O-I Glass (OI) 6 Aug 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the O-I Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] With that, I would now like to hand the conference over to your speaker, Mr. Chris Manuel, Vice President of Investor Relations. go please and you, ahead. Thank

and Thank Glass to O-I everyone quarter you, earnings Myra, second conference the welcome call.

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

call included o-i.com. disclosure Following today's measures Please non-GAAP those safe comments will and review our materials we the use financial on remarks, a Q&A the available prepared Presentation materials. Company's of of session. in host for are website at harbor

items press Some of presenting management profit, that presentation. which we're flow, our start found who non-GAAP share, financials operations. turn measures debt, on can like be such today release items operating non-GAAP the free Andres, X. in considers this relate not as of leverage segment A per call net certain earnings to ratio reconciliation representative I'd appendix and now adjusted the will of earnings Slide the to exclude in GAAP cash to and of over to ongoing

Chris. thank your Glass. in O-I you and Good morning interest for Thanks, everyone

Last First, agile employees, to to execution and and our of night, O-I XXXX. the industry. quality critical the we which let the we during decision-making sustainable challenges, results Despite pandemic. many effective quarter deliver and as of protect we team food reported top priority for the glass beverage is high say our me the packaging for second continue thank Glass you health for their safety entire

improved conditions the slightly decades, were strong share markets across in challenging business most consistent Despite of $XXX to were flow demand These earnings Mexico update flow such business operating results and of over results the -- profitable, in positioned drastic and our was business cash the course lockdowns for recent per key most Andeans. $X.XX volatility quarter. particular, I'm due cash our remain free the the the given well adjusted pandemic, significant we and of recovery. generated Our as trends proud and with severe the the a disruptions million. as

the continued investment execution balance business This we continued important we at advance by our the we benefited to MAGMA took and the As to to to steps thesis. from we portfolio sheet. our execute taking of advance our strategy and Results actions bold valuation turnaround rebalance to initiatives. attractive exceptional our of improve optimize our our manage through ANZ an help our of structure. divestiture Likewise, pandemic, brunt includes

very the to While challenging the XX% the and quarter improve overall, Sales as reopen were X% conditions was X% volumes we and markets in was began business just July. disruptive, up June over about quarter. did exited second volume yet down course down of

volume that are COVID-XX, from Reflecting prioritize sales We challenging trends, principles to continue guidance uncertainties shipments Likewise, recent as prior limited liquidity, I X% flow the our reducing we Overall, to speed strong and guiding year, strategy execute resilience now to to Given of with to debt. despite our to full year have compares encouraging long-term responded down operate we O-I under X% free XX%. to maximizing continue pandemic key the and we cash believe backdrop. outlook we ongoing outlook. will guidance. sales favorably down which our X% be revised last expect our

as We encouraged by recent markets business reopen. are trends

maintain reduce plan have our inventory half year. COVID costly inventories set in of X, financial on year. inventories will line pandemic mitigate conditions swiftly see cash year-over-year with response that the June of you were Slide steps to to in demand some Back on the in have We March, focus the to and we will we ahead generation, flip the prior starting impact taken second to the established turbulent you in to mitigate times. see with July through If these you and avoid a supply we Likewise, of aligned and growth flexibility. the basis our right financial

balance our business absorption we managed capacity, network to flexibility for the establish right cost fixed recovery. we As optimize the and

Our platform ensure have initiatives COVID-XX. successfully we turnaround navigate been perfect the to

optimization achieve revenue efforts Our by the us best have possible given pandemic. helped top-line, the imposed the pressures

focus efficiency, efforts including factory have in increased XXXX. Our which were profitability improved factories, complexity operating at by impacted our

implemented cost quickly controls, strict and have have results. we significant which generated Additionally, immediate

operating new improve and the simplifies a as established that we company execution. organization decision-making well the model as Importantly, for

We are watching like capital a hawk.

period. compared year During the favorably capital second working and the to both prior quarter, CapEx

reoriented on we option. allocation focus our priorities to free debt Finally, capital

environment content with structural focused we company's on on now actions While to remain I'm fundamentals. O-I the in the change bold X. business lifetime, most business our Slide difficult the

indicated, continue turnaround progress great initiatives. As we make with to our

Generation is commencing be X will This in advance In to milestone, installation deployment which for Germany. we continues long XXXX. best Holzminden, fact, X will I've way this the XXXX and of the in an company quarter pave on Gen seen in MAGMA perform time. track for first a the important our broader remain

January, our XX our week, had our Furthermore, customers, value. for as last Paddock our investors. initiated sale announced to fronts highly final a unit. as debt we and last nearly employees the And execute Late and steps our ability our across ANZ confident O-I, our we Finally, believe, venture right completed year, unlock been liability. we of we our remain filing optimizing I the rebalance shareholder sheet. our are strongly previously these I for our in asbestos these and divested legacy by for we structure ash reduce soda seek balance we improve Chapter $XXX million. resolution portfolio joint and In

The for of additional John, I business who financial on over Let discuss X. final provide it me Slide on I'm charts to two context -- turn share before color sets trends information. our will now our results.

O-I's you'll On rates. recent the left, shipment see

we right, key markets purchase share for and the have glass. On retail for trends categories

O-I. starting with me share Let some thoughts

we May. note, volumes Europe June the the for stable the the in realize impacted in significantly of first subsequent pandemic, most On Americas. quarter, by April sharply encouraging were the pandemic and reopen, July volumes our contraction with consistent first, in and an the evolution recovery followed covered as markets While and of orders

shift on Let's right. the the to retail patterns

remaining was clearly, has overall. on demand trends that lost consistently retail and while XX% off-premise of retail believe remained since This between bars and sales makes As sense Prior represented about the sales, we the at category. in the XX% bars pandemic to Bottom-line, our XX%. to XX% generally balanced consumer sales XX% can activities offsetting strong and consumption from the you off-premise with restaurants, XX% falloff see up elevated to depending the considering restaurants. pandemic, sharp

was quite demand of After chains our rebounded were levels While channel stable, a relatively shipment this supply consumption period chain. and volatile. for disruption, rebalanced our

underlying with XXXX glass demand it be our levels. down -- the will consumption converge, choppy patterns Despite and will believe are on could for Going volumes any eventually return a virus. market while for further depending eventually but pre-pandemic exceed glass adjustment forward, we volumes chains developments confident the and from supply we being disruption,

Now, I'll over turn it to John.

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

As business our was $X.XX share, which Andres recent update. per quarter our mentioned, results most consistent with were second

million, reconciliation on which was year. the right. me profit walk earnings Segment prior through Let $XX the million compared in our to $XXX operating

volume to in This particular, supply the comply FX drastic $X with an from our and pandemic. lower production in curtailment is plus as JVs. improved efforts effect headwind, prices virus. reflected impact our results was decrease lower cost XX%, due costs levels Latin fully $XXX headwind. Andeans. FX levels partially was induced America. net volume. of to inflation, operating $XX with the especially the million was to XX% government in turnaround Sales mix million Higher impacted attributed the was offset control which in million In $XX in reflected which $XX a and by production cost was the million Mexico our As and a inflation, were benefits and and sales The initiatives Production cost This both Lower demand to other selling decline offset noted, was which to address well was inventory the by at efforts. as and production decline align which forced million. the performance. shipment in a forced elevated control disciplined levels, Operating down headwind, exceeded curtailment decline

of expense, following savings interest We including will expect activities. the sustained clear be majority the and Non-operating recent lower items these refinancing benefit earnings. future

Our reflecting factors, tax elevated other mix a rate was shift regional and in given earnings. EBIT lower

not We will rate an with year, of cash the tax will impact which XXXX. in balance contend likely the for elevated

near-term debt, in these results Latin related for in more include our earnings. management well recent does restructuring, to America. of employee costs as pertain ongoing force not of one All The refinancing consider items, details charges to These reduction operations. retired representative includes we on as initiative, appendix related to primarily severance as adjusted site

line, EPS was and will to We cost significantly as continue cash XXXX $X.XX adjusted favorable operating volumes expect were year, partially by Bottom lower due approximate the impacted compared performance. $X.XX to earnings prior to year in pandemic, the by offset restructuring prior levels.

shipments selling on X, FX but currency June. cost Slide basis. million, during share Latin Americas, on were were performance later In in in inflation improved volumes to inflation, offset quarter, a in down Moving X% during induced a let about elevated million Higher me regional prices, quarter. the color profit neutral significantly which $XX Sales due little and the $XX period XX% down mostly the to was was America. down the

double-digits. down up most was including still countries, June down America. single-digits During in North volumes sales America. America low volume in In which across The North single-digits was about of across the the growth high July Americas, Andean Latin were mid-single-digit flat exception were and

partially June with Sales X% prices optimization and of second in the Higher and a with were as inflation, profit lower than offset efforts. region impact control currency production quarter, Americas, to controls mitigate cost quarter of volumes revenue improved neutral Europe's lower during benefit improved the last to operating down shipments which inventory was volumes we July. down operating Like in help volumes. were the down quarter cost million than impact year included controls production on comply operating began and basis. down was pandemic. markets cost the reopen. of sales slightly was selling as supply $XX but government $XX XX% and decrease. performance offset million, the Improved to region's second demand were and up the the balance performance more Second the

prior profit $X was comparable Asia Pacific's operating which to million, was the year.

Asia sale we majority completed the information of in the ANZ appendix. forma which is the week, As last clear Pacific segment. Pro noted, provided is

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

a principles are We capital allocation specific amid set operating the pandemic. under a

progress these made review me have principles we the Let and mid-year. through

MAGMA. are cash squarely free To and maintenance this, First, support demand maximizing normal flow. in on limiting with focused we to are supply we investment CapEx aligning

very making been good progress. have We

was a Our flow second seasonal period of this cash use for quarter free often cash being million, $XXX despite business.

XX million changes In fact, normalized about the than in the $XXX Chapter suspended has factoring was cash any Likewise, payments. AR for asbestos-related Paddock year, process activity. higher flow prior

focus the prior as to All cash disciplined of a and year. this on capital reflects flows our year-to-date highly favorably management, compare cash

are the liquidity identified floor preserving our Second, $X.X second at pandemic, we improved liquidity. during Despite is actually billion committed we liquidity and have exceeded XXXX. our above mid-year. the This for strong quarter the well

we Third, debt. reducing are

mid-year, illustrated chart, both levels. $X.X billion of period debt quarter to on and which year first the As prior was compared the favorably net as

below mid-year at X.X. well than our the agreement, of pandemic bank which leverage our quarter despite the for slightly was higher ratio limit covenant Our first just and credit was X.X

With of sheet. used ANZ net the the balance improve to being proceeds last completion divestiture week, are

repaid already debt the in have reduction the in and debt remaining over occur million future. near We $XXX will

few we stages a plant As in continues, advanced our of are properties. on close the tactical program divestiture sale

its in the expect will in allocation position transaction making improve will compliance we year-end. XXXX. we on priorities with these despite the leverage pandemic. in and should we highly covenant completed All remain confident are Overall, minor, the While our XXXX, solid actions progress are of be capital by further our O-I bank challenges

I'm comments Slide now a outlook. XX. with few on up wrap our on business me Let

O-I's in given worst guidance. sensitivities volume, pandemic earning and we is the we behind uncertainties specific cash are providing While earnings believe to significant of not us, remain, changes the flow

We there is will in future, and consider more public reinstating health market guidance stability. the when

a which previous full-year expect we trends, our down X% sales of However, between to compared we outlook the fluid demand our of be compared X% prior favorable more Reflecting recent XX% year. nature change are on X% to trends, due to reflects providing our in best volume XXXX XXXX. the now favorable estimates down guidance will and COVID-XX. This could to

quarter year. prior Most be Given the XX% expect continue expect last in lower is recent of prior that of it should of Please that, this to We sales production ANZ, X% volume sales the be rebalancing will to the was we divestiture July to do our compared With has quarter below trim outlook production third as note at than After we do modestly trends, IDS that trends. the providing during volume our year, with include effective business IDS volumes business levels. will complete anticipate to for this outlook. pandemic been levels we continued XX. year. end Andres. regular down I'll evolving July the turn third aligned will sales our our to Yet, quarter, flat updates back be normalized

Thank John. you,

comments. with conclude few me a Let

supported an cash agility. reflected unique in challenges, our we this which an continue quarter speed downturn the since second met improved remain solid the successfully volume and strategy operating we've in high a business global fundamentals. strong change flow and Despite in earlier quarter, rebound sales After actions performance. the is seen to demand June, profitable abrupt strong resilience, our and to difficulties, take our many outlook. equally Despite we we demand pandemic, advance bold in The presented which by with generated

we confident glass that in Let will stronger your past. long-term questions. will today XXXX O-I company creating I position, remain a the I'm We on for emerge O-I and in taking to benefit focused in the your you have me welcome Thank steps reiterate and said enable stakeholders we're beyond. its interest and value. now what the

our from the comes from first Baird. of have [Operator question line Instructions] Panjabi We you. Ghansham Thank

is open. line ahead. Your go Please

Good guys. morning. Hey,

morning. Good

morning. Good

Andean implied guess, I levels And inventory quarter, the Mexico first you decelerate region? can off July to up tight third market on X%, So, the end volumes during breakdown the in given just a why us volumes by and give are then region? theoretical

Yes, Ghansham.

is was North was you being when and slightly sales X% America July and put June year-on-year up mid-to-high shipments about strongest about the down, were -- So in performance might July but Europe year-on-year. single-digits together. flat

those So well in line in that market two stabilizing is months. year quite prior with

in Andean up Now has still recovering but Brazil the Peru in Mexico improved, quite about Ecuador mid-teens, particular We're and strong, very down, down flat. soft was the local well. Colombia improved is a and significantly strong well. export very and performance, was still market still is but market

of and why X% was up the why other quarter the of your then part off the and... part in it. question, declining that on And which we did I'll -- are in kick July back

Sure. Yes, go ahead.

on, we're think the seeing be I the with in the whatnot. that will an we're seeing certainly but and quarter Well, is certainly long inventory restocking -- that, second going sustained how right, process dislocation after question

So, Andres...

Yes.

we in Ghansham demand high few across lots to is there volatility are be because the want over all So market markets. instability we've of Nevertheless, signals, encouraging the seen and cautious months. last

evolution that Illinois's there the with future in Now lockdowns we and to and mindful it got to be is impact might have regards economies. uncertainty

just John replenishment the inventory is that there mentioned. Now,

you States to look the a months, bit consumers the consecutive just are it's glass is related on performing trading United for the good little high off-premise stronger good four premium and encouraging been and at and This is based are of it in data been not is off-premise. been performing see in Now strong glass to off-premise quite a four demand down. of and well products that in demand giving IRI, very side, than expected months quite when has we

double-digit and know channel if XX%, that Now, up is product that between spirits up beer glass down The mid-teens is up wining and has and food is good line. the been normally for at are on-premise on specific the categories glass. you look we glass high depending is product XX%, XX% up

low were it's after Now lifted, lockdowns it's been operating operating been the at levels.

Now very what increases. they for use got use that is demand very containers that because to low single-serve low of causes our that replace of and because glass CAx are and then then [ph] are is good

on-premise on at demand the for be be otherwise CAx to will high the go of it to life is back use the to Now, require risk. safe to product rotation activity

is in the aluminum know there Now, the U.S., shortage -- a glass. this favorable cans of and you to is that

Now extend point. XXXX the through at shortage to we expect this

look active I are demand we that America, we countries will all is conditions. improvement, see fact, Brazil, that the and with look there this been will that we're is Andean Brazil we signals cans in don't at point Again in and of market. monitor to at capacity we've really when for However, we we high activity encouraging we and demand at high, beer while issue the they example, cautious. continue the seeing looking And new final the in factor seen the shipping Europe, the North this market. is say be for that but have the shortage in product in at development time, have in We've we Mexico, want in to aluminum of

very that's comprehensive. so Okay, Thanks much.

our have comes Maguire Sachs. the from next line We Brian Goldman of from question

ahead. line Your please open, go is

morning, Andres, John good and Chris. Hey,

morning. Good

morning. Good

Question on third quarter outlook.

seven of second the will So of just guess, think implying to be flat I if half for the the of triangulate in you sort year seems both it like you're the quarters, to general, year. outlook for slightly end four volumes down the I in

year-over-year? could the you decremental can I margin of forward in do if if So had on And know kind decremental sort are and is, of the time that of about flat thinking range adjusting to sort cost or in take and within of roughly will the to then changing EBITDA tough sort we could the you're guess a be actions. bad about put volumes for XX% the half looking a EBITDA you you number is that? XQ that at a question of margins be the fixed margins think, going of year second there I you think as you've was, kind quite environment flat decremental be not talked think What some I

Yes, take those let let a there. me -- this me number John, of points stab at is a

parts the to little we get of as back of headwind we the into a So year. year, of be part very half moving of is if bit a some a later the maybe factor, look shouldn't the major FX

take ultimately, said, be that bit flattish, over the We of will balance able little where volumes be we to Like we'll bit in probably it induced little but with might world the inflation now. of a able that time. through you contending a of the should sales year, still be FX yes, to pass a sustain are

are that We mentioned the of of the bit little quarter production taking a production in off X% as levels. -- we third downtime downtime to XX% additional inventory bleeding I are as some here

the you will half $XX that a is the So variables impact. And we could probably And earnings or quarter the what to the worth an XX% up of earnings the variable, million and were third of nickels of or get an end our of that bit can year from of XXst key then in tax that third in if Keep back down if look We're other or a so over of We'll mind, third be ANZ be that quarter, is, you as the above the a to impact of or the in we're that second kind balance the taxes. have or two loss to it than creep the the other we effect were because XX% in of of kind July course be the rate the year. bit that. you at the probably of are half divestiture about the there so year, taxes, have be able year flattish elevated it regard. saw average up a second in just the net is half for volumes of of little calibrate probably a of costs environment. might about quarter, lower effective going

quarter, take bit in kind little look decremental course your mentioned something second the a a a On at the did you have, of the if quarter, you decremental regard. you in quarter. we question so gives in during that color as hopefully like margins, margins that XX% So the of XX% or about of

and of that also impact volume We have little that. that a impact really the Now to big sales reflects bit on tends JVs did was a the piece obviously little down the our have disproportionate of margins. a bit

good the in... production we decline despite took if job, the on side, that at rate I at did thought it, we Now you yes, we really above look a were a down take production the taking fact because a --

Demand.

been given achieved reduction we to actually kept you're XX% decremental high-XXs the in our would that business. now demand decremental where the good or on XX% type a even Yes, range. probably have that that In that decremental margins of XX% during we recalibrating very world margin around cost

then a think about should profit So the on you're it incremental the as recover keep margin or to gross on decremental normalized if we as be side going or low-XXs. so that going And can we XX% forward, another about sales what production XX% decremental then to of margin sensitivity matter its at XX% kind margin margin pushing is forward. or XX% for we decremental

much. Okay, thanks very

Thank you.

from Bank We Staphos next comes question George of America. of line have from our the

ahead. open, Your line go please is

guys, the details. Hi good all operator. morning, for thanks Thanks,

Morning.

customers you the the of product it is much. that I to the again if expectations versus growth filling characteristics question related And in 'XX. the look all saying? what importantly, back what technologies, wanted the finding tie in you're take right have 'XX back to your on what outlook, been so The terms with you're the everybody are and of have, findings traditional performing your And as right Andreas, as Streator? to very to growth What finding call MAGMA and' finding Morning I for out 'XX how are a you changes, way? this MAGMA of Hey, Thank expected far the change now, does the been using glass well. at in what out and terms at XX? looking step given line,

Thank you, George.

has important there all the to it's tested wanted Streator in we wanted and and a to things test melting we has been positive. the most MAGMA, proved. outcome part was the The been So grow over

at form required in efficiency quality, at industry. quality no barrels levels of the good it we we melt with this can by of So we problem rates, the can glass point time, high do can at

well. that for going some some going specific waiting position So to is is we're confirm We MAGMA a that We're data deploy be milestone Holzminden the covered. and be in to XXXX. points. to in to If other want confirmed, applications in XXXX

encouraged customers growth part increase are which can So, see how follow very flexibility by technology the that. significantly, of this scalability is question. better, They your

MAGMA they're an has looking we small which end-users. concern in having this industry So because to increments, forward of we Then, across at having been available all the a and here. and kind development to when look a the a for -- really growth, scale important MAGMA way is is up constraint

progress these of we So so MAGMA confirmations position follow opportunities X the Holzminden. in with if is is that in and the positive some can been so, a want to in increments expected good is X We of deploy Glass smaller out the the additional good. we that a developed. far, we then, to line. we're The product to has to a Gen were deploy Gen as in position be growth complement get so lines going we quality are volume

Holzminden the operation. to now we're looking So forward

Thanks in How good at luck you and have much quickie. trials quarter. the very Streator many you done since a just Andres, started?

a been trials. We've two operation that now multiple half, in years. and a in year for line Yes,

development. in in constant with are is go test line, continuously even off this activity. an new we so R&D is in plans R&D regards to more we So And things test and this there XXXX because to But things.

we've this testing time. over been multiple in conditions So kinds containers of multiple period of

you much. very Thank

Thank you.

We question Bank. from line of comes the have from Jones Debbie our next Deutsche

open, is go line ahead. please Your

good a taking realize specific Hi, question. CapEx I my for it's XXXX for Thanks have morning. guidance. early

maintenance context with So MAGMA to to CapEx? you scenario. kind need Asia I for are related of And of you the they have would can a really, kind are then additional COVID where two How kind don't but plus stick anymore. that just What big, see wanted of the have just CapEx areas spending? now businesses you realized long ask recovery a I you in

of in each If or and each you for of forward, two of regions those kind years is next two maintenance over the kind of the think the going just regions? about needed three what remaining

John. that. Hey, this We've is to said the $XXX on kind of number take of $XXX around questions million. some I'll Debbie, of always is million maintenance

Asia, normalize million on business would annual $XX the ANZ of an CapEx have basis. about

can or portion you that for kind of large CapEx. of at So least a that deduct the

is XXXX, were thinking -- into it look million, $XXX going Just it's obviously Nonetheless about what what included going to could at early. million like guiding this into very year, obviously into next that year, $XXX we ANZ that business.

MAGMA I investment of growth when kind discrete incremental talked we plus some So the performance-related in about doing were that projects. level maintenance that operating plus included

bit got new normal what the that to is able the of where understand is then as of like baseline, that's the what next what recalibrate. taking So be business the is to question is need a really we year, marketplace little -- opportunities topology to the look and a

So, Andres?

to going -- so 'XX. standpoint Yes, related some determine 'XX that, And willing looking required that take difference from demand seeing we're over is of capacity into a to difference think to the I long-term trying that at capacity balance strategic customers and be will and coming might major the projects what we're and couple -- the we're be the commitment to of the mid-term something last months pandemic. at out looking

So that be might difference. major the

critical intend MAGMA, into in which 'XX. XXXX covered we've in had assets maintenance we investing the been and think continue the I for been going then to

next I the to at thank did can given there which of you ask the just looking of scenario just your significantly kind borrowing Okay, about is able last and do you that think year rates, would John, thinking Green were of with Bond couple you. do you guys there? to a years, if And what back kind lower able you be

all, investors, up up, had we thought a I great we the we in interest the investors especially a umbrella. of of XX% amount X can about Green improvement. first Yes. I for by from funds A Bond the of an tell of the ESG point target mean, related least being that the success lot ended us. what percentage lined mean, companies is was either ESG Green independent times at Bond of or under under

we think that. better got I than

we the better, to point I you tell a got think quarter or truth.

of going of to would to on going would I'd be is our Now, certainly Green average around set right were more And doing evaluate forward, right circumstance, under borrowing that given that by any always the those understand X% and now so. rate you Bond encouraged look but or value forward. very that of hard it's we what think

So investments. spectrum the of across the

So but we rates, that, that's when rate. to back continue will in can chip good away the pretty it Hopefully, market. we depend the get a at on

Okay, turn great. thank Alright, it I'll very over. much. you

next of from line question Our comes from of the Mark Montreal. Bank Wilde

line go is open, please ahead. Your

Thank you.

reduction wondered presentation one-time back. want that. impact kind second I could if cost in the talk about note coming of clear to cuts very and a the you morning [indiscernible] salary of and So I amount from this quarter

the your little think is in I sustainable question a was and you cuts whatnot. bit there, what Mark, out impact Yes, quarter much cost the of cut and was, but second how

close second like the effectiveness was turnaround that reduction okay. million improved efficiency had in to factory initiatives, that's we $XX that or sustainable, about indicated we million or at $XX the that, XX% about our very of really had that is quarter, So of things under cost level, so

is of activities do Under The pocket, that sustainable. that we with $XX it so reduction other some the million other to or has across had cost business.

we be that So in a we will component indicated in reduction activity sustained. the had force had quarter,

is type So sustainable a that let's of savings. say half so or of

Some mean, fact of was situational. production down. that is it were I the down, was to access the labor even volumes down,

for home, be would are So A at lower bit the the overall, have maybe the I obviously maintenance little business. levels was lower. a been people spending type savings XX% lot level about of so second more But -- the sustainable say bit quarter. or a during should working little spend of OpEx

as managing the slowing it just lines? you And can quarter? in just the down production back sort talk John, how down follow-on, Okay. shutting about third shutting of you're line, reductions Is a furnaces, guys

It's...

And the footprint contemplated. moves furnace

cost quarter, the incurred that's and spot was sweet going restructuring on what has facility absorption. the the last cost Any in that substantially decisions the period. least having future. about about We We the and did the later identify that's -- management towards we second the it Latin landscape minimizing online. we XX% that the between -- to be a lines the furnaces higher production would and was the July in obviously absorption. Also to down XX-XX into items, XX% in But fixed comes blend -- down obviously lines part had at at the progresses. quarter, one So, America. future looking understand it also We good time quarter, out other to first. a the We about business got down. of But between place flexibility as demand down operational we back able came during in

looking And back start sales bag production kind line we we then it that's to were with our the will into production getting more on kind activity. volume in activities the and indicated we we here of as comments, prepared of IDS be, mid-quarter at. want aligned in tailing So where off so that with to mixed get

helpful. very Okay,

We Anthony have question the line our of comes next Pettinari from from Citi.

open, is Your please ahead. line go

Good morning.

Morning.

sequentially some North talked coming it are shipment or say Is with kind and in guidance plans states possible on-premise some full-year in assuming of strength consumption? that increasing. back may and cases or cases as with are You your of you XQ to pausing XQ, the back terms be wondering in level what of America to through just kind reopening of rolling activity? about I'm improve current assumes kind Is expected on-premise of a COVID

Yes.

had in So in July. America. -- a in the -- out North strong sold this At we're point we in time Americas beer

of balance the We expect go year. the to through that

in increase, significant high. to -- got has we're be cooking, punctual taste it seeing in I very increase Initially very on-premise that emerging There expected is to will been punctual. trends say was was but go It to at-home There is While going that's changing we some something off-premise to monitor. and for a reality we have that a consumption very it's that are monitor trends. off-premise going be some now to continues months and closely. and and we got in four

something and So, we got what to at go at equates units is a the of to to single-serve to the containers. The end. to see see where impact. of back important CAx X.X It's CAx monitor that And closely is it I volume it use going level. monitor to about what And to on-premise, up. pace has got of is significant because -- think billion

pretty a it's sizable share. So

So, we monitor closely. that

be but North in by expect because capacity the in at have this market -- pace, we all to point a beer continue America America might the placing in the limited time, -- market. We to in capacity we we the good are

just does year? the helpful. to so understand seeing you quantify or America, you're maybe you I the indicated, impact kind very heard through seeing the Brazil that there. in correctly, back be it's but or more? and I If you degree color is this then were I this kind go just the maybe how that's North much is that kind a whether to not up, lock-up are Okay, of I of that beverage it able guess, with this point And Any volume shortage to them regards And next to correctly. multi-year contracts just market may of you're possible pick in then heard able And those of it same XXXX, cans, I to shortages, and Europe. think volume

for for Yes, glass, demand so obviously here over we're increase shortage. that consequence the as what in a -- is an of seeing

In out restaurants very in in returnable have large in seeing well bars sold coming demand we now are for are and We Brazil the containers off-premise this are containers back in strong opening reality, beer. One-way cities. point. because are and been performing at Brazil

the be for we demand going performing that beer. in a States is in shortage by aluminum, Europe strong beer. but strong. We're constrained are is to capacity. Brazil doesn't So, seeing having for demand it have a United very the has It strong very

monitoring Again, current So -- the that's that situation. closely. this we're

glass as this glass their consume We hands their more that positive knowing time is impact going have like a glass, have and in the to in consumers in that consumers demand. preferred to over expect brands

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

We have our next line question KeyBanc. Adam from the comes Josephson of from

line Your go open, please is ahead.

Thanks. morning, everyone. Good

morning. Good

morning. Good

flow two for John, cash you. questions

The into then, a and you're because business be then were recently. much the $XXX had initially than asbestos first payments you thought is, we such plus pandemic ANZ went earnings what going your million, obviously that lower partly not this year do and thinking sold making you to you you

reasonable these I think for changes given future, a the and mean foreseeable cap economic in expectations is of this So, working which whatever for CapEx are that you in when flow? comfortably above free year. of cash what of level normalized source your given a is the say normalized, do it major is maintenance neither year use all When level kind and be a your will I

above level of business. a say range CapEx $XXX for the still remains normalized that would I Yes, million

Okay.

-- EBITDA can in of of on million $XX interest So the lose you with level of of your of come debt. then payments million thinking but the out and up mind, ANZ, also EBITDA again, Keep the more CapEx kind view. follow-on of the savings moving $XX pieces of we themselves the about and in some that so spending lower or regard, the have on we own of of thinking the normalized

net kind working swing on kind or range this leakage, a those about to million million. modest $XXX $XX you little In we use of for down $XX a assume million, So a see million, the if or CapEx, something there is either slight the that of very continue back cash lines. may understanding bringing numbers that in restructuring million world the maybe that, along $XXX to of where then way as it of just $XX capital ANZ we of this brings thereabout adjusted have side kind that down really under and

it So we'd there that off of then flow like and and over improve what of from grow million of that's cash $XXX business course environment you there. an the base to for what the supports is have

were last inventories, just year, to just related you question course reduce just you as expectation AR etcetera? guiding of that's to Thanks. And sold whatever your ANZ, this your this year about a normalized for if for capital year given given can your talk to that's is, what level, working COVID before and before factoring you compared efforts

about just little me that let Yes, a talk bit.

we last be this to $XXX large going had of million should working million that use. to So a cash reduced going into use capital $XXX was like and year million something remember -- indicated into $XX fairly about XXXX a

Right.

of Now, of longer markets now we harder hit terms aren't the right things areas what mean is are the that. seeing pieces. we're like seeing a moving -- some also is that payment One couple have some I the of and

also fact a focused on capital inventory or management, Plus ourselves working that's really the re-calibrating of internally, a side effort. bit etc. receivables it's the that So, whether little we've

world about, range, a we're use be of million cash. in be you it's of million that below should talking $XX of we that $XXX comfortably that modest we range think still I but So, were kind should middle in the to part a

I'm this And about so year. that's probably what thinking

in be factoring year. of XX% had keep regard. to the of range to business needs the it the about the our and think of a markets so at the going higher seasonality and try Factoring, or side. into the that of year, cash and is on at assuming don't end always little first Now, going given XX% We the end use between what tends to source last gross this are they cash a or of a the of be that bit factored we receivables the a either We quarter are. XX% year,

messy it the bit will cash flow will that of is, elements working one community through very financing -- year is of things make the fact thing and reporting caveat going free clear for come basically Now this adjusters, these capital investment would of flow, going through the activities, very a we forward. elements, be some make those because from the for little I to and cash divestiture say ANZ

Thanks, John.

Mike Leithead. of line the from comes question next our have We

open, line Your please your ask is question.

one to by, say, out. me, the you in beer on question customers or products sold glass tremendous the with shift shelf. traditional you. trying your they're increased on dynamic canned they're beer demand if and And you're this seeing Curious demand Andres, this get for through Great. more talk Thank -- just U.S. that more driven it's who seeing cans

towards have traditionally premium more how back moving these glass different towards of they're So, trading your sold of dynamics? versus bottled are customers Just beer your demand kind evolved given your else that out? because kind call say more consumers is brands, everything just with beverages conversations

Yes.

developing on both, brands opportunity are a a on because but too right demand interest see interested that -- as in and that. Clearly, right the consumers shortage going in we're of up So, the [ph]. just of aluminum picking and the cans now, have glass, is seeing customers an to I to think, in think in it's which there think I we're like, in activity are products that, new glass pickup by get there seeing we because I their improvement is they

that that looking can good product product. Yes, way. about sign of there talked interest earlier, glass our brands us of development I in bring this it customers and that in a about a you lot as lot a revitalized also to see fundamental and forward a ways interest in coming is by we And launch we a is the different are a is that evidenced that's new think,

a premium is glass very in the fit are number branding. growing And there products good premium of products a being market for and and

So are that's observing the in market what taking we place.

you. Great, thank

the from Wells Fargo. Hajde We comes line our next have Gabe of question from

go line please open, ahead. is Your

Hope you gentlemen. well. morning, Good are all

Gabe. Hi,

can heightened competitive Iberian market. guess, of more the the and reports Europe in some in France, Peninsula. maybe We've I discuss was in others and at imports removing particularly read I curious, capacity specifically landscape all, the you

I of premium for spoken kind a So you was furnace, I kind of added I correctly. product remember it if know beer think guys

be So something plants was difficult I operational going second-half and for that But factories. a and to different relates remember point. I being result else it schedule that into I'm is seem kind obviously, get that furnace there? to of is is curious to MAGMA and just QX, to this pandemic, at folks XXXX it's appreciate on or as if of to there then engineers And push

Okay.

So shipping of been Spain a in Portugal long France into companies situation France, competitive has excuse -- me, in or situation. time the or

Now, what France is this we're seeing recovering well. point at

with start coming soft back area is remains is Remember pre-pandemic in -- same. Devordo regards into referring a dynamics little going wine pandemic to [ph] The competitive wine the the levels. the to which in Gironcourt, So to we -- that before the went was to a and September. furnace you're dynamic in

a MAGMA it So was bit same in you move as thing. delayed slowdown. regards we're finalizing and the got by is difficult pandemic, It construction to and September. With just little go the the we're needed will imagine to we borders ready people to to across

to -- and QX. advance the or have But back and is this up fourth construction by months running expecting So at of conclude the everything and to for the this point the this couldn't we by we time of to to construction. suppliers, the the in couldn't year, to we normal in couple expect send people of to end move because equipment a were we quarter needed we

kind next pretty How about levels a tight be again in in locked of And real-time we thinking we down production have that this of you given way sort don't year managing of you. manage are kind QX you thank kind Okay, should have feels trying year? XXXX. far of obviously, and guys I the inventories like away business we to recognize particularly today, a volume and guys XXXX recovery are some kind but assuming, of measures

think is all lots point the as of I -- at Yes, a uncertainty. said there volatility we and this before,

able various expect we to we're in before, closely color So all factors the monitoring later that and of on XXXX very described be we these more to provide year.

year, to signs have some an potential go it's encouraging described give are they're the impact there of them too an to I you demand, a as before, think give into early -- of following but again XXXX. now, right the I having in estimate

are close we with production our I to having to getting just that, would add, demand. aligned prepared at is again back comments point our I mean the

quickly. -- the course, doing of the mean, lifting, of a a that. we'll year at to were to year Great company the look couple in making heavy able to we're what back at inventory large, is achieve the by how Recession. months I of want what during very we after over much it much end took the So, the have do and we But further how to progress and

we to we inventories, cash forward. right going us which very the absolutely So well the for is positions quickly acted I think quite right decision and think size

Thank what you. I was that's Great, for. looking

Thank you.

from next line the We comes from question have of our Suisse. Lars Kjellberg Credit

go please open, is line Your ahead.

you morning. good and Thank

tracking it question your margins points. the looking to comparable Just appears and at still have in range just the one XXX left basis most XXX region in they're

margin can think And have what is, do question to play -- pull to of sort you so EBITDA what narrow significant in the levers do gap sort level and that? that role of you MAGMA

Let a mean, turnaround during just cost of reference making focus to me -- accelerating lot with done start goes reduction those that that something efforts. to I the the is we've pandemic initiatives. the and

when to Gen solid improvement is a have building a get into intensity we're for X expected lower going think when MAGMA we too. we following to pretty a to margin of comparable I year -- cost a capital conditions. total foundation ownership have under lower So

margins then it expect can have a -- Gen we impact X we to X, to and it's Gen that in have So and Gen X. a going as positive implement

is one just on meaningful second into the second also half the weighing sort And in from delay half? was first level? of follow-up, the of that that the activity production Yes. furnace terms a half And

The rebuild schedule?

Yes.

year in -- we activity delay, bit some we some the the of forward. have areas for had little high well had delay moving Europe those the scheduled when started. of projects level of are but we Yes, a needed We to all

we most them. So of started already

issue covered. have world, So the the we because people that's didn't didn't we move across. In other parts restrictions of pretty much have an to

into been our we've as to So year. performing schedule the according we came

the pretty as and third them balanced evenly fourth the we is of And the balance say I quarter. favorable is the the will through to be year would both the between of spending, that prior-year look levels. capital

Got thank you. it,

We have for time last one question.

We one Capital Arun have more Viswanathan from Markets. from RBC

go open, ahead. line Your is please

some just you've last my the couple now taking thanks maybe about over one Great, for ANZ have I all and and question, also changes I when think made level higher the footprint guess maybe you of about are is Do selling about years question. regions the to thinking now opportunities are consolidate how you necessary the dynamics, globally, industry? any that's plants? thinking there demand the of where you maybe there shifting Thanks. within think

Yes.

balance right The So the which having have market world footprint capacity. a market of been had is and in decreases, across between at North demand we been now. which in a we years we've for it's adjusting America, demand looking capacity couple the which

there that is a other are to an Brazil, see demand. that to requirements regards well we think Now, capacity. demand, increasing significant take where got we're we going is in seeing with us like so to of But positioned markets than I

to incremental well. over demand we but So we've look at and balancing that on got market been ongoing We're in always sure that most focused the are for want at looking the doing will margins we continue capacity capacity high very future. make But part and an time. continuously assets we've -- we have exercise good that's assets the and been returns, to

call. XX. Please everyone. Thank choosing And scheduled third quarter by moment as call note sustainable make our That a glass. is you, you. it memorable currently concludes our that thank for Okay, October always,

good you for Ladies concludes you Have and and conference all today's gentlemen, participating, a Thank this disconnect. call. may day. now