O-I Glass (OI) 26 Oct 212021 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the O-I Glass Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Chris Manuel, Vice President of Investor Relations. Sir, please go ahead.

Thank you, Laurence, and welcome, everyone, to the O-I Glass third quarter conference call.

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

who Following our website. materials. to Please session. start the X. safe in a will call will those and I'd available non-GAAP review prepared turn disclosure financial comments over for included of are company's like materials to of Slide the this Q&A the on harbor remarks, we use now Andres, Presentation on call host measures

morning, interest Good in Glass. everyone. O-I I appreciate your

are yet adjusted number per We in about strong, demand issues. pleased were Demand is its of to levels to challenges, our low choppy macro earnings quarter report once chain containers our a the they’re due ongoing for X% earnings guidance Despite stemming as delivering from and on patterns, inventory is third down commitments share. O-I again quarter $X.XX supply shipments of exceeded range. global glass

hand, other nicely and expansion revenue performance final year, the enabled was and curtailments production rebounded the initiatives. margin benefits the prices fully Also, our initiative operating On cost elevated the better-than-expected offset Overall, results prior higher at primarily the of our of mandatory pandemic. selling impacted stages onset optimization from which inflation. strong by of by the the levels reflected management, cost

announcement including valuation Portfolio business discuss our will intent and as today's priorities, we shortly, sell As of program. of XXXX our progress we're Optimization part great attractive Parfait our to making an at brand Le on

for Yes containers, the Day last resilient And company. as profitable we favorable O-I's transformation ongoing and a MAGMA paradigm at Yes, to agile month. market building to introduction an also path is of Investor new of and accelerating the to to our are O-I's Yes, We glass. transformation The for combination glass Yes. growth. conditions shared

for prosperity our for confident sustainable and will stakeholders enhance ensure O-I. this plan value are all We

If Day Reflecting you be to view $XXX of anticipate outlook. our encourage Investor and our $X.XX you website. momentum, free now haven't $X.XX at good are earnings our earnings between can increasing which least expect We share, on we million per adjusted year XXXX presentation, we already, will cash range flow. we and found full

expect early cost approximate to XXXX. adjusted quarter We fourth starting $X.XX recovery per earnings in $X.XX amid pending will share price inflation elevated

Let's Slide turn X. to

on touch to XXXX leased strategy. commitments, are O-I's we X As continue base also very page, well On deliver we making priorities each on our our good of on I'll progress our this progress. some highlights our as we as advancing platforms.

to First, we expand aim margins.

in initiative have We well America. continued targeted million $XX performance as improvement North as of benefits

and As you around achieved can expect see, benefits initiative in total year XXXX. now million already our full we have target $XX with

to revolutionize Next, glass. we seek

Generation line X in commercialized Generation piloted MAGMA new half our and Our line in has second the in Illinois Germany, X a Streator XXXX. been being is of

ESG Our advocacy glass are and gaining steam. also efforts

from our the Third, structure. simplifying the includes liabilities. addressing and balance we number ranging organization sheet, adjustments, continue to efforts of improving optimize will a legacy portfolio This

agreements recently into in billion sales including entered to date, for to announced have of we program, the business Europe. over Le divestiture our our Regarding and brand sell $X Parfait intent asset

in plans the sole our next million severely, markets to up Day, America, $XXX are are premium Canada. during enable Latin XX include to on Investor lines the across and in up the out we profitable our U.K., MAGMA beer focused premium laid spirits As years investing over to and X Expansion U.S. that growth.

XX including very free year-to-date to the is upon, expand Overall, quite past to favorable will Paddock we're progress. with important cash John flow process. Chapter our other advance trends continue and pleased compared efforts, As we

Day. laid X, have shared of Investor our during key Moving elements strategy out the Slide we to

containers, glass noted I've of combination As earlier, market are transformation the for the and to favorable MAGMA path the introduction Yes. O-I's conditions building ongoing of

sustainability, as X.X% we profitable such a Just higher at-home poised in key the year regions premiumization and from these market average glass growth, principal benefit megatrends to is to living. operate. and where is to global Reflecting growth wellness, anticipated tailwinds,

revitalized these Given key agile resilient new approach, commercial we opportunities Yes, enable trends our to are company. and organic growth a commercial pipeline. to capacity in investing within strong and an

and momentum the performance Our transformation I demonstrates is well are building. underway recent we believe

margin significant initiatives. expect ongoing our from expansion benefits We

organization fund improve the we resolve portfolio, have are to invested Optimization that our to on decades. We pension on our Portfolio expanding and intend return realign capital. liabilities hands our program legacy organic Also, for business growth and asbestos

solution a meet value can world-class profitable an our MAGMA. on our of heritage evolving glass-enabled new needs just additional to network. market stakeholders. of host to business. paradigm provides by capabilities for we MAGMA, top improved With through all of performance These and breakthrough Finally, to a build expand are This set transformation financial new accelerate efforts to the and growth, O-I's the

future and believe represents compelling investment about the excited we are We O-I opportunity. a

over John. Now, to

adjusted Thanks, good I including performance outlook. morning, to capital Page business start a with third I'll performance, on of well topics of share. few progress recent per current a on structure, today, our plan XXXX review Andres, our O-I and as earnings quarter everyone. X. cover as $X.XX reported our

freight our energy year. be Investor results slightly reflected Stronger exceed $X.XX. at significantly we guidance $XXX the which the inflation operating $X.XX prior exceeded elevated expected as our operating selling would during fully prices Segment to noted high was quarter. As exited million, we profit end of to Higher cost good costs. or offset Day, and results higher momentum linked

performance due demand impacted strong, serve. choppy initiatives. favorable continued levels driven trends. improvement production includes with we cost by from good benefits measures. favorable remains by an X% ongoing force expansion prior markets the lockdown details reflected items. was volumes in performance slide Cost our non-operating we margin Likewise, several due Overall, year curtailment are also in pleased of performance performance operating The and additional to to chain X% challenges was While as and demand sales dipped

Page X. to Moving

We Despite pressures, inflation down still by informant on-premise managed was but costs In of more particular, favorable In up seen million the reflected above low-value profit food initiatives. net segment, categories revenue pre-pandemic levels. as tight certain remains segment. price was mixed on conditions cost volume we challenges. the million, food Americas $XXX Sales have we reopens, significant and intentionally have chain last timely benefits rebalance some X%. our pass-through inventory from supply categories $XXX provided optimization volume Likewise, given and ongoing have year.

higher In was operating to $XXX X% wine initiatives. ANZ hand, expansion freight was margin region from nearly up performance prices good last $XX as year. well mind million elevated segment rebounded On we X% following earnings Sales performance the our selling category, production reflected expansion initiatives, and cost other July. partially Europe, that million benefited profit strong Significantly in as operating inflation. margin the growth longer costs operating compared in good lower offset our an X% last Asia benefits while Keep mitigated elevated ongoing levels, very sale production costs. from of the and no improvement with in volume Pacific which in report

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

for our strategy with following are guiding aligned cash increase flow O-I's structure value. to of that set shareholder We are a principles and capital specific

XXXX measures We be should working levels. favorable expect flow this to cash in significantly year compared line higher free and capital or key

As cash was million. illustrated the quarter on flow free third $XXX our chart,

of million, Over the cash our reflect we flows, we $XXX of the management. have approximated and year, our consistency which are of normal so past least flows of cash cash operating solid positioned million improved Year-to-date, achieve our results free flow. the $XXX at seasonality to guidance well now year capital business, full working

Second, floor. our well committed with quarter third the established preserved $X.X strong the billion finished we of above liquidity and liquidity, approximately

X.X reducing and the $X.X And leverage favorably ratio times. and lowest leverage net debt ratio third our BCA are year level debt. was since we into Both net debt Third, full targets. compare our our billion, our to the XXXX, quarter, was around

a and performance $XXX X year, far our subsidiary with agreements effort. have from sell as of to into includes was binding in of commitment our this Berlin part represents brand of excess Le for of trailing This in basis. So XX for EUR million today's business EBITDA similar assets XX-month optimization announcement X.X multiple. portfolio valuation we This acquire Parfait XXXX million or a of Packaging this to a business a about compelling million. $XX on a a million entered EUR

to expect Berlin of sale agreement to proposed brand. will year-end containers The expansion early long-term to We a year. next the be or support includes agreement and completed glass sell O-I growing attractive this for by supply also

legacy the we as we liabilities process. to Finally, XX Paddock Chapter intend derisk advance

$XXX Pad a million where ex principle effective As previously for a date XXXG consensual Total consideration be trust. the we is will agreement plan. an at plan O-I funded in of of funding support the have to of reorganization announced,

liability. balance channeling a Paddock reorganization and our legal injunction we court improve be provides continue their position. flow conclude a Paddock, and affiliates agreement remaining will to proceeding to sheet protecting matter. from and future the O-I The the timing as and of Overall, Importantly, this actions expected function is current cash and

Let few now on X. on a me Page business comments finish up with our I'm outlook.

down per guidance We Fourth share, adjusted $X.XX earnings will will results. be $X.XX share. approximate cost our from cash prior anticipate $X.XX as third free least quarter per $XXX $X.XX We to now results full fourth expect the increased million. be inflation should and reflecting have We at favorable between year quarter flow earnings quarter year peaks. to

preparing next Importantly, to impact year recapture increases we the early implement price are inflation. to annual of

with global sales the anticipate flat be ongoing supply about we chain volume Given prior year. challenges, will

margin has and maintenance weeks. their upon at markets mind Also, reflects is and Additionally, our in benefit serve. some rates given highest will outlook the performance Keep quarter. from across engineering macro recent conditions, in current shift continued the FX uncertainties for expansion activity operating could fourth outlook dollar the during our as which we the expect level levels of the current be initiatives. strong we year that This strengthened based

at We have back additional Day. outlook which I'll that, consistent also Investor it are shared longer-term our turn for shared our Andres. With some XXXX, with to themes

John. Thanks,

Overall, on a performance XX. Let me with the during few wrap Slide quarter. with pleased third up our are we comments

Importantly, we priorities advance I At consistently improvement a macro step perform its a and to time, for in number ability deliver. commitments key challenges O-I continues to our of our change same uncertainties. despite this to continue XXXX. the believe achieve and represents

gaining Our expansion improve our steam, continue structure. is to and advancing MAGMA are margin initiatives we multi-year

that well-positioned to We our a resilient more much and now is are transformation. agile organization accelerate

we building path that Yes, your last you O-I, welcome for we your questions. in we're and Finally, Investor month the at our to outlined Thank interest Day.

Laurence, we're ready.

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

related it. pricing termed as around be the will questions to you volume environment My choppy

And happening fact, little a of in us it's supply more deeply color, in to what terms could of the volume might because pricing? through to then on what risks your inflation bit look Europe, trying amount but the Particularly gave the a that terms you're and to what you prevents you what's earnings have patterns? from of that? recover 'XX doing regards dig as to of are doing volume? you we So choppy this bit chain What the you your as of as in lost pricing, is, European environment setup

George. Yes,

looking labor inputs we limited tend supply orders markets. or are they're are issues. get issues, facing at when availability -- external is delay factors, our their they time, as on inputs facing In -- have the too. when same orders. the in factors, and our So have Internally, factors don't an issues, several we we inventories chain the example, external The by they truck or internal the reduce customers thing to

shift to Andy is you America in Brazil been mix has same. running to is has In on-premise. the the highlight Mexico also the As as cases, tight. off-premise some we through food been on the going the category been Important rebasing case. North have depending too, know, that from

also offset prices several important managing side. to priority it's the are and to commercial that action, levels. on we in opening solid the perspective, in into the have margin we and we in for in a From as Now into following for fronts, we see place we're we've constructive to very that we remarks, a plans pre-pandemic to that the inflation. procurement expect year. in actions procurement side our gain seeing price have category commercial mix able been we're The highlight return. We're taking mentioned to very it a one, increases we're we business, And for some the versus them. executing and the perspective, recover mitigate it doing retaining also inflation. fully be giving We going doing active XXXX, as -- policies and environment From managing already XXXX, to go in

the third chain and asked, add things of what's down up other thing I They We X%. that supply into like on had the volumes had you these quarter that. the to impact flat be were expected quarter one George, would impacts going would X%.

you think attribute can to X% in the that or difference or format mostly one another. I differential, supply of So say, chain-related X% issues

a it's but So having it's impact, marginal noticeable.

strong. for Prosecco recovery growing resume a of as us into complement, asked the And demand very seeing very referring Yes. George, We're activity. 'XX, and key for Western good are And for, which -- well Italian mineral to strong. And solid. just beer you the in Demand going just wine demand champagne Bordeaux and the is is in Europe. to very on-premise very wine the Europe, fundamentals is also in markets quite water channel

Italy, growth very for are and market us. So we're single-digit high glass beer U.K., the in relevant which seeing in France for a

with very going price don't inflation into fully see we recover our increases. we're any XXXX. going for confident solid fundamentals, issue So those to We're

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

This is for How you sitting Ghansham. Matt are in doing actually morning? this Krueger

Matt, Thank you.

Great.

is about angle? recent O-I how these aluminum, there's flow any availability as limitations the to come by supply in details And might from potential you what to with compete directly as substrate really is which glass that conversation on aluminum would volume about several fruition, now thoughts far that you benefit to or causing thought being a magnesium If indeed specifically guys obviously So could some help? there levels. serviced been be capacity have that were potential handle quick cans? shortages shortages into that's Any

Yes.

and utilization in we during Investor this why levels, out So X-year a at capacity point time, for Day, are high expansions. we at operating plan that's laid

are expansions that So are markets expect we through quite that those strong. address highlighted. that plan, timely. are we we the through issue expansions to the The believe And addressing you

the Citi. from comes question of line from Anthony Pettinari next Your

It's actually Anthony. Bryan Burgmeier sitting in for

and price On via needs much what much in recovered getting secured how to up? be how to already recovery just in matter And contracts of a be it's the yet place assuming in XXXX, cost is timing negotiated? you're of caught contracts

say of include would covered this Yes. of Between -- XX% globe John. agreement, across long-term agreements I price business is is adjustment those and our some under form the formulas. long-term XX% and

is year. it of into part going the that So next established

to generally most is XX% open obvious on The is other, of call it, annual about on XX% renegotiated an in business part to of that The example annual is renegotiated tends market of year basis. that very the basis, here. the speaking, early get XX% Europe the in an

area new into So the that's PAS. to in price a focus primary that's going the addition on year the movement

next those on to recover freight, cost you Got materials? of easiest can most the it. That's very difficult year? which labor, drivers going then buckets is helpful. parse out XQ, and price negative And the be behind between energy, and on raw to contract based structure, And your

you -- So followed by the or too, through issues bit And much take at, more monthly that which on modulated. biggest of then that, passed fuel particular, a in the the if look quarterly pretty freight the you're regard side. probably that on clearly, a fuel comes I In a but it's side, North little would biggest that driver side is is say seeing America, basis. that through is also, the electricity in the

pretty pretty going ones think square are overall. the where Latin that you see, reasons are pass-throughs. I and year-to-date Again, well in I we the in is the timely pass-through of cost focus as inflationaries. One we're of with to generally organizing broad-based adjustment have quick that negotiations the the in supply price North seeing America, been And -- inputs price chain across of to the our all have much see those is can able American good those inflation a particular, pass-through say keep would market, because spread we've around markets, you able to that in these you're the formulas business obviously, very a for up cost timely forward. globally

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

I just to energy this going European wonder, issue. back

talk If mitigate to can't have Because In -- really mechanisms Europe the you you European like impact And on epicenter for operations? you words, issues in those of get to it's gas? it what of are issue? that if natural can been the ability the on your any type also about energy has impact other place seems operate? the whether having

Yes.

before, mentioned -- procurement a we of this place standpoint, increases. price as have the mitigate I So policies from kind in to

effective expect that. for to. When a know to been going move position in are very the position that which very going actions. because and supply, of a as We've a comes have don't of issue good commercial clear difficult it And we winter very think we taking I to it's plan. we our any result forward what is

our if is see this at our for in markets things we what this going Now don't pattern, and at assume time, see place, we'll the expect I risk have to we that is of we it have then we point contracts we mentioned, accordingly. any -- a us have suppliers a winter. a which But risk or point normal contracts If suppliers that is, -- location stream, the through winter go and adjust and operations out issue the we'll and the with based in high we as supply. normal the on for really present, the are little in to consider very it when have for risk supply nothing let's

glass public the industry, just press unpack plants. America. us Okay. and hearing very could come the here of stories about we're other how across we've for I the just And to bit if Because little Andres, that wasn't it this one sort We're glass ago you point? North of a on in shortage long That's bottles these helpful. Can one. closing people

curious, imported all I'm duties on how the -- kind logistics of issues? situation -- do the of And of then you is the you some kind this think How on is do much so are? of trade the to what term? issues and the just in near capitalize What much of glass? of can the this And

Yes.

difficult is increasing. to in the -- glass increasing and for comes demand are peaks well, been continuously it cases, serve. has that So In some strong, it

are our tight. Now inventories

The that. has with compounding that's from So glass, coming China, down. particular been imported in

adds to the problem. So that

this now are can. capacity our we the point, utilizing best we So at

As is circumstances. we mentioned before, mismanagement these in important

And So return. the we can you margins to have support be doing able that. of we know, we And cases, establish out this. can depending in and improve across the even States support then country, Andean the also to all Mexico and a supply seasonality network we're as some And we everything Americas. or to productivity on support United

take can. to of as So of the situation advantage is place that all in we

from that Now the peaks. going better into be their actively we minimize perspective, a because are with go these to as 'XX, able through to a we're inventories position working confident customers, them customer very been better them with And to to issues. in our we've we're collaborating be well support established

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

the should the particularly chain Have Or you here today? of even follow of into on on frankly, we First, customers staying side trend quarter your like 'XX? easing customers other Andres, I shortages. sense labor, trucking the I'm things on they're laid sense? get those or or wanted external fourth well a or as to the out up to have whether that you your material factors given sit factors do think, supply I same a and of how just trying they visibility,

Yes.

they're these they're everyone. and -- supply widespread, are issues the impacting industries across chain So

in I strong. with are and is what our coordination case in is our customers a is our place think good very good relationships very

the can situations to demand, better of their which can us XXXX. be that through we this gives we plan the that for are manage for we the these because expect that our we the as And into better. leveraging to going respond the So network, growing supply knowing actual needs ability Also we able mentioned best I before, will to across on customers. supply Americas based also support to better work,

John. Great. helpful. That's maybe as And follow-up a for super

rate about conversion XX% still and how still should free wanted kind at that there's of cash think EBITDA it's in that 'XX of early appreciate the CapEx? before ton I we growth of should outline, to parts. Just flow a about Looking year? I the moving through flow ask XX% guess, the to step-up think But conversion. we about and from next I

Yes.

a measure call free flow. I adjusted think, we new we're Telly, introducing cash

-- that capital. just so the it takes looks And maintenance at

you you're component when higher just think free look of percent flow that a number actually take as the something a cash that probably XX% I maintenance a EBITDA, because conversion. north at of free adjusted is adjusted at flow of on looking capital it, cash than it's

White Bank. Your next from Kyle Deutsche question the comes line from of

you think volumes wanes. could about as volumes forward pose have headwind mentioned food United incremental that States wanes? consumption going I throughout at-home consumption specifically gained the headwinds to sense as at-home in in of a potentially pandemic, much on how your the a you Do regards food, you

obviously very seeing that, came on-premise So food peak It up is What digits, peak back pandemic that that double channel during a was open. right because is at-home down consumption. strong the now of we're because went right? already

pre-pandemic important versus However, gains level. we're keeping

incremental seeing and So this at X% layers. volume versus we're those between point, X%

is premium healthy all happening the food quite is of me, -- on So the across because this products, is excuse categories. premium focus and consumers of

is Yes. that longer-term and that, living focus And to that of some there. a looked be reviewed the level is continued going studies premiumization at is we've indicate trend at-home

most So some continuation of of type structure. project demand of form that

from Seaport Tiano Your of next the Research. question from line comes Salvator

the shipments shortfall, give you what very more points also confidence is by that though And shipments region, regions? actually on by data refiner why that print provide specific can your demand even Firstly, down Americas in were you despite X%?

Yes.

like Nielsen both off-premise for give the we're interesting through statistics, I'll data channels and beer, example, around seeing and you When we on-premise premium a which is wine the the performance, XX%. in data look is -- in up at U.S., few X%, CGA, So like spirits up XX% and points.

for So decline the rebalancing, what improved. has glass. with those that and well very are is good, demand channel quite products means Domestic is, those beer the products even with aligned

half used to We at of small are we be a the out rate base.

down and beer So are our premium mostly system, brands in international beer and offsetting decline. the going is that impact

Now mentioned that. we imports from from diversify we've continue seeing example. growth to we're before, away in I and successful been as domestic than That's the why And before. doing beer, as food, the an China are lower

pre-pandemic share compared of and X% premium is glass before, then higher the And for and beer strong products are food Andean, strong. out important good and is local demand it's increasing. by -- the Andean that's is those in X XX% products and Mexico, these also good which is tequila beer, glass in In in Also how case premium countries, products the than performance Mexico exports countries global beer strong performance So out we're beer look levels. is of categories. X% In the driven a strong a NABs are new at performance total is local of increasing glass for Mexico, levels, Brazil. supply. category. quite brands Andean to the of all When of In pre-pandemic is we're at of very of due glass XX% back NABs. the returnable up across in or X X% markets. beer a very the there of particular, seeing returnable for But to exports. seeing -- indication to Brazil, so I growing. food are is And of One-way Brazil, them, solid premium one-way

markets are those really So doing well.

as by all these capacity, opportunities. limited are X-year capacity before, are plan, the take part we to of adding to we of explained advantage markets We as but those

XX% Great. you And that million in $XXX almost CapEx of the X-year XXXX and number, towards CapEx, question your is would CapEx your strategic investments And is 'XX. said period. be on I over you your plan. terms would strategic more geared my second strategic of Okay. spend thought

because So more did you're something you Did spend to opportunities? upfront change? decide capital seeing

laid No. in do and with, kind believe, strategic the of Day. ebb is is we're capital I in we're in side. to to very XXXX Investor This going up during XXXX, here going out off much what ramp see line peak CapEx in XXXX we on What

I loaded the to up ratably sales back-end think the we're as volumes are that ramp what comes mean, -- XXXX we're the in window. capacity more XXXX referring realizing and to I online, is going

So so spend the anticipate optimization this the portfolio cash before is all has CapEx that activities I in thing planning, too also for the we is I-Day consistent And guess, with add the what would out I nothing with that, changed. consistent is also said that cash be front-end loaded the we side. strategic here on the having in-house those we goes transactions capital that on the

Alton Your next Stump Capital. line question Loop of from the comes from

from of can longer not release in clear you your how third from this impact? short-term had wanted customer comments going last portion much that a and some margin the able lower just satisfy that it to press U.S. walk be to ask, was do Or quarter. the also Is you to during base? morning your away a where pretty here think I that to business you're

Yes.

and have inventories of margin that the that was spots a in management that, after have original ideally getting So the we -- inventory issues the due shortfalls or the had supply chain low are did primarily ramp-up little things bit and strong to because that what just inventory would mix we markets geographies, for seeing we're of the opened certain up certain categories, in don't again. parts business. we that is we And

be away in goes example. mix to be are but able not for our to inventories strong that is is of This the transitory managing So on one business in we're the glass. of quarter, what take the capitalize for that to we're able issue, demand the a doing system something advantage it's and

comes the question next from Your RBC line of Capital. Viswanathan Arun from

Hello?

Laurence, let's move to the next one.

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

One then flow on one on your earnings outlook. on cash just one -- and

slightly or not a getting talked is earnings, month you On better. fair than at end a higher assume be being volume, that. earnings high not out I to higher it bit obviously $X.XX. was any the just of turned It than inflation about John, ago, the $X.XX to the because

just ago, side? you can seem beat help a what what understand led to So indicate pretty me the but on would volume relative to to you the month wasn't sizable

projects Yes, this month The what numbers good we to the exactly. asset the the good a very efficiency. cost a be to of at lower were than we number performance for sure. little wrapped yes, a In intended. the originally Yes, proved up better strong that underway of good of business a earlier very, business. had being saw was out we anticipating actually that particular, labor day than we end September and The pointed bit very and quality

good major very levers the performance across of towards end So quarter. the operating those

it. try just flow on bridge. I flow. do free free Got And to If cash a cash

it I year, will a $XXX-plus if you're maybe, CapEx And down you're or Correct it, a subsequent but basically negligible then are the in this bit, be, plus would $XXX talking think, million. thinking I'm earnings call $XXX-ish there. will that about it, still million such step me up million cash. capital, year-over-year, if million. free would flattish wrong So a call X bit, years, about working drag CapEx be $XXX

free thinking just about for Am so? something? cash missing I'm flow the thinking X I over help way? am you flow, next adjusted you're years free cash the with So it me but wondering I right actual not can what Or or -- cash

here the we're into we're that beyond. -- next not dip will numbers cash we're is the one Well, years. But free saying today getting going some on flow for not XXXX to XXXX think specific and couple I in of what reported thing, and here a

get to capital and the it the dip the we run of driven margin the EBIT on of because some Parfait growth $XX of effect those Le actions We more businesses there business positive, we we in improved think that over ramp forward strategic as as will strategic to But previous self-sustaining something expect those that do remain we by to the net okay, a doing, additional capital to the today. sale going as we've announced it where portfolio but that's ramp is is $XX MAGMA such that like the million actions conversations we're then optimization of of million the is that, term. funded up fully longer up. by we had think result that it's management additional about rate as incremental

comes next question Your from Truist line of Roxland Securities. from the Mike

optimization the analyzing and of for is account capabilities. upgrading company quickly work is lot Just you receives profit that a going the company make mentioned through marketing impacting initiatives pass-throughs. around has its each innovation the the and revenue obviously sure value to Obviously, done sales, products. on it The how Ford

revenue So missions just wondering, done you can benefited what actually quarter the specifically in you've the talk how authorization and the about pass-through?

Yes.

initiatives. So mentioned, our leveraging is to It is we the improve one as of expansion few the top this really you about over built margin the line. -- the capabilities years last

frankly, done over the in over the So what the to be opportunities. quarters. product that up of capitalize to And we've things work really top time, able line on setting the happens is better top quarter the

have that We this tools in processes established. well we also very have point, are place. sophisticated quite At

So there helped discipline QX. line. of us is And what lots the rigor with around top and that's

good… just would just -- I for Yes,

about that. sorry QX,

has mean, million there $X helped revenue million it's margin between $XX the probably I optimization, major discussing clarity. of good and the a spread initiatives here. well. we're Just -- our been quarter, associated X is and through consistently performing expansion mean, which projects, benefits I that in revenue very our

as factory our side, cost the our the is cost on as have, side. on more which also well transformation, SG&A We performance

benefits added things we of But of to. net are those working All against course, that incremental us. those then,

quarter. was $XX the in example, For about freight headwind million a

out of X those had incremental initiatives that net you about expansion against margin when it off freight million $XX of So buckets net we costs.

So we the organization. make sure at want to something looking that that's to benefit a net we're

point, correct. And matter it. accounts, the mix that management. you businesses one away from expect mentioned given your this supply just the you question accounts, of on ultimately inventory tightness given inventory are maybe a that certain that John, as the -- management Got quick your also chain, the on saying, need walking inventory given not fact Obviously, maybe the something look you're you Given mix just is to this customer it at this Is at you pay customers then -- all your given you and point? this inventory profitable And what, giving aren't they for you're products, know at it. tightness your you maybe more in business. don't to We're We us quality shift need historically? go is mix appropriate going to And higher permanent your had you business a value. this elsewhere. than your than you

Yes.

yes, that's focus. So the

various and define very is challenges, priority criteria is margin as And us. through important all these to priority we're we a what return. a that using to giving navigate for we're So

Yes.

America, There above last to our to always that you about to And our we and things like the that XX% going some and continue of permanent to better spirits because going inventory sure shift over you're food other I'm of I think category some years to time, mix." places that. have capacity are do and is "Hey, the beer in right, I and we've where several transitioned on. looking other in don't commented specific away can categories at make this North business. the the mean the have ongoing capacity shift I of you inventory margin that inventories, to saying, that categories all wines, actually got to are over changes to

comes Wells from question Your of the next line Hajde Gabe Fargo. from

different I I inflation wanted guess, the to comment a couple angles. question, from of

then gone might policies of I'm thinking but total about, kind we kind warehousing, asking the where include obviously, control dual baseline I'm through higher of when aluminum I'm into ownership cetera. doubled of into premiums, The first structurally answer could China of these calculations today? new forward. a et kind sort place the yes, context assuming kind that the imply taking of you And guys cost is kind of in of materials aluminum putting almost be that raw have again, are is that's account of aluminum go of costs

more at? initial have looking guys guys that theory extent been is packaging something you expansion? that in What should this response So announced been does MAGMA aggressive more. to even a that you improve since alternative that, customer of glass kind then cost-competitive the it to makes And I corollary guess,

Yes.

perspective complement So give just to. that one you on can let John and me

other important glass of the mostly advantages the And impacts. that the that is supply chain is of One one has is local. for cost, One environment. is X very glass

So those are the large of dynamics that's those when you pressures. support described, not chains they're places that case at that the are you very substrates nature, glass. and look are in multiple But demanded related creating to supply from that global that

the we in to glass in know, you same facility which we As converted melt containers.

So and is supply chain our of very implications important implications very integrated with important very cost on sustainability.

Yes.

As far as…

Go ahead, John.

do in add point going I market. one just to is there, go was add how just your based -- How that look price marketplace? in the at opportunities upon the do original question to to Gabe, price? going we We we clearly

We are not a producer. cost-plus

So MAGMA. would clearly, reaction across on I we good. we customer the to competing value the had say been landscape then been make price And look get sure accordingly to at been has was competitive you And question very other opportunities what to relative initial that it's opportunities. the the

we've constraints. that's intent markets for business, we some talked the well about run With capacity expand is against to received by I customers been in many time very think our

new fits on that there's market in responded everybody the we're MAGMA the very, that table realities that so today's of I that we're around are well world. And laying because customers facing very corner. with So all it very they think capabilities the opportunities working with just our coming is to with the well encouraged out

near one time, but be growth we change scale, MAGMA help more follow at And to more industry. the also for scale glass MAGMA. local a because supply aspect can economies locate. or co-locate of down significant we is protect production the capacity that to on same and will become then And which even can able to the

think I Laurence? the will this question, last be

sir, Yes from question we Panjabi from Baird. follow-up Ghansham a have

across This We're market. a And marketing forward Thanks for on touch can seeing capacity and what packaging But see a hop in mitigate letting queue. in in as Krueger what lot to about on hard maybe that lot see what here again side a Can the market. campaigns little to out obviously, your a Understanding starting I opportunity situation hard the back ready-to-drink the you're opportunity tight just made can wanted the seltzer Ghansham. bit. the come been your seltzer me there there's of and in substrate on that is Matt some level business? penetration glass you advertising the moving talk the you market is the about with slowdown things. being

Yes.

seltzer So glass. hard an upside is the category for only

very very, So small. is our current share

branding, However, there that confusing is which it presentation the good significant a which glass, on of is for consumer. in fit proliferation makes a what for of category, attributes the perfect very going is

doing So one and the of they that products. that's the seeing need why things that's we're customer

part. that's Obviously, by Now suppliers currently the category the supplying is demand down. slowing than expected that most the previously category lower for that are

Glass driving of categories. product demand of and during are of to present. highlight products the of go are in we the very and we it's lanes aluminum And the Now Glasgow, when not comes brought cans which products up capacity it the important different I-Day. cans that capacity in what where aluminum to cans play are

that there categories into those our but other categories. So we for are anything, if towards in glass, move the for particular, if get demand all are driving them, and they several upside premium us really in

call. That that Thanks. concludes making for glass sustainable X, a call note fourth is team XXXX. remember, right. our scheduled and currently our in year-end join moment And earnings memorable glass. you. Thank All choosing February Please quarter safe, by

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