O-I Glass (OI) 2 Nov 222022 Q3 Earnings call transcript

Hello, everyone, and welcome to the O-I Glass Third Quarter 2022 Results Conference Call. My name is Sam, and I'll be coordinating your call today. [Operator Instructions]

I will now hand you over to your host, Chris Manuel, Vice President of Investor Relations to begin. Chris, please go ahead.

welcome call. the and quarter Glass Sam, conference earnings you, everyone O-I to third Thank discussion be our by Today, will John CEO; Lopez, Haudrich, and our our CFO. led by Andres review discuss business will results. we Today, developments and our key financial

session. Following a prepared host remarks, we'll Q&A

for non-GAAP available on this in materials. financial review measures website. the disclosure our are comments harbor included safe and call and materials company's Please Presentation the use of those

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

Last appreciate per Good as announced interest prior your night, morning, Glass. adjusted $X.XX O-I strong O-I of year I share, quarter third everyone. guidance. well a in exceeded results earnings as which

As illustrated improved. measures left, on all key the

profit prices, basis turn. offset a operating margins full adjusted financial which XX%, cost benefited inflation. more nearly improved points, higher from more than Segment Earnings XX than selling EPS leverage and increased and was down

slightly was low sales up and expected, markets. amid As key constraints capacity record in volume inventories

to costs our did initiatives. needed work benefits from new margin we mostly much operating and we solid were by which capacity, commission performance As additional expansion some incurred offset

a In on performance, a of key the strong quarter. we delivered initiatives addition third transformation to during number

flow July. inflection efforts and time a First, legacy has liabilities, resolution founded on shareholder we and are the decades, in point, our an O-I in cash trust to of of fair asbestos reached strong and for was first its final Paddock achieved the value. all focusing increase

program billion optimization expansion $X.X completed in which we Second, prefund our debt portfolio our help August, also investments. reduce and

level acquisition. net debt target, in since Finally, lowest our and ahead our well ratio of line XXXX with the Mexico schedule O-I the Day now is leverage was Investor

and our rating Recognizing credit our during the upgraded quarter. S&P progress, Moody's significant both

business strong into and outlook our momentum quarter. year-to-date updated heading performance a have We the fourth good reflecting

year expect with cash cash in range end encouraged at line now and macro September. business flow for will A Despite you well earnings and themes we may beyond. outlook in continued our key raise that as full investor progress updated an guidance our outlook. in John elevated uncertainty, and and expect of we XXXX discuss be later, as the outlook earnings are flow high We during conference be performance our our full year by recall, XXXX. did As will should bit

move review sales four page Let's to recent trends. as volume we

and Our Americas, shipments increased mostly and the Europe quarter. markets due in use around down the in Southwest down Europe Brazil NABs in to Central elevated double in North third asset in Americas. nearly and in nearly and (ph) and Americas. maintenance the across almost shipments categories X% X% year-to-date, about demand were spirits Europe, was were Volume across the Americas. in In strongest Global up [Andean’s] strongest said, that shipments repair With multiple up In were activity the the digits X% the X% in X.X% and and America. categories. were North was the X% up

consumption On we XXXX latest the the period. the have XXXX to Euromonitor projections right, for provided

decades. be should the several the glass the and we markets. in glass nearly to we have fundamentals leading growth seen mega rate line growth expected in on we X% see, favorable grow can trends the discussed you exceed support that As further strongest packaging X% have to is strong across markets overall projections or last the to The serve those calls in

markets. earlier, across several key mentioned capacity are I've As we constrained

needed next capacity Our add new over few program much investment will years. expansion the

capacity enabled Colombia in our the fact, will expansion and In phase next year. first and more Canada first production in Canada the in is be half project of now of

expansion good transformation. continue reflecting Segment advance points up initiatives. a net very realization the recent our strong page to on we turn year-to-date, price five. strong margin our XXX and to of Let's are On margins top performance, basis progress

have noted, are progressing XX advancing good the All and expansion glass efforts As strongest we on capitalize well are very projects MAGMA well, on development in as years. made we fundamentals progress The key our MAGMA which Greenfield innovations Kentucky, such first as and expansion. for team greenfield track is which MAGMA mid-XXXX. for preparing excited is batch modular the in for system, remains critical on our

we our for new weighting Likewise, are starting trials ULTRA full-scale solutions in year. quarter of light the fourth preparing market this

also and efforts ESG are advocacy Our glass well. progressing

up making result Paddock program liability. excellent wrapped we're we progress and strategic discussed, As on Overall, key legacy our objectives. asbestos optimization is our portfolio

to you found the sustainability updated of which all our encourage at company's report, on can look take be I website. a

You can on see a few page six. highlights

reduction to and further than to to well as with point XXXX of percentage Renewable our more XXXX, a XX reduce XX% on than such technologies from are gas halfway goals. implementing our oxy increase represents target furnaces energy and energy way CoX. We we more our are are XXXX recovery source, emissions already heat our now

recycling ULTRA progress. industrial so will find I expanding sustainability collection with to expand making the position. hard-pressed numerous Glass benefits most levers in significant the are and bond will MAGMA we're sites [indiscernible]. and many we companies future. sustainable provide to many also Likewise, green solid projects to packaging and already Overall, held our be you sustainability recent solution, is their believe on improve

matters Page turn starting I'll it to to Now seven. over on John financial review

quarter O-I on from from Results FX, headwinds nearly prior earnings Thanks, exceeded reported Trust. $X.XX and Andres, the everyone. the share. funding XX% adjusted despite of year and Paddock increased guidance good divestitures and morning, per third interest

prices $XXX higher to offset as million, points profit margins by million effect net million and a XX while was increased net $XXX higher inflation. more slight segment elevated increased a from mix Shipments X.X%, was the in change price last basis up of than profit XX%. volume year Favorable sales increased benefit. operating cost around as operating selling Segment $XX

up Finally, operating were costs modestly.

mix segment favorable was which and by profit, and impact initiatives. with The Higher favorable the about price. an Americas partially net Earnings were unplanned about margin basis. flat. reported reflected adjusted benefited project downtime, of $XXX offset expansion flat asset sales year The our million of which activity prior operating costs lower on was from X.X% combined volume elevated

agreements performance discussed, was been America. measures While restore across future taking mix improve earnings. we in network, we rebalance are addressing previously and to customer margins on segment, as North solid to enhance proactive the have And our focused

In the operating primarily Europe, favorable very million the of benefited on adjusted mix. from reached prior segment year reflected earnings X.X% a in $XX change $XXX price. basis, also up Results million, combination volume Higher higher an was and profit slightly from as margins XX%. sales net

down impact the that prior energy did net not of mitigate period mostly recovery costs a of the subsidy Finally, Italy an $X this insurance year in repeat in operating costs were help the elevated reflecting about million, to year. benefit received of

The on provides non-operating details chart additional items.

earnings and As highly was range in macro discrete end tax environment. items high rate despite Yet the margin tax volatile mix noted, quarter. the improvement our again, our guidance and company a to at regional delivered the earnings due effective strong of

turn Let's page eight. to

We continue that financial progress Andres to make O-I's discussed. well strategic on very are priorities, objectives our which good aligned with

flow improved course original of set year conversion cash has expectations. the is cash the and to Our over outlook exceed our

have risk reduce our We our structure, the and balance sheet improve to profile. optimize taken action

target, ahead is the the end in financial bottom As at Day well schedule. leverage the which X.X of XXXX times Investor shown quarter, of line third total chart, with our approximated our on

over environment, are to allocation summary, we few sheet years review will X Given best interest the to further In further years, the next is an our priorities. continue reduce improvement. when rate intend leverage our capital to in position increasing we we and times in balance to below committed

fourth results the improved now Overall, over guidance have momentum discuss our asbestos earnings Let's be course of exceeded have interest has range expectations, outlook and final down page good FX, $X.XX our and per $X.XX on September. Results consistently the of the original will from year, business due Year-to-date between stretch some our and to quarter increased year. share. heading in now divestitures including the We into additional likely last our on outlook. nine. trust. from funding the headwinds will year, mostly I'm we adjusted provided expect

adjusted be up on basis. should earnings an However,

the outlook quarter implemented guidance prior improved in has fourth price increase Our from Europe. we given third

high XXXX free expect $X.XX in are down share, our commissioned. be expect exceed per is given approximate $X.XX year challenging recently to earnings full line previously record outlook which until or flow little is new $XXX a approximate to our of mind, increased continue and the now at prior markets will we end a improved are with in at shared key will is As year cash volumes inventories low XXXX constrained levels, Keep comparable. September. Furthermore, sales communicated, we range. We which in capacity will in our million, several guidance

on net strong round will likely in will adjustment expect we out continued and flat volume pass page XX. we amid remain preliminary inflation we cost to XXXX. on we I'm on sharing now incurred and themes some are capacity. uncertainty, commission elevated inflation progress from increases continued benefit a the lot macro in Despite annual price begin Starting that single Sales XXXX. January, in optimistic of low new XXXX. we formulas digits As up as ongoing or be XXXX, price

markets. as if given While be we FX oversold face in will a higher have offset recession, given interest that have margin pretty be impacted rising XXXX, Like our we modeling costs potential the it our indicates from especially key will volume expansion due is will is partially initiatives. unclear position overall, results project headwinds. rates -- benefits modest our higher activity as impact continued in interest by to rates well elevated will Naturally, by we

adjusted in interest. earnings represents Paddock XXXX improvement from a line FX or XXXX, levels strong expect from up be when considering double-digit we which and will Overall, likely

should comparable modestly our CapEx current plan levels Next will in be year's flow current peak below potentially XXXX. as in likely free investment year cash expansion or with

leverage outlook the the uncertainty of levers year pandemic. we manage the the help have since market This macro balance our conditions in through done elevated in to many XXXX. we by fiscal reflects have and continued and like progress sheet of the anticipate to we preliminary Finally, financial be low best inception three’s on view

Let's page turn to XX.

challenging macro uncertainties, resilient face agile a to course, much Of as recession, we in navigate volatility. we elevated market or company yet continue O-I including potential and situation we is confident. a Europe energy a more many remain

legacy have O-I is many recession the the resolution global and businesses. balance in market, and more sheet which conversion years, the serves than strongest We asbestos-related resistant cash significantly up of liabilities. flow beverage is food following

as shift use end years the over improved and represents now we has global mix volumes. to business beer X% segments, of attractive more US only our mega Likewise,

markets around from network is year-end. in of Importantly, buffer capabilities natural EU we our are gas as enable across to manage significantly Europe, Russia curtailments which we provides and half O-I Latin key by across a potential volatility. positioned recession America oversold energy switching well

XX% storage efforts around has to of the Russia continent very gas reflecting levels While and good across curtailed (ph), ahead are consumption. reduce [LNG] EU schedule,

significant market since amid agility Finally, we improved disruption XXXX. have consistently demonstrated

Now back to Andres.

summary, In improve. we third transformation. with John. Thanks, continues continued performing company results our and progress our executing our business well, and The quarter to are pleased is outlook

met consecutive In exceeded fact, expectations or strict the quarters. the for company XX either has

O-I capable, beyond. company, Importantly, a is much agile continued and we progress resilient expect in XXXX and more and

our an reduce in program, the our breakthrough leverage Finally, sustainability MAGMA our profitable we position investment I new green and like risk ULTRA as believe represents economy. profile, innovations execute win further attractive advanced O-I opportunity growth, transformation and enable to

We are stakeholders. for all this confident create will strategy value the

Thank you. we questions. address ready are your to And

Session Question-and-Answer

Instructions] your line open. from go [Operator Ghansham Ghansham, from first you. Thank comes ahead. Please Baird. Our question Panjabi is

being into morning, in you first give obviously sizing of head the in strong have Latin that you a more on the and of Good with operator. you, it? visibility Thank Europe and out backlogs in you guess as just us associated bit backlog you that color Can called in XXXX. terms America off I is that everybody.

Yes.

at places markets look a France and Italy Europe, from the So within amount we Europe other the when places. importing significant various specifically and in wear are -- of

case in So if changes you as demand. in will, move that provides forward a we buffer, some of

that situation, other present markets. also is across Ghansham, Now

the So tons or X.X the importing countries, two North we at -- look million, Brazil when market the look it's that markets same, are every we X.X it Andean at is those importing. year. million America when And

the call add we all when markets backlog very than us. So million present And that in that multiple important X.X tons. for situation imports, that's is you what of are more those up

a than that's Ukraine. is X% in million of then happening of And Europe there a as Russia more the also than conflict of between adding result in we that and supply and that. mentioned a call tons, X that's And previous more capacity the to dislocation

into have the very as will we that be pricing factors out go go us we to looks coming all it buffer that So into pretty we following forward as constructive those a we're good as position pretty XXXX. a year. result, confident of our And

Yes, We're digit position a looking I at least positions also. we would just add, Latin got probably about Europe. America Andres oversold across oversold double at mentioned in X%

for Perfect. are initiatives, I'm the for in any terms in that. than Thank with couple that anticipating expansion seen years? anything that if you're margin year. for XXXX, you've you level. pretty $XX-plus Okay. consistent of then been And the what next of the curious drivers last there's just million different the different sort of You've

same. the They're

initiatives line. the going are or improving top Some of the or to addressing

them pursuing of are productivity. in our point, more Some we this year-on-year capability to of At mature those. terms drive are

been confident So are achieving more we we've we in the years. more achieve previous and can what

a the organization pretty systematic it's So those that across delivering results. approach is

so much. Perfect. Thanks

you. Thank

is from open. George Bank Please next now proceed. comes Our question of your George, America. line Staphos of

Thanks. Hi, Good morning. the everyone. for Thanks details.

on in that of of guidance, the clarity the the What guidance the slide where and on I bump into couple again, terms that? a my You XX. really that? key On time capital in driving the effect spending the early quarters the wanted unplanned spend guys about Can what's downtime ago, up mentioned first. I you Americas? you appreciate the caused that operations, talk the that’s saw categories to What material we're relatedly, are we seeing And What and then this, XXXX. buckets was? of think,

Okay.

drivers downtime. So several the there unplanned of -- are

them of issues repair. One unexpected that need is

the part address supply right we So the But them offered comes the by away. other from chain. challenges

They it's materials As difficult get get know, and you to delayed. equipment.

we equipment with are given proactive forecast. if enough the to that repair and deal be a get able forward moving repair, we even time very wasn't in repairing every So to

and normalize. So make that year, expect equipment the go we chain higher that And to we improvement number right things thing the inflation continue that's but gradual obviously, also the unplanned. as then supply we are following what the it we drives happen, CapEx, to in the into improvement, up XXXX saw of as And a it's situation. number. CapEx of on year But -- as forward, an counting considered repairs in the capital along that, that's driving that

Yes.

me Let quantify elements. of couple those a just

planned higher the and we about That have partially additions costs On combination Brazil, did costs Americas, components was the about we was that rebuild, as discussing margin as that million primarily $XX $X furnace of initiatives maintenance costs with change a the on, in operating had plus probably well Americas. of operating associated the there in that unplanned activity, other some million the working of of big capacity in we're downtime million Andres you there. $XX offset the see by expansion in the new

some If capital with that there looking we for to that and our the chart initiatives. upfront $XXX going of had of on are we're a next associated million that working also is we $XXX -- is we a which into look of is at previous year, be in included be projects. $XXX that on million $XXX to Canada XXXX, about you working A million the on which spending that going take million But our in the in two expansion conference. big will are provide projects to lot at Colombia, the bigger

just going rolling years. got next we're to different So out. projects over XX couple be continuing of We've the

So that's those activities. going to span

are the side. two of things. supply inflation chain. referred because catching But historic little is the $XXX maintenance we're on about increase average. that delays spending. we now that's the in bit component in is a to CapEx at kind think year about some looking of of maintenance this and We remaining did an $XXX cost are One maybe because up million also of The seeing right I million activities a But we of Andres of some

just Okay. Thanks. of wanted the under hood on sort that look point. I to

related, you're the are getting more unplanned that rate, you're so, And you been see the You starting point? of is frequently? -- up and Or really and us great pretty stressing be at. track. pulling everything are outages more was a you've you about is -- Or been asking that's can furnaces, from in there to I what troubling seeing, how it we But holding that at outages anything on nothing i.e., the crop there's markers you unplanned color on what's worried in Thank MAGMA you. the next thing said a going? 'XX? there then give should And should sort mile we vantage just your be about bit is to you've

year. the at repair Those unplanned the that happen category first I issues every mentioned driving

it's appear, But us So in condition so. And -- good keeping they get proactive we activities just asset opportunity to do is to a but unusual. continue keep really this regular at point. Every other and in have then we're nothing When an will got we addressed we we the not time an concerning than very there place. better very them going.

is, But in than those shows -- harder of been because thing through small up good Maybe you since the buy one activities. to add that They to doing that's them those keep in the have rather give more incrementally And and expense episodically the projects. go downtime to do we've all of chains, on but projects of unplanned years, been we assets that you supply to capital. do the do because big a conditions. more couple

where So it's some little I the you're a seeing think bit coming somewhat a money of of of reallocation through.

MAGMA, regards to well. doing And we're with

and -- are Kentucky. meeting that first is one at in very centers time line in Illinois, is we're we make our the And in this one for And line We innovation Germany. is to Holzminden progress the very we One X lines other continue other the the good have in and technology center, progress, to making Streetor, with the three Generation for of piloting which technology. point, pilot developing good and X. components

Thank it I’ll over. turn right, All you. guys.

Thank you.

Mike next Mike, now of our question Securities. And your is line go Please is ahead. from Truist open. Roxland

Andres, Chris. on Congrats Thanks, John, strong quarter. another

could some on George's there just mentioned other of Just initiatives -- And margins? about those closing outside of the the following just Americas? of issues in just margins the sustainable in up upon you're you you downtime, then margin And maybe that Europe, the weakness are quickly that John, question, though, unplanned region? to XX% can some how are expand pursuing that restore in you

Yes.

a our have So it's of a Americas. but in lot the like quickly it Europe, -- we of you less It's mind, -- we as if keep book price in through basket of of the through formula. at like adjustment have business, In a pass adjustment more of more have annual January in Americas, more them North look in contracts formulas. of in know, case, about this in those next go should can as get year. price while the America, XX% take XX% picked most price costs energy long-term XX% up And about this in our other contracts. you goods or And business lot of the

So effect cost significant recover to see lag little bit does all ability Europe this the a the more you than inflation a its of in have and Americas what year.

So margins that's will Americas performance be the next for Mike, element, the the out overall going and to year, example. natural that a in help

it margins, we've on very before, best-in-class long-term In energy. and position far believe position positions I have we the procurement Europe, on contracts the take as a we we and mentioned structural energy long-term basis a our as on strong think

where aren't in So the purposes, world and that. we have elevated We're basis. a environment pertains we this energy well But a extending future risk on long-term to Europe, especially beyond of as it in competitive costs. for margins positioned in

Europe years. I that on in going to Yes. think important for work it's highlight several margins the has the been And on

It we product is, what we've last mix and expansion confidence have very is are contributing, facing of ahead see protect capabilities very The on today to the we contributing fully well what high year work. we're the going the is also positive inflation, last have initiatives and a margin proposal even inflation have that the done price. have net were that what over inflation, the today. year and current capabilities commercial, strong So is the improvement same in very the margins planning gave we in we are us time. position strong procurement, their that recover we we And

same We are perform reasons. we going very for to confident, in XXXX the well and are

That's clear. you. Got very

the Just that increase Kentucky, you one the can by by how capacity tons bringing customers is is Of asking and XXXX. much spot your talk to you're MAGMA much capacity quick planning already one that, of is about peers about in maybe leaving committed And I'm capacity. reason follow-up new XXX,XXX on how of capacity for you're to online volume?

you you So any peers? do I'm with coming and XX% we increased should larger have Kentucky concerned just of your be from committed, production -- wondering And mid-XXXX, committed? starting if online competition XX% in one about

Yes.

So capacity that fit no imports. in are we about is able market a will fragmented for good There through the the driving to is blocks X.X be is have primarily the, which that demand. it the tons. there concern two That's fit. country One very let's that natural big MAGMA, market. in that with placing say, that, all to capacity a be million supply is Once supplied

with there no is So that. issue

market. We part that It's it. growth a is have MAGMA plan a a multiyear and plan, of in

have out supply which long-term too, agreements. we that we Now customers will with of spirits

that going So capacity demand is. is be that And secured. to will where be right the

to very other still going very the position So to country. going available a demand might close versus -- that be in capacities it's and be in unique it's to be

at the luck of the balance Got Good it. Thank you. year.

Mike. Thanks,

you. Thank

our go now Pettinari Anthony, And your ahead. is from from question Please next Anthony line comes Citi. open.

level in US, you're of weakness wondering the Brazil think from kind and just gaining you Hi, Europe? cases. Just high are shutting on is you was makers of can what bringing Are the a a of projects from canceling it back I or beverage footprint? seeing just some all share? online any say in a glass your possible do this as current -- and of percentage of you're plants capacity about And you talk morning. net wondering percentage what high god seeing in if XXXX level, to rapidly could is down then

the Yes, Anthony, one. I'll touch base on first

our three adding we're X% Over growth, over years, believe, period installing the realized, of and on over time. expansion okay, equals support and that's additional -- the of X.X% implementing program, X.X% about three We in next a X% we're year part capacity and rolling run it it that capacity between because we're in. capacity about rate but might XXXX, basis, it new to be

we that Now, online. into a new more there. probably to period our in it XXXX, capacity in go going we're onboarding time coming with peak period of see little subsequent off It's bit starting the to trail

you second Anders, do So to on touch want the base part?

Yes.

shared Investor the previous we and of play different as Day So some during glass before cans lanes. aluminum in and in calls, the

products growth bottled driven is our driven drinks, by growth food soft and and water and hard in by wine, spirits, beer. seltzers. drinks, energy carbonated premium And So is NAB drinks, in sport in their

happening from segments at their are which what's to our to position So in driving different are those growth. the this the versus aluminum that is industry segments, related point

it separate why So things. are for growing, our see you performance we're those purposes, are two way growing the and way we That's our is. things the

I That’s over. turn it Okay. will helpful.

you. Thank

Wilde next open. Please our line go of is Mark, ahead. And of comes question Bank now from Mark your Montreal.

Andres. John. morning, morning. Thanks. Good Good

morning. Good

stack each order Any on on would is cumulative it if these cost wine a increases price prices of the to way third to size magnitude, we all other? container Europe Just in? us over bottle once of help what increase top the this impact do of in of

not that cumulative you, were providing third the price to price are the look forward a guidance quarter, basis. third what that a per they on price that the European indicate current to year-to-date. increases if se XX% give additive going would numbers Obviously, our direction have the that we of That's for can sense know, the I have at in in we the increase have you up be we marketplace. year-over-year here. But about on effect increase on the we of you You

initiative. ULTRA way you the both Okay. curious, mentioned just for follow-on, weight does what container? quantify light-weighting Andres, That's of helpful. but I'm the then, the cost just any Is to a kind there my savings And standpoint, of to the it from also

Yes.

share with So is. I target can the you what

to of XX%. weight up it's So reduction

So a And not innovation coming some really significant. sustainability very are battles but it's are And are. impact, the center which seeing only going to how of it significant. is of they're is a out very when that cost have impressive light already those those impact, we

second going We're So emissions going end of by -- down. CoX at customer quarter. trial container the then go start commercial of with over the that the work is the first ready to the to reduction very to container commercialization get of targets first at conditions. cost for next obviously, And trial intact. quarter quite this cannot year is share in the along we'll production in the reduction first those this under I But weight point. XX%

as actually less furnace get each that add You and bottle. another any benefit, is have pull, of you can because using have more lightweight capacity in product of individual out real this that, to furnace creep you'll you Mark, would that it thing out I capacity is One so right? you're

good us on basis capital growth So really pretty low intensity the to a way that's for able be forward. going support another to

Thanks, Thanks, helpful. Okay. Andres. That’s John.

you. Thank

And our next question Deutsche White Bank. comes from of Kyle

slowdown any Thanks it throughout morning. seen nature. taking quarter, good We've trended for demand was a the On question. Hi, later quarter? about talk like packaging in noticeable volumes, that the some you're of other the seem there anything in doesn't or peers difference how seeing volumes but

an know, were and as as be when And was softer, at lower, if out-of-patent you higher So than the quarter in compared the will, look seeing was along positive current that quarter. we July to we're it's September pre-pandemic October, expectations. August was year, you the line stronger. Obviously, that prior year cadence but will levels. with our

it's X% level. about the pre-pandemic higher than So

So fine. just volumes our are

as protected versus And needs of share is you then any And to there year? from next how think secured energy from nat oil could forward? the strategy maybe there it. aren’t the where Europe, smaller term, gains opportunity are you already potential of costs that longer be of going at higher regarding Got capacity And some on your energy then much gas? XX% for do players for switching your

the fuels. capacity So -- we preparing very the doing to well, take are various

planning of by ready XX% the year-end. to be capacity are with We

So that's progressing well.

Now in since the quite situation of our last natural Europe call. bit improved gas a has

has have consumption time. The at thing. quite the effective. milder been measures this in been That's weather one point So reduction

or So that's the contributing to balance storage. helping

gas natural Now storage the high. as And is liquid result, up, helping are the the so that's handling supply. levels a capacity pretty

XXs of excess XX% in all they're high and across even in So countries.

better are So rate if the lot prepared point we a Nevertheless, before. looks with [indiscernible]. than situation at capacity this

energy the question, now. I for take long-term established have right that mentioned contract run-up in we contracts on as were well our we environment earlier, the would say, before that energy And on approach XXXX the a I

we in pretty a there. good are So position

purposes, competitive like of in would we that. inflation good see the But say I the that quantify continue -- lot that. to environment despite don't we things through very costs indirect position, a and For there's

we realization I interest, not to mentioned like need inflationary do as SG&A, So good before. mention net situations price cover other to CapEx that,

the make cash investments to flow in our really support company net the for maintain to cash price on sure that needed we a we manage company. So basis. continue strong the to the

position is very mention how and time. point. our some is, overall performance Promoter it Score, our high been don't some with customers significantly quality at at something are, improving at There we places, markets often, very Net measure levels And our with Yes. has over When is in through in customers we this perspective a look evolving? we position that which from service

in going evolution So with been there us customers, has very forward. good put relationship in position a a which and our solid service

over. Sounds good. turn it I’ll

you. Thank

now go from ahead. is our open. Please comes question your Hajde Gabe Fargo. Gabe, And line next from Wells

Andres, John, morning. Chris, good

Good morning.

years I be employed a of maybe was price us consumer sort the in the some understand, contrast some is which of I different for or the maybe guess, occurring XXXX, because you so. O-I that XXXX, compare pattern feel of hitting might could was reasons like what inflation it the strategy consistent by different. a or is hoping versus help and XX -- recession, ago with I is Obviously, or that's

similar X%? to down maybe be getting versus crisis. the a during And again, -- that think financial we appreciate, little sitting may with lot a Why again, of in guys the I But might see kind of the So not the just today? limited critical are negative the here hit a that X% not in impact of drawdown did with magnitude consumer I we're why maybe why proposing think to we market around you if 'XX, global here bit you was 'XX volumes might eye, inflation. what

Okay.

on why comment this difference So time. is and There reasons just are to XXXX, different. the with multiple this XXXX,

you what is in which we're weren't. different. pricing, the that time, At this with in positions start time market. within suggest. we very are me those point At priced point Let two And

case The glass why to short expect very they're in Now there compared in which to are very answer better and considered all markets, the multiple glass solid anymore. the you fundamentals different is, that decline. when be performance. that That's reasons was time in not to demand referred are to secular to

that's been solved. So

GDP-sensitive, like for one in are other creates of that not condition examples. X example, are And markets of that, which is several in happening sensitive supply GDP. capacity across That's localization global not today drivers and which in there a location demand million securing important The you me Europe than everyone. tons give is markets. the to let more brands, Now

in amount key to O-I in and Now X.X I a adds of mentioned markets for before -- markets importing it's Brazil. up O-I, Andean that wear that Italy, significant more tons. And those France, America, key markets, million than all several in North are

years happens, home today that thing opportunities And a million to going and channel is up have it's what recession that we go glass pipeline we shift very expected tons. those to conditions. if go consumption impressive performs last that other the into class is up. adds new we business to in at last today the time. as point the demonstrated through point That is if off-premise. resilient is is three and was that, X.X And well on-premise of a that in consequence lived And very what the Now has in a

a 'XX So are different all to what back none 'XX in describe obviously, lived we through conditions will these take and that -- others, long and 'XX. of many but very we time than

premium that. more luxuries. we've a things I more One last our add categories. decade to is, the just would mix in seen improvement And fact, to over -- in considered increase are affordable two And those

little of So that's you improving tough out even and over there, buy are still go whatever, time. bottle a bourbon things if that or out

over 'XX, those we fact, mainstream more saw commodities when in 'XX, In other same categories grow declined. actually

the [indiscernible]. In biggest only and was remarks, prepared X% 'XX of fact volume hit global during took recession That beer -- the is in and that 'XX. in we the our the category mentioned before in mainstream global

that less bit a regard. we're So in exposed

to you. just I tee some 'XX No, the you then quantify agree thing guess, a down help be of thorough the, right. you if We the it type land expense build All activity us where year? if guess, that view, corporate sort that. that can rebuild quantify why for on and mile then year maybe there, expect for something, take to us want kind And I that bridge. the just there's you I in us, of nature can this to given to answer. next And nonrecurring would you of just appreciate I with tend

Yes.

expenses corporate are elevated. So this year

expect We that. been is, million two main drivers That is increase year. a this One million for a to year-over-year. $XXX it's be There good is around $XX them year.

up are management So in $XX million incentives regard. that about

And we insurance for is higher past, then out embedded but rebase commercialized, costs. R&D about ULTRA MAGMA, number for in million $XX ULTRA seen the those in in mind GenX and once $XX thing other keep million will to we've The some. are years, a inflation those is, than out few with costs cost kicking have be do that of particular, in -- cost, just start us inflation cost kicking to elevated higher level in one

just the of pattern corporate expense. So understand

call year, rebasing of say, the expenses. reduction. total next $XX in as we'll a clarity corporate far as $XX let's And on million more give And to about management alone the census of million, position year-end is

a year. we environment a is into furnaces far getting mentioned probably we back typical as As are before, XX activity, rebuild as more to normalized XX level. about The

so to. And we be returning would that's what

Thank you. luck. Good

Arun, our Capital question Arun is comes RBC Viswanathan open. now And next your line from from Markets.

taking wanted on guess the bridge. I earnings to for first just Thanks I my Great. question. ask

then of out parse kind I out? price kind look volume what volume headwinds. and Or you of forward variable as is $X.XX biggest if potential would into factor? then guess, of that would and is mix, the it mix tailwinds. and And mostly as volume you 'XX? uncertainty say the on called about you've we discussed you -- So mix so also How price

look Well, biggest be in to on, price up XX I net of I we flattish. looking as mix we continue and was we this areas to we 'XX, you're saying, guess, in as kind and Volume will be, the environment. lever The that directional page have. have to say, will maybe

So it's in that muted to regard. be going more

levers, the inflation, look now, variable what harder at So the one things are pin that is of cost Obviously, out a two biggest pace little the always is down. it’s that net we'd the more is price there. to bit that's

flushed value still the costs, cost seeing XXXX cost and costs raw expecting we've being quite are through in inflation, -- labor under amount up. been not higher the higher a this costs maybe still but way particular that elevated We the material chain, of in as levels, remaining significant their and inflation, of assumptions in all set particular

the span probably to recessionary of are when gave there, pressures. there sensitivity -- the comes a X% to probably that's maybe unknown. of X% biggest And those we course, it any of So volume,

to don't things sense a now, Of course, we we you right that wanted see of right as now. that but give see just sensitivity we

there conversion anything $XXX in then the maybe do I as that And over single-digit that or million the long-term to we really plus far range the do X% would And that is glass to expect level clarify, or of low long anything had of term? so rate And that CapEx you else? say push you is just as come substrate growth in do believe what when should kind expect some kind question so, down? to other the more of sustainable that that was, you or up if the X% think Is containers? Thanks.

Yes. Yes.

capital. give equate go But As the recessionary materials, far X%, of type that's you projected to X% pressures. don't the any as page long-term of if to our four to sensitivity growth, rates. the which in that say, growth, operate long-term X% long-term is markets in, we we of anywhere sales And driver as that aren't okay? the demand to this is last capacity applicable growth there, that environment volume in in be XXXX the from, fact, believe growth So X% about in we obviously, But just far views low it the at out growing the expansion we is regard. obviously most for but as X.X% of quarter. CapEx feeling been still yet. CapEx, example, biggest type And the on environment the will we've behind single-digit constrained elevated there, That's XXXX giving for levels, we're

from comes your Instructions] is go [Operator question Please And Josephson our next from Adam, ahead. line KeyBanc. Adam now open.

by cans is taking Andres mentioned can affected Anthony asking products versus glass about good increases consumption by seltzer, I being asked earlier think hard Anthony questions. guess disposable for better confused I and I'm and And very up falling incomes, products, would premium Thanks things energy I earlier sparkling be soda are -- harder and if of if my and would recession? into going was anything, for that John, you demand. products soda. used demand would those hit be still we're for water, about soda, demand et holding a cetera. much morning. sparkling for price why water for demand kind for than think like getting than of premium

than for soda? that premium hold you help gives and you will products can me perhaps better demand up for that So understand that what dynamic confidence

Yes.

in and categories several already. that demonstrated So the consumers afford to premium products, tend stay can been of during -- It's recession. those they recessions across those in products

So expect something this seen happen to past, today. that is the we've and in we

identify there down of a if there place. lot that is taking focus to been trade seen has or You've identifying trying on

so And clear down. there far, is it's trading that that not

mentioned a you happens tier. what lower Now at

-- go there commodity above is issues. and the just more because is it to ones sensitive consumer that of trade is pure products to off, those type that, So that those will the

markets with make a changed. Now to our have just how let me regards comment

in for us demand the highly as year, you by every pressure point when a of And our in you beer growth or our been been really over numbers influenced at years, know. mainstream. look has So, it mainstream performance has

years you we we NAB, that on into which premium been for Now diversifying in categories, and now products several focused like spirits. growing premium before nature food, shared with have are

of consequence to is in only mainstream America used North down But XX%. a as X%. that, mainstream Now is globally, XX% be around that to

to So we category that at into most look really when going take got is the small. forward, becoming we performance our consideration vulnerable

important. So that's

quite States, the in recall distribution an channel is part United we organization other And with and all called substantially, tons developing we're well per you before. X.X that which volume, million (ph), we imports to to OIPS. acquired that year. with we've a which an which that organization quite distribution as us been -- is The might even that example, didn't up [Vitro] are go access growing And that, give there have

So that's navigate challenging as we in favor performance of our times.

Italy. Any of you heard Can that, details you subsidy. what expect that's in Thanks, you that? more such received -- Andres. Do on that? Italian -- talk John, appreciate. And you subsidy around you just about I'd first the expecting the Were I've subsidies? why Can a that

million, cost were potential originally we it We about heading least at the wasn't quarter, $XX quantified yet forecasted incur $X million of later $XX originally estimated, subsidy of confirmed did than sure. Europe. fully Yes, in the about we which more until was higher The third was September. inflation quarter into million or aware probably a in but in subsidy than

effect muted compared original So is guidance. the net our rather to

that. And they of that like past. It's these It's that the issued within white and expansion over through things. things one way credits also in and lot a certificates things historically, we year. this We've They have manage manage development -- industries had of things called they lot how Italy process. different a through incent has the

legislative in actually it's included this particularly -- item in Italy. surprise. So a is not a It's

supportive with quarter the I fact, positions indicated had elected pretty of positions of like some Italy in would in firm So official France industry. the situation that governments even position -- think that we be energy through we in last had some the up the and building that call

so So not bit than we but a huge bigger expected, surprise, inflation. a cost was little

Thanks, John.

Jay, from ahead. line Please question is Goldman And from our open. Mayers Sachs. next comes Jay now your go

the Hi, I versus in downtime seeing you getting wondering in kind everybody. these Latin have you America. Latin comment note of How you anything North of kind mean, demand Thank sold-out you're that of America/Brazil that North and impacts outright North from decompose was you position do me shipment here. much America? minus just unexpected if Americas. number was could kind X% the of there in just a demand I in maintained America? no Is America, fundamentally perspective on a for in

drivers two as had, Yes. in say is there down that where for I X% It earlier, we I primary large rebuild. the would was down. Brazil, mentioned a furnace

for So the the that driver sole that. that, driver for was

in there's it up wasn't strong that, In fact, marketplace. if backed double-digit demand for that

other then combination of can we are And did was market. produce there's bit a think impacted we two a America, that little relatively than have the downtime. unplanned low, can factors. in we was situation, One Same is inventories if incremental sell some lower anticipated whatever I of production it that in sales. reason North So

of a bit beer But of major a North anticipated. little saw the quarter demand weakness across standpoint, our the of percent where fundamentally in from a couple down overall probably we was network in wasn't company. that The we global for a was only the what area in and America, performance it from driver

a complement by was to and them. opportunity very, characterized They customers' ahead Andean, very that have premium. Brazil looking is of market significant that, on And focus the Just That small. growing at category

some also focused on of into place between consumption there those business -- categories. across And that's is localizing a markets. related they're one-way from returnable glass global premium brands the to been and they've conversion in convenience containers So containers, And containers. taking for But occasions.

and So for well affordability the as quite our containers return resource. well, that's as sustainability user moving for

that's -- inventories Now, users capacity but bit in Obviously, by limited building markets. and those capacity our incremental adding today. to are there. we're -- why we're contribute don't capacity growing all-in We're

the of below little leverage you you Can sound a the talking did comments of kind why you kind John, just but talk Like of you're three’s you. bit about next quick is helpful. just That's end were like And it Thank targeting number? then, follow-up. longer getting long-term by three year, made On low it is that number. the some business? about term that the how And about what right a on number? leverage thinking of

Yes.

world in think rates to I this be, BB in rising. is where interest corporation are believe good a a place we being strong a obviously, business

company. of right, times below being being the we're a of view position our dropping three’s rates, healthy is good kind kind environment interest answer Our creating to rate allocate place being for high And mindful value interest that leverage funding -- and balance good capital spread into. with being mindful a the has between it's a the some, we interest in for But low of balance higher as as able I good target to well is rate for be passes sheet to leverage being a mid of of position company. mid would to and below very an it we right that we're X And be. -- also the appropriate think the believe the do

you much. very Thank

you. Thank

would I questions. like any to call further no for are hand remarks. there Chris back the And to closing

by is you. note choosing safe moment a that And X, February year-end earnings for scheduled make our remember, concludes currently Thank memorable glass. This Please it call. our Okay. call XXXX. sustainable

disconnect. This you you Thank may for call. concludes today's joining, now