OI - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Angel, and I will be your conference operator today. At this time, I would like to welcome everyone to the O-I's First Quarter 2019 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.

to conference like speaker, to would Mr. I turn over the your Now, President Investor Manuel, of Chris Vice Relations.

Chris Manuel

Angel, O-I's call. first you, quarter Thank and conference welcome, everyone, to

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

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

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

Andres Alberto Lopez

and impact interest Thank an by Good for I journey performance new having a on like most journey to Investor we in supported recent enabling in slide growth company's major on that our to you, profitable X, our outlined morning, a O-I. update O-I, provide Starting on Day, which the will Chris. thanks transform and is your future additions. capacity

cash value creation and generation for these earnings, confident stronger are shareholders. drive We will actions our

developing over way. continuing has focusing capital flexibility, are glass, grow disciplined past We system portfolio collaborating to far and customers to in come years, total the our their stabilizing on innovations our how company this while a cost, with proud three allocate operations, improving of breakthrough in

long-term with we phase supported result, customers. supply new growth a are a As agreements strategic entering by

by excited a We will which in this I moment. discuss are development,

financial the outlook, things. three take me and John will let highlight into review While

which per line guidance. first we $X.XX reported of results was First, share, in quarter our with

in the year accelerate. expansions well cost expect reflects improvement as second ascribable course volume earnings as of over by Likewise, quarter. to growth capacity starting progressively will transactions. the improve specific our continue supported improving This will strategic we Second, the contracts, efficiency and customer

Third, guidance flow. and of of of our $XXX earnings adjusted share adjusted affirming are cash million for XXXX, $X free we maintaining per

to made the foundation making Colombia, facility out Americas, for greatest Turning of we in in X, quarter furnace we one slide laying in In a first efficient strides network. the growth. new the our most added the this

over market. previously segments, idle serve wine And U.S., in market We years. capacity Brazil operation food, spirits, the past beer to constrained to capacity continue has segment. a a the also healthy the we broad-based efficiently and and re-commissioned This reliably supporting the to NAB two growth in more demonstrated growing serve while reposition

half Fanal O-I's ABI, market. leverage. anticipate O-I immediately bolt-on by the We long-term will earnings big and with the Supported will agreement acquisition accretive neutral to beer transaction an attractive premium increasingly regulatory from four is brands of productivity synergies support Fanal we fast As the the strategic customers, ABI. beer plant with ourselves furnace to serves align increasingly We acquisition Mexico we globally. to outside with growth. in to the a be growing XXXX, be growing Nueva It that close supply City, about Nueva is plant with a Modelo announced the consider shipped pending this significant approval. future second The aligns of

capital. above returns cost in market. agreements to investment least capacity decades. our France, Engineering well-underway two We premium Gironcourt, investment adding and long-term as generate supply supported expected, of our in furnace the a new in first in come should incremental beer these European is activity projects by will at This are standalone includes is and sales early All well serve XXXX. healthy

during key Investor breakthrough making Importantly, good are we on introduced progress Day. like which we very technologies MAGMA,

We of key our successfully. are all hitting milestones

MAGMA by producing encouraged glass. that consistently excited R&D high-quality the pilot We promises and effort glass. at is Our remain and for business plant this model running Streator and to up operation redefine the

of X glass grow, containers will As with sum we shipments sales change. the volumes we our O-I is On and of of slide legacy sales our consolidated sequence illustrate across This Comegua patterns network. O-I by CBI. volumes pivot plus to the the JV

each about the just combined As quarter. volumes we you outlined. first that O-I strategic I Volumes see, reflecting increased many can of expect quarter, initiatives X% the during will the of the improve network

planned O-I our in global strategic of The the occurred of sales to the JV X.X% transfer first CBI shift quarter Importantly, to from volume. about XXXX. of with volume amounted

shift. we at point, So, this have this cycled through

transfer, Excluding declined X%. volumes organic about this legacy

past all this in Europe in and few February Asia decline Importantly, dynamic and number quarter, in were sales of January, rebalanced up chains the while their April. favorable global This supply over And early Overall, normalized especially the volumes of customers patterns March. months. a in have occurred order continued in Pacific.

network added to Finally, X% volumes. JV Comegua than the more

new and year. forward, through enable organic Brazil Going will and capacity the volume in Colombia beginning increasing quarter growth in legacy the second

volumes are XX% our large substrate the for from Fanal by inorganic represent growth will X.X% Day. growth with in incremental to Investor of expected to increase organic about three-year Day. a is growing Network you consistent expect growth, are and is global a Nueva have secured well less of We will legacy we volumes outlined what XXXX furnace X, O-I is given Investor increase beyond. our months, ahead presence. create America. six in depicted. cumulative furnace with volume share at Central XX% contracts volume for to JVs in fifth this our the due target. JV see of over France of deliver target even sales a and On Mexico the taking slide than transformation projects fueling In XXXX growth and and Other CBI glass the the successful and more pipeline like our Clearly, growth guidance at we of will pace to

we have mentioned market increasingly we transactions from the and upside While outlook trends with segment are glass, on market our trends. general ascribable favorable growth for are basing

our commercial growth pipeline expanding opportunities high-return Finally, beyond organic is and this above with target.

extends not We improving growth recognize drivers it flow in confident with well are exists the of cash and but future. comes XXXX, We foundation only expansion. multiple stream growth profitable that the profitable for into are

to slide X. Turning

quarter and down profit was we earnings as volume, anticipated, first will key segment price the on year operating by expect the performance, driven While rebound initiatives. of strategic realization, over cost course execution

currency segment selling realization. incremental offset the Moving to Despite profit and price prices, the quarter, more pressures Americas, to the first commission than cost given new regions, higher capacity. in inflation declined cost in

volume, X%. And stabilize with up currently, outperform organic impact the legacy of beer our trends Americas' U.S. X%, Excluding transfer was and growth expectations. up beer

lift Looking in to as well be the quarter improvements. and the the expect improve as organic growth be ongoing initiatives profits forward, we cost year-over-year in inorganic half. modestly This suddenly favorable second supported by will and we higher have spread, second discussed,

the the inflation. operating Turning an as as offset second quarter year. from XX% Europe, in realized constant was also Profit our higher favorable in first in profit prices from were to that total first by quarter by partially Benefits as quarter energy to well the currency. system and efforts last opposed improved credit cost improved selling price cost

supply mostly segments. modestly higher to to across due lower their rest modestly regular XXXX, by most Considering the rebalancing we anticipate January. planned driven strength and in be were volumes sales of expected, chain, engineering customers downtime, As volumes

higher in second and for favorable profit, given year credit energy pricing sequential volume, segment the we The slight for to expect building full is stronger As the quarter, currency new the capacity, expected improvement flat building cost about a cost improvements. with dollar. shift and be and

improved cost, Asia Pacific prior-year. rebuild the in was activity following operating higher significant furnace reflecting profit segment first in year-over-year, the quarter

the is first shaping a Full we of a range up improvement segment to XXXX profit XXXX expect For profit second operating period. to Asia be quarter, magnitude year similar the similar to to quarter. Pacific's in

financial Now, more to I'll call for on over John matters. turn the details

John A. Haudrich

Andres, and hello, Thanks, everyone.

quarter start X. slide earnings with first Let's on

of expectations. Considering noted additional of and capacity. Andres our reported $X.XX. additional in headwind, commissioning the performance of new quarter Currency factors, earlier, our was line As end to lower an landed an at Two incurred $X.XX with us we accelerate developments these we cost guidance was in range. $X.XX the our first earnings

review results Let's prior-year. quarter the first compared to

Keep and increased first inflation. but operating was cost half price to in million we prices be that the are expect of mid-year. this $XXX strengthening or by $XX we the increases due unfavorable was quarter, ramping As up dollar. U.S. XXXX mind decline profit million of this to declined year. to first from $XXX concluded reflecting illustrated, nicely, million in segment spread in the quarter that Selling starting

an $XX and lower. $X the good year. tends These embedded credit line the engineering higher shift in of approximately it that guidance, items is period a performance of and quarter same sight cost $XX EU initiatives moving to so in first in was first credit improved the by quarter We This energy had the about costs was sales of million Overall to million of in expected mind, by offset non-recurring received we results year Keep As XXXX effect when energy parts. provided volumes number favorable new outlook. by $X net the last second of discussed, of quarter capacity. of partially credit the million. Cost last $XX and million. commission One-time were improved our cost in million reflected gains items around. were

profit. reconciliation. provide already We currency we changes EPS On segment the right, discussed a in year-over-year and

see, you of can by of net including $X.XX repurchases. the effect earnings As impact benefited factors other share the

XXXX our X. on business to slide outlook shift Let's

the represents number earnings balance will a We year. to quarterly expect progressively earnings the year-over-year compared This positive developments of cadence a and XXXX. improve over different the historic reflects patterns of of balance across

higher regular headwinds show first volume rebuild benefit over supported the the of capacity volumes the compared production improve in peak furnace year activity. left, are to Higher of by the new course we contracts, supply the expansion and and the exiting As initiatives, quarter. should in sales

we of the upon today's rates. pressures year-over-year Regarding lap based currency, midyear by should most

the in Our favorable right. Europe and trends reflects these outlook second Earnings headwinds, as on particularly the currency diminishing spread, growth benefit across shown Americas. volume from regions, price/cost will all quarter

reduction Asia to be Pacific in timing support growth largely engineering the as mid-year. the price energy in activities by Structural increases the offset around generally shift get cost well will implemented investments credit. as initiatives of

which should is and taxes compared $X.XX anticipate and a on to Finally, share company's in year higher modestly line currency-neutral between program interest prior higher offset be $X.XX, will basis. Overall, repurchase XXXX. than the results quarter to second the benefit essentially of we the

to XX. slide Moving

outlook. Let's discuss our full-year

some last repeat we EPS As benefits maintain a illustrated trajectory. on number efforts underway year-over-year With that the currency said, of translation are and to positive not headwinds faced O-I's one-time year will year. that due left, to help this

we for annual regions all X.X%. our in $X at quarter second the organic expect guidance for in per share, of beginning positive Looking an growth growth

of balance the in first year. should While the peak TSC the exiting positive expect activity. headwind price/cost over and we by engineering regular a driven Cost quarter, performance spread improve

are costs at SG&A Strategic actions staffing Perrysburg simple, from structure. Importantly, create voluntary and XX% includes completed the This results. the will and program in a such Comegua levels campus. decrease expected across completion organization resulting of to more a last the boost also in month separation cost as Nueva to than company's initiatives benefit effective future agile a Fanal

expense of the Finally, will and well as additional breakthrough to support innovation taxes. benefit repurchases interest higher share as partially offset

of XXXX sensitive fully of timing many a in outlook which our Our control. number are is not to factors,

based compared guidance. $X.XX our foremost, per an headwind the today's share translation assumptions rates, $X First upon represents currency in and to

of amount of but volatile, could to $X.XX modest rates we the offset actual Fanal FX up remain is of timing Nueva currency and anticipated the half highly always year, course, strive Of Closing in create variability. a pressure. second of to

by end. tactical completed on be working to a number are year We of divestitures

these as Our share program by from proceeds operations. as cash on repurchase divestitures well is supported

flows We share be will in seasonal year the proceeds. conducted with later and cash divestiture expect repurchases consistent

cash could positive on year additional of reaffirm per the to Furthermore, X.X% we'll of ramping free these line, capacity opportunity growth. volume $X This we on as update adjusted Bottom we to the board we side, $XXX maintain our adjusted guidance. are sensitivities you planned share our flow On upside volumes. million guidance up progresses. our and represent EPS

XX, slide important allocation balance approach is believe Turning support and return growth, to capital to shareholders. the we sheet value a to to balanced de-risk

factors. allocation let some important me So, insights a capital share in number of

Regarding to upon in based but $XXX will liabilities. reprioritize and The projects CapEx, less we we be million and CapEx legacy could focus to Currently, FX environment growth. project current expect certain as continue continues we XXXX, company refinement. the approximate refine this on de-risk

we Our asbestos are million XXXX and our unchanged to less the assumption end total on to track remains than liability of reduce XXXX. by $XXX

growth for two namely and strategic acquisitions, near-term shared recent our Nueva outlook our inorganic investments, Day, During which Investor Fanal. include the we Comegua JV

M&A Fanal. will While we the expect always we of deprioritized completion opportunistic, Nueva upon a remain

Our I-Day planned planned exceeds XXXX, tactical mentioned. million the million of I included by to $XXX divestitures $XXX just outlook of which acquisitions million $XXX

and leverage end ratio the noted, previously the mid-Xs of year. actively of we in several Deleveraging on XXXX priority, and engaged the are top half times expect our a XXXX. second anticipate about is As will the divestiture year-end and projects by by improve to we X proceeds

Looking at an $XX in million January average at of share buybacks, repurchased we $XX.XX. price

$XXX We value remaining these to have derisk grow capital structure, and million authorization. approximately our actions in Overall, business, our return will shareholders. the

Andres. to Now, back

Andres Alberto Lopez

Thanks, John.

XX. slide to Turning

basis, cost-effective enabling producer. As is productivity out value O-I are preferred standing to historic future becoming glass taking EXPRESSIONS, These profitable are opportunities glass very in make breakthrough attractive we together innovations. : catalysts by we and supplier, said a and removing continue System have the creating in to most do effectively the the we drive cost and that in across a in continue we MAGMA we glass do, efforts is becoming that industry. the our mindset execute encouraging Cost developing stifled growth important what Total which critical growth company the strategy, segments exactly the constraints to continued unlocking geographies, creation. organic will progress,

three-year executing XXXX. adjusted EPS and $X of guidance and flow our $XXX adjusted of plan million are free We of cash in maintaining

future, excited our hope are share enthusiasm. you We the about we and

wonderful floating be the Consumer waste. and creating bottle reusable all packaging fight solution hard non-recyclable for reality. is one concerned packaging of the the believe the for for existing to into plastic. is recyclable. directly represents avoid are awareness to message with In slide are converging Let And Ocean of endlessly natural, Glass a is the right new Pacific products images Several This rise. to packaging. is surrounding and product over of us this year, of XX% future. the our alternative. acceleration minds winning packages glass featuring the plastic forces sustainability activity, and trillions on me the borne consumers ignore final glass. used coupled stories XX. past use a It's animals development again by around harmed of an with being share returnable glass to today to make the We conversion glass. back is can on the in of O-I over leading It

fall the that years. sauce XXXX, example, growing beer, beer fastest As and year a of double-digit in outpaced the unique misconception trajectory (XX:XX:XX) and of in converted phenomenon. In been NAB in a than the America firmly their brand-building to are due in to glass glass volumes only substrate country. our growth for has After a had has less U.S., has not Brazil. long-time glass. North using customer excluding who customer their past glass, for four the experienced back tabasco five is an a Since digits. glass year, sales converted growth years glass this in is to last This to declining also There double growth resumed plastic substrate see power this

volumes our X% have fact, been these year In in growing categories. per

bring a result, clear, with is tangible by transcend moments. on this. As supply expansion. to is to customers anchored and can is consumers are its Glass taking capitalize to ability and in packaging and unique emotions Increasingly, its long-term recommissioned agreements. build No have do Brazil O-I we plan To substrates. capacity a wins collaborating other other this to we brands, not in be backseat further glass seeing

We digital the to our business are capabilities premiumization technology the instance, This boost intend packaging nature for for we advancing solidifying deeply and the customers. O-I MAGMA, exactly you. process power And is and And that doing. for building : are is number developments to brands, what remarks. the to industry. concludes sustainability. with questions. Thank product our happy O-I change glass marketing, commercial, leverage the brand-building is take our We that further glass glass. the are in connection we and fundamentally premium fight prepared of technical and for believe We expected leading win your and glass. model for is printing to glass one EXPRESSIONS

Operator

And Citigroup. Pettinari of line the your first go Anthony from comes ahead. question from Please

Anthony Pettinari

morning. Good

Andres Alberto Lopez

morning. Good

John A. Haudrich

Good morning.

Anthony Pettinari

John, guidance. impact timing $X you EPS indicated full-year could the of divestitures

So, and the of sort the about guess anything I my said, know on as is, you if the million question $XXX divestitures year pace I at expected timing? does expectation of the in with still just at your planned beginning the wondering out it's beginning year. second of the half, but more set

John A. Haudrich

yeah. Yeah,

of it November, to of I out a and bring which back, divestitures a in did are to $XXX actively number of back laid We big $XXX XXXX. in at Approximately, mentioned plan occur million Just three engaged would proceeds, back to $XXX on over we next the as expect it that those. hit component on years. that million I-Day, working of that we projects earlier million

Of year. other course, say half timing in like always you're energy is working things the that. for there's high the those would with and to continue the look I of we that But and because factor back those the on counter-parties activities,

not So, linking share with strategic while us, I buybacks, earnings, would divestitures are to in for relative also our keep what they these the mind generating the is that divestitures say are earnings.

buyback a to is divestitures. be from to of as at value the a look as basis. accretion going net in We it creation, accretion net but a loss to the think the there's the you've got that share company, well matching So, of the

we it's so not year. the of all to a kind it's major of get-go, together, effects those So full as variable the muted look fairly from initial

Operator

ahead. R. the Panjabi of Ghansham line from go Baird. Please And your from W. next question comes

Matthew T. Krueger

Matt Ghansham. Good in sitting This is Hi. for morning.

Andres Alberto Lopez

Good morning.

Matthew T. Krueger

morning. good – to wanted Just

ask, detail provide to of in light XQ, you the wanted from overall some the that as XQ growth and the sort you for have give year-end targets the factors you it to early perspective, volume that on note, ability a confidence Just seen do have reach context can you on of to what And your relates there? added volume XXXX? what traction

Andres Alberto Lopez

Okay.

fact at seeing are and you look volume got using why are are the projecting forward are compare going look I we've growth. our reasons we think So, to projections the we ways projecting, we at when two the to things, the we and of future

I'm the going two. cover So, to

that the product is, seeing the one work the over we are of volume we've years. going first three The the forward last are projections that done

As you all priorities we recall, ago of that the place. agreements strategy of long-term in we on you translated redoing has go-to-market successful. three that And we has our has one been now, were to entirely focused already approach. And that as and been years into done have that presented the to in

lines Vitória, in went by Colombia, back through it. this did the we adding year. up in an a are to new we Now, factory, quarters, were capacity. We at as we, last incremental bringing Brazil the in we capacity we end one all doing of supporting same APAC, in And this we capacity are And describe year. in Europe, we in this that more just is Europe. adding work we capacity capacity every lines, four year put the for in place as with with already of example, operation. added that we few the the And in example, are year year, And assets, when the did as

important were Now, users. that be in that they've end to to in beer, row. for than along years are in United to we a to the that States three very end in able a we and consider the row It's three years mind for have been States the very United highlighted growing line all other all important in serve converting growing, users, way

So, we're to enjoy going that too.

that something going Now, that simultaneously is very is which countries before, haven't interesting, seen there we amount forward. growing of the are

expect and, right going experience flat in Mexico. And experiencing explain in U.S. now. can And to that experience Peru, to So, Canada have in growth we and we're detail, Colombia. in we growth – to have stabilizing are be to is Pacific the able the Brazil. generating We're about for going in We're that market but to growing. that. Europe, in the we to Asia year. capacity more in going volumes place, now the a very then, countries we're growth the it we're have emerging some they've with generate in capacity which be And solid is we growing And projecting. in we seeing will growth before, been enjoy too

represents year going operation last million or these operation last of all is Now, through into – late when into coming X capacity late year going tonnes into is that operation of this year. together

are the these X this of million are between these that going tonnes of Now, and million of be agreements in in that done place. capacity to And work we matching later, long-term the tonnes results months X.X we've and have incremental XX is sales all place.

that on megatrend ask users and may grow for before. Premium work focus been a our on of which why years, for are transformation is the growth grow glass last that the across reason very work glass. is the prepared across regions. you Now, is and didn't end quarters, the extensively our customers few focus because that because the premium. is supporting can over few are a And over we strong it really the we covering of the that it with the now, all customers. did is of last all products we And and of that megatrend That we've

projections have comfortable because quite obviously, feel out before. that pattern, have and, we So, growth are didn't those with of the we projections we

Now, the that to point. takes me next

many transferring Remember, volume are impact for previous first CBI. quarters these me a as use That in a that in that lapping the and back that soft won't in highlighted and going at attention. all harvest bring the (XX:XX:XX) the and Pacific. them significant But from the the If done we've We let a part our very calls. JV to O-I experienced of forward so We of reasons just is them for your in which proxy quarter with Europe, Europe that you reasons of along to last won't XXXX, we refeeding the on We've base the coming. And strong they you going what look be mix volumes over. for is Asia been that soft the there we is impact going of year. because assets now the to that Remember worked is optimization because most impact. away, that's have reduced demand harvest wine, it in we is are see now. been

Now, they're ready to produce Queretaro and support the growth the that happens last in issue (XX:XX:XX) year. that Mexico region. We with had in

the in becomes We that comparison. capacity strike, we constraints so favorable Brazil, that a and quarters. Europe year. had is that couldn't the and a Now, previous favorable growth the in Brazil, in We strike comparison had experience transportation general also this

Now, incremental we capacity. have

of price is of buying before Last increases. the the this were protect to advance, implemented first Europe we're year, of last they so wanted some because their to quarter customers secure quarter the in of dislocation end volume at this the some which and volume, bought be of we just we so this price the ERP And to able – themselves deflation customers the because because blackout are year of from before, because period, then, to in the in situation into some we increases, Europe, the first prices years year, the having increasing Now, caused with had year, year inflation themselves. fourth enjoy just advance situation.

what's to of proxy O-I. So take in not quarters into previous in volumes consideration, for a terms very coming good important are

Chris Manuel

for ready next the we're Angel, question.

Operator

of And next Markets. from BMO your from Please go line comes Mark question Wilde the ahead. Capital

Mark Wilde

just taking Yes. just sustainability. noted Andres, of that recycling we and into support what to I wondered strong plays make recycling wondered could argument. recycling you municipalities the I can glass sort briefly glass some sustainability I've that about stream and U.S. talk a if how doing are of so this you're out

Andres Alberto Lopez

Okay.

and at think on have has we to emphasis pressure When Europe. an look U.S. in as at this example, remember, all on we rates. So not And high only the as picture, the Europe, recycling global look very plastics sustainability got you'll started you I

example, a in as that, seeing we're Now, on of in emphasis for packaging glass consequence waters. Europe,

actively to conversions So to because actively (XX:XX:XX) reason premium sustainability working for glass, expand at that. as in of we water well we across already categories. customers back have are But the customers, new customers very are glass, emphasis because designs working also are looking on seeing important the that same they as

And country. have capabilities some with we are the to in create be recycling. situation system stakeholders that in Now, our to there in allocated able working comes a improve different plan the recycling to we we these actively in is when it presented to In multiple money U.S., the capital country. I-Day, the

is Now, the the premium trend trend, which the packaging one, is by dominant And it's sustainability most followed megatrend driving right now. emerging.

just as preparing to do I the we this within So are that work we enjoy mentioned that, U.S.

Operator

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

Scott L. Gaffner

for so far. detail thanks and Andres, all morning, good And the Thanks.

Andres Alberto Lopez

morning. Good

Scott L. Gaffner

this on been I premiumization just quick that discussing. parts you've trend two had

the or it of the is how business go-forward is the about does that, for impact second part really forward, of look happens be cyclicality premiumization in the you which to returnable you shift a first of a release the glass their So, stated cyclicality business of when in of that And which America part competitors, at, think morning going cans. premiumization, America, this can specifically manufacturers, packaging they're on one to South your in also seeing mix South aluminum from in company?

is apples a South like little premium you bit some there comparing oranges one-way to say provide feels it we're – glass if in could details share about there. region. Maybe America, in taking because So, you we're Thanks. I'm glass the wondering when talking if that

Andres Alberto Lopez

Yeah.

So, up I we brought this think point before.

in why moving returnable I mainstream reason volume into that's glass the think is we you're cans, one-way referring to glass In Brazil, in Brazil. in And glass both. the and are Brazil. growing

in in quarter growing. beer for was the we are glass So, Our XX%, in right? Brazil first growth

example been X.X% fast now breweries dynamic me Glass Brazil. emphasis fit are Colombia. brewery with is the growing country a vast around on And now be of the this But used a good now is very you. majority that beer; another is entered that very premium mentioned it's in we of just by I a market for because new the total developed, It we which premium that which new is is is volume operating, of just Now, one. a so premium. a major the volume. also in are share growing really Colombia, too, there two let that there. of A premium And making to XX.X%. having is place, hasn't in is just brewery have

be we're high-teens. the shipping shipped, countries the you of in that Colombia. are those expecting together, are growth When look into Colombia We in to in place Peru, two we have putting full markets for we capacity but the expecting also at

very And continues this expand. So, trend healthy. to

So, think that premium, this trend it a to to stay. comes when is I here is

to If that good the solid CPG used you trade to going make translated what to They model And been their they the to this have long-term I very fit very that has into changing. the need brands being able we're at and be a up forward. to or business earnings margins contracts is need make a the process, mean, make glass products, foundation. is companies, look in that's the that and seeing.

going we following growth just we growth We see. I fact, to after building all are contracts. that long-term right forward, the that, think the And are in wanted those capacity enjoying

this see to grow. industry We see to going wanted growing. it You growing. company is and It to wanted

John A. Haudrich

then premiumization you asked on that. seasonality change effect in about on Scott, and also

summer necessarily the course are and One consistent important are so food the that, cycle, it is more products to is the like – also focusing premiumization, over on or the of things over see two out as those even rather over But there's time as other cycles are like outperform other whether out year. of seasonality importantly, smoothing of premium a categories categories throughout type think just if I or start demand you'll the premium softer months more peak a perform to that, the tends category. better marketplace because points products it's than there NAB there. there,

provides as growth margin So well premium, more as stability we that as to opportunity shift business. and more opportunity

Andres Alberto Lopez

out, going returnable consider are point the to compliment way one fill-ins of out is look and those And of they when at Yeah. people the fill-ins glass. that going returnables, glass

the is However, because significant volume us, change for glass, one-way of growth. into

mutually growing, They're cans are exclusive. we are growing. So not

Operator

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

George Leon Staphos

related Hi, beyond outlook your of It the one that go occurred last I X differential? scale. you where that, this causes because don't about on I see about guys. deck ask first volume you, part is this the relative incremental flipped, relative was of in on what everyone. and terms the that details. to relative re-engineering easier much the I much is to in they anything and charts, was quarter to you quarter, the that. sales volume how that to seems two-part sales Thank the that look If there compare this, than to other the is a What the were into expectations more comparable was when bar. in behind volume talk don't Thanks don't quarter's question, outlook, production wanted scale. the perhaps the Again, for because I I and know there's minor, especially the morning. I Good to more question no were? what to volume surmountable the growth $X.XX slide quarter will, you likes, quarter. – slide, comment to have I quarter, compare guess, production how know last And we bar third and behind what the I the at What of your can your terms of wanted thoughts operations. to you wanted less I like? to – that And in capacity you've but check if

John A. Haudrich

your let with first the take costs. commissioning question there, George, additional me associated $X.XX Yeah.

prepared comments, we mentioned the the As we of at is what in activities. are looking some accelerating

So – do we early try earlier as to in activity we particular, could. in as the Brazil, that

growth we end, accelerated forward. given, on just And so, we that point mentioned, XX% an country. It a incurred cost capacity more on have that front that have what pushed that doesn't It's se. cost that little to per and bit means the extra as so is, the Andres we

So, you change production per question in the also had se. the the of volume

Andres Alberto Lopez

not exactly commissioning other. capacity I tying up. with we picking and are are And think each necessarily sales They're

can with That's influences seasonality understood your that. I correctly. correlate question Now, if your question, what I

John A. Haudrich

as repair also cetera, looking engineering trying we're commission, lot details would I looking the George, some off here, And of adjustment to to of Yeah. the et a say, the on at schedules, we're been some there has because balance work.

I think much that the appears be of as to cause anything as else.

Operator

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

Chip Dillon

Hi. Yes. morning. Good

Andres Alberto Lopez

Good morning.

Chip Dillon

position. new your on John, congratulations, And

John A. Haudrich

Hey, Chip. Thanks.

Chip Dillon

will few changes being that guess of think of perhaps to had that's rebuild bit more bottles venture at or or own might I you to rebuild as seen little want was, will a in years? It you in prompted the it? three to about to you furnaces. get get actions technology for in down like their as And you'll several seems I cost benefits from years, least since the joint out you we've noted from up customers Obviously, a your question do you've your go out five then. control. look deals see like talk or making with A some customers past you And decide totally Yeah. the

Andres Alberto Lopez

So, an partner their the with the all the resources, focus business. for to the just focus Nueva business. are Fanal, growing we that relates dealing customer have that of best And the the to acquisition to on – we agreement beer glass decision of

for reason the that's So that.

world. Now, that really which fast investment around is to beer, is growing related the premium

to for concluded. it us, strong linked because is very we the evaluate, good this that's synergies it's potential, when which to transaction that. are So And has

today. will flexible at less In technology capacity deployment, that have current them building difficult, long expected intensity in large or being because repairing. for Now, volumes it event of and look growth build one things. also market. require technology follow advantage. when And an has very very to or technology, new requires it's is growth we But takes capital in we reality the the can We technology, rebuilding significant the of capacity. the than the change It's which can that so really we maintenance that, means, what that it that's well follow to to is justify that potential that many

volume and to really install have. the be even ramp the if it's So, will able follow customers we capacity up required. With that the that of increases difficult large add very quickly, more to to volumes, and smaller volumes, technology,

this will So, changing business many implemented. if things our is technology be in model,

Operator

And your next question comes ahead. from the line of Gabe Please Hajde from Wells Fargo. go

Gabe S. Hajde

taking Thanks morning, questions. Good for gentlemen. the

Andres Alberto Lopez

Good morning.

Gabe S. Hajde

curious context divestitures there. I'm around of levels and valuation Nueva asking talked of in was I in And interest about some of about. you that the Fanal sort the sort tactical

accretive is, transactions. So, anything that is we peculiar of the some of made to there or for commentary you lower maybe net a be it's end unique to any would got one question, guys in into you closer something John, the or would tactical scale imply for divestitures then, And what what towards seemingly basis, terms that on two-part about, Comegua. transaction of entered what see seemingly might

So, sort indications just it's of, recognizing and where that delicate trying of understand value to situation. are, for a

John A. Haudrich

Yeah, yeah.

So, points let there. me address those

is X.X range. as indicated If the you the Fanal, we between back something lower multiple you X, announced to what which of Nueva the suggest end and with go would

that, next at So, years with be online in some there we of will couple – as the that rebuilds over bring furnace so. rebuild of or and activity the that's associated furnace sequencing looking operation

look we plan, our at incorporated when though, three-year that. Importantly all we

that provided and So, that that we and were item. in fully November CapEx back of levels guidance of all stuff the inclusive

value on about and think we question is up in for or did other range, which more accretion. the relative you share to very what the to multiples present and probably pretty closer example, factor you those, with a basis, will X Comegua in similar then, I net Now, end a once for type the net was And market. attractive buybacks

Gabe S. Hajde

yeah. divestitures, And

John A. Haudrich

Yeah.

just clarify me let So, that.

basis talking the that course on earnings to the a the year, So, about did on would if we have year $XXX-million-or-so we're add that of continued about buyback for through through the share $X.XX and that ratable share side. buybacks

Okay? the be when with earnings are divestitures, obviously, associated at same token, those the earning those But foregone. those we operations, will do income

for to to look we be the strategic muted the best believe a They're it be these positions their think returns so you to we our it the business. for accretion not when appropriately of of net that choices result, the It'll a the business, can still full because in where down the the $X.XX. As business, more positive make. properly, nominal fairly still business, that we of we make. amount right but at it deploy have But capital course, to be the earnings will core impact on outlook are will us long-term the

Operator

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

Debbie Jones

taking for you Thank Hi. my question.

Andres Alberto Lopez

morning. Good

Debbie Jones

expect together, you And I to regions, should $X beyond? elaborate was a had that that from I And any I a can bit One there know on you went just John, – neutral refinement everything from your be If might kind I comments. the QX? XQ what price/cost. million the drive question actually could possibility put to I you then, on hoping of different CapEx a is and recover

John A. Haudrich

Yes.

me the let So, spread real address quick. price/cost

we placed on process, take the quarter end look line So, pretty quarter. it much price the implemented if being XX% quarter, we increases, quarter. through the fully remain had come By very we second remaining second about by the our then, started component price at – you comes of expect the to implementation the first by our And and a at of first and of beginning normal. the

boost regard. year-over-year so a look inflation you because energy peak or mid-year was at prices, be And an really, we take last starting if will first in cetera, a saw in quarter hit year. what was to that that period, increase So, inflation, et our

during look inflation we of the is first the quarter take the quarter. on comp a exit inflation by basis, that you when fourth a half saw less than the So, of

those put is definite price/cost inflation positive see impact year. you being together, dynamics a when balance what two over you So, the of the

Andres Alberto Lopez

us all around across for Pricing regions. very the world is constructive Yeah.

John A. Haudrich

CapEx was Yeah. around And refinement. you Debbie, the other question, had that

also in. mentioned put spoken machine that current I guidance. This the of million a need bringing where the land still we a refine different furnaces recommissioning of So, the we installing to we're on capital there's anticipated to like lines combination we capacity, we our but year previous parts. lot about, better beginning doing Andres continue a as that, has call, $XXX for and of current year. business. is Within Colombia, One at CapEx the That's new in we is, we moving of we're think a have couple across sense as the these in agreements

plants machine got, those addition lines that putting multiple business. more have two lines in to we're machine the across we six associated, So, in

actually make adds that able So, same we're opportunity some I'm looking we're at that to to great to is refinement to to push some get able order because to In to planned productivity without do money. talking that investment, the the capacity projects be better there's deprioritizing that think way the though, the degree, about. be we also

And looking so, at we're that.

effect we this which refinement net the why throw You an to of year; think in capital a time CapEx for of some that at below net the in offset $XXX be could with level. that FX the the costs that's is would point there be million number

Andres Alberto Lopez

increasing avoiding through then is Mexico this for in that As supported improvement. to CapEx productivity an need at example, is growth And capacity the point.

Operator

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

Adam Josephson

everyone. morning, Thanks. Good

Andres Alberto Lopez

Good morning.

John A. Haudrich

Morning.

Adam Josephson

John, welcome.

driving go quarter, have got questions payments? though just your the over asbestos the asbestos to I've this precisely were payments and last you in over going pretty what in the to gotten since. significantly average XXXX tended And years, a up the couple downside, one more the XXXX broadly, said upside been going about uptick up just has a XXXX of than payments asbestos. when I on in John, obviously that you even XXXX. year. Just, that surprise again, questions and few Jan every is John, know then, Can claimants age rather about

would down out time. over coming hasn't the that way. payments necessarily worked that think It would one So be

thereafter? you what indeed again happened payments precisely So, can post what just these appreciably confidence go quarter that, and gives last over you come will down XXXX,

John A. Haudrich

Yes.

it's litigation the as And decades. – mentioned, favor for are on has been in the asbestos that going some over a future potential on of certain a in still of cash know at the pockets the there see understanding are the working across So, as our demographics activities you well a and the when we in to out that here. inoculate those believe probably process that the trends jurisdictional of later and the as these get the on avoid remaining we for be population. focusing we to into cases road. little use on risk of here, end nation, front more But as term some down take inflationary look good inflation to there's as that a potential stages, that bit that longer We certain pressures we obviously claims able some there's

is end of all the advance did of Usually, So, a million what with in payments of here pressures. particular a the of all towards of bigger all most attorneys. in $XX had – of beginning bit It'll then out claims some quarter. what We payments. million, component first big the end be the planned, saw for throughout towards to year the and you well the out was over $XXX $XXX year. these we that tranches what take discussions big this you those see the so laid out year, the piece Obviously, goes so the know, the you'll the is piece we I of of million certain lumpy a year. through in little This year, of suspect tail of

even what $XXX by that I end, you taken years with into payments, more aspect there lot And when you're to going And with so, this front to get end the appreciably age-related million then, of was us litigation. trend from benefit of lower well-orchestrated the and we XXXX. out in the below of a believe it's a especially down in down couple mentioned this

Chris Manuel

Angel, time have one for I we you. think question. more Thank

Operator

you. final Thank your from And from Edlain ahead. the Please Rodriguez go UBS. comes line question of

Edlain Rodriguez

morning. Good you. Thank

target? the $X (XX:XX:XX)? enable much look forward? you missed see had that a there volume, risk we like you what how ones. you quick two I Can risk much going three the as energy benefit do was should in Just like see – how quarters, much what you One, achieving expect like credit. question next was how in the like again, more remind you do next Europe, us an and it, in And maybe towards FX, from Is it

John A. Haudrich

Sure.

here. Let me on focus questions your

Okay.

the that you're European So, moment that. credit just on – referring to a

So time. energy over transactional it in is what and period of costs is a a process Italy this normalizes it is

So million on around. year authorities result, the it from was credit, annual it $X credit last was And in as and it mechanism. it and inform an prior It of This for that normalization the us results something a receive year. this in year. an is bounces the that the basis, last arrears year energy of occurs million whenever $XX is we this the so

prices the and there's Going market forward this indicative so no prices more now and into the transactional future, need credit for of anymore. are

had basis, the a we our in line but we first We quarter it year. is this, good before, sight of understand it that to As during second I was the had last included quarter guidance on call. quarter, something look as second mentioned we have to on year-over-year

So for understand outlook next we just the to quarter. got as the that

the here articulated far we associated pretty the the think recap share. the $X.XX we risks of that, per page look $X well materials. as side headwind to have, on today, earlier had, our just XX with against the outlook right-hand in they're that As the we I do of as year But assumptions included for that we

that rate. time So used XX at we had January

represents rates XX that apply that at look $X, and So April the if you $X.XX. to

just FX exactly that that of timing it's initiatives. the year, course, volatile. nail early other we very activities so is identify one there down. hard Of more very are It's the then, really, to And in

closing And agreement. of affects repurchases. capacity share of which the onboarding customer of divestitures So, this also as of ramp-up timing Nueva Fanal, new well the in as

all something that planning But volume. the whether on with they the we of in are new front-end is in now, to that commissioning our The quarter. that, Fanal, as justice balance Nueva the we anticipate XX% we're on. bit volume That have for. authorities capacity another divestitures as we agreements, right what second So, and little in in review, and these, course, is capacity XX% the people loaded counterparties it's remaining this was to the well like third have the on in whether – so quarter, bring quarter working the coming on of our coming what on that of of that onboarding a we're fourth the customers counterparties

unique period period that aspects aware to is us, it we exciting a some timing it's for for also, of. So be us, there have is but

Chris Manuel

you, that another remember, And day right, to ends our our All Thank it's call. exciting call. That choose everyone. concludes glass.

Our Thank second August call quarter will conference be for scheduled Xst. you.

O-I Glass (OI) 2 May 192019 Q1 Earnings call transcript