asia the during hand, On in consumption period. Pacific

every course, unique. situation Of is

let So ways. an two situation. Slide is and impacting presently X. color It business fluid on is more on COVID-XX in COVID-XX past impressive important experiences our how has me provide deferred from

has home all witnessed bars a to stocked consumption rapid pandemic grocery on-premise pantry believe store at as shift we I at First, from patterns. in loading closed. have up the triggered the the restaurants and consumers when surge

meaning As XX% purchases mid-March. and in XX% in illustrated end of and the grocery like. restaurants consumed the on store about our level has key the glass right of to estimate skyrocketed hand chart, We for is markets on-premise, bars

to how consumption to from long know is home. trends on benefiting Yet consumed and is last at patterns business, it effect business. the are we our those higher the our the However, are XX% It majority, home of will will net patterns. about how remain. significantly sustainable impacting also XX%, Certainly on-premise early closures too those

Unprecedented economics a The than supply least the operating widespread At the regulatory the demand. product. of our change virus second aspects unique has aspect pandemic economics required stop simply of combat of and stoppage of in regardless to been the in demand. of more actually and the to consumer in impactful have many of markets are instead many actions the economies we under short-term,

manufacturer in the has the been largely in containers of viewed essential countries which we glass operate. Fortunately, as

high certain transportation not supply and However, chain by some still to deemed absenteeism we we are essential. that serve or are have secure geographies, use In categories issues. in cases impacted ability end issues rather been the some

of helped Mexico about areas the Customers or have some in deemed endured adjusted markets. like to essential. In line similar our And markets challenges has as not and have requirements capacity many countries, well. filling been that we Andean beer curtail those in it half have had

and down anticipate of the shipments down impact include Mexico of to we the will requirements second be stoppage mid the Andeans. March, in in teens, high half which X% Overall, April temporary were about and our

Mexico now weeks XX% in over the Andeans. excluding of but Looking like month, than of improved second and requirements last by at April, demand trend was impacted two temporary stoppage the was first the April. half of the sharply during half down the demand the Lower the month, markets less

inventory rates believe not corrections. will demand supply of patents We well disruption given the level true the these as as market and chain reflect

reopen. levels shipments More normalize markets provided slide. is on this after expect color will We regional

reason solid As we foundation a contend times. significant these market volatility, to navigate operating is, strong performance with provides

now I'm Slide Six. as

First, top is priority. our the employees health and our safety of

protective not gain are measures the operating aligned taking with We improve to our COVID-XX. and of actions operations as impacted WHO have effective CDC. The to all XXXX in implemented begun drive we by performance traction

self-sufficiency. Our higher of at operating levels

basis, our factories that progress reflects year-over-year at costs initiative. $,XX million, stages a good eight improved of On the earliest very focused which operating for

while are focused a to cost efforts on our in discuss augmenting on opportunities even transformation mix will I As moment, SGNA pandemic. effort focused revenue

speed downtime the to moving and instead in the -- optimizing our furnaces with curtailment worst in year. be we're to we reflecting to of of handful quarter concentrate machine the actively would mitigate Importantly, down, widespread impact line of We are Naturally, dislocations the supply anticipate be we and full of half improve tried as to agility a run and demand. trajectory the downtime. to and production second of second the network

to Slide this manage some And through advanced to long-term well the we're create as actions taking of Less share pandemic would value. as X. I

position. we a of will a As emerge believe efforts, we stronger these in result

cash using we COVID-XX free are flow navigate we're on maximizing and debt. our we highly maintaining liquidity, As focused

as are transformation layers. approximate XXXX their inventory we We -- cost working continue our we I or mentioned, million, part will are manage lower. with And demand to CapEx initiatives. our capital we As million to program reduction supply to expect now aligning as quickly all avoid $XXX yield expanding $XXX expensive SG&A of

and also XX% program pay up to of implementing a As to certain element, will The salaried including a employees' fees goals. repayments XXXX. Board officers, to refer XX%, executive certain temporarily future certain the are CEO we to as with company proactive subject salaries up for temporality base during by reduce achieving me

and As we also repurchases. cash on suspending share dividend our we reduction, and are pausing focus debt

efforts these will While these the we through periodically, expect continue reviewed measures status be will XXXX. of

the same as structure we to for initiatives remain well shareholders. to includes At making. our initiatives changes decision create efforts. continue simplify Likewise, will in turnaround value and as optimization committed business This asset organizational with our our long-term the to key time, expedite we

remains asbestos We legacy will resolution seek to final MAGMA. the on XX as to advance Para reorganization Chapter our track a liabilities. continue we Furthermore,

Our ongoing. review strategic is portfolio

of resolution by that mid-year process been previously stabilize. we to until ANZ complete halted hoped the markets has the However,

despite continue to by will We pandemic. Similarly, divestiture still performed months of believe components deliver well end the the the of some program of proceeds run the tactical recent the will in $XXX XXXX. $XXX operation, although million which has we million to program slowed, have

With that, I'll it John matters. financing to over to detail turn

good Andres now and everyone. morning, Thank X. on Slide I'm you,

incremental volume $X.XX. despite FX Andres range were which This share, of higher-than-expected pandemic $X.XX by in achieved COVID-XX. tax additional of two our a headwinds We of reflecting initial by was and to was results the March. the first primarily weeks per As estimate quarter sales $X.XX quarter, X.X% within guidance earnings of and pressure, in our $X.XX mentioned, the rate $X.XX last impact the first impacted

items. operating was of Let elevated especially and FX the me inflation, prices prior million, which in attributable America. due selling right. than was in cost through Segment earnings $XXX induced Latin temporary more profit on reconciliation all to the FX you million Higher which Nearly $XXX walk was compared to our this inflation, offset year. to change

attributed to I million was as was mix fully $XX mentioned. and Volume a headwind, which the just pandemic,

reflected and cost contribution costs as site see, favorable Gironcourt our the despite can well initiatives as commission various by maintenance million, in of $X capacity activity. to benefited you As new turnaround or brownfield operating earnings other

regulatory Mexico. was Bottom higher reflected reported expense FX Non-operating tax impact items recent interest a temporary activities earnings lower included due the operating including certain refinancing items. line, changes, of and COVID-XX, and mostly strong, rate, while core to unfavorable following performance

little down Keep volumes. X, a mind results Americas, impact million color that $XXX currency sales lower production profit neutral about $X $X regional to share in Slide was due the about during basis. Moving let to In a pandemic million, the performance and quarter. me million the on on

sales benefit the mix turnaround good the region most and America, than progress was significant by in complexity Overall, The the offset operating price net with was by lower last volume. increased especially which North year. made of more impacted unfavorable initiatives, performance

While pricing periods. in inflation LatAm, This for FX the which as America usually for higher is incurred unusual recovers expected, induced price and mix significant not geography. a resulting Latin net subsequent in through lower improved inflation, price

reflected North This Fanal, X%. was down Sales which more X% American benefit the continued about by was from decline in the beer of year. impact COVID-XX volumes the and of offset off which prior about than were category, the Nueva the

pandemic. Higher adjusting operating conjunction mixed an down impact Europe's prior from strong to the estimated improvement million was FX were for temporary $X in profit reflected region's million, year, COVID-XX. X%, the with and was volumes up related strategy. slightly price the which primarily from earnings items $XX despite realization Sales

progress good very made Europe with its Americas, turnaround the Like initiatives.

were costs elevated the activities. construction operating However, furnace Gironcourt of and other maintenance brownfield new due to

profit Asia adjusted with Pacific's a essentially operating was basis, which $X results COVID-XX the prior impacted was while FX $X million. flat negatively on million, year

did improved region benefited significant prices Shipments performance downtime in region, improved than cost modestly were increase asset Likewise, in prior markets. all the maintenance While in gains. inflation higher key and X% up these year. the related offset more following the from operating

the cash shift and sheet. now XX. flows Let's I'm balance to on Slide

part the first for seasonally the the business, source of of the use a is half know, of the you be of to cash cash year. which a in strong year second reverses As

to of favorably due Most suspending prior more given and pandemic. million than Our favorable cash $XXX related the million. secure capital, factoring year cash, payments was of AR to a including $XXX use to quarter asbestos the which improvement the compares by was higher working first

Factoring year to were prior year March $XXX the compared higher this levels of period. in million

the on prior net lower funding see chart, Chapter filing. can favorably Paddock the year, the XX with debt also you prior As despite to compares

capital derisk year, Over strategy and we shareholders. the return set sheet, of a past value allocation fund consistent the balance have to shared our priorities;

allocation are on we capital as shown COVID-XX, Given the chart. our priorities temporarily changing

hand. we our $XXX at which annual cash liquidity, will $X.X quarter, of nearly First, or million stood billion on the first maintain sales of including strong end XX% at the of

until maturity after Fortunately, due until maturities relatively and isn't is due the small, early XXXX, that have XXXX. next of we March which no

ratio the at the X.Xx From our covenant quarter, well a BCA of Xx our leverage covenant first below ceiling. was bank perspective, end

So we have headroom. good

seek we focus As with Andres means with demand, management. working balance capital significant discussed, we This supply will prioritize cash generation. on to

cycle, maintenance be or through on expenditures, to maintain $XXX estimate will and We down focus focus our as so to means now lower debt will reducing which intend financial that capital a will reduce substantially million activities. we We flexibility to value transfer this shareholders. we on

share As a suspending result, and program. dividend are pausing we our our repurchase

proceeding legacy as XX liabilities process Paddock our continue manage is expected. and to Chapter We will the

you As imagine, our the can pandemic. it's challenging strategic portfolio amid advance to

to the tactical of has been at time divestiture for As being, Andres our a mentioned, the but business program ANZ slower continues halted while pace. for review alternatives strategic advance,

Slide to and principles. and discuss move outlook Let's guiding our business XX

COVID-XX, uncertainties significant and providing and not the Given cash volatility flow earnings specific guidance. we due to are

We future stability. guidance in when the will there consider market reinstating more is

best providing of our guidelines for how run over However, we the on estimates our trends are demand we operations the year. balance will and

to be the most the in quarter And the economies, be governments First, open a to slowly period challenging April quarter their second period. of will we as expect starting impacted many look up May. very

that shipments X% be to a could For around the year, year-over-year XX% we basis. down currently believe on

as this get perspective so could a be Of course, we underlying subject range. of limes fluid, the outside situation understanding actual to remains better This change is trends.

agility we with to principles key the also are work following to to We as we pandemic. respond share the want that

strong preserve to and levels. free $X.XX quarter. Furthermore, This prior we will liquidity this cash each will liquidity so will that company with year flow at maximize manage our business balancing inventories above our remain we intend supply we below demand our at/or or year. maintain billion First, to to run includes

support measures free generation. will also control flow Cost cash

Overall, net debt expect on we which end reduction focused strong cost cash the below position XXXX. our stringent maximizing was very liquidity, Finally, keep and billion, at free flow, debt will controls. at/or maintaining be $X of to we

Now back to Andres.

John. you, Thank

with Let me wrap a comments. up this few

quarter on in And very factory first I'm pleased The progress our turnaround with initiatives, solid. and the performance. the particular, was

efficiency our levels March a over fact, and In achieved monthly best productivity year. in we during

While with are challenges costs to and we taking improve measures reduce cash the contend during we pandemic, preemptive generation. many

steps beyond. will time, XXXX enable taking creating focused in key same the to the aimed a we're remain that in long-term O-I us and position we programs At benefit on several will I'm at emerge today stronger value. confident

In make the some hand been examples glass to customers in A troubling Finally, of of America I these would moment you page. spirits contribute shown this to a we held ways about let have of to times. take to like communities bottles. the in North have and are we APAC, our couple sustainable sanitizers on able know our to transition both

for donated to a had the PPE. the group found have Perrysburg-based capabilities, shields X Northwest of that in manufacture RoBEX, to make innovation we in with utilize local Additionally, able type. Ohio, XD presentation. was partnered housing printing was their An earlier some engineering industrial O-I company, COVID to to our frames for face example Slide in been hospitals in

We are proud of these accomplishments.

your Let me in pass glass. interest and O-I thank you for

We will now questions. welcome your

ready for Okay. JP, we're I some questions. think

first Yes, sir. [Operator America. of from comes George Instructions] the line of Bank Your of question Staphos

is line now open. Your

morning. Good

Good morning.

the your well, Lots all as on going thanks for for and Andres. Thanks COVID on doing details.

thinking decline hood go anything then, the year, if non-returnable? trends guess that geographic different of higher the versus many your of and what how reduction I I but could for about to or seeing sample my to lots striking you're get Thank under that's intensive rate that So to start or questions relatedly, quarter of a realize volume kind volume we with in there food requiring one, can from of places are there? you you it your ask, kind seeing you. are the to the double-digit any you. with are versus programs, peer of And returnable particularly beverage, they cost

George. you, Thank you. Thank

comments about few a So current demand.

point scenario in a ANZ. So America we're quite time seeing as in at resilient North well this as

following sees the part world, in news, so with year that In dealing you'll been of prior the with see about illness that they've quite far. fact, ANZ flat and the successful

quarter, of our things. at today look for you couple when a the numbers Now,

in by they're Mexico Andean place the highly in they're we needed impactful. influenced quite stoppages that to And and countries. the put mandatory First,

which O-I decrease you is really primarily Andean France. driven of and in is when you In for local by driven will at -- capacity driven the exports, but fact, world, demand it's wine. demand, all of the primarily case demand In the France, look across the the for the by by is to also and countries as related across it Mexico, world downtime expect,

has see the is on-premise in at are When That's world, demand, demand that across we at pretty look across serve Now, the and demand up. that look patterns a off-premise much off-premise constant all the categories growing when we world, the we dropped. channel. we

time more consumers we think -- overall, by, I The Europe down United we the in trending States. see what to weeks off-premise So on-premise need in trading the as by understand the based decline. -- offset will able -- go and over be much up trading how goes is to we

to to it's something track or that's just we going So hold see temporary. to if that's need that

food performing mentioned, is been has well. category As a you that quite

is end about in use food. quarter is of the that quite in United position solid a demand Our States, our

market. by it as at -- been So we've mentioned their our point that. the then income. at is When benefited we put And point by demand gets And transaction that their they to CapEx in example. resumes, markets look customers categories at they're in time, -- most by an when can the growing consumers expect want they reduce be spending. affordable them. containers impacted off-premise. returnable is emphasized be the this are the ware, this I the reason emerging in for disposable you because the all instrumental would are And going to would in for that time, But in to returnable going be deemphasized

in we're fit. related will All a they're moving lower is already. to minute. around of the we are efforts, exception is the SG&A be shutdowns, deal everything with then cost related. it explain and not not to regards capacity and I how doing forward with reduction be will With that returnable we very good something So will a the But spending the

cost were transformation. you working As on know, we

X these probably we've months. working So X on to been -- we for are

road So all we're we're way we And but down is doing and the that. organization all we're the the processes already. expanding what place, have in program,

comes When down downs, So compromised. shut take reaction be when that to demand to we it wouldn't lines. shut the goes down first is

plans. then we or consolidate furnaces do to we've when XXX% do only do taking we the assume we need full we shutdowns, left to But the fixed need only we to of that, what after As these lines, cost. downs. furnaces fixed is we shut or then consolidate And we we're the into assume of to full assume that, And then with actual of to only if all XX% left into fixed cost. shutdown XX% those we we got that, hopefully that, is take do cost. And start action the

So so far. that's is how this playing out

next question. The

Ghansham Next of from question comes Panjabi Baird. line of the

Your now line is open.

morning, doing Good everyone's Hope everybody. Hi. well.

Good morning.

morning. Good

there's variability volume Obviously, considerable by region.

America in food. across built including range pantry wide of You categories, consumers up cited growth North a as stock. That's

Just managing had issues kind complexity given you through mix asymmetric, of I in these that? this handling you're the depending on category more with increases on touch year, last mixed you you are just How how at complexity. and assume are that region can even

Okay.

are last making we very We efforts in year. to started these our early deal efforts complexity. sometime good So with progress

of our All factories they're quite I are well, And would impacted stable. by higher. quite complexity performing say

under up control performance. is that in So and going

So with we're fine that.

keep forms, the challenged, not need only So to create by guidelines for in and efforts putting expect, able down will be able to when right? consolidate with up that. the shut is you the as support special factories various into to Now, capacity be been to we we've the to that flexibility capacity

in a So far, seen efficiency -- it time point this that we've operations at total is the through operations, year. in the higher than more Ghansham, global

up that focused, going these performance down. with so are people this so committed deal that to they're of think I of instead going the is factories So

that’s the we're So direction I'm confident taking. very

factory although we'd We on the are now. working year because performance, for well-prepared a be

this in out the complexity playing been all time able these that’s favor in quite So at keep well. our by and all we've to point driven with up changes

please. question, Next

the Bank from comes question Mark Montreal. Wilde Next of of line of

is now Your line open.

morning. good and Thanks

Good morning.

a on you on you could little in or bit I had just John were mean, decision of color with Andres, and sale. you the quarter? a second it line I sounded put dealing party back a I to single a pull if on wondered sight here thought like had closing the ANZ the

yes. Yes,

in for little year region shifts priorities. that a as that in our Just off mid bit a review, as we business so last strategic our through or backdrop. the capital review of as candidate as ANZ identified the customer given well the and own kicked that We base

-- I is mean, attractive. So, business has very the

very, on significant In say and number several fact, with the process were good would But both sides. you We robust backdrop number just we of a to pandemic diligence under months. is to, I we ran introduced as we this down party identified, on process this really to set parties. interested the primary continue very that one close a that it work worked lasted this. We the And of finalizing to of all impediments that what of completing circumstances. a had

So stepping to meantime, we're been backdrop. review quite mentioned we'll more going we're has a favorable the operate back, to process a result, in in In and as well. the performing which comments, alternatives, prepared as ANZ, before continue we're halting that we

Okay.

question. Next

sir. Yes,

Next Sachs. of Maguire of question Brian comes the from line Goldman

line now open. Your is

Hey, good well. everyone Hope morning, everyone.

Hi. Good morning.

But similarly, down two you weeks be expected be full last of Fanal volume for the get I would it, from a year? the does additional outlook said up kind in beginning or sort with year, X% the Just were of And know to color being Mexico. bit little the sort maybe get trends, you and on clarification, to on teens. color but now. with that gave for little being different earlier and April following is month on those in bit I mid your for down, wanted then without Mexico. of on you are Mexico maybe excluding include shutdown up benefit of the a the of those could and to X%, Nueva be really, was shut XX% this to might the think outlook more some questions I volume the that that the

that’s and exclusions particular, Mexico. the for that's be to in on some Mexico number actions? just by those lifted comment operations Thank expect So to on government true And of those be just if then, could maybe some you of or sort unimpeded when making government you. if you restrictions wondering

of first the take can I that. part

comments business. XX%, view of yes, year-on-year So the the meant be in to that to full of is X% a

would Nueva So so or the we include mind tailwind impact, mid-year, keep benefit either of a X. But will Fanal. Fanal not the be that comped a will as on in it that headwind, result, July which Nueva will starting be a lap that starting in --

and the anything So of -- out than or such the April outlook aspects -- market of yes, the were the government there that Mexico the the was or that associated those rather color or activities. with by other as later they affected so on of the of restrictions and -- part Andeans, markets less because XX% carving

Yes.

the So take stuff only volume which today, is the waiting pretty of purchases in you inventory correct selling an to just some think, customers, I come would looking at in of the We're those to performance inventories a seeing into tell important -- correction. they're back. part important to consideration that

through So to play the that we out quarter. expect

to Now, Mexico and that mandatory are the you stoppages Andeans, impactful. have which the highly -- in we in are stoppages addition that,

industries. is see multiple important with in think one resuming starting countries manufacturing that operations Colombia to like we're I comment regards to

And the -- other should really those start of these of within So the impacted future, to highly geographies, in that's it's at or operation if by just seeing things you so The raise will and resume. Andean foreseeable lifted. is demand what's some that, every as difficult will is It's know to a see quarter, geographies, government two our we happening that, in exactly in these stoppages, you Mexico operation not consequence when look going starting happen. but to being instead. the

mentioned the half we April. the been in April has second our half than first of better opening of Now that remarks

this what So expect. indication that has what's the better watch even was go going important because I to end at happen a that's And give declining to us weeks, we we closely, that's off-premise it Off-premise to beer, users that's going is been consideration think for something following performing is into to at an RF, time as in of to we well. it factoring in than which serve before. years, declining less all point got

is better. category that performing also So

just I earlier made. to add that comments I want to of one some point clarification

to comment excluding the that we're So The XX% that X% on the does effect view had down Mexico Mexico seeing -- on overall. in I only the full-year is for from relationship to full-year mentioned of outlook. what the the our April, is of saw was but in included trend two excluding that it weeks XX%, where overall in down of last was kind that Mexico we include

Okay.

Next question.

comes Debbie Deutsche from Next question the of line Jones of Bank.

Your line is now open.

that you performance for And Thank said $X Asia think ask for I wanted just taking my about question. to million the you I Hi. PAC and there. impact COVID.

Just to for prior So done be on years. would you I'm it comparing an what in curious this goal basis? or of number annualized kind now what would think a business normalized you've

million. I clarify Debbie, $X the will Yes,

We So, PAC fact, It found originating yes, by COVID. $X levels. in our Southeast virus And the in in mind, Asia our was We other quarter, really in business is XX% the million despite any business keep actually have in maintained minimal. overall operating first was market, of we Asia. that and the impacted more China, food didn't that there categories. our fairly in effect net as not in XX%,

there. held So up pretty it well

back normalized level 'XX were, that PAC look the a go need at secured some say thing quite elements back region, take in where as to think deals margins 'XX, in far for is you Asia years a is, a few and As I one the -- term I longer for some negotiations, volume that contract time. we've pricing period. The would of some that entered into

with there's those a So I little margins. would say establishing bit associated decrement that of

down go bit. to periods tap back prior and then So a those it little

so much. you Thank

and during previous And evolution demand stable quite that the it's well world. part of very in the very with comments, -- we're -- as regard a in having to I mentioned ANZ, being illness the good the of

performance on seeing in APAC of which manufacturing entire so China stability the performance, to a organization. I focus being expected think is we're to time and and what for important that into the is is So tailwind quite remain. that's factoring the high. for And specifically the recovering, the benefit fact COVID-XX initiatives in is turnaround this challenge is of factory be coming

seeing we and solid why we're well-prepared in that's I manufacturer. very So seeing are performance think we're the there

The next question.

comes of the Citi. of question Next from Anthony Pettinari line

now Your line open. is

touch Randy is to million on move Toth in spending you delayed below canceled and were moving sustainable that or projects CapEx of for level or forward? type sitting how Anthony. of Can you. $XXX Thank what

Yes.

referring good is spending which we to keeping $XXX to, about what maintenance shape. the assets capital or million the the are is level related to, in of So level it's lower,

that -- projects, keep those going. So one we

We updates, related improvement we're a on the or a minute put doing can little are to projects improvement those on we for later. cost and primarily are that focused hold reducing technology that

we So as sure in we will normal circumstances. are do take care doing we this, making the of critical assets,

So that’s approach CapEx. the been around

The is, been one doesn't operationally, I as thing CapEx. a as there benefit add much in it would FX has challenge

represents, part is -- million FX in and say, that favorable of $XX dirty, And probably provided that we million quick change $XX so of to outlook movement.

line. project to of that So other be the seen has net activity in effect

mobilize because is people factor on difficult additional lockdown, to projects. is of it to one work the And market

the the would amount you will that some within we execution too. there can that delay So level, the impact and is accomplish expect of year

Next question, please.

comes line Mike the from question Leithead of of Next Barclays.

open. now is line Your

asset but pension. rates in be returns I early John interest still on the appear know to lower. it's trending and for Question XXXX,

last that how walk thinking I rather for provide you pension? real And cash know funding EBITDA other update fluid thinking cash about about than the provided you're is what really on you on any can CapEx, you're free quarter? flow changes versus there are So any

sure. Yes,

I book we that had stand year rates returns where mean, if where headwind on land, about would and right. $XXX example, that you're could So asset is liability. today, -- year-end the we today, represent normal interest pension a to for the the million entry

transaction marking Of mean, I a distance the course, evaluation market today. would the There's lot -- of end year between occur. we and that now of to that aren't this when

expense in Keep and that change that this mind example, to ideally contributions anything regarding start the takes make out, with that we actuarial So little how we'll off the pressure to would continues to associated the have there. a nothing play would see or normalize cash bit calculation, for things year.

been those Recession the already are what the about that, relief, period points Act in benefit there, Congress that pension that contributions Great timing lot days pension be some to it there while of that in calculations there over out in these allowed may smooth has some understanding fact, form adjustments this degree. of there And totality in to CARES time. a seen early should impacted making made changes some talk In longer of back the was you we in in by really can time, have be was

-- be On things sales volume function of big moving, various and the worth that cash the the will believe robust we're production about two but of flow pretty of obviously, plan, we're major of side, is things uses obviously, EBITDA that all the a of managing I we P&L that dollars going are that recovery cash of of probably business, And other flow the things a aspect also hundreds things volume the levers that on, -- levers the free what working. that identified, affect, cash. different represents or we've millions of XX got

a point the or of So yield U-shaped But related lower people one, -- could And also recovery the benefit depending U-shaped process, receivables. front statement payments, in on it remaining within lower recovery. suspended positions. some collect under then that and volumes as mindful see last activity that mitigating with flow our we this trim, the to asbestos I to $XXX exceeded have cash capital, at if we of also are intend are: replace that working of flows actually expect can keep that obviously receivables we we as as of less think we whether investment talked do, that And we we be capital have million improved capital of all the more working expenditures year. on plan this you'll a which support And CapEx do, most to V-shaped be the should looking cash a of overall time, and working factor about would on if the end consideration we business. inventory the of that levers

that we mitigate pandemic. of different are we that can of the levers a impact flushing overall the there's that, So lot help through think that

question, Next please.

from question Kjellberg. the Next Lars comes of line

Your now line is open.

back Thank come to to just want you. leverage. I operating

into us about operating like Just negative you I fixed offset furnaces, how increased, about of cost looks as a guess, also get it complexity, may XX% etcetera. go potentially for through had simplistically bit terms transportation how of QX operating would and the can be we closures etcetera, leverage in costs, how in QX, think there variable you I fixed the leverage component various example, cost, an make QX, costs, reducing of

helpful. could that, you give that be us color So on if any would

Yes.

view on cost Let position. the a me give you

So, And fixed ranges do downtime, cash look were to take all that then the from to the let's comments when way have line costs, we the cost the have down. being a referenced stoppages business. but plants Andres again total it spectrum at of to of

XX% XX% you of So so point can that underneath you to to remaining cut or cash you with of or furnaces down, having get when stuck number maybe but at your -- go out you fully costs out of getting your cash because really can lot you X% cash you of And down, costs down, you're cost, time. a anywhere out out maybe a out from, still a from that's things, When plant total in line So, everything, okay? a XX% obviously. cut as of overall. can't get take is more

before the is end as initially on lines impact respond of, now taking very this, mentioned so the front you of And Andres down. by that

scenario, set probably seeing the impact so And of that the that is biggest absorption. and you're cash that in under

it's function still It's more very situation. is we're specific a and we're give a to being right is going very Now to fluid factories more capacity you process I now can't and through inconsistent that and a and back are our come decisions the the governmental that. a of through of lot providing because furnaces optimize continue economies underway. going where position this some and not number, with through guidance our of down managed also quickly how

please. question, Next

Fargo Next from question of comes Gabriel Securities. Hajde of Wells line the

now Your is open. line

morning, gentlemen. well. I are Good everyone families hope their doing and

Gabriel. Hi,

that bit hoping between I in the But and was I and adds year. a end the Europe, lock-in now some a how play of adding competitors years we as are just some pretty happening out? Again, point price transpire landscape are of could if a appreciate capacity, thinking contributor has you're Any big the last look cost operations. about little forward the about to over view some been the competitive given that capacity well. few

has Europe the been we this capacity to been is capacity three some balanced years. over have be built has in the so There hold. Yes, of all when that year. demand, Europe last information well projects look and the are is two, those on we All considered quite at

they're So expect will COVID-XX them. execution reasons the Obviously, be in with for but issues anymore logistics we deal there able that. to not two also to are of and situation, any the

at this Europe level pretty capacity come that to we the point. coming don't capacity be this saw expect more to would continue in year. much will of board it on I into So expect I

most through going activity and a price, think of look forward input I when side, In -- of lower that. see two then you the as that basis on flush very will was substantially costs because at things on regard, take and inflation. as we in counteracting forward. going one we energy to at you And some some are activities referred our had the net in costs have down look part that like is improvement you put goes in obviously and And a pricing of year early pricing going that know, we overall can the in you place. On price our

things, FX have as that dollars. are other things future side, each are On we inflation how overall in other much out But spread. of Latin we'll points some America, especially play kind counterbalancing periods. kind a bought of the price some the and in net now pretty U.S. right normalized see induced do Those in to

Next question, please.

comes from question Arun of Capital Viswanathan Markets. the RBC line Next of

now is line open. Your

Thanks. Good morning. right. All

mean, periods? countervailing the be couple there or would Just on us would of we margin that some get line imports on on recent, containers positive thoughts see give to offsets glass I guess, affect just Americas. wanted China. that your Thanks. was business. your on the cost how your placed development over Should thoughts some duties There of I from next

and that volume Yes, some to so regards cause we're come an is this will what saying with to China tariffs in increase way.

more in in that in going related buy inclined China, operation. point the stability this so seeing also customers time, challenges local to think their with can be supply to they all we're to I the change are at have

produced will that of with those I we will States. volume see expect in has So the two United China been that considerations, coming more that from being

volume are, supplying already We customers. producing in fact, our that some to of that and

already increase So place that over taking it's and to time. I expect

The next question, please.

of of Adam question from comes the Josephson line KeyBanc. Next

open. line Your now is

your are you and families well. Hope

Thank you.

that cash to a hold year. to more your back earnings this had maturities obviously plus million going to year. was just flow. I’m managing be capital. this up I'm flow of etcetera, the cash difficult debt if $XXX I But commentary, wondering flow by it extent you cash -- And $X.X net just I have than second, 'XX. flow $XX of was than tightly Obviously, than billion payment the expecting the a based guided are million you the too a flow and wondering got what just could cash know better just it's up you that, know because much I’m dividend, is cash just wondering your obviously to Paddock -- about the aware asbestos many if I 'XX year. earnings you've just negative And but ask which outflows. I'm don't not And cash coming I XQ think to of last I'm know is suspended manage impact cash free reducing and John, on obviously generate working for you etcetera, your the year. doesn't And you're to pre-COVID, previously you're like payments. much seem managing and and volume flow it given CapEx this other in and

just here. trying understand better bigger I'm to the picture So

Yes.

first So, of all, we're term guidance. not providing I obviously, mean, longer

I'm can't … be in a So position -- I

Sure.

the to $XXX is is, worth costs, to are the anything. We've obviously alone net But And better on lower compared right got to now period that substantially million business. cash side. Understanding EBIT … position variables different right. were then to effect provide what's capital you're of on position is we negative slightly performance CapEx ultimately different year, the mention to on a major of not working on Those million are we wildcard on. any do asbestos. cash where dollarization the the Last on the expectation substantially going flow. $XXX two to in investment,

before, lot we dollar maximizing have It'll cost I and performance reduction be there. the the significant said that that recover changes is amount the performance. or what I marketplace, can't then on the how markets quickly obviously underway. shapes, cash and very a fully are fairly contingent, that the the is of degree dynamics flow say that whatever focused what to activities As mean, volume that we I

have We which we're multiple scenarios operating in under.

from different business. work whatever volume outlooks fit ultimately and activities does to able to the pattern our under emerge recalibrate to So be

taking conservative the cash that right view on we that can generation the balance sheet course, we're more management side be so the and on probably now of right Of view.

back floor you the over make Andres closing Okay. turn for your Thank a comment. questions. going to I'm to to

Thank you, Chris.

challenging goes more it for across as the and few that situation the by, more everyone are a understanding will comments. we weeks in a COVID-XX impact So world. is and have

the been we're on positive well think few turnaround impact. executing think they're the for now this in us many point that they're them working Now, prepared things that time. and a with structured A full I to we're confidence months have reasons gave and having deal for at I it is right we're well. initiatives And very and execution our in

the most to able have of severity to of scenarios we deal minds, been as will different we have that that. on modeling When we've scenarios, level depending identified Now, look scenario demand with leverage the we be drop. and the likely we the our at have expect, in you

point time, have the and also the that. severe a have likely. this we with At most we levers scenario in We associated on executing are

we've been see the levers that addressing to be You'll possible all addressed.

capital with our taking a CapEx, so cash, is important source with down position manufacturing quite consolidating, share strong, that's waste liquidity very capacity, by shut SG&A, the cost with and then deferrals, dividends, we working dealing we're So too. out as buybacks how of

and And are execution. better I align when ever very organization, quickly the into I think we look integrated move really globally. than at can We

are we very agile today organization a We execution. and then in already are

situation, challenging me So it. things very with deal we're well we're to take but believe to prepared. to all those taking right be Again, the measures able

O-I you your thank for look the and forward in interest I I to next call.

our concludes Thank X, earnings second Please call August That Thank that note everyone. scheduled you. call. you, our quarter for is XXXX.

you. Thank

gentlemen, this Thank and concludes participating. Ladies today's conference call. you for

You may now disconnect.