O-I Glass (OI) 28 Oct 202020 Q3 Earnings call transcript

Thank you for standing by and welcome to the O-I Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the presentation, there will be a question-and-answer session. [Operator Instructions] Thank you, Mr. Chris Manuel, you may begin.

[Em]. you, Thank to everyone Glass quarter third And the call. earnings welcome O-I

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

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

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

Good in Chris. and O-I you off for start to of and morning factories. frontline recognizing thank in all want I our team particular employees by at Glass. in our your O-I the interest everyone Thanks,

we the health and day safety, This our XXXX. for every challenging now hard results Last our produced by employees quarter worked With we to attention and all. operating. have great and the quarter. strong well. third of work Our hard the beverage all night, glass to food plants are the third rebound you conditions safely Thank to fully performing operational a keep team in for needed ensure manufacture containers supply chain of reported

was per were cash free $XXX earnings $X. share and adjusted Our million. XX flow

business quarter. the the was America increased volume compared by X% Overall the changed much course in were shipments quarter of consumption pandemic. Third the fairly over our haven't strongest the stable North across unit. led levels prior year Americas Demand to as nearly

from preference on-premise as of shifted health has strong Amidst sustainable demand this given consumers venue. healthy, the public glass regardless for restrictions. and to However, a off-premise, expected, premium maintained shift, have packaging

We our continue to strategy. advance

gaining and offset the lower third substantially Our quarter. impact improved momentum operating initiatives the during turnaround are production of performance

optimize to As ANZ sale would All value our for the the believe seek to of manufacturing. to to we On to an as continues We will actions outlook proceeds encouraging our improve. every all seek apply business note, develop we shareholders. restructure, on while, our unit have glass continued revolutionize we these MAGMA option. our create business

expect previous X% X% will solid decline year a in quarter X% in XXXX down volume outlook. now full be sales about to we Given to our X% to compared

sales fourth have conditions approximate reinstating As compare levels. comparable prior with which stabilized, we prior year for $X.XX will volume guidance per quarter, to share favorably are the cash the to earnings to year Full somewhat also XXXX we should the year. $X.XX expect flow the

outlook We versus are will some flows where on and cash XXXX thoughts also for the improve XXXX preliminary earnings levels. providing

the pandemic continues. Of course,

public subject adjustment trends is outlook any as evolve. So to health

Slide trends now of with shipment the stabilized our which I'm provide past on me Let have several sets information. X. this update presentations, months. on two provides an over chart previous Consistent

will O-I's shipment you see left, recent the On trends.

across retail we right, are presenting trends the and On key purchase several categories geographies.

thoughts me some O-I. Let share with starting

disrupted most for volumes orders quarter, May. April the stable of abruptly were our While first and in the pandemic

fourth versus this sales slightly quarter flat be in higher recent slightly reopened, been of recovered will have volumes October behind trends, the compared stable to month With shipments year. each significantly year. we us, third and volume quarter. markets June up last to up is most of month Reflecting many the As prior to anticipate

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

on remained sense category. elevated can in our you considering see, sharp demand higher at the sales have and depending This bars clearly the restaurants. makes consistently premise As since falloff pandemic,

reopen started trends locations While the has as some recently, strong, remain more on-premise moderated growth retail third during quarter. to

me Let make two key observations.

bars First, balanced generally the and with overall. restaurants, from for the strong offsetting consumer O-I, lost consumption trends sales retail activities

our with We glass well adapt and supply shift. channel pleased this and the customers are ability chain quickly of with doing to consumer is

most is of remain served end likely for chain present, quarter. the but for overall foreseeable Second, chain, the disruptive well inventories equipped customers markets chain it not reasonably beverage type At supply surge. future. after food the and is immediately are not and to possible snap will flat believe the overall this we back supply supply fully the and restock our second Frankly, for

So continue the think we and fully patterns demand needs that rebalanced. confident level. return are serving until continue to levels are levels elevated choppy and customers' off remain as product could will our shipment line, these we to pre-pandemic particularly well an but grow our at activity will that improve remains base, to Bottom development

are pandemic, the actions create on executing to now to bold fundamentals. we the our value. structural am long-term strategy we I I Slide shareholder have improve X. taken to you business on with focused company's the While on highly we want contend update the

to make our capacity progress which commencing XX% was Likewise, performance of substantially and at continue our which XXXX. XXXX was to down to the say levels. improve, advance us improvement MAGMA that reflects of year, to these with mind, thousands quarter. to deployment members that turnaround we team pre-pandemic offset platform great perfect contribution for an of will have help with navigate these by pandemic. achievements. X in for Germany the beyond. the quarter operational. reached X from the we initiatives, way broader the MAGMA the be milestones million after Gen during pave key Holzminden, is be headwind, as quarter. $XX on I'm important to our to turnaround was continue remains The installation a continues first ramped O-I up which thank plant productivity initiatives. Generation proven now We This second to several the and track to operating proud development production Keep the challenging who new now earnings in I This operating is want helped Gironcourt and technical in ramping plant back last

Additionally, a AG, food to innovative with collaboration and the strategic beverages leader enhance can respond Krones systems. develop sustainable improve and technologies. our glass processing agreement entered in we filling Together and at filling we and efficiency, and ability into global to speed recently market trends glass line

by and Finally, rebalancing to restructure balance optimize we aim strengthening sheet. portfolio our our our

completed ANZ multiple attractive at of We proceeds sale in number of including with during total the have of an third quarter. a million, divestitures $XXX excess the

favorable of past result flow, net reduced a transactions we debt the significantly over have cash and As year. these

across I program that we believe accelerate year with the program shareholder tactical additional right O-I, O-I. our expect highly elevating are our our and ability investors. Our divestiture and Slide continues to execute Advancing to these Furthermore, how unlock like for debt fronts in confident we to reduction. sustainability proceeds and X, about further to these I are firmly would value. steps further at customers, remain complete I our next to employees talk

are packaging of on chosen supplier sustainable and We most innovative, being solutions. brand building focused the

focus, sustainability our we Sustainable Nation's aligned you As this Goals. program United with Consistent Development know, ESG with ambitions. are the elevating our is

our recent steps a on Let me few journey. note

Officer, ensure ESG our appointed reports initiatives recently will that Sustainability position and first we are directly Chief me advanced. First, a to

year, several U.S. broadened other sustainability This developing actually recycling model our materials. our vision, and next initiatives in for we on achieve packaging goals have years. to system, recycling includes the glass Europe, all where Second, building glass successful next the outpaces

and inherent initially focusing advocacy campaign we More benefits initiated our at forefront balanced our and O-I have MAGMA nature new of transformational of will is brand sustainable industry of a the overall. sustainability broadly, in will ensure standards also many will healthy the campaign in the innovations on the And glass glassmaking the a characteristics discussion including the product, Third, including emphasize premium areas, the This glass. effort of U.S. set glass. many public building technology. lightweighting,

detail preparing have much which are these for XXXX, initiatives. will we Finally, Sustainability next on our more Report

provide on me over John turn let will presentation Next, who detail the the some finance. to

now Slide on I'm everyone. X. morning, good and Thanks

third adjusted results This mentioned, $X.XX share. $X.XX prior in Andres were the third our As compares to year. - our quarter per

impact earnings million believe impact the operating corporate While great in tax We stable accomplishment last due over downtime, elevated down segment higher rate. profit costs $XX following year, of a and was is nearly earlier and to flat profit were divestitures, of quarter the with production quarter. second challenging the

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

business. from a Operating the elevated boosted year. and was which increased inflation. about slightly and mostly items earnings divestitures when selling temporary the to up cost prior offset FX, year impact the of net mix headwind. from volumes the excluding ANZ volume X.X% Sales prices FX-induced was noted, prior Higher costs sales due were as inflation, As

given of Likewise, lower activity Bottom of benefit after production, catch second non-operating tax up rate with some turnaround royalty the insurance year segment tax As as and Higher of higher interest assistance COVID. the adjustments well profit unusual quarter, and temporary savings, includes pension prior include our expense, Anders despite the lower say, initiatives income elevated recovered lower costs including as technical cost MAGMA substantially rates. levels. line, impact is comparable continued second a our quarter. overhang engineering lower and disruptive costs, higher corporate that the after a spending down, noted, additional corporate retained and items offset was and amid higher The production costs.

color Brazil inflation X% a improvement quarter, down offset due was elevated In where in let and cost from to Slide during up was which America me and share year. prices was to Sales North nearly performance low million pronounced both selling regional profit partially X%. Latin most $XX the in was Higher Moving $XXX were prior the the on X, volume FX Americas America. around during up the million, quarter. the inflation induced

quarter and or selling nearly inflation, was turnaround major costs shipments as and of operating in production. X.X% efforts. last third capacity. profit quarter the cost the was was well significantly mitigate benefits of as as the down Europe's offset slightly million, the controls single-digits markets than up $X volume those over year Gironcourt. lockdowns ramped last prices lower as production, the Both in third cost Like of Mexico quarter, more low performance were were operating in included the the operating the helped year. the Operating offset the from improved in revenue course impact in region's up million Andeans, were at improved lower lower all year. optimization stable benefit and and up production modestly. recovered as good markets the flat $XX and performance we Sales which from up Higher While quarter Andeans October. earlier Improved costs from initiatives Americas, than startup Mexico

million the $X was profit compared to operating in Pacific's $X year. Asia million prior

Given of financial our statements have ANZ, XXXX reclassified. the been and XXXX sale

As our corporate. Asia a in result, the while Pacific Asia business only retained ANZ includes included segment is

were ANZ. you flat, As pertains pretty again results which only segment to can see,

While sale the was on the headwind, dilution date performed sale the well XX. on July after a business year-over-year

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

are during in As following the pandemic. allocation stated capital past, the we principles specific

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

have good We making been very progress.

reflecting a quarter well was On the free Cash and above due current were On cash cash capital $XX significant but by activity. from prior to prior year flows year focus our were million. cash basis, on factoring prior flows factoring shift cash prior neutral basis, management. working the third a in a year this Our flows down million. $XXX flow levels, exceeded was year year, year-to-date

pandemic, Second, exceeded for the Despite $X at our liquidity. committed well are the preserving liquidity and our continues we improve above we established liquidity the end to of billion floor September, XXXX. strong

are debt. we Third, reducing

That and in year-over-year of net As million and currency prior at just $XXX chart, the helped both reduce levels. nearly pressures. ANZ The net billion proceeds debt was second end quarter. under compared by free favorably the cash illustrated quarter $X.X year to period despite the debt this flow

should we our at covenant ratio per X.X. X.X at well and below credit leverage limit end level Our around is bank year this be of end. This was quarter agreement

are confident with compliance will We covenant. highly this bank O-I in remain

achieve of These actions will million As tactical $XXX we million sheet. to further end proceeds target $XXX divestiture we that the will of strengthen our program continues, additional confident our balance XXXX. remain in by our

as proceed solid progress capital making to Overall, continues priorities Paddock we're our XXXX. Finally, on allocation expected. in

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

As we significant macro the all remain know, given pandemic. uncertainties

will we quarterly are early XXXX. cents. approximate we Likewise, Currently, adjusted $X.XX earnings However, are more guidance stability reintroducing given quarter lately. providing to for earnings fourth expect considerations some we $X.XX

offset turnaround to our from inflation, to selling expect volumes Higher key Earnings conditions be sales Earnings will quarter. flat and divestitures, production tax corporate costs. operating cost dilution will also in strong should the and we performance and from higher a As pressures. fourth up should mostly stabilize benefit during reflect business which continue continued slightly initiatives. improve, prices rate include retained recent elevated will FX both

will flow $XXX Keep Looking this skewed at full-year expect or million. we our exceed temporarily cash conversion year this in divestiture. ANZ EBITDA-to-free recent flow, is our by cash XX% mind,

be would as as Specifically, this at for million factor compared $XX from line in free XX% or while from post-closing which This between after Net Well be a minimal the cash divestiture. view issue expense well higher. XXXX. favorable be a will cost as XXXX $XX XX% to Interest a gross provide reducing higher these XX% on while in by normalize operations. earnings tax capital that should price will expect rate we favorable million will and of normalize represents improvement million least cash will reflect rebased Likewise, Keep should headwind. operating cash it's $XX the AR trend a million benefits conversion continued divestitures. be likely timing inflation is early adjustment recorded to stable, detailed will year. We next be from this XXXX. production from $XXX continue factoring sales would formulas expect Earnings to or around a we recent of flow volumes cash has will in will continue working receivables, into of to to significant should purely be to inflation begin XXXX. as reflect flows. investing measurable contracted instead mind price anticipate earnings from improvement bit benefit items, XXXX we a Bottom performance. we year, this Adjusted been

We are expect next conversion will we With during focused our flow on to conversion. XX% over call. We and to increase improving our turn on details time. our anticipate it that, more Andres. aim which XXXX to year-end providing EBITDA-to-free earnings between back XX% We I'll continue cash year improve to

John. you, Thank

and me Let comments. XXXX presented with few high agility. with a conclude has resilience, we challenges, which unique met many a of speed level

earlier strong. in initiatives our an downturn remained operating focused by performance has executing reflected rebound and in been on turnaround year the have We equally strong met our abrupt improving outlook. our as is The demand from in sales volume

glass and given it both in open now can consumer demonstrated strong Additionally, in channels. has environment, market the an closed preference excel both

advance have strategy in to successful improve fundamentals. been business continue We to bold taking our and our actions

Glass interest your place will for we've creating stakeholders said a questions. and on reiterate will and what its me and comprehend we past, remain position you have beyond. taken today long O-I the I value in the term Thank focused company in Let that steps we your O-I XXXX and that in stronger benefit welcome

Em, questions we're for now. prepared think I

Citi. comes first Anthony of Absolutely. from Pettinari line [Operator from the question And Instructions] our

Your line open. is

morning. Good

Good morning.

guidance? guidance just that and wondering kind Andres, John, bit gave was about we've this you've And you're Europe by XQ of into volume of region. in how but that could the States, certainly if XQ October volume talk you a you obviously, seen I factoring had United the trends resurgence cases, in little

we're And mostly I think better have on-premise a is - thing is the in and so important expected Okay, in seeing offsetting drop. the to consideration performance this that most than good off-premise.

channels. to resilient than demand our Now, is originally that these what expected change between is we two this means more

food, up down ending as from with And that in Now, in spirits in has that is, we in seeing in we've performance example. beer, And what America saw the we're in this pivoting craft think the the we expect in in expect slightly is the a point multiple America, that strong a highlight been before. we to I trend. in same been QX a food, categories. we and has market. performance in beer, very so be important the QX performance and is We're - were by driven a Europe, be line shows seeing this Europe, RTV. in to intensive more continues Americas QX, look than wine in October we because performance this what in driven North this continue line to or which We And important stronger say in most an NAB, in beer, at thing broader in in mix premium flat very seen the we're beer performance, I in is North let's When Americas, region. mix think to by strong

countries We our have Mexico, Brazil. Mexico, prior back Andean recovered shipments levels year. - we example in and in of are are that well And to for

and categories in strong which Beer in strong We global spirits. comment are driven seeing also and In Andean by the brands. is on glass mainstream in what And recovered that well to to Latin to convert This And point in glass aluminum premium the they're products converting in is think cans. and one-way I they're are by very around is important, the this countries containers was convert another it a only and when primarily to now Brazil, the driving they important driven and third one-way quarter We performance. is high is countries. the market primarily quarter. seeing going finally beer. then important strong in are food at do across demand in by And Returnable forward the food, in by case, containers is beer reopening bear premiumization, And glass. cans. these market including growing Brazil data demand returnable convert And beer and demand an one-way back a And because in The strong is Brazil. in XX% annually. highlight capacity. through very is point we aluminum to restaurants. American in bars the glass limited

when today, the stimulus unknown and these at the we we what pandemic this And we and us know pretty today, XXXX levels. when with with we're we is of scope 'XX, into have believe, we've continuation taking into obviously So in be a terms that to see QX much in That of QX. seen what go in with is governments believe trends, line look we the to going that information we is by will be all timing. impact trend uncertain is what

Okay, then, that's product or And base could to it's development. much in possible finer I'm just with can regards very the you if add around growing kind volumes you just talked about helpful. any how wondering put to that? point quantify, 'XX, new to of that

it happening Latin glass to product America difficult of And you countries at Well, I mention by And develop I is, Europe. off-premise to that in than think activity point. strong. new the it the is American been think every in is that increasing and products. development performance level this quantify way We've customers stronger is And market. that Mexico, what every interest is But same the I new something in in of to can North seen is the is anybody in expected.

into So level expect volumes. is the help years. it of high, And will this continue obviously, the to activity we following XXXX

question. next you, Thank

Ghansham from comes next the Baird. from Panjabi question of Our line

is open. line Your

well? Hey, guys, of all are doing good you morning. Hope

you. Thank morning. Good

you. Good morning. Thank

morning. Good

as at inventories well kind of looks first end. your that off, and XQ by like for judging your outlook XXXX to is just for relative production outlook, that it volumes, you aligned So sales through were both the pretty Can confirm are you interpret if the in and And supply kind there comments? on give chain XQ impacted various in beer. production can view your of inventories, you disruptions right think the for customer clearly way that Mexico, us to regions, those example, second,

Just replenishment for customers? could cycle wondering inventory how long your be the

our optimized the been that have obviously been they've the food in inventories Okay, case, so production would reduced. like our I primarily. well - say

that side, our level we're So I chain has into the working inventories we think following the go replenish in to to supply inventories. of as continue inventories. that obviously our The entire been customer with expectation hard going is year,

been we've since level Now seeing this July. of performance

much year we've October through four months levels now, July prior So pretty or been at above. is

coming I their So to back from the that are a in expect that perspective, will case. level good inventories

a Now, disruption significant when Andean disruptions, countries. in the it comes and Mexico to we experienced

was I as most those - world, obviously as but going the that expect what and the won't this we've think impactful, will the that in the or dramatic in measures across shut down quarter, I the down is past. seen and lock going to quarter year, likely very into be following countries

much year, down bit Yet, on even going add the I of to six that production though point our we're would in a continue Ghansham, those is out I inventory that calibrate continue end we is $XXX ideas run now and - aligned as as about to intend the of probably - at days, little even things end this mentioned, we as And the of one levels. of would were Anders sustain million more That's that and to of September with time. be system. at to at of down types we've the pretty on with to demand taken

seen in helpful. your it's press since And releases very then inflation been you I've question, a while out that's your call comments. Okay, second and

up prices America and up, and go gas you. near freight on your North to is there margin the seen policy Thank natural the natural us term kind gas? you've see, lags just in in pick risk for pressure specific You hedging U.S., remind of

make can then John compliment. I So and comments a can few

constructive. continues it highlight fairly overall market be to think environment is I to important that

highlighted. just in by inflation XXXX factor that is to higher driven Now, than be in expected the inflation XXXX, you

goes total our XX% have of XX% to to volume. because our So contracted up we volume

We as in the right recording to into be position. inflation primarily then but XXXX going record to because be in we like won't - as that that opposite should high are XXXX would after we're expecting we we

inflation. be So it recording slightly we ahead of should

what we're the through either quarters behalves for natural through and because of in through at seeing hedge America our allow our there. provisions of We contracted of quarters quick the regard. would and pass of occur prices will the next the contracts of most that monthly couple most our last America gas I business have in right here in customers say or North Yeah, that probably for is in is in that pass couple that we now quarterly North only

We life are saw inflation. now. that's mentioned we Like And bit seeing now we, re-price then. but normalization where is that example, first We're lag ash because the to take and effect. flushes to like $XX inflation. that then a through million on the is next I NG, - our year, a said, it for passed that'll those And for pass time until prepared also through. said look little to to showing some the That'll induced buy notion XXXX couple see at Latin marketplace little situation comment as prices be things through PAFs in pressure soda quarters price third to now was we're is that a we example, cover in of some of to comments. we now. during will are and a through also we here you for That right the quarter. right seeing in That the American out in and U.S. Anders cycle bit able for little while negative itself in go play dollars FX into that a probably of that the this about of period inflation spread then probably that a of right countries. normalize right start go low whole And and quarter I through. XXXX here overall bit going being probably that the a that happens had prices through And is lower Obviously, because certain the are that where passed earlier quarter. inflation speak

we had did a you we for that outlook for we think look price that indicate inflation mechanisms if little to going here, window the that have do So pressure. those XXXX, because at a of temporary we're take

much. so Thanks

comes Our George of Staphos from line Bank of from next question the America.

Your open. line is

for morning. questions. taking Hi, my everyone. Good Thanks

morning. Good

Congratulation too. going will concept couple given overall on on I choppy the O-I navigate a to environment that as how and progress flex, of volume be of the I the in. you're Anders you had said, questions guess

you've out initiatives So question costs in had on a quarter. turnaround saved the system, of taking the done good in job I guess is, really the you cost, the you've first million $XX

As back, of stuff into your 'XX, holding how hopefully the now into much reintroduced about coming MAGMA not talking might constant, right business capacity be that's comes And on, P&L? just and new cost that from so on, how there if just and much good was I capacity, a to if a productivity, you in on? your in needed could you way, get out surge had of another volume follow

the of turnaround Yeah, sure, that the initiative. as takeout and first I far cost part take the can as

systemic, we've believe organization our cost quarters great really job taking XX% sustained is couple long-term out done savings. So, about the the been the costs has the business, it's of initiatives. of of mean, last turnaround I here would by I you're over say right. doing that I a driven takeout

advanced though of anticipate year. long getting into then of that future. them part seeing some other all well and cost year our are more those even be of that some that temporary, additional as we opportunities the our will provide other But some temporary the saving year, additional in nonetheless, and some temporal. retaining It aggregate because we things, now, we got of maybe next going in more the pipeline is amount turnaround - then same total, benefits we're them cost right more The sustainable offset of were as probably and forward initiatives savings this that next won't

year adapt the us this high. with took a quarter second in I to live Yeah, and before before ability with that this tell ability to think has to experienced significantly George, to the we was And us think flexibility, this We a this you. before. really year, in chatted organization respond its requirements, what quarter I we've said regards flexibility improved what or

forth So comfortable, can we required. are flex and - we back we very feel when

to initiatives, top we with to resources multiple that performance the But them and I last the to they capabilities in important Now years. improve are in them now them. turnaround available time bottom line. and put for to think it's it and to us took place apply And build regards few mention over build

So for runway initiative we following these good into the a years. see

comes markets. high at the at 'XX, it be across going and to we're capacity QX seeing performance going and this Now utilization when capacity, point, we're into with to

that's for So obviously said flow and as we opportunities something free before, focus growth, that are on we we a look And that their reduction. very got cash though. to there at. But it's take important

as is in for tactical we're already look, Now looking presented targets all committed an additional result, go we're the you. to that divestitures of a we opportunities what beyond to taking doing additional

the to are Now, markets that some growing if attractive are then some, we that in ones which we us will into more than present of find some give the opportunity redeploy today. cash

the My Anders. you a for reasons, reasons COVID, make stressed, has, one. a significant Thanks, The saw - other quick off to and because I'll question, of system had You've been for understandable then rebound. right? you good and it try had drop

like necessarily of is are good spend a You're and maintain the quarter. do has glass you of because not lot process. cut luck most manufacturing of in up, customer when the you'd picked and the you now looking like At companies to haven't position, how your of able same alone, and the a for you COVID? manufacturing manufacturing maintain your been demand or reliability Thanks, time in inventory constraints CapEx, that not forgiving

Yes, George.

to been reflecting is the I now, took what we the So build that our factories I they used. build just significant performance to be performance across capabilities when strong before, what complexity, And to mentioned exposed at last we including higher. that significantly over available deploy have right seeing, what few the now we're and they're and is the for years, think is resources but example, world, the look time all

This and deal comfortable. So that, I of learned, has feel complexity. with to very organization because

shut ability imagine limits to very to will quickly and technology. respond capacity, we why the see And to wouldn't entirely, with responded change performance are. to to Now how up. are organization deal down I feel you because this challenges. with And our it amount we that temporarily, those where the we But designing still just go high. we was MAGMA, resume comfortable really amazing structurally, I of back brought and and it's of really mean, we able that's

XX% Yeah, and unprecedented our I the mean, production engineering an Anders of on activity, underscores we point three-month just of how number level resilient time. to it's time, of says, restarted just at put capable in period and over what which organization a this is just just capacity is a that,

much, very Good guys. in you luck Thank the quarter.

Thank you.

question Your next from from the comes of Leithead Mike Barclays. line

Your line is open.

Mike. Hello,

there? You're

one go Mike, you Go queue? in the Or next the don't Why are we to Em. ahead, there?

right. All

Bank. from Debbie comes next from question Our Deutsche Jones

open. line Your is

question. Hi, I thank you for taking asked. that few my follow-ups some just been a have on had already

in the tough where at growing where answer that and you on Do wondering the COVID. but George's got mentioned, thought focused something would would your of kind And with there? process exactly see, kind right It's markets. point, you that be? flexibility invest of a long-term, not be? kind little question, to that certain of you're First could like you now tail you a was I just realize you've I elaborate today, of if it's on might to

example. we're there Brazil. in North is Andean the like is growth a the And and developments the in - for so seeing markets markets significant also activity quite high. of level important America, Yeah, But

I Debbie, how what don't their all about driving think - which much is we that normally before, that segments growth. I talk mentioned these

craft in RTVs, so the of food quite we long-term started it So the Gironcourt. so just takes operating growth attention, And that and beer normally a as commitment before, said or just more than is has premium we're lot we all that. - beer, seeing spirits, a most in it's this beer, NABs production. well Europe, it's for it's cheap And or this

that's better taking why and as flexibility to are the in look company we we're a So redeploy broader high. But know, we're exploring not looking those at you to these opportunities growing. see resources how markets tactical divestitures to can is that that opportunities,

the And sync MAGMA that with up early opportunities we'd business. to clearly, like in

Yeah.

a match there be those for And and for markets that it's particularly volatility, where forward. might going more then the great capacity in

you as to approaching regard we milestone XXXX. it's MAGMA, Yeah, in and know, the maintaining with are how of

end we quarter. is some line confirmation the assumptions that be We us some this the first of by give of that expect the going to running And to of have.

We that to are us And us give growth than will with give optimistic can out today deploy the we're lot legacy XXXX. that. we is going positive results in ability the to Gen X of follow to ability a do get technology. And that unit what easier the will

on earlier squarely one to reducing And cash reiterate flow and we're focused debt. points, of Andres' free

event fund at You know this not current trajectory. that right the would do these tactical now in would beyond the interrupt to scope opportunities we and improvement divestitures we that we on that other have look

could have Thank five about? product what think it's And They this actually would question thank on a what talking My going potentially are be of concerned was about to space, investors being impact well. realize as so to MAGMA, through business growth as I or the ask really the more taking that some over or lot which, four - the about your years help have you you. to for to in that related seems not just around you it be you some guess new be I be longer can in second U.S.? to well. next metal share, development, I could seem us

business? think can your So your you give thoughts just on the us impact how about to you

significant so aluminum is growth, there know growth cans, all Yes, that. in we

driven XX% is this by aluminum within of primarily is to the adjacencies. Now, there important by or seltzers, in the at beer is beer that, can time adjacencies. consideration. and take something that volume some hard driven the of And is point into growth very

presence the very, small. Now, we segment have that very today, is in very,

really share category. So mean, for our having virtually are get upside. we - to that an we're zero, I in that us some chances it's going is

remaining related NABs. that Now, to total is volume cans of of the XX%

And primarily those. within that of are driven present growth is the Now we in by energy not water. drinks any and bottle

there is very strong. even beer the primarily which a it's beer not And in So - beer. even because we coincide premium which primarily In we're North premium beer. is now in point the mainstream America

got we mindful be to of that. So

the So we amount I of obviously as growing. categories activity. there before, are at is of in a But which lot explained look

pivoting said at mix well. pivot that playing as are we mix we categories a seeing beer well. from in away As were exactly point the going to time a growing quite multiple this result what just quite those performing And into is in categories And past, of segments beer that are our from and is into we're well. multiple

the go capacity market for XX%. situation the could mentioned at in the capacity, that's that we are glass but we for more very today. had we is to growing countries, in States capacity, when beer other example, Now, beer I to if When we is at max United we Andean fast. go growth for Brazil, achieve that in us markets, that

very it's So go when And pretty we then healthy. strong to Europe, performance.

France is that In we is in are pre-pandemic seeing in are we where at point higher were was fact, in not we well something levels. wine it time this than only that's before, performing

now. that Bordeaux you right pre-pandemic, soft wine If was we is recall, very mentioned strong

across we opportunities opportunities are and cans our seeing yes, but we're growing have aluminum So too. markets

for you the that. Thank in Good luck quarter. Okay.

Thank you.

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

open. is line Your

on morning third Congratulations John. good Good Thanks. Andres, quarter. a

Thanks.

Thanks.

and going - sustainability the America or recycling from concrete it's the shutting can stream? just in it take recycling with bit moment North here topic, the are what measures it's way about at cases in you you because could if little trying wondered some a you recycling the the I to situation talk improve - down a to wrong exclude municipality like seems glass

the the is view glass what if - it you of our comes of - guys Europe. has Yeah, when recycling I glass guide potential the so the performance think to got in the powered got to

you substrate. is look at packaging the other recycling that it. glass if highest rate So the indicates to think when potential at I any compared Europe, And of

in stream, that manage. as And went on difficult that you work work And of and to in the creating say, materials, we recycling singular it in system. some North when got unfortunately, the country been significant system we has America, that. glass, needs recycled to the a Now, disincentive including the are and working some

is, Europe at what a that And a is in see to establish time them streams, point stream. and we glass with has establish working what they're attractive. this separate way in in many Now, counties separate we're

going put we States. the United really proved hard can work to So we we've in Europe to in are proved in the early place in that days, - this we're but again, And it work well.

that friendly the do plenty environmentally a and we make mindful that, if to a got Now, attributes shift for glass that highly of very, we ideal it be has [indiscernible].

Okay, next question.

the comes from Our from KeyBanc. of Josephson Adam next question line

Your line is open.

morning, Hope everyone. your are you well? families Good Thanks. and

You, too.

Well, thank you.

the capital embedded capital year question in My can terms else ratios two CapEx? of there? the questions. costs. the and there all cash your will something beyond in working is that conversion over expectation My or corporate that working you in Is is other about retained John, there talk free this for conversion flow regarding what XXXX? improve are time and assumptions And about

R&D, talk glass you retained talked to corporate you year-on-year, costs of insurance, is campaign can because expect there XQ drag about where advocacy about them a being You in and those going mind next as one decline sold they're go and you've result would there helpful? any But would to beyond ANZ, year? Thank XQ bearing thoughts be in assume that you. a

Sure.

XX%, $X.XX cash be that conversion, earlier cash of we on we would be million XX% the XX% to free neighborhood EBITDA, this we in happen that expect say what before free indicated flow that's next pandemic Keep prepared it in So to of as for thought comments, in similar base be going year. about guided XXXX, mind, to was a on data the would to very ratio. about $XXX million XX% conversion flow that a year, we had of the the

step return trying to able then to we're words, a other of and first off in So to that being back improve as that.

manage cash as assumptions modest key some that expect inventory there'll the the At is because of same accounts use the going would working one look well and some the to of payable. XXXX, capital as a receivables. on be this time, as to some if volume receivable we're year, be recover we side, buildup lost primarily so tightly we - in our that behind into we of that, was So

probably CapEx $XXX this the the it's be $XXX in that million number million. pretty $XXX of the think side, million in is mind range We keep low, year. On next it'll year to

very the was we quarter is projects earlier, It second get very difficult done. disruptive. engineering to any As talked

was much very The projects of third quarter lot window. a ramping focused capacity, not XX% that up that in so on

start otherwise to projects creep will into year. So a next couple

million we million, maybe So would compared to to $XXX $XXX there $XXX million closer more kind expect. being normalized your is that a maintenance level of

a and productivity always for type at projects. little are for XX% XX% project more growth looking ROI engineering any at bit MAGMA the project. say we target in We least have some or And You'll there. related

So those process. are we're the being evaluated right still budgeting now, clearly in

out reduce dividends to couple still we we through pension that. interest do under the bit, to allow that'll So other places the going coming should creeping a we're equity evaluation. that as be work expense or that A reduce term, but over drivers over us conversion at we one little of that getting up more of down long IVC better. debt, expense finalize $XX over be the time. have and and improved have, for And is interest then expense like continues so to paying the pieces million of all We're course, will

- there So want you a just mouthful but color little give to a

you John. thank Well,

color in Yeah, that regard.

was question corporate - retained, and other the Now,

Yeah.

to right. retained you're has million our around year. million historically, I mean, $XXX been corporate $XXX And a

a million basis. we or off plus so probably stair that. or that's on other $XX and stepping So the then basis to activities have That million or minus $XX $XX project to would million is quarterly up

we in And we with So let has, anymore. earnings a previously was bit trade there One part as corporate, the ANZ, that was sold rebasing running COVID me of Asia recorded reclassified business so divestiture that. a between deficit Tata, it been of the also, at not is explain corporate. wars. before, of is that and our we least the noted which have now And of position that's at

that expect of improve course. we will time, Now over

great those get well all some building a glass talked good also will wise, to market, episodic that, sustainability is MAGMA we and of to as more off out some, as program, then advocacy as to with spending, refer broadly, costs got spending we believe need have we push as glass Andres So of what end tell angle much media story. story especially the to associated about which this, to that we social tell and that the attributes we on

provides that clarity. hopefully, a little So

I appreciate.

to you So John, net the do expect going of for all just forward, $XX million that? change much

a be So then window. quarter. we next that do we while where a put startup will for get the a little have the window glass few lot, R&D gets probably advocacy, that those this of we're because might all Holzminden of so bit And doing recovered, bit all $XX during the million for up kind little into it step up a elevated next quarters, that the ramp several stuff startup

much. so Thanks

comes question next our line Capital the RBC And Viswanathan of Markets. from Arun from

Your open. is line

morning. Good Great, Thanks my question. for taking thanks.

morning. Good

Morning.

been soda next out go have the long? you I to back maybe, and may two? maybe ash. But through yeah, inflationary quarter or some or can kind the you expecting ash the think question. you the get reiterate guess soda you're from a to for on quarterly what natural basis wanted million just I again, Could maybe for gas side, just just how I and that marches mentioned $XX and of inflation of how pressures Thanks.

take So I at it. mean, a I'll stab

to the a the said, Of we induced this at to year this couple the starts gas a be in quarter that the But little the probably year recovery point to you of to - some for having in after because of natural and going flushing of bit ended component, nat - when first is the quarters North in inflation comp last major time. already through of FX of marketplaces. know, America currency a the the points with we I the second up quarter, of little was there's be shifts you about course, talked said, determined the bit

is costs far other some seeing time. the of in costs, earlier, account as to that as natural are to recover obviously And So more comped some referenced your as degree. quarters, starting some We're lines. pieces probably some on something of point of those to energy input freight happen to PAFs then on move few along and at starting next gas that initial get the lagging ramp up will and need of the to Those the a basis. over that

drinking consumers Okay, consumption thoughts patterns, that's maybe on more get helpful. updated goods just are can on-premise. packaged even we then And obviously your

I to strains So, out. on levels. the just market can curious there's, sold demand the if increased know system is still still satisfy

So tailwind containers? a is glass that Thanks. also for

seeing And at. is in going as a the the the performance think will we're of that activity that on-premise off-premise the And so I we lot result, offsetting point product seeing in and think looking expectation is I - development glass rope. new we're in beyond Well, mostly that a market at customers are any expect something that's before this continue.

Now, they today, see the are we and lag, have serving the them capacity as as right we're XXXX. we in markets now

a got However, there at. are take growing look to markets that we

terms and been I very think going or glass as new some we'll it preference support product intend high time. through preference, is and take the that all then take been that with to in a this important process, in we've what for look development evident, activity we the of obviously, at might capacity categories is

Thanks.

Tiano question from the next from of Global. comes Salvator Our Seaport line

Your line open. is

questions. the taking for thanks Hi, Yes.

cans. differently. is refill? some I one little beverage on on first building guess questions The prior a How's bit

cans that do that a short the is supply, liked and cans cans will for - especially catches up glass? to of would actually capacity are customers do years we've few in it we have at actually as in the hear Now can't now, - that there as next expense beverage North risk to America, in that some that the transition

is what glass. that there brands to know think their is glass. - shortage. in the I brands Well preferred at point is put opportunity their giving love And we the our to to consumers we customers And that this know that in have what

plastics perhaps these is period is might time. even go on of And two depending years. this next for longer a for how conversions on, going going the this while, Now, go to for to go go

States, in very active United because opportunities requisitioning have is package market. that expect this to going glass there in significant impact. an the we're for that Now are this we And

Just to we campaign. idea, give advocacy mentioned an glass you the

last was very And there in market lack of glass as a of there for active - with time the of result, the active is in a in we market regards is And were glass. - we're the area. I the 'XXs. that this obviously information promoting think attributes lot to in

We and we're that. impact. the innovation last work. have expect And we putting capabilities that is to few we're years going to over developed seeing an But of impact also the in them significant

So to expect going that is open avenues. significant we

be have, successful. Now innovation important, well, working able and to little be in which the there - it presence, that because a been in doesn't days just of because has to quite are not have are that into glass share growing third categories very are are categories it's early we to those the get very

to going things those all are So converge.

the for same next good think I meantime and very in a for think I years, support we're and to the for of there trend couple glass, ready is that.

like we customer good job You add a and those shortages for to to continue is, are well. going challenge know, I being them obviously base. doing thing the would very a serve served, customers. serving Right we're are one now our They

long-term difference capabilities. So big the I think that that makes in a

Okay, bit to in a question, QX. for on clarify second my little volume growth just perfect. And

the strong happened countries QX? your well. be other demand. much how I from that regular bit to volume as assume other companies that rate be have and Some would in much little demand would pent-up was plus X.X% and may would have clarify QX pent-up due a mentioned exceptionally Brazil run Can how demand you growth,

well, Yeah, up so single-digit. was America North we're I what seeing think is, mid

I think performance didn't it and but So that's, get truly high. strong on-premise quite part the some that's And in really in off-premise then performance is strong. due obviously to in

is Mexico and is too in continent. back which And in and driven local - becoming This it prior well. then areas food, according market. position and market exports demand because regular running We're to it's beer Now our is more more is performance, continent, is an its there in spirits. to And export by of some recovered the the focused and market of opportunity. [chipping]

as in driven food. and you business. Now it in demand Andean level there strong And when large a countries a were the is that demand. exports is is comes those there significant activity a those of that know, And to and local and quite business food countries countries in sustainable beer by it's

years So and consumption, have. we I to If probably selling this out beer the categories caps more, very in the returnable glass more. are highly other for because strong Frankly, XX that growing And current both exports. market. containers as our local place before, or mentioned everything be strong. one-way and XX of Brazil we strong is had driving is demand for we're we will is very We're or utilizing last aluminum it's And too. And glass. as selling And but been is goes and conversion of high markets, that in years.

that which Americas, - markets too, improvement region. that across in are mar explained And Europe all this see the and present we all in in across markets is So we that the I quite in demand healthy. it's

last I think time have one for we question.

Our from next of line WF Hajde question Gabe Securities. comes from the

line is open. Your

I doing morning. Hi, Thank well. hope good everyone you. is

Good morning.

America or guess of in of find compare to or or way quick way. getting different levels? cans question then one contrast, industry O-I over XXXX being kind And that a into of the itself revisiting Do this was of kind past your kind again, I what's availability into benefited And years? what question, been the because two of, did a maybe have issues, transition A as a North I can brewed have its out? embedded back view year kind beer beer and/or, not you trend comment if keg from in of the the maybe that relative to we XXXX, your then think sold approaching volumes

obviously been activity on-premise the so down. Yeah, has

and now, beer kegs XX% result, that's And are into normally containers. use about of category, a the volume cans, to one-way then been glass down aluminum that is been the in what's the and As of we've up the two. the Kegs been share share important down. is single-serve shared are So those moved And resilience has three. off, that's And down. both, I between drop right? being it's here on the channels. so seen and is think And and that between

channel. think the I that's high Because up down and moving we're moving important. consistently other when in quite one channel, in we're

lot from that. there. is place taking volume coming But So more there yes, some than is just there a

Now period declining a particular nothing the and else, has in when all, mainstream I slight we your is question look of been slowdown there during related over beer. at primarily real of trend performance mainstream, If your mainstream. to this in time, the think -

of in single-digits in low is strong presence quite Now double-digits that in in in time. period to off-premise And has high. been been well, sales the which glass this the channel, fact, beer way mid quite of along total in the high-end all that channel the all up other has very craft, premium, has demand a growing super segments, premium, beer, of for

mind six going are mainstream share important the more of at important beer, comes States beyond growing that necessarily that because before, United products today less in categories think least lot to have starting are in I well there I conversation - years Because up. volume is to And was important is segments handle beer last total. few show other of quite in on. very focus our Now, go as the beer. we when is mentioned there the are total over to seven very not to to but that a and Its yes, it there the are

maybe to of and think is guess Europe kind to Europe. seem years. Brazil, Andres. America. I contracts you, contract North they behave run But transitioning more I about inflation, or talked that of three then recall one here Thank in annual in an I We to And maybe how

of into dynamics, Just supply etc., starts important that foundation, that process input of and costs, of go kind the kind there, that I'm demand sort when whether presuming discussion? is it's pretty but

least, normalized whether gas, now. the clearly, Fuel was, is more tell to to market, deflationary process natural whatnot And any that or a is Yeah, XXXX. in the it's right thought levels, area more truth, fuel. - biggest returning you we're on at it's other at so it's back so seeing the change Europe in was - least that's

of So level which now. Europe, marketplaces. is XX% returning it's back more XX% us In to not input exactly, a other to business term long compared allow increases you of know, our will address other is just cost maybe about basis inflation unique on timely those under some open is the contract, market, but

end process So right March February of and into, that year next year. usually say, starts continues around the window

window inflation to a that we're the seeing to year. in a that pretty and timely the open shift the for allows timely than sense it's more So if in bit addresses happened now us little different starting be of it market

Thank you, John.

memorable concludes everyone. Okay, quarter is you. make slated a by call. glass. moment earnings sustainable fourth choosing call year-end always February as that you thank That Thank And, Please our note conference it for safe, our and XXXX. XX,

conference today's all joining. you for call. Thank concludes This

may disconnect. You all