OI - Earnings call transcript Q1 2018

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Operator

Good morning. My name is Angel, and I will be your conference operator for today's conference. At this time, I would like to welcome everyone to the O-I First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like the now host over Mr. to would conference turn to I and Investor President Johnson, Vice David Treasurer of Relations. Sir, you may begin your conference.

David Johnson

Welcome, Angel. you, everyone, earnings O-I's Thank conference to call.

and by today discuss will our developments review Lopez, be financial discussion a business our led provide outlook Our our Today, will key CEO, and Jan and we results. Bertsch, CFO. Andres of

results harbor the those Following comments measures review certain earnings A call this GAAP Presentation in to materials we presentation. our and for excludes items Please earnings that found our adjusted of prepared remarks, non-GAAP items management this reconciliation disclosure of can otherwise included o-i.com. available representative today and we'll our and the company's on use host are operations. release the relate be earnings considers press to financial at a ongoing financial safe the which materials. adjusted cash in Q&A to session. non-GAAP noted, website flow, are not appendix of Unless in presenting of

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

Andres Lopez

you, morning, and good everyone. Dave, Thank

that results this and of the program is more Americas. programs already is profits by Europe in facilitated we're the back say targets Let the of was of than through the Pacific as Americas, performance account Asia assets. financial really the delivering a meeting the improve the or before we're quarters in saying to doing investment beating key when me that and year, fit-to-market through for XX% [indiscernible] nine and the type Europe start and way margins in intensive consecutive rising we of which and half business. of And now improved same done This half their

the overview operational as financial the across will review Jan and unfolded and in performance. Sales an were conditions, sales as quarter moment, a constructive singles a outlook well terms prior both as a solid shipments, and essentially let across and as external see first high of me with on expected beer segment joint CBI provide we supports world, which of at world. the detailed in the XXXX, year reported of Shipments our into that While non-operational the with by environment from and expected shipments inflation the cost to stronger continued we price and in stronger venture US. euro fastest were growing just a par dig

actions our in capabilities Our our was cost in previously added a position are Systems key is line on full immediate deliver line. as expectations. results in the mentioned bottom first assets targets putting this to we and we how footprint we and a cost temporarily are pressure with quarter, In investment calls, that right prior year Total Meanwhile, solid on more we on moment. the assess track have business XXXX. delivered performing and as to confident the in in term, I'm for earnings, the financial

products new to This of are Now, to productions value in I towards let's glass. where trends the sustainable Slide Consumer creation. around world. reflected high and the want focus starting is turn on X, turn level

integrated as in and US launched We're organization. business and like countries until building just chain the an supply such UK, milk talent glass unthinkable in glass end-to-end and recently. we example, sales capabilities six marketing, selling in planning, and recently. key As is countries milk the areas in for something Today different further innovation,

in to out be around of visible benefits actively fact, we our are starting world regions. capabilities In the have and largest two been the many rolling these

glass as do end-to-end and Pacific several operations year glass by supply This finance is For and innovation program by new is technology with within a year investing in We've well an and asset support container the Americas and standard much packaging applying new dimensions work glass separately early long channels region has industry process is launching position growth so rolling adopting instance, methodologies. plans cycles market like deployed demand, planning four of significantly supply the within operating that continuous TSC and product This ideal three O-I's in the and been as in now to will horizon. process will part our of Europe chain through been to next interest to improve of the the now intensive are improvement cycle. The stake integrating an and system in a capital consumers, is efficient and allow important timely industry the customers for holders. the Asia industry a very as considering a IBP, whole. our

top people O-I's truly Within working and and functional and and sales, more towards world, impact global productive teams manufacturing, from together Cross engineering to the much all we're bringing leveraging are ways. line of practical collaborative chain, the finance solutions execution the driving enterprise. bottom dimension, insights marketing, in across the supply

Our are end-to-end singularly their improving and flexibility on supply assets enhancing reliability. focused and teams chain

strategically will our in investments. more ability These Columbia also higher generating cost seeking assets. We cost works. linkage in value XXXX, key into investments at favorable this footprint making more sustainable to productive strategic with proven to very our to dramatically customer meet asset. is to a In the our While a needs on return while redeploy already Netherlands, efficient rising enhance continually how are we is footprints this did projects we from that investing in in and a point. in review serve the our changing are ways supply And assets XXXX;

we variety the engaged Asia through of half a Pacific. intensive calls, first As in deeply XXXX program earnings investment in we're in asset noted previous

evident while matched needs. assets past or so costumer year to is in good fully this it become product has growth that the evolving have Over there our not been region,

are term what Europe before with to the positive This So to assets earnestly done begin segment year, that that improve value. to areas to expansion long Americas opted by a catalyst by more illustrates the profit the and similar assets operating, Pacific's teams. now in to of results and fourth leveraged margins drive lift our and margins drive to efforts doing, increasingly quarter Good the we very This when market to last market past in fit properly in improving the we as better is are will process, over rising functional cross is years. fit Asia two order we've are This so productive margin assets are and earnings. what strong is it turn.

finish, finite meet needs. a well know in a have how start manage we of current to set We from that future customer to all way projects to and

up that were the value Bringing program. we let over firmly initial presently turn the clearly ramping the to In the asset shareholder Now, part in are all of the are increase furnaces fact call path to we together, improvement me Jan. regions on

Jan Bertsch

Thanks, Andres.

private Americas and recovering the were increase larger Let's volume. us North new one resources year-over-year. geography, cost is revenue digits. and the turn shipments last currency Trends Beginning Brazil to in America saw sales segment where to and have strongest exiting was in up performer we synergies. and that Slide best and Sales region price we single are named America Latin XX% introduction was expected. practices allows Americas to the product across X. into across critical consumption with the better consolidated this volume reported to trends up activity leverage low year, us gains replicate realize This Continuing year, the as competencies and the Overall enabled

cross and introductions growing in are oil fast introducing helping teams launch name US, Colombia, juice fruit instance glass the this new water generating among pasta juices all sauces new company And across the region soda to we coconut beverage in Brazil For uses. premium tuna glass, just Mexico nonalcoholic packaging a across in many Ecuador, segment few in into new and end in functional major in fruit product are a successfully the in other in glass business region. olive and

volume that up Within its ramped now on growths better. and first O-I Constellation at the trend offset I'm levels the US to has been solid of higher food plus traction in in helped in is overall in mentioned in is volumes and we market US, which taking years, record with Use by expansion. beverages of furnace situation the US the use earnings declining O-I last into beer. largely quarter solidly recent say results. we the that containers JV, On of JV spirits, of Brands. Americas when quarter year-on-year, seen account even the total driven performing when systems from margin our fourth beer, call have premium the happy mega in containers and all, the price and super premium with again the growth In is once continue to XXXX, the our cost nonalcoholic including results

XX%, to price Turning and were driving in prior with a was was exceptional currency. strong and in the light solid Price favorable modestly healthy results constructive total to the Netherlands can XX Good of rest view a and extend point. and in our the dynamics year. see After discussed. plant trends improved the the of basis the driven expectations Sales both year. quite the consistent closure team we've in Europe, revenue with expect positive in from layering flat, cost of these by margins we essentially improvement. benefits Shipments period you systems line is the comparable into which spread is up cost

of the mentioned the program which lower Asia profit in to region. end the Pacific. turn asset the temporary Let's is cause already margin investment Andres

While to region's going first sustainably this through the of is forward. improve right XXXXit's do, thing earnings dampening profile to the half the earnings

will year well grow Zealand growth favorable and solid As the upon to this that leveraging a emerge continue as half with as come, result to second years Asia New expect profitable Australia for healthy Pacific in emerging in in we demand of foundation markets. the to which

all Let's broad operating engineering stronger guidance, X% with in higher half the sales cost, activity the segment of are also spend about several to over gains more Price operating favorable there due year line compared with profit of from the elements prior volume X, bucket, volume the inflation profit right The in segment and overall production in to was Slide cost rather quarter. up in first currency quarter plus helped led in with respect manufacturing in regions. to is With turn impact operating mix and higher was the it, with this volume Americas. growth euro primarily year-over-year. to our

closure cost in and system total the performance improvements drive side positive our cost plant benefits to base. the from continued On sustainable

line. asset the while to to margin favorable cost in and normal lower this less we top I gains price second know XXXX enhancements growth to are passionate committed to anticipate simple about expansion, level drop spread as in mentioned, the leads quarter. return support margins You the year-over-year line to bottom TSC so associated didn't with within the the and driving of math line half cost all the bottom quarter pressure continue We as a more and in just

year full the that solid confident least For to basis XX are expansion then, we on we points. of track are at margin deliver

business to in few. Slide profit is line improvements segment have $X.XX cost modest relatively X, moving impact and TSC, tax in our Turning The with operations the parts total, spread annual while to rate several The and in EPS asset year-over-year to in effective added the name a was guidance. price operating our EPS. sales, quarter, quarter

However, headwind. basis than points tax $X.XX since about is it was year, XXX prior higher a

rates and two share a euro currency. I'd like pass those great interest in the rising the EPS, we explain variable $X.XX is items While outcome expense, Flat expense interest on as adjusted together a interest US. increase sufficiently and faced stronger in count to

our We pressures outstanding the We no March. therefore shares in impact quarter capital repurchased This smart global earnings share have per and had two no appreciable and our the deleveraging management. efficient all of cash average offset million in planning yet. quarter, these on in stock structure on shares impact essentially through

another, one I Lastly, of not $X.XX results quarter which a are call as quite outlook tailwind fourth quarter we And quarter albeit a favorable earnings expected currency pieces of $X.XX $X.XX to at $X.XX our largely XXXX mentioned on moving the Slide overall, our on second X, and guidance quarter upper although the was like as is to end delivered $X.XX. feels base. first about lot looking There leading which from outlook second adjusted EPS many offset our range.

by will offset footprint the activity we pieces, plus first pennies expect to prior cost about Here's the the the engineering favorable global Europe operating impact of cost benefits we partially Segment likely a the spread profit the still than and quarter, year, systems outlook. efforts full expected won't in be quarter, directionally Similar of be overall. interest perhaps quarter but be other contribute year-over-year in modestly consistent we price the in to a anticipate year few second is it benefit completed From higher regional regions the the XXXX. while lastly in of quarter, should key muted. a to as of entirely to have a performance continue very shipments in total with a are favorable spread. continued the of taxes the is flat will currency be and more in the be price from well non-strategic that minor consistent quarter should running benefit sales FX region while first and should flat Europe for assets perspective, Americas second the cost breakdown with

the in quarter. the investments some first as in of expected year-over-year, assets but half Asia much our all, in the of on resiliency. quarter in outcome Considering stage because a testament back this a to the be be earnings lower year the coming solid level XXXX. on prior not with we're high the of first is half In Pacific for improvement would of are the par to back year and as substantial setting the line EPS

Turning we making that our are see I trust comprehensive you through can progress transformation. to Slide X, steady

come get effective two financial key results. are strong You efficient better as really APAC's are margins. over a O-I our our flow Americas The Americas the us profit foundation now, and temporarily global cash been that has my improving hitting our sales, Said and a Europe that assessment are and solid I've for establishing mid-year, working enterprise. future. mention simplified, in years assets delivering Clearly Pacific targets organized, rebuilding we We'll an long and and earnings credibility contribution. differently, even Asia in focus. year-over-year, here with way team behind Europe the the for performance, are Andres know, performing a limited

and there Americas in some Europe quite APAC of ahead is improve us. to As rebounds continue runway

Day the longer continued While earnings margins, year, of we outlook how term more and higher lead Investor and discussions that later strategic our to volume you will have can at actions solid cash to about about say expect anticipate the we growth impact will flow. this our

to to in in activity continue an our ventures. about XX, CapEx we invest our cash turn as on Slide allocation for and will reach to business XXX capital full will year increase we the Let's million see our contributions joint will

furnace joint to XXXX. with to expected in we come venture on invest example, For continue in line our fifth CBI. The is

we and We product footprint will to by just legacy look to on deleveraging continue we recently the built have manage structure, acquisitions complement liabilities repurchasing that for our of global begun and portfolio. slow pace continue that And our shares. while to

plan in of repurchases. course million execute the $XXX XXXX, share about Over we to

let With the turn the review to me and call complete, back Andres. outlook

Andres Lopez

XX. and Jan Slide turn Thanks, let's to

it's There sustainability. NGOs shareholders, with the companies are communities excited as path we as the are our customers for our expectation increasing of prosperity and as the end impact and We packaging. is about day, to provide customers, commitment financial along on to strong well our from about on ever responsible consumers, bring the as At government well an we employees to the the planet.

on get make preferred it, We earth multiple conscious are proud you is chemicals it's and is and consumers, no a product, doesn't or is floating see that decompose consumers recyclable, benefits, glass the to of reusable, seas. by glass the is pure into infinitely in mass harmful health oceans has there open

is we commitment amongst the and make glass, mayonnaise, how meals for and to to the is environment. milk continue goes quality sustainability beyond fruit others, We coconut we premium ketchup, good of includes make products premium yogurt, resurgence glass for O-I's them. returning products a see juices, to products really which water, there

plants recycled carbon process to and That energy will new are use that amounts We respond to customer we waste material. are glass XX% much more as we recycled possible. minimize of lower than In to able better as reduce some making glass Europe, is improved raw in which envision changing technology use, in glass investing, our emissions, needs. leveraging our

Cradle we glass algorithms project energy in pay more control productivity. The elevating A, and and for And world Vision We Let back efforts we America enhance me conservation containers upgraded a system that on O-I in recently to significantly glass corporate consumption one product develop achieve products investment O-I our will management. across in highlight dealing for efforts responsibility and global advanced from Health XX% footprint. health the berries Externally, scorecard, the in packaging. industry. the Award one and melting the a the fruit use the EST our around are replicating in Cradle Material earlier of for certifications MSCI is receive across begun to rating energy have and Beautiful. with and company Keep premier on packaging rating stages conditioning the our these about year the sustainability the to into recognition is due to for year social to O-I top and America of and sustainability. this we first the world gain

O- only Investor but November plan high your perform. execution come. do, XX, level finalize To Their a Day And to and City. fuel of and sustainability will the to rapidly lines at for share discipline thank ownership and questions. competitive advantage to to we years strategies open For our business this for more and now O-I taking driver I growth York on New not like sustainability engagement, will that employees is financial rigorous in their to transformation. business in energy and on our the our is thing We for right I also will advance

Operator

of Anthony line Please [Operator ahead, Pettinari Instructions] sir. comes And first at question your from this go the from Citigroup. time

Anthony Pettinari

then Asia or kind exiting could where of early normalized more in the pretty where And Asia it you on be of any there maybe progress kind your made where have in they think seems be of you to growing Pac, XXXX are the in when might opportunities in sense you've operating Southeast potentially Given footprint Pac, margins a capacity strongly? basis? do about is Asia region add demand like

Andres Lopez

with question, let so quite market a and me your second start some steadily. Yeah, growing in we see Pacific places stable Asia in

to can evaluate is the going make expect that at opportunities of company. assets in fit and fact our point time as we So in way were taken we opportunities go best normal first region year we're the decision in describe. phase the into to closer the are the step a that following to which to gradually complete When in second if on the into in a the best - to them the move comes add did as region what into times if and is for they we then in There can to past. be margins, those will we they'll this go recent half APAC margins well this set next we as it you year running capacity we the the we conditions in and half be normalize market this working in just

Jan Bertsch

improvement something the they activity been year so margins normal to we'll prior as XX% this see in of of this around quarter-over-quarter level. more Yeah, see consistent could next for this we'll XX%, year, said, be or what Andres exiting year had

Operator

ahead, next your of of from sir. with Lynch. question the America Please George go Merrill And Staphos comes line Bank

George Leon Staphos

that remember the back your side. from to question. development you ability Everyone you'd one to call in and wanted things good indicator on because we cost hit I Asia on one revenue your question. I should your margin last gauge I my we goals an on just think that was ultimately progress the your asked, to that how Jan hit as taking for for Pac are we ability focusing the morning, come mentioned focus of my should thanks of

to going effort quarter-on-quarter I up you revenue being weakness in if I'm when underlying that, you have in bit seem - So the the that pleased the that and if with Thank the still Pac cost on half profits the you remember margin, for and also going volume but we comparison the the had you. would for the me you Asia down revenues the that was look at a development flat even and being with are to mentioned relative correct 'XX. goal the first would that forward on wrong year case, be is in

Andres Lopez

the in within limited volume, sales is reviewing the quarter by volume market had capacity coming containers. start impact also so Indonesia lower in down this from is because why me let had reason we the So our and to we certain some

see Now, going to we're sales going and going we cost improved region positive market the the look should improved to and see we making the the We're improve we're several earnings margins the One and in earnings at this changes region. enough going footprint. to improved that improve help cost, the in because because supply capacity logistics going see to and effects second we're margins. way to when are it of see warehouse be, to manufacturing we're an volumes is onwards, half going mix in to we're have therefore

Operator

the next from ahead, Capital Wilde Mark comes question BMO Markets. of go sir. Your Please from line

Mark Wilde

Andres, Good Jan. good morning morning

Andres Lopez

morning. Good

Jan Bertsch

Good morning.

Mark Wilde

US, on your like Canada. aggregate Andres, us Mexico, I growth. just places sort a of I X% could the Brazil, you number little color more about region key was the for Americas know in sort wondered markets, across of volume if give the

Andres Lopez

Okay, yeah.

prior seeing and X% been introducing same the about we market up wine products were when premium however versus food, in and seen beer we spirits, and and look this growth US, trends in year the we've in So we've too. mega we're super premium at year new before

that O-I is in by large Now, joint when the growing and venture or is the you segment in beer, it imported we presence this IBC. the through fastest by driven segment is look market, very it CBI brands know primarily at

for goes company. this though basis from has we magnitude sales consolidate it volume, of we even that in volume total IBC, so our to idea it something up impact, don't growth Now, an a points quite the give is XXX you large

US this presence into when from the you're we than containers because local today because US imported the combine Mexico for with is supply the you that years ever the larger it consideration O-I - looking in down of take in at having market are in has been beer. market the recent please So supply

were at in Now, five. for look XX%, three we Brazil, up market XX% when up quarter beer we the and the was

look at Nielsen Now, Brazil look look premium we by XX%, total looking one is analysis we the that leaders at three the by look X% at returnable at by XX% premium. beer market. is this when when you when at and of analysis is in only glass country Then one package packaging glass one, you see, is sold Nielsen Now, This way way it what type when up. it mainstream the glass, being at is up in XX% you the up [ph] in that up when grows you look in is

glass Brazil mainstream O-I. returnable for that in very Now, in drops that little in units has impact

crisis that been there's that since it's the doesn't demand, glass premise economic on and Brazil low because drops Now, way in record. returnable it

that volumes impact quarter. unit up just growth growth in I as see therefore one Now, way in before is the large, XX% our described the in we very -

for of Now, before Mexico we that and were all we're is Brazil, as drinks markets we country is we limited, that the mid-single of see in for flat a fairly And by solid Australia, single and soft juices as low that and been quarter, working categories. at this digits, to then is there there we digits this healthy large fact at market but emerging a water, we on countries new market well other can coconut benefit however, territory. as introduction demand fruit very the which activity product in Again categories and new at is area when driven the room. finish they APAC, flat we look we the was Zealand, serve consideration and are once having also beer up with product mentioned very we so growing in New work has to introduction a year-on-year [ph] this in development over mid when capacity this see lot work in and from the important this a assets. EMEAN look pretty is our the something

So pretty of demand. an much that's overview

If demand very follow you little there. we're on over more Europe, bit solid in a want seeing

You'll see QX year. being prior in line with

to at Now, in comparing XXXX, so was that's compared is X% volumes XXXX. year, there even and Beer year. the in good the though consumption solid quarter harvest a with in are are we very a highest Europe levels was one that previous very strong poor in it at when very wine was

Operator

And Suisse. you're Credit sir. Kjellberg - Please comes ahead, from Lars question line the not go

Lars Kjellberg

for Good taking morning, thanks my questions.

'XX. onwards to comment margin asset less your Just cetera the i.e. imply improvements look commercializing looking expansion drive terms into XXX and that to year further own us bps points, what my would other model enhancement be if I you XXX more on does in basis about XXXX your sort into would 'XX range at of half, disruptive, to full guidance want things XX of in continued margin that that of of tell in year-on-year also heading less beyond the volumes et if and second expansion

Andres Lopez

So influencing are time There pricing this the a expecting of factors in point this few for XX year we is margin point at margin are in constructive basis time, across expansion. at that world. points are this

a year, we're the momentum a benefits and structural marketing described reduction contributes going into everything few and doing some the margins margins. we last seen combination expect is investment to TSC bottom did as mix we're to gaining year, haven't we kick so in so we expect fully embedded lot in 'XX the increase cost for and organization management, through forward, also and And we opportunities the line. those the we of continue on, are contributing and with expect in that to quite we're investments into dimension some of that onwards. there more to working in doing this before, the and and We evolve team sales us is TSC work in years, years a that following going

Jan Bertsch

In and the substantially as second quarter-to-quarter the - lot will our to the half through or not of less asset we that detail we'll we'll of lot can second to up, EBIT have improvement, negative talk second down improvement first flat Lars, and this of APAC saw as it'll for flat in expect the APAC seeing second good should get maybe relatively and to the In to for love be as while performance the Investor are relatively margin bit for first a go And better will for better than XXXX quarter, the the see elaborate margins Americas more margins so perhaps. we're seeing upcoming still we the I in margin quarter this improvement about expect logistics general but than both the if in performance continued they be will as so you and the the the Europe, slightly a on continue flat, and Day I during half would year. not performance in out cadence in equally cost enhancement be the on year-over-year. we quarter, as a for so quarter that be we in November. little we'll a repairs repair strength the well little so asset EBITs as Americas, cost revenue be a year happy we're carry year, bit good be over in cost be say first basis these see and negative quarter and

Operator

of And from Please Debbie question go comes your madam. next the Jones ahead, Deutsche line from Bank.

Debbie Jones

year your I clarification in quarter it about if if sure Hi, so not good I guidance you wanted just about did pennies Jan, on and QX can far through last in for I to you three I'd guidance you ask roll get or to was in repurchases. what and not said were QX? start morning. think to full just that XXXX the and then decision shares repurchasing it's share talk

Jan Bertsch

I question that's can and that a so Sure, you. clarify good for

and in any expect given we've little the total, around XXXX typically about less executive in and and we that repurchases more we of part of considering balance that if latter the fact a dilution of less. for will those shares rest in repurchased the the have on how little little or I share are think the than it's year the $X.XX during then a in of half of compensation for million purchased determine first after timing the XXXK of roughly depending or a the after shares should shares year quarter $X.XX the

this that we guidance on see year for or earnings the our for part rates, we'll in the FX the as ups more but for of in the throughout as them so included repurchase, you'll of downs call probably range and not there's mid hear typical year, update mid well. about the our refine guidance in have of yet, as part our - share We next

Operator

Fargo. your And Manuel line Chris the from next of comes Wells Please question go from ahead.

Chris Manuel

parts so there will wanted that I to glass were think - kind do of to and guys. acquire One, going when or of are of thinking may how morning, to Good how they growth two of the anticipating you acquisitions and you you forward that? around kind to remain in beginning the volume then or of sector growth into about you're to mean circle topic folding things you there improve I areas try view the question. nature. are volume look glass of acquisitions the outside that you kind

Andres Lopez

glass. we in line in product XXX in so in in a the the question new are the glass call that previous a seeing part look renewed volumes of That we're at significant volumes, the volume very seeing applies we're for interest year-on-year the seeing solid last Asia renewed activity three or we're and interest with in pretty on environment and that's the Europe also years Okay, Americas is new and I applies fact creating in mentioned earlier growth basis Pacific. that to of a The when points.

things countries comes we there. out when are and look to way setting and in the at Americas grow the Now, incremental we is that match over Mexico approaching up can for capacity Brazil we to because in source a back demand in very good serve as growth. EMEAN that continue We're a

the plenty before So consumers, by comes M&A, overall the mentioned it et glass, see we're to are O-I world, around looking positive that we over for we we glass, to continue at channels are we are in there, of are interest the opportunities and as primarily out before, to the nothing we're the evaluating opportunity it if world right so There company. be cetera. going like for [indiscernible], we XX% this time that find we grow are that. see it, point in opportunities to other big by be opportunities. strategic and right had at in opportunities are in time. we when will we XX% glass of so time There there segments. them by more When of we plenty a are to in glass, before accretive look can There will not materialize said around environment market customers, not but we comes of for some is and That as thoroughly there

Operator

Ghansham go from comes Panjabi question line next from of ahead. your Please And RW Baird.

Matt Krueger

business of compare first filling is Krueger year-to-date then level of context the and In good your the kick for inflation level the how This initial expectations inflation you what across your of XXXX, your higher Ghansham. the inflation did rest during Hi, cost to quarter the outlook for morning. of in actually see off does freight Matt And for year? what's to XXXX? and oil

Andres Lopez

with US. expect fuel at the the So with in inflation we into line of in inflation exception a that year we freight the is and when look coming what

freight in When freight. very situation, are driven has world, record record world and Now, confident to the in able inflation inflation to We to the we first first fuel XXXX. in country be specific increased see constructive we the before been had price comes so primarily US around we very that inflation to environment this a we've which we're going to it described quarter, punctual able the a cross in the the the been by quarter.

the when basis. basis, that quarterly a pass so Now, in monthly and through pass basis, it we annual freight yearly quickly. a in through when that The it fuel we comes fuel to we can fairly record

Now, we're we much second fade as moderation half. in into pretty expect the quarter we go second that away a that inflation of will that seeing the and

world able concern a the we're So major that to with point this we're that at in and going in record have inflation expecting we across don't XXXX. to be time

Operator

And your of Dillon question Chip comes line next the with ahead. from Vertical Research. go Please

Chip Dillon

could little into Yes a you Americas or or in joint company of free it total million your ventures either confirm and the above good is venture whether out then not were lastly to joint talk you you if the and or If segment morning. that Jan, bit CBI your share the just Could include investment the of the about XXX the taken is volume? cash line?

Andres Lopez

points and to we at for So basis CBI it's that so total the you of consolidate around look when XXX O-I, we it. a sizable don't the equates growth note it volume, very volume

is which earnings going However, XXXX and healthy so to we from just to volume growth, are following have combination this growth healthy we of going growth drive we're five runway a it's two going furnace drive because - very a that equity going that four us, business has going of building a is and come - into and of very is lot to a with and XXXX. to year year it generate lot started to the furnace the

Jan Bertsch

free and in then be just and $XX we cash as bit from investment clarify that then have on $XX a then JV we in to flow question million Constellation our year $XXX should and our Brand, flow this to about Okay such free your million with cash JV of RMBC. adjusted them make

Operator

go And the line your from Gaffner Scott next question of from Please Barclays. ahead. comes

Scott Gaffner

Andres good Jan. good and morning Thanks, morning

Andres Lopez

morning. Good

Jan Bertsch

morning. Good

Scott Gaffner

basis there's and like I XXXX even Asia some new about some these and this about of expect go should on - we and more on the improve expect? the and mix when win any of on bit what expansion Can talk categories is talk require it yogurts, above side, slide to normally in at and growth a and little you the you new the X% innovation Andres, beyond look milk about Thanks. Pacific. you first, talk business, margin plus as business profile plus volume business forward of capital should additional this this then a capital we you would and

Andres Lopez

things. so Okay, a few

is, entire brands. towards one see really to that moving value space, categories in yield is we high for glass first an The helping well and all and segments does it market

segments. support those larger will tend grow segments. the we in innovation our high higher improve the are in product As to which glass going innovation, Margins so and we that invest presence as we we of value in in we're of are because value presence in high mix segments, to doing, - the

as be a capital in that businesses, time nevertheless have support to will move there those that forward. positive investment accretive is return, very Now, very will at high point so able highly required to be capital we it

Jan Bertsch

CapEx prior we XXX at elaborate this all do variety that about year Scott, look is the all ways. Andres's to these on we returns, million of a investments anticipating a of for And little discussion of that for that in included in bit just we're and

strategic the you've value the growth. supply sustainable company, the plants this another returns. type of might, highly actions Netherland know in maybe and kind those plant investing - as that would in and areas high Netherlands our strategic Colombia, one us our classify the That of We're chain ourselves year long area, talk some a plus also our have investments I kind plants, we positive such course of type lot term of heard area for our bring and and also type of closure First, the work returns those greater don't about as of company. procurement in then and type of which very I to be or include like one returns closure that might things XX% in are footprint

company acquisition market that Vitro greater APAC type Andres few the across future So average the plant. than more the we're talking to year, average such cost to joint manufacturing to things be can for years all of continually customers capital in assets especially efficiency as growth. of would allow maintenance growth that maybe the our area like weighted the has better about a but than improvement then like last Constellation, be in the our fit ago investments these and our better of responsive and are where we so in and capital, needs to with things category this And our ongoing for these allows investing in our of drive for been some venture

understand are company. look on I important and at to those returns how for this we investments So think really

Andres Lopez

add me you're comes Let comments it improvement, a efforts. very familiar though, margin when TSC couple to it with of

are second Americas to We half to growth the already a the be implementing year is important. planning about fully implemented covered process in support years horizon on, which important in This the the this going momentum gaining chain order thing couple that following a fully embedded to supply questions In are things technology of call highlighted this as Europe, the early global contribute. odd industry The now in IBP, those They this into investing in process be is next and rolling, the will go integrated very is for continue margin. three glass we will if business we growth. will they we and year. APAC efforts today in organization, that is to in are Our total in in contribute industry. planning, very implemented

time. we be margins growth, over designing and systematic that's a so earnings O-I, solution fact are for systemic signing, we'll solution we higher can what in So support and

Operator

question next our Edlain Rodriguez UBS. from of the And from line comes

Edlain Rodriguez

good you, morning Thank guys.

Andres Lopez

morning. Good

Jan Bertsch

Good morning.

Edlain Rodriguez

on a comfortable point by quarter, still the end allocation, year. Just leverage times to mean went capital of have about up I this times. you or two do four your I with quick target the one getting number of three Are mean, that you

Jan Bertsch

went up is ratio X.X well which very well. of only seasonality X.X quarter-over-quarter, as our times is not show times that the guidelines, covenants but Yeah leverage we about our within and typical to from

to I exclude at X.X. call roughly year be credit about end certain prior agreement Our debt explained borrowings under the X.X, expect think our working I capital as seasonal bank levels and earnings we on

in we throughout repurchase we're now. program, instituted smaller that share ago, a the approach, perhaps there So this looking little bit but years past bit opportunities we capital more to little is allocation because with out mentioned, think the at than little three little through it to putting but some balance M&A the continuing are repurchase, the prudent we few think balanced to to we year continue this also more importantly with deleverage that because deleverage as I way looking a are we're A times approaching have thing share in at a pace albeit the Andres more do had is that is bit put different we and leverage bit process.

Operator

from comes line Please go the next Viswanathan your question And RBC of Arun from Markets. ahead. Capital

Arun Viswanathan

thanks. Hey, good morning,

Andres Lopez

Good morning.

Jan Bertsch

Good morning.

Arun Viswanathan

curious parse in to I help the couple non-beer and could expectations the a it great? expect something guess else and so shipments if beer about Americas. flat other US, maybe dynamics remain wine your us different your questions, similarly so or Thanks, then just maybe also you the year. in Europe, categories the would Do for the you whether outlook be if categories, just or Just by for rest of in understand of stuff you can that and be some the or

Andres Lopez

that region, across users the but Europe expecting seeing demand seeing also reflected product a were so coming activity solid that and decision, we it even of years, remaining very is is its development year little really a Beer Wine poor of solid. highest didn't goes slowdown hard in nine end bit our because we're The demand. strong that important, new in across a point Good, materialize. in across consumption we're very the the at is categories. though into

up, a situation to strong year, when a comes with expect it the are Europe, we comparing same flat will the slightly that's as year very trends last we are for but to they've year year so be that Americas been. mega So

the on everything However, and very a are is premium, that wine, new as are solid, very, in so in decline, in all we good in a time else well. - product overall been in NABs, year these and spirits, for at all in of this same presence food a is seeing in in we're slower focused that US And is our consequence very the better highly so is offsetting that premium categories growth the previous seeing decline good we in development segments, quite very a those those we've partially fact growth. we're position growth the so in segments year example in super because grows

Operator

your the And Markets. Josephson Please question from Capital from next KeyBanc line of comes Adam ahead go

Adam Josephson

and so XX I you up just Jan you've little Good your anticipating you're of you as include or net Debbie's morning that historically? rate done quarter guidance why FX goal give you're a as more, have FX in assume on far using not and your think perhaps one everyone. or as quick end given should follow $X.XX question, we buybacks just a that another

Jan Bertsch

to moves I so the minor as we our peso, daily, as throughout share toward clarify if of share that full seen based quarter if year go we is daily and shares. end. would the so we of this update currency quarter was sure, strengthening dependent have can $XXX and or guidance more - we end Yeah, there. will slightly changes that. a rolls in do last items. back need sense moved rates, And which that of what the we the is repurchase for on we the we try takes our add and dollar year course the to that we the just for on I'm as the out. And But course It euro, $X.XX of two, Debbie's yeah, if execute mentioned March the year we The when maybe adjust but don't execute other and real, it those and on buyback second you've you likely when than the second guidance Mexican not it's question million the balance impact more we'll guidance refine further to in as know of the the will be second slightly of the will repurchase, higher all do offset adjust then the typical and for do FX Brazilian quarter in and penny we we'll

Operator

the Sachs. next Brian ahead. Maguire Please from of And line your with comes question go Goldman

Brian Maguire

morning. good Hey,

Andres Lopez

morning. Good

Brian Maguire

know decent I in kind to optimize to brought Just guess you it's opportunities going have your times, US it growth the this the your mega out to for out the adjust any weakness been you Brazil, where taking level environment. evaluating footprint, again, in the in a a making on took reductions couple of capacity if wondering maybe US the one again, must in seeing? plant of new of US I sounds growth plant a think just or like have enough to you question up we're down just year, planning Americas competitors a for things of in the strong there amount a sort or it to given do and US be been you're are beer been that's

Andres Lopez

said been we performance best previous of premium in every mega have on our one this Like bear, of the mega premium super within as beer year improving categories. situation the so better though even we've continues. supporting customers and And Yeah, efforts, before circumstances. period, maybe we're so the we're the is US in and this our seeing the for than what focused seen the and the the the years, beer can perform wine so they in decline also

products demand and we've footprint. to it and and the in remaining our influence so when now comes that. is in what on to is some quite supply a footprint producing, IBC capacity few of there are local adapting and the There Now, that parts balance more been moving between the

point So at we're which and and is relevant seeing that we market the plans very our focus this are we respond the glass interesting constantly present there it for analyzing that, to developing properly time, in is also obviously increase the we don't have making around world in that out any glass sure in major US. is is

Operator

George comes from America Merrill Your of go from Bank Staphos Please Lynch. next question the ahead. line of

George Staphos

a everyone. it's quick back Thanks follow Asia come Andres I not biggest recognizing had follow Jan, and on. my your Hi, on I to taking segment just and Pac up. wanted

you the profit a higher solid constant sales arrow a that quick saying a and Europe, of rest program like quarter was should at year, profit good expected is I in on think Slide in dollars that terms then pointing in it point. Asia what were was on. luck higher I - and quarter. we expecting or expect currency still Asia-Pac the kind growth, is this in of volume Thank modest up the think on just as Pricing EBIT revenues you you're that operating what X, looking Pac, basis, progressing last price level, was you that would and of you expect increase it the is half follow year the for that the

Andres Lopez

George. Thanks,

So seeing it that Europe, we're all We let continues done. is balance negotiation all for of expect the price season, with what what is went you the environment constructive. to year, me start and in very already can be the so set through

a confident Europe. in we're good So recording are to comes place we it when that inflation in

and we've seen we've look volume at been the we quarter has the first that been that the we in the best by the the have quarter When in the in we're Now, assets. when fourth previous year. we place compare to APAC, activity influenced

them in the condition the have all have We will half. we second in the

demand because better a is fit going footprint, we as quarter quarter quarter in higher, there are the have because impact this in to of little in will volume all mix but region, volumes to well solid Our bit the second and as though going we're is fourth as a to there, that change mix be so and improve an market. the

to with very and earnings, or and healthy when markets the it this impact, years markets first, we we've though been it's way. Europe have Americas same set in it's get with the positive comes margins to a a been healthy been done can the growth we better or few is thing program Now, that healthy because it's last

the well very in this is very in is wine control of We half into activity, behind we be going year. that second progress making that is get we that our something know is are finite that, the once to a very good and

confident the cost So impacted cost to mentioned better manufacturing very to warehouse going we up, so sales volume going we're performance logistics things be XXXX. going see of the to second are in be too, right moving in as better many will be region will that to is going we're half be I come before because is variables that this that will and and direction better there

Operator

a And go Markets. BMO our final Capital ahead. question is up from Wilde from Mark Please follow

Mark Wilde

a earlier it of know program is we've Pacific, Asia last, programs? Pacific do like had that couple rounds other eight didn't restructuring programs about just different What from and of you don't this on now? more what one just earlier Andres I Asia seven over seems Yeah, wonder, in to the you're I years doing

Andres Lopez

Mark. is it very question good very Thanks Yeah, different. and

say when look you're Let so what perhaps a all at of that to there way the a created period XXXX I me are a side just major for time are to things two you go back in that related will number minute, XXXX effects describing. that

the had you company the of sales clearly know years very that which 'XX, newest as we and thing losing this will. we've on business volume as volume and price we of protecting [indiscernible] company the in early we and a significant over said in approach impact first The started was back been along the this strategy when

However, as you look volume because of many that. back taken were consequence actions a as losing of

the one is had Now, is both time, thing many thing strong dollar accelerated go to point started empty it impacts, at in has is third second conversion that the strengthening and imports very to thing is time. the Australian It the up, currency the became that that big those glass imported volume over of slowed other the the line at is point and to a grow. in reductions price wine combine is beer very Australian related time. was there because dropped forced capacity exports fourth the has the all When capacity significant over thing that plus excess local down four a in Australian drastic you it started has to beer region dollar that

significant in number of - those us. behind created So you described that time. growth point issues when that past, The strategy, various and all you very to those events in we've is of look is a at China back was happening were hear thing all only see you that the

Now, what different. today we're doing very is

improving of assets. those We are the fit to market

very important different a APAC you how seasonality, approach this quite the growing, to able are the was Culturally situation we're easy business point very the is of are earnings very of we've those is changing same going different, is this with Americas Americas in glad now. the be We we and and our assets in APAC understanding last Europe right though asked time, not perform. them, to dealing with good This are right it that through changing to are is we those needed so up, you market, go is the this. we that very the results, to it is going changing. evolution improving a of condition to the but because It do time strong happy if dramatically. in late excellent run up, are so at are It is time this mentality, because the through. is question is it at point done balance we done company, company also is a of this margins I'm the the with is Europe so able with years this the and

so different is ownership on so region is are we're think Our high, and moment execution a on the exception, I focused this very and the in very the very are people there engaged, path here. it's we results, right not

Andres Lopez

are Thank brands, and concludes our July appreciate that is Thank planet. our you second your for good where This distinctive currently and that call packaging recyclable in conference scheduled consumers infinitely both the earnings you. growing Please We O-I, for we everyone. conference is glass quarter interest note call. XX.

Operator

Ladies for thank you your and gentlemen, participation.

You may now disconnect.

O-I Glass (OI) 24 Apr 182018 Q1 Earnings call transcript