O-I Glass (OI) 30 Oct 242024 Q3 Earnings call transcript

Hello, and welcome to today's O-I Glass Third Quarter 2024 Earnings Conference Call. My name is Bailey, and I will be your moderator for today. [Operator Instructions] I'd now like to pass the conference over to our host, Chris Manuel with Investor Relations. Please go ahead.

Thank you, Bailey, and welcome, everyone, to the O-I Glass third quarter 2024 conference call.

be John our Haudrich. will and Gordon today CFO, our discussion led CEO, by Hardie; Our

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

the who will Page X. Now Gordon, I'd begin to like call over to turn on

actions thank and the recent you, Chris. have year's will continue we will our quarter performance. the Last value night, grow everyone, Today, performance we adjusted review to and last per $X.XX strong of reported the morning, of share we O-I. to third and a taken XXXX, an from Good take loss for net of decline

of sluggish primarily during offset down, price action to partially Our reflected production quarter we after XX% levels demand. shipment by of inventory higher of curtailment several took our as earnings quarters Net reduce decisive levels. third the also lower was inflated

We program to Fit improve to Win are performance. our rapidly implementing

costs, rightsizing to In SG&A reductions improve in redundant drive are economic close working making to our profit. significant to inventories productivity capacity and and addition we unprofitable

earnings the near-term our recovery impact flow, actions they position, cash which set competitive long-term these While XXXX and believe future to foundation growth. profitable we solid a enhance for and in should is key

slowly to self-help actions that company's are value, conditions the these improve take we As recovering. see market we

been began year. up Bowling challenging all as achieved Kentucky were milestone operations the volumes a shipments nearly program plant XXXX past geographies. first quarter. Green, sales Our MAGMA in quarter in greenfield has this our modestly our a in third as Further, increased key

trade together destocking given performance in sluggish by both impacted consumption Our and been in-home, the economic uncertainty. with has

softer-than-expected marketplace. have, adjusted continued reflect our outlook therefore, the We to

markets is our significantly Fit gradually we While and XXXX the measures competitive well to Win improve can results -- what better business our below expect business position performance the recover. in this deliver, as

Let's the to actions X further of to taking significant and company. the now Page We actions discuss are O-I company. are we has move value meaningful and the advance taking the believe to increase potential

focus by growth approach markets enhancing capital well returns position This to and when discipline. will Our profitable us turn. driving on our achieve is near-term competitiveness

profitability We X In focus on is of significant of not Fit the the level X, see we that flow to will will dependent recovery we a which we growth or and profitable intend position our volume. In earnings or Horizon Horizon to the step by enabled of improvement execute volume Win competitive cost Win control the the program. have this profitability, generation change a Fit we in over horizons. much We X, by more program, accelerate competitive improvement will leveraging on timing improving a drive our our to and expect by cash company. within position market incremental

we seek business, we developing to and As plans, strategic in with markets. large CapEx long-term plan customers' align our to particularly the grow

large potentially geographic have in Finally, to into pools. This past strategic profit we which markets efforts. optionality, may is with X, new include Horizon to plan expect expansion different

and that review our streamline and and drive We and our network holistic business business order operations, reshape our of are growth. boost conducting comprehensive approach we our of our aims a profitable chain. our reduce to company value In significantly. doing optimize This entire cost competitiveness

that we X X-year established have both is Horizon targets the slide. X span initial it early and captured days, on While as Horizon

X% that is adjusted of at least sustainable economic of EBITDA XXXX, our expect at of an sales billion, cost and cash to generate free above $X.XX least capital. X% we flow least at Specifically, by of spread

the XXXX improve in which XX% XXXX, million $XXX represents increase $XXX levels. will around results a by our to from expect We million EBITDA

Let's now Page to X. turn

are we our XXXX. are we reshaping conditions, deliver Phase in market A, B, Fit in sluggish In the we phases. Win enable streamlining given priorities to we savings first these steps, growth. million structure. least pressure under to rapidly at are expect X Phase $XXX organizational is supply implementing the performance near-term From In profitable to While chain by

are productivity, take capacity productivity We with and improvement areas: XX% of SG&A. to X have days profitability and With of at is our IDS reducing to by the in business. X excess million and the cornerstone reducing redundant least reshaping XX regard driving milestones low progress reducing cut inventory, to we in rapid QX, further target. Key capacity. X-year making we XXXX, in in driving XX% past XX% which anticipate XX savings our the out $XXX in the is achieving days working productivity inventory, include of regard all achieved of are increasing come. With to turnaround quarter to Significantly focus

and closure least reduce closure We to million redundant generate $XXX than the should by cost mid-XXXX savings. the of are of evaluating of capacity the unprofitable network. The of at capacity annualized X% more base of fixed

of sales markets expense operating over regard $XXX the an to shift by XXXX approximately delayer reshaping on reduce are As annualized the early local reduce should should and this costs central significantly. SG&A to no accountability already than we have capacity, X% million results. With XXXX, to announced more benefit actions These organization, basis. of part the saving of we which structure, of closure evaluation, to X% moving

targeted are over and delivery Win of savings steps well underway to Fit expected Overall, in XXXX first with XXXX. more $XXX our than should actions EBITDA initial underpin half The savings in million generate target. of the

our optimization operations total high-cost transferring Additionally, Efforts by we new margins, improvements closing profitable B, a volume XXXX and management. in of sales driving remaining savings and more disciplined across Phase productivity additional force targets. through and also will network. ways productivity, into should performance expect chain generate procurement to further value fleet, the These helping working our deliver achieve include operational us higher supply

Day. more We will our Phase XXXX at on March details provide B Investor

discuss and X to turn commercial the Page environment. now Let's

in by modest priorities, evidenced implement see green As sales Fit we to shoots during growth geographies, volume quickly third quarter. Win our some the most we do

On our have volume illustrated left, the trends. we

Volumes Following X%, double-digit particularly increased showed demand, categories challenges, all All in the several the America. Shipments increased except to lower with increase by Brazil. a in in across Americas quarter. for shipments X% in including geographies, improvement, North in rising continued X%. spirits, face were quarters by of shipments which by Europe down

activity. However, beer Southeast growth shipments slower Southwest Europe while Europe, demand, in down including we and given in noted solid in the U.K., export and softer were wine

Although market the right. conditions trends as be to recovering demand on seem consumer slowly uncertain, remain illustrated

beer, year, lower, and from While all categories and have beverages of shown wine consumption glass are food up year. spirits the course non-alcoholic of is the still prior and improvement while over containers

expected customers consumer we year in now a categories, trends it an trends trends business particular, the challenging demand. This It indicate except shipments with a in forecast the uncertainty actual recovery integrated beverage pantry is macro clarity address forecasting trends considerable planning. particularly spirits. accurately broader challenges, is are the complex U-shaped at a recedes food of the year, U.S. regarding and earlier factors. In remains Our To consumer Rather depleting. there in with significant the on been levels rate unknown, destocking which align as lack along given more given improvement has more to in-home the consumption with closely stock working these and in modest of for for L-shaped recovery we gradual marketplace O-I, most than and

to targeted made improve also analytics have market understanding We capabilities. our predictive investments and

year volumes Over a X% October the same-day balance up the about sales the shipments remain fourth on we and with cautious last flat from of year, expect to in basis. be quarter,

Let's now to turn X. Page

is cyclical consumption products While charts on sluggish glass than return, market we mid-XXXX, for but and The originally and largely packaging. overall we the demand this by show category expected. will this have trend navigated conditions more believe page slowly since X

the megatrends sustainability is and influenced time, between We products. premium trends premiumization. separated wellness, glass Over such have key as increasingly by and mainstream demand health,

trend past they to As of cycles mainstream XX years the see, temporarily at by tend to impacted premium are times, events. Further, over supported you products continue, is the strategies Premium products than customer most growth grow investments. clear. expected or is even if the by faster macroeconomic and categories, can

result, categories growth the while that a confident stabilize, categories across stronger will time. reemerge premium mainstream are As demand we in across will

operational our this on properly capitalize focus changing growth. commercial are We to and

who turn matters. financial I'll you to will review Now over John,

Thank and everyone. good you, morning, Gordon,

partially offset our operating with as the we about to in performance demand results offset sluggish over share financial on quarter, $X.XX X% by significant levels volume capacity $X.XX price sales per XX% costs year-over-year per and third past This operating -- Downtime higher curtailed to O-I performance. Net $X.XX primarily of in inventory quarters. begin by loss Page due from recent partially was Let's adjusted historically response X. year. strong rebalance down, impacted the share decline also to was cost decrease several share, of reported growth. earnings particularly a of per an by our was last adjusted high

sales anticipated, adjustments with While as was beginning as well cost the expectations reflected net at volume softer price the mostly was price inflation, Latin than heading established of in year and quarter our the in consistent America.

higher the be rate in a we flat benefits net headwind costs. Heading more price slightly earnings expected elevated realization the items than in retained and interest quarter. lower should positive XXXX less be quarter were and the third into quarter. Non-operating with of headwind lowest third The net fourth of tax the corporate in the a expense offsetting an quarter, to

line in as with expected, the favorable rate. mostly $X.XX impact were sales than to higher cost higher was these offset tax about volume. operating expectations Our of due costs Non-operating performance performance lower primarily

volume our Turning results performance X%, from operating to year. cost of due $XX impacted a price across Page the across $XXX sales discuss America, segment segments. Americas XX, Gordon Latin by Net let's to discussed. the while inflation The last million X negatively as million, profit mostly posted increased down

curtailed which higher significant year. costs. from totaled in In elevated resulting profit XX% capacity $XX a our segment million, operating inventory from temporarily $XXX we last of prior million levels, to was operating decrease reduce year, Europe, Additionally, up

sales net expected, built temporarily was from reduce slightly. Operating inventory and capacity to year high was rapidly were adjustments of levels. up quarters, As declined we price up a year downtime this as headwind several that as over which volume had prior XX% to our the costs price significantly due levels earlier past curtailed major

business our XX. on Page outlook discuss Let's

year to full to our guidance XXXX demand. continue due recalibrate We softer-than-anticipated

the up flat year. second of volume prior volume third mid-single Our with prior be will levels. and Actual sales quarter about in assumes fourth expect was quarter guidance volumes X%, we be the year sales now up would half digits

volume As we sales annual lower revised have X%. by such, X% to our outlook

share. Lower a As drive guidance shown higher per additional impacted prior $X.XX effective to on withholdings $X.XX due $X.XX guidance sales $X full cost adjusted partially about share, down the tax volume which actions. be deductibility of tax year left, annual we earnings to certain per share, rate by annual our earnings of minimum $X.XX per interest should year $X.XX to and and approximate about now full limitations from expect our management also to in by jurisdictions. Lower production offset

free our Fit of adjusted related lower to includes also million. will cash and flow to earnings This have cash SG&A and and payments Win to shipments we guidance, use adjustment We restructuring million between additional $XXX due plant a softer as cash part now which our sizable $XXX be actions. incremental expect of

of cash most our low-XXs flow demand significant expected second previous to improve to to to compared higher change Over softer-than-anticipated capital the in IDS aim target half. levels to time, still further enhance the we the in chain. historic in favorable with mid-XXs the standards. supply IDS is reduce as be low-XXs end-to-end to However, we working is compared year-end to due our due IDS

noted, significantly cash deliver. business at as and can charges, particular, flow what the Gordon is curtailments of current among In earnings factors, been not other and impacted detailed chart. do of reflective the we As our XXXX by production temporary performance the bottom have believe year restructuring

year power earnings As current illustrate. underlying such, than results O-I's is stronger

Page turn has Let's been year. XX. a XXXX challenging to

performance taking for However, set we proactive in steps, stage we are the XXXX. believe will which stronger

illustrated anticipate next As the improved will providing are we business results in the key drivers support of that an early view year. chart, we

XXXX cash million of in production at and significant free Win capital cautious some commercial approach we higher capital We level economic will allocation. inventory earnings anticipate normalization results supported by and as earnings to outlook lower a should maintain from expect least to boost after Fit conditions benefit adjustments, adopt yet markets by initiatives profit $XXX an better on adjusted until fully stabilize. We expenditures we flow

rebound. flows leverage expect review. we and includes details for financial Finally, more lower as cash earnings The your chart

back it to turn I'll Page on Gordon Now XX.

conclude, To beyond. in position taking are decisive a to we for the rapid solid action XXXX company and recovery

enable our competitive profitable is future position strategy Our Fit to and to to central improve initiative our growth. Win

We now are questions. optimistic to to take of about are the O-I. Thank future and ready and the improve your value you, are determined we

from from Instructions] Ghansham first the question Baird. Panjabi line [Operator today of Our comes

off, $XXX projected, bigger likely I just year. much to you're sort Is you of that you'll the guess, than the think million volumes trying to And little a tracking you into up lower we being was on October initially cycle little the I forecast think much said when more. you it volumes too working still have than first why bit. negative a for you capital flat that inventory said roughly XXXX? I of reconcile be back expecting half also bit XQ I'm are a as

the a down the at were as in targeting can working of we're capital. we I I the historically in would it's softer comments, our our to we we network volumes IDS that challenging talk move kind the with for about to low-XXs. the business. what that which be probably Yes, seeing going being mid-XXs, prepared a that quickly, upon fact bit Ghansham, sales level Yes, is low mid-year mentioned to Based and the get are

at as you resulting a there. in of higher inventory higher So capital, And of bit the the referenced. a year, little working end delta that's

destocking of we extra inventories that drawdown down taking that now, as is sales stand here year, million that as think draw more there's the we least the back this likelihood will some or do internal As production right destocking all activity. the meaning inventory. half to we come as but expense are inventory in expense that activity, of at in next of $XXX is incurring about done, we of than lower worst We because we will -- continue year we're

of So the future $XXX million a will that be period. component remaining in

because, outs estimates base and you And Okay. for and basically for levels. to the on to point? it I'm you're But just fourth margins Got in implied assuming at -- terms look is this so the lot quarter, if as XXXX, fourth asking for XXXX, so doing Europe pricing for are back it. estimates forth. European the just And margins -- cost obviously, a in at what pre-COVID relates then case just your quarter of

of that Europe? you're margins on cost specific next to And so that pricing are downside? incremental we expect assuming to going and should build get to you year the offsets off savings 'XX Or

to is, first then certainly I and can take the are the last on volume level. question a right questions our and now over turn margins other it suppressed Gordon in

Europe level in third we tier still good little Even a as be we the lower and in that mentioned quarter. effect, Americas before, profit believe we're probably we're at mid-teens an of normalized segment business do about the in that's We'll the We It quarter, third margins. in is the for the XX%, mix the XX% pretty a incurring the with bit higher to suppressing be business. to be probably saw penalty in margin fourth is earnings a XX% more in of a obviously So consistent given bit what up That, going that curtailment step the in next will to. quarter. okay? little here

Yes. I almost When X look flat and calling we we're view of think hemispheres. a at it's volume, the

price bit capacity we're more region. given again, probably some by in I flat full pressure, would in So slightly be off regard looking I suffering and a where is the flat bit if and imagine, big in could less it Brazil, in market, maybe China as there. With Europe, mainly capacity increases the of like volumes say the there in as I pricing, at flat see at -- driven are less you probably spirits Americas, places a to coming driven would a the in say is I look the export think pressure would we so volume, in particularly the across Europe, there fairly situation, situation were down softness, markets would you and to -- the also U.S. on pricing then Americas, like looking to wine

of in You've in pressure which bit capacity a on North may tighter Europe, kind capacity pricing. some more free America, got put

And we're we out, an is business. on net that look around as improved flat. the the So action we've very outcome of for And the the we as rapid we then looking forward taking cost base laid are all see business forward. going of

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

This is actually on ] morning. [ for George this Kasim

you're year? end be result the closures capacity rate and guess think could you terms in next for far so I of of considering those you've next what potential benefit leverage I that? that operating year, of with And from as be the by better will So utilization that guess, do the running where done then you a

the in slide. included We

a the balance, comes exit the curtailment, due back continued year is business it because that next of more probably of to balance remaining which destocking, remaining about temporary So or softer okay? capacity curtailment about XX% right with, also least you now, to that closures, at rate at while the XXXX, half worst to sales permanent on year we of in so inventories, us us in a recovery. continue depending also million bringing to capacity to looking marketplace but that The run gives million And how at allows with better will anticipate curtailment, bit that we're be advantage trend if $XXX the temporary little the take level through $XX on if still than will of deal capacity volumes take but and basis. there's year, the us half dealt some more down that, across of flexibility the look a one, and destocking, we give volume, next

to and level with So normalization. some capacity inventory it of management of closures XX% dealt be between is going

XXXX that. the put the of I volume guess growth guess, are you long-term EBITDA, And of out that? guess, business that Got I what is then And the sort terms in in underwriting what growth gives initial And I forward? confidence terms volume of Appreciate in of targets [indiscernible]? you for you it. potential what moving

neutral, Right all, bridging to $X.XX that volume part is our the not now, a neutrality. address right at is volume today the volume assumptions okay? I'll where we where that think we are is contingent first assumes at now are we from it of billion, when take look

need through the over with split more then behind it's XX% consistently. need glass mainstream And we just effectively, to of markets to evolve as mid-premium well. need get volume midstream continue it. If look while how see competitive. customers charts we at there, base many to we've down. Yes. driving close perspective, cost in own -- a glass and And the to We stabilizing, commodity grow in XX% glass, the seen play premium. our our we portfolio, regard that going cycle, to approach are medium-term we and the from really as to cans investing be to to portfolio And our this between will to gap and the major We against not premium see more we

previous said premium suggests to the lose get data cans We're cans. we you cost I to XX% gap high, losing see And between cans share. and glass. have if is And reverse we from all too flow XX%, then our can glass between and holding, that's that current a the will on As just you XX%. about share

that, what particularly across exactly to and into we chain. and the doing face structure to up of need we total we're the need supply that's terms competitiveness and So of the business organizational in driving the it across and reality, both to that's the get

a base but more so competitors against premium. not into also then cost leverage that be allows that you to cost And against just you cans, base that glass down, competitive, other as underpins get

as continued advantage And and consistent we go growth of forward. so take premium that

And so that's our approach.

better better data I and we margins a that cost the go a ROIC underpins feel customer get that, behind mix richer the and think as customer see give the lower us portfolio will base And business investments really the to that approach. all we much then opportunities portfolio supports mix, strategies, the forward. with premium higher a in we after

today from comes line Arun of RBC Markets. Viswanathan, Capital question The the next

of when I add What $X.XX be to on of it point the to lower about could guess think first maybe that it the $XXX potentially kind think are bridge Win end the 'XX looks you to when math question EBITDA, And ] 'XX? you items, would of [ of, guidance, top be about starting in your would range. benefits billion? for $X.XX in possible to be, kind like that billion $X.X headwinds say, some billion some so of million of Fit your for

of additive I mean, The you're shared. I thinking it ] to as think [ as Page we the takes. earlier, Yes, production well million value, some we're got of materials, the year as some the we base because meant be exiting I inventory is On we and the worst mentioned normalization of XX right. this of destocking. about a the $X.XX it that have puts to

the do a still down better interest some and to will little You'll bit. of start come

earnings get see rate as normalization tax of better. You

there. Of might neutral course, that either but some pressure headwind commercial some identified there of the price and flagged repeat volume don't will we We we elements be there. believe XXXX, then in the slight a we net negative be there, that it that sales to have

certainly, that call. because too gives these all And we the parts. the it's we're will hopefully, of moving quantify at certainly next you So looking the while early, blanks levers fill some end in to today earnings not year

bridge. Okay. on the similarly, flow cash free And

source of went down $XXX million a you million a from So $XX at million, $XXX use kind there. the swing midpoint a of of to so

push that going free does about as 'XX So How when 'XX? you well? slower are you X forward, inventory or a cash flow free you out year thinking cash or should kind 'XX? be in think flow into positive of this depletion Or that about

and just spending indicating peak lower come few as last kind Page positive the that again, clear, about some we -- free flow done expect the cash talked Just as the to making payable, take and maintenance we in be Obviously, this we years for we that how profit to progress whole capital better over had challenge XX, to more of off we're strategic we've a working the on some CapEx will of on the spending level affects of economic that inventory a at even level. of are with And business. how it's we look of example, downtime even approach production next been year, a the level normalize. accounts be improving earnings if

you'll normalizes as little coming inventory level next of out So production have boost and AP temporary a get also year an the you'll a of system some we're bit, -- carrying continue to coming if downtime. even

more, if that are a sorry, does there On -- number? And encapsulate both have projects bring CapEx you that spending what MAGMA you could. kind CapEx, one just and potentially capital Is even you CapEx way in I or down have? MAGMA still that pursuing further any to do of

It's gate As steps or stage mean, an lot we Green production started I obviously, year important facility. MAGMA, at us. a on get to for started, don't new I look understand we've stage spending the technology. that we until next through next that any and gate as mentioned, just with Bowling MAGMA new anticipate CapEx just Gordon

as down. will be probably will $XXX below It there, yes, will it million come signaling So CapEx the we're level. --

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

Gabe. slide for ] Richard a [ This is on XX. actually very Slide useful in Carlson It's

just ask there. to want I of a So couple questions

signs you're next being talked green into and but maybe you seeing So about some more going cautious first positive, on shoots some year. It like volume. of sounds seeing sales

my the because looks point, And puts pricing going it And signed? number what to So I contracts for shape is XXXX? want you into some areas for cautious year. could what you look just percentage the is on a of What like your areas that actually you're into then feeling to the what your confident? get what next at get and to And guess, takes. visibility price are be And are of more already what move into this of question starting about? net we like bit that also, little as cautious the year? are year? And second could going But get

is Yes. in sales we trend and to With probably flat European markets also said Latin obviously, particularly regard America, the With to at softening And issue we earlier, wine. you to brands look volume, strong. is market for America, slightly big as a the in we at China, spirits Americas, Europe, I regard North also offtake see demand, in potential see up. as a spirits look which as

so And categories, we America. on in outlook as we're is -- we're North pressure, those There look Europe. spirits in at some the also obviously, cautious

So the North to as are net In watchful price, Latin keep in again, be America. to regard available and guiding will as the tight a Europe, I in in capacities think, said, our market. continue wine, pretty America with they softening year-to-date, volumes, bit spirits, capacity have more on. around been we sales I and a something volume. With that eye thinking And really is

that about there. sort they on looking that -- pressure we're of of drivers be guiding XXXX. sort is are assumption the how there Our main would pricing our And some thinking X

of to agreements. positioned. at our in about on a when long-term that, business Europe under contracts the you it's That's look open is kind you take XX% look And maybe just to when had add take About of and X/X the are about our Americas. a globally XX% rest how are over about market, you asked and

will they this They are have So hasn't all price albeit of inflation been a -- fairly year. adjustment lot there all those stable. formulas,

That talk a is over the the So about negotiations biggest in visibility you in and November market our are bit there. And of commences the usually looking time timing have to stable we business the open we're Europe, improvement there. over frame. little X/X of

to date we'll [ plan early, you up ] keep So the and it's there. still we as understand

today line the question from UBS. Spector next comes Josh from of The

on longer want net to but kind follow the maybe a term. of medium I little to bit price, more up think

Fit So that, look Win I play EBITDA net some understanding there's guess $XXX all roll to this does does that at same talk as down and square into hedges and the up. of off to goals your generating your Europe. EBITDA more that you when pricing your higher costs longer-term glass become how you competitive savings, in million how you going time together, growing guys at competitiveness, And prices coming about and price from

would there be thoughts any So helpful.

Yes.

taking using growth where growth. If we XX, is the that that -- inefficiencies value are we're of sure in that too and to then world, earnings, we're facing in flexibility said, all to number on in our X-year pointed doing the more And top structure main I our in next all have of the more chain. us the gets the chain We have any around of value on and reality and that be really every at the end-to-end drive dynamics on organization As then we a productivity review our advantage structure need position. market. price will them business of able market cost squeezing all depend how to and we much over cost that across being program operate competitive There to competitive period access out high. focus and of that and of there. haven't into look out to the take been competitive cost fairly time. But planned, then position them. of in some was the measure focus, the base need focused on as a this past, to just given We're reshaping a the at because we And waste customers with growth will as that the And a reshape flow gives both we is say, to a make and of our business different we we us growth XX that an that increase market. be and that cash increase the

And competitive so with customers can be our need large position businesses the of choice. and ourselves we we and they as supplier to be that ride their develop

looking it. targeting in where do and add net you about A prepared or talking and more Joshua, the savings range now Phase talking we to we et opportunity what indicate XXXX. to would into in And we're cetera, $XXX savings that of about million of B, Win, has also Fit which if if -- go all But remarks, energy, to headwinds, with I is would we're that was there, being else with associated are the during equal, did have there's bridge savings. itself, we more at back some Gordon run right price that we which Phase

the So our we target. ability confident feel about to achieve

put I it peers? determine it's to a with? that at versus that's guess, a helpful. if guess, I should be reduction. you mean, pretty be you you're do maybe I closer you right best-in-class? just I save That's overall. hoping does you guess I if in follow how big of Would on peers, you XX% look what level that, Or up operating benchmarking yourself terms looks the that mean, target SG&A. I to like could

Yes.

July, running in our Many we at revenue SG&A are As mentioned was competitors or to below. of our at about X%. X%

is obviously that that's immediate took lens So one And it. benchmark. an we on

portfolio. the taken The looking it other lens is we've at

Therefore, we that that portfolio. an XX% reality to commodity reflects that mid-premium reflects need cost We a have and world. base

so on really, to to from at anything and made and to going customer a subtract does there's that a strategy we that whether safety does rightsize results, we all to exist we the and we needs how anything is lens, better cost support outcome feel And challenged and the connect or capability the can't our cost necessary business activity to we that to or anything going are health innovation it. connect ourselves, we connect can't And to it can't asked outcome have it we forward. And get in we result not. a how support have adjustments base through and of the looked that

benchmarks a guided we're have clear decisions of the we're and taking very cost set base. with clear at decisions that very comfortable we've a framework comfortable that and we're speed reduce the with very to the which and action So made very

XX% exit million there, next the One of of taken thing we've we'll But basis. course over -- as the the XXXX rate be drive run already at will That's million that target will that present expect reduction. for $XXX accounts that. I halfway that that of the action that a XXXX. because calendar-wise, on from already -- More fully like of so on million would get elements target the than we out XXXX year an get $XXX we $XXX done have of run add million we're work to of about phase-in full to rate look more actioned that $XXX and things the

Our today from the Citi. comes next question line Anthony of Pettinari from

you and you're improve you gives what to at wondering a looking that confidence enables you high Gordon, if that maybe I can drive, forecasting? forecasting about what improvement kind of was level, talk could in the

Yes.

and consumer the to of saw saw through normal obviously, So miss purchasing period And in sales. a COVID the nobody 'XX disruption behavior. lift sales huge whole as you patterns 'XX, wanted

chain. were there through big the sell-ins So

and of that out very Then really And their of chain saw -- think kind took the I down other they that partners take coming you the what's a the through end look at inventories customers of their at have sort come you a destocking look cycle. -- distribution period. we're side the to or were and that high. and as of

big the think the spirits. is around I unknown pantries is in particularly and still what

line you If spirits the I do wine, faster and And consumed you a of you in levels home, you before become way beer get get of are pantry. take consumer. happening focus distribution just is beer, sharpened get sight is there are if in U.S., chains. I the sort the what what clear think to everybody's how consumer X And long think bring I the to mean, than it's wine what's through visibility spirits. do how than through all is faster has to the consumed on very you chain look

hard parts all at stock train a travel different it's of massively typically the take look the where visibility kind retail, is world. of has long get that to a been on in You

those discussions do And is recognize our us share that own effective for in had also, all more our forecasting, us share investing actually insights people much also we've which better to we're major agreed investing own there's people And a So upskilling and customers. much with coupled many bring, to in share a data, information, in insights around we've our result. with way. some giving with the when capability many AI a customers. of way We

business. to everybody's it own going sharpened So for see around it. sure. focus And yes, improvements I it And in forward I our think we're starting see

be customers I've getting focus -- Our not many real everybody. want forecasts we're to are the it's we but yet, tighter, XXX and for over certainly, with a when last days, been where them getting you there. And many,

And then one follow-up. just quick

of, meaningfully next by looks about plus or X% maybe plus closure X% year. to is of have that. think, contingency X% could capacity then XX%, and But glance, I larger evaluating I or I of close first around planning You X%. kind frame guess, or at middle -- like possibility there just XX%? Just that X% a you a that more of talked X% to trying the mean, or percentage,

Yes.

on I'll Anthony, So base touch that.

Gordon So partly talking business keep profitability of be their That's up looking as and that's profit against economic together talking looking been more But take A kind X% about, But where A out we both talking the about that's those really B be performing negative primarily grow and B. closures partly can overhang this more that when best X% just how with plus. But into handful -- plants try taking that that in able shift Phase in going furnaces inventory. supply profit either we at our and economic and that's remaining higher are we're allow Phase we're the lower if on and that, capacity the can with network low about. capacity. Phase the with low of deal economic out what of the profit redundant and profit, supply is plus, to and just then productivity will demand to -- find to shoring to at rebalancing on Phase A, the was to we find likely those plants capacity demand. network, or to align we the with to trapped the look more our mind, we've Phase us at and take unlock opportunity within and that we're align books lower of

more not necessarily there think we're I same And here. missions into the get X will be as as probably A. there's B, we but in Phase mission So that's doing Phase

getting efficiency that. we And after as Yes. on reasonably pilots to and we in we've improve seen some mentioned and plants, XX%, run a July bit XX% anywhere fit between we're that, had of by just opportunity that the and

are growth go more to we is it there, to not volume us plant as so there we then if optionality efficient, is then make on kind that capacity it's would the then profitable, we after take more if each And or competitive that whether volume of go down. ways economically we gives through -- and but find

But the can't more we will as get have play we capacity. warehousing So certainly, to the place fitter we we get, any we we forward. -- return, optionality not go be a

Roxland the Truist Securities. comes of today line question next from from Michael Our

you Nicco just, for posted, out I Americas Europe, of has a peers next total Win. such ask why discussion, guess, or normalized just I'm mentioned one European margin and the there's in step Fit is to as big I reason on XXXX? company step. obviously with I guess 'XX the that This I Roxland. for curious, in Piccini higher lower you And I think EBITDA Mike actually while than be starting mid-teens the through like back in lower I margin, wondering next your XX% to total is can if were that. closest after delta a just that overcome And think, was is

Yes.

I the the end at year that as achieved achieve. as we So where segment I the not, I to that's year. for whether was get is into at would is say numbers think referring next to what medium-term referring really the target, probably we to -- EBITDA a closer we or profit, that of to when XX% should percentages, one thing, look far was when teens high I

couple and it hundred could a some of hit is margins alone. on what last we number I to that to more Looking of kind were that differentials end where think we seen by already couple higher at years. And SG&A Gordon basis think the I at XXXX, of of would year, achieve the of range which the return of of a points in is of highest a point in we've a just levels

throughout discussion. referred to that number So a the not of to the competitiveness mention opportunities we

of and a of now right into to where we number it's competitive that very a So are move for industry. really both margins combination to the those are try from

business get we the within And at measures, productivity from the we've are, on this lines them sight and yield. got what they clear how very where they'll of plan,

deliver that behind So -- a between now program and very here and disciplined the on to set there's XXXX. out we numbers from

life guess retrofitting gears I closures, does into play future, the guess, just in of of or now switching and the end then these does furnaces that at come either some MAGMA for curtailments your I to deciding, where closures are? when

It can us flexibility. give

market. you at in as you focus deliver a bring the scale. on scale; There's does live in that Kentucky moment at and is, the we've new can we've two, it gone on return making industrial right sure technology we Green ability MAGMA when Bowling make it. to deliver mentioned, X Our hypothesis industrial work on just and to the One,

and learnings both And will teams. Even in we technical leverage the industrial and for weeks, be plant that then we're can where learning as lot. we real going for forward. scale, that commercial at the MAGMA the So MAGMA plays a through run engineering that's best focus and there few first moment at the

part So configure look thinking we the fit at as ensure we're of yes, it best how best to the get to our it. That's to chain will we market arsenal be returns. how about the we

no at waiting this questions There time. are additional

management So it pass any I'd team to the remarks. like back for to closing

call. note, Please quarter traditional our Bailey. this ends Thanks,

housekeeping items. Just X

safe, calendar for choosing Thank First, Exchange for February planned second, X, please that's memorable glass. end for by scheduled City. mark note moment you. XXXX. York it And your the our in fourth then please March Day is Remember, a our XX that quarter call at Investor year make New

Thank you.

Thank concludes you This today's for participation. call. your all

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