OI - Earnings call transcript Q2 2022

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Operator

Hello and welcome to today's O-I Glass Second Quarter 2022 Earnings Conference Call. My name is Elliot and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to Chris Manuel Vice President of Investor Relations. The floor is yours. Please go ahead.

Chris Manuel

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

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

start will slide call over Now, to three. I'd like turn who to the Andres on

Andres Lopez

Good quarter interest improved night Performance as morning which in O-I O-I announced results I appreciate guidance. everyone. your of across share Glass. all a adjusted per year as Last strong $X.XX business prior second levers. exceeded well earnings

and more higher prices this helped performance, contributed As costs expected, glass strong offset shipments than and increased initiatives and slightly our expansion solid benefit year our continued selling the operations, to compared to projects. quarter inflation. prior as up cost Likewise to expansion cost we ramp elevated margin of offset the

left on the from adjusted with up EPS debt illustrated measures improved all XX% As year significantly. about and down prior key the

In addition our advance continue to we performance, to strategy. strong

investment best Americas This sheet as expansion in now balance Nueva as a out and acquisition Comegua. Fanal of since the in and network well includes JV build the Our to prior substantial between is XXXX XXXX. IBC to the position and O-I Mexico

as a inflection of plan, passed has XXXX. Investor least, the and team's and greenfield company Paddock resolution the challenges, track to July a Day and goals. macro been MAGMA mid-XXXX. Kentucky first MAGMA has facility announced In developing third but development better our should recently fit point O-I expansion of Paddock an funded volatility. execution achieving on US the macro a backdrop the liabilities asbestos I'm which and has we the of Last commitments. strong the of our Bowling O-I while, are not Trust fully revised at agility start capital little of Additionally, I'll Legacy which and achieved current certainly amid consistently final delivering proud our review unprecedented record adapted while Green,

review and for the discuss to business performance, navigate will improved O-I John potential gas Europe. our outlook is structure, how XXXX curtailment capital strengthening Finally, the and Russian natural in recent well-positioned

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

were favor in XX% and Southwest Mexico, strongest shipments X% Our X% increased resulting Year-to-date the the Europe Market up improvement market strongest XX and Europe. the demand on the second nearly fundamentals year Volume nearly prior Europe years. X% which an with top in Americas over shipments quarter both in glass the in Andeans, trends comes Americas. was quarter. the of clearly in up in X% and in X% in about

affordability comment and the products me demand few growth. been are structural favors consumer trends. of sustainable prompting premium our returnable a on favor considerations Let bottles. glass Customers shift in markets several longer-term is sustainability imported consumers a increasingly for these brands secular that years. containers, and Premiumization of had America, Across customers localizing international Latin are one-way use successfully and greater while to driving

one-way holds the beer share XX% share. now Brazil category glass both glass example market gain For in as returnable and

by have other As the growth in consistently to improved away our page, we categories. illustrated at beer bottom the America from mix shifting of North

imported of represents glass mega-beer a of historically large America today only from In volume fact Ukraine our and In to US is not North and the markets channel few demonstrated about years, a long-held produced over locally performance strong and resilience available Russia which globally. X% drives on-premise to longer both XX% assumptions business redefining due Europe, glass conflict, glass. last recent for off-premise has across up the demand shifts. around Glass

Finally, a is there many according increased growth. about Mintel XX% development pre-pandemic secular levels important new demand are data. product which to is demand glass, strong up from Clearly, drivers driving in for continued

be volume inventories low and healthy by demand in as around our X% up across expect is markets. tempered will year XXXX, We capacity full many sales record constraints

In fact, underway our XXXX strong expansion have to and continue and efficiency On volumes NAV. will year advance capacity top in production much volume that of performance, support a speed levels. we pre-pandemic each Improved exceed and Long-term, our quarter we this can for stage modest needed add several should transformation. beyond. growth projects

Page to turn X. Let's

already for and successfully a are basis the have better net we we on second our our margins annual financial expand should expansion up despite objective. are year Amid glass selling I'll price time good start, our over have its XXX years, prices the achieve targets. this in initiatives growth challenges to our MAGMA year-to-date target. the plans more to year Likewise, exceed feed Our XX margin fundamentals next the raised revised O-I inflation. development adopted profitable In for further off we and exceeded strengthen and April, strongest points expansion cost page. unprecedented and and macro full

and electricity XXXX. is Nearly are being of renewables XX% big ESG from one-third Glass Advocacy now of towards our supplied goal Our a efforts by also well. our step renewable progressing sources,

million supports gear, digital XXX Our our high marketing campaign growing Glass Advocacy commercial impressions pipeline. generating over digital which remains year-to-date, in

should program of portfolio by current optimization be schedule. ahead completed year-end Our

capital development then plan original plans. profitable enable these challenges corresponding mid-XXXX and objectives. macro fall, to Last on we introduced impacted X. fair have over a achieved progress years Since expected. the excellent final Slide are three resolution we we Advancing on our our growth key unprecedented making legacy MAGMA next asbestos Finally, our as expansion Overall, to strategic plan. liabilities by and

delays with as to XX significant months we supply inflation, lags, disruptions. labor experiencing contend six chain cost of well are as We COVID-related issues as availability

plan, requirements. which development business our we MAGMA are plan, with these introducing original believe responding today's capital expansion result, Today, is better agility longer a challenges commercial meets no As revised macro to meets O-I and we environment. our

X% plan return to the XX% target and portfolio Importantly, expansion volume with growth CapEx. the sustains total investment organic our X% lower on our across goal revised enables

that scale construction line lags prices complexity, and sky to particular, wider projects generation supply and In planning the cement our hampering of legacy technology. chain with larger-scale expansion, high are required time and early range expectations. reach reduce We the and steel meet market or feed are customers' whether on smaller cost a greenfield broadens MAGMA

capacity be Kentucky. initial in will US have reduced to efforts. progress facility various XXXX. macro are support other challenges. yet starting development expansion furnaces, So furnaces proceeding and focused projects of The to favor well OIPS no in our than in included similar recently to anticipated capital new Bowling existing online There plans in to Green, the changes same map idle of shows extensions, we revised and in the business and greenfield the projects plan. number line the reactivating attractive is the slower line in is coming the MAGMA MAGMA MAGMA with due announced spirits Likewise, distribution originally the

to on MAGMA focusing help Generation market of we MAGMA opportunities. includes a key and rather the engineering will the US in generation of capabilities our solution, lines on technology. development resources our So greenfield which This suite positioned two are address MAGMA early accelerate number sites of are R&D than best X that based full larger

will targets. complete Investor facility. growth in should new basis In Generation first our Bowling We revised and Generation development follow be to environment completed summary, of in the XXXX. our mid-XXXX be Day supports Green by year, the X today's financial meets expect to development X which business of our next site solution the with mid plan and

Now, turn to I'll financial it on to starting over matters X. John review page

John Haudrich

to O-I reported and other everyone. $X.XX time, slightly improvement mix price from $X.XX profit attributed cetera $XX quarter last and more price million and year higher per volume. $XXX million increased Thanks, prior Segment zero. second essentially as same the FX, profit earnings very X.X%. volume million $X fully favorable selling despite to higher cost million inflation. of This strong elevated sales morning, by points up realization as margins operating basis Andres from share segment et taxes, XX the Favorable good interest shipments At net divestitures, added up than FX improved operating and was headwinds. net prices corporate increased as All offset elements, adjusted year. was netted $XXX

million operating recent divestitures. from with prior nearly inflation. operating offset $XX Segment higher adjusted the profit posted profit cost, of an both in dilution year year. unfavorable Americas reflecting were significantly Finally, improved $XXX volumes up and while prices Americas the operating and costs and million The and the cost FX sales on comparable from segment prior Europe selling elevated higher despite modestly improved basis,

from million benefited Europe, situation price, The prior chart we while up costs operating were costs. in net to elevated provides this on Overall, improve future favorable profit details were North due business non-operating basis. was million $XX $XXX items. Earnings performance adapting reflecting import this are to adjusted focused exceptionally additional asset across favorable pass-through on results second activity especially quarter strong year key all margins and In on contracts operating levers. higher and segment very project America. Given an from the

page Let's X. turn to

the As financial see on discussed, progress you objectives here. priorities we continue to good our key strategic make very including

chart, end the bottom the our leverage of the on shown financial quarter. As at four total times second approximated

Likewise acquisition turn investment at we leverage to in Americas Overall, is mid is of down since this high-Xs, time the year. leverage to objective. out favorable expect fact, substantial than the build a prior to including lowest Mexico to since in level the In year XXXX. end more XXXX the our was network the O-I which to last

fundamentals growth, our by expansion, drives investing outline profitable flows. current Let which our margins greater in and higher ultimately, top me allocation generation, principles. remains glass top-line the Reflecting cash MAGMA, a best capital priority enabled in

is our tracking priority, is improvement next sheet balance which Continued well.

the in return and appropriate be In our will sheet balance capital enhanced value for committed are to position allocation the we position as we to may sheet Finally, shareholders is which evaluate best balance summary, in creation. improves. of our value years

outlook. of of second business outlook I'm year. half discuss improved and X. has the half page first have our momentum into the original now expectation for our exceeded heading the Let's year Overall, results good we on our the

recent outlook of capacity provided incremental full well the the headwind network the second are half Furthermore, Together interest the funding Keep a for dilution on half. as which year. year. both the our earnings well Paddock growth we on volume is and as have into fourth these factors unfavorable in will constrained represent Trust. our as divestitures limit in absorbing as $X.XX third We updated back around FX, quarter to mind,

of addition new to year with growth in the However, capacity X% improved support X% along productivity will next XXXX. early

partially anticipate is continued the to and $X.XX a We for prior quarter higher adjusting higher up when which costs and $X.XX We initiatives. will around improvement FX to project expansion margin which slightly our the $X.XX results as comparable anticipate expect be but is favorable operating third planned Paddock. $X.XX will and earnings represents when ramp adjusting we shipment favorable will year year. adjusted approximate range Earnings up $X.XX approximately will will asset divestitures levels. per in between this quarter performance mitigated price adjusted to or net price. net $X.XX, prior from which be $X.XX benefit down Operating We and by potentially divestitures share FX fourth activity stable Yet Paddock. for likely from

will up the sales now early expect costs constraints. expansion will be capacity with will prior contend as new growth. likely which support some higher in and shipments X.X% ramp operating we volume to we inventories year XXXX projects, and be quarter capacity low Again, in as grew However, add we down

year, investments. historic should timing $XXX levels Please second assumes Adjusted will project are per $X.XX of be flow of year, and which which this We we challenges exceed half. million some. earnings now increasing will impact that, top ongoing adjusted cash flow expansion by This cash is our free will and be the between on $XXX CapEx million. concentrated flow future end note and high growth chain the guidance. could supported free in range outlook full performance our the cash share earnings cash should at flow and $XXX $X.XX Looking expect million, supply

to our outlook. we solid business macro a navigate which potential potential Of much past affect fundamentals. than are given monitor signals, to demand recession may glass course, trends, in we continue recession including better Overall, the positioned

the a we know, could Europe, there all months over natural disruptive. of in several As which curtailments gas is Russia be next risk

temporarily winter. other East, further this from turn is for more ramping natural to to this locations, discuss the page next Middle as preparing curtailments up XX Russia as actively topic. including Let's plants. coal-fired sourcing as potential energy gas such well restarting idled are Europe alternative US through Countries sources and gas

actions, by Russian include member allocations XX% of plan. specific gas the curtailments. behavior and potential a the these promotion to will country key Potential EU has mitigate safeguarding NG usage In established consumer addition reduce have Each to changes, gas a brunt plan of to industries. government-imposed drivers,

of been switching capabilities preparing tracking our date, this time optimization in in Likewise, maintain install energy expect year, the is some agile To operations. situation energy protect have have EU with year-end. We prices. market we our XX% network running, for Early plans. spot to to that capacity oil of evaluating we by volatile and and best-in-class against and covered we and contracts capable started XX% established long-term

often an EU many essential glass as Importantly, regarded markets. in is product

to scenario believe time, positioned materialize, risk that outlook. the is the we For markets to unclear, XXXX only example, taken largest manage slight it will industry. If does may issues this Italy O-I's have a currently and represents France, are meaningful which positions we At our if business well protect this situation, glass emerge. potential

to back Now Andres.

Andres Lopez

Thanks, John.

are very have are and executing second pleased O-I on transformation despite achievement for our Likewise, revised today's business significant is environment. through is improved inflation. well of key with plan properly the our suited cost We results and milestones margins volatility journey. capital quarter market that we our managing several

and We increased O-I have consecutive or year increased guidance cash This momentum. year outlook. outlook full quarter, have has we consistently exceeded met and earnings and our good either solid the represents reflecting progress ninth our year-to-date full flow

our year's opportunity. XXXX target updated significant we no Investor earnings believe approaching conditions. In represents, In about O-I in increasingly changes is from are business investment provided fact optimistic XXXX our our performance an conclusion, I Overall, attractive Day. outlook last XXXX

are We material are plan we breakthrough the advanced execute commitments our successfully technology. stock MAGMA on structure. profitable on improving addressing generate many historic overhangs on growth, delivering and Likewise, to and our capital our

to to shareholders. this We are ready you create and address our Thank questions. will your continue strategy for value we're confident

Operator

Our Thank comes you. [Operator Instructions] first from Ghansham Baird. question Panjabi from

go open. Please Your ahead. line is

Ghansham Panjabi

Thanks everybody morning, good

John Haudrich

Good morning.

Andres Lopez

morning. Good

Ghansham Panjabi

to if at I example, ability high, some exposure European as gas exposed investor and natural to can't just your current imagine in more and your flex too curious how XX countries So footprint, flex do with as your were for on there plants the system your capacity the but Europe? disruptions you in in there deck, across Russian are Republic. have such and Slide obviously some others, XX, to it's in manufacturing Czech much

Andres Lopez

XX% of have capacity the heard already the Ghansham, us provides level range of use Yes. that oil converted conversions that of allow furnaces already We curtailment in we Every our flexibility. up to to that have XX%. capacity in about, XX%. is

have expect up capacity a without to a our to is We able good year-end very to demand. have that for to provide to us, to going by and enough run problem be protection serve to XX%,

likely government industry. markets important is have to that that in highlighting the be, Now, active operate, which largest an most having it been the consider we essential glass as very officials characterized will

and for footprint is is going of to large part So them implementing into the reduce of winter. situation protected. to with they're measures Czech, improving Nevertheless, our largest We one already because consumption, their challenges. that increase the reserves very have the that, already know Germany

in they're this example, is for substantial sourcing five three they're For again, case, is is stock supply. their at XX%, X.X Germany's sources not months at is already of supply. only months different XX% this to activating But which to from which actively communities close point of but savings. Czech,

pretty here So at a be risk minimized, that all. optimistic risk we're will if really the

has very glass focusing used a out is coming Hungary, Now, Ukraine there a the Hungary, of industry. country agricultural be the that to which available country is because has into on large anymore, the which not for been other supply government priority supply

supply. really So, is the focus on

be our So is in the continuity minds there, of -- over our operations will there.

on So at we all, us. this, is this all we risk continuous in all low comfortable watch though when closely we even look very basis, for really feel this very a

Ghansham Panjabi

just timing variance million And million that half cost, you surge of for this in then Okay. America, price back That's, the gas $XX of the in is the prices? issue, great. $X And segment in How that do North on a Europe. terms natural decline evolves given the then year? think

John Haudrich

We Yes, favorable -- the price believe of is long-term that this back year. that a John. variance. half believe our net we That includes Ghansham, have the we'll

one net the overall overall is, down because it think million, Americas actually little particular about And right, contracted quarter. $X has had third we quarter, I it would we second the long-term the your Americas thing So in be with point price proportion that businesses And $X.XX would levels price year-to-date for formulas. a in consistent up million favorable down of second you're very on in choppy, adjustment the fourth North point, quarter to company. the million gets America, that. higher being is the $X And have the a and $X

inflation, as So we as of we'll contract can, structures actively in on we've very comments, more is tied the working we America work said PAF, because again, But that been the to flexible. have quick be through. in working through but to prepared our annual it in up to the actively push it some need pricing does we're as

Andres Lopez

case this Yes. spread this And North for really XXXX. getting year any is to be in not America, positive a would going for

John Haudrich

we positive in do spread XXXX. expect And Yes.

Operator

question next from from comes Staphos Our Bank George America. of

Your line is open.

George Staphos

at Thanks around very morning. And just for My making the years least much really some my that. in for Thanks props here and the for deck clearer too, outlined, is the Hi, operations. everyone. Good over view. again details. just thanks well question

MAGMA the comfortable hearing steel, rollout about that and just that new constraints having to times, think the new relative for two stuff we've these makes the heritage the I'm lines same relative greater plan, issues? sort the think constraints if you from in there you're does now have last from to the correct amount you that since to I all the year overall, makes been me year only and capital relative the are seems thought won't lead how the intensity? be all, wrong, reliability, comfortable technology follow-on. for What intensity still MAGMA another the a old are and of plan industry of time, Relatedly. new out? that in shift quality, capacity the expansion of of the on MAGMA that the this quality improving to where not and was So, how then about implications footprint going glass glass What plan dial over on quick mean? when to be capital what I US, comfort we to you a the the reducing around were? about for in shake new the Because part all you half does ongoing and you your technology so to back concrete, And

Andres Lopez

Okay.

is new be to by this is used back bringing that all So the smaller impacted and So – changed line all you greenfield line down. required that existing highly what additions the plan we've steel with are required projects, what extensions, civil cement projects – the conditions the of which are work done much right? infrastructure, that right to the that capacity mentioned, is

of from the we So are perspective plant that the risk lowering significantly. whole

number and Gen test because to everything way, a several footprint. us testing to increases focus to being Gen places in MAGMA on in on we two we're X test. going capabilities larger we are lines By the wanted focus will of our allow that lines, instead X our Now implementing of already

team test on the R&D be focus located nearby So everything which have projects, to able will we able we'll two and be those engineering team the and be to too. will

in going of to lot these comfort. So give working developments, us we're increase for efficiency of these which purposes, the a our teams

is pressure Now advance well chain that in we all under are orders the for in the supply of today. placing everything

are with well that covered. So quite we think we

Gen to what successful So line to for providing redesign X. which on for you're XXXX the and there for be deployment is achieving this of taking time get the is XXXX plan consideration and line enough first whole the be second in in with the George, time able highlighting,

been Gen has is generation all the we've describing Now for that the MAGMA. X capabilities

towards We entry. are the moving faster

comes position improving markets, doing that when to So we're it are we serving focusing. the our and by

Now demand this point our healthy We time. The serve multiple high. even markets is are cannot markets. the in in demand at quite

able it's the doing to projects bring extremely because plan going that. we're to on on issues to do are The satisfy original wouldn't requirements. the we be Now all time. to too long of to capacity able The of time and customer will important take deliver be kind

of be is Now the MAGMA. will capital attributes It there. of intensity one

be time chains actions of improve value to and to that So offset pressures. will the help engineering some we're over able expect our too. those to all And supply improve taking we the that all

George Staphos

I there. I guess get all appreciate that. I color Understand. – and the

the Brownfield purely Is us that Just relative two down other volume a correct will have intensity with we've Three, lot up wrong you good an otherwise goes a and revised O-I because are expect, weaknesses capital had what been legacy is Why not? you'll color me, And Can more greater and now you the of got the plan would the then first if bit Additions. terms MAGMA ongoing on constraints, additions Thank on you business? four you a up have had a as of in only I'm everything fact in and assume plan? have it just will to this. quarter. quickie questions on a the years give XX the greenfield there showing have let's in quarter? fourth luck why the to capacity if why you than the or basis, from or some you with new

John Haudrich

George, John. this is

lower target. we which to to that always It's Day were relatively kind years as the relatively So the of three to little intensity Just a high. lower that Keep going about that that mind environment. in Generation we relatively structure the talked still Generation factory going X, were intensity still allows we original be capital capital were next and keep And call legacy do of still X capital the like to what during on the intensity those have over right? we large a things comment. you to get everything Generation look the X that, either X.X in of and plan mind capital legacy, going high, X Generation than intensity in Generation or in high see that still the Investor XX% was but

we're right? of a to Generation that going leapfrogging X activity, Now, We're lot be going to quicker.

I think, on all. changes our issue, intensity okay? X.X% things by fourth at then picture up We the resequencing And don't last capital much comp So this quarter, overall all on question, a your later is year. were that

We up wasn't out production Our X.X%. inventory. that were serving of

and Of tough year, care in record just capacity taken matter that course, just the capacity a ultimately lows. But when we bring online Colombia fourth inventories relatively now inventories Canada. of new part earlier then are of quarter. in It's low and again, constraints the comp of at a all first

Andres Lopez

potential MAGMA help And on intact. put And together presented we the our we -- both. perspective that good remain plan can And achieve goals year, to we the intact. had just complement thing the is, the last the our that remains plan, you to to us in also

Operator

Our Roxland next from Securities. Truist comes from Mike question

open. ahead. go Please is line Your

Mike Roxland

quarter questions. on for solid Andres, and Congrats outlook. taking John, thanks And Chris my

a on good higher job do switch Does at we're it mentioned in get come if you flex have been switch, you similarly your I that capacity a skyrocket that So wondering, such to you oil. And effectively that but a try that want very to XX% as make to -- you've cost? oil, done able in Europe, if not you've going to costs. energy gas natural to hedging hedge see the

John Haudrich

Yes.

run flex have will said has That going XX%. XX% oil, we your oil capability capabilities it Mike, also but too. and ability have blending between to I like gas yes to So, capacity on

So, other. you'll be fully to way able way the to switch -- the or one or not over have one

did as marketplace Now, cost, more if markets course, of nearly is to we've pass be just And of the higher oil, It's gas clear very successfully that. that not we expensive. through we that as as the so to would done looking natural fuel on cycle. to obviously spot on it the are on incur today far be just expensive

Mike Roxland

follow-up. one it. Got then John. just And I quick appreciate that,

any One recently in that inventories. of not tight because European competitors price implementing gained mentioned other in market. -- your was may it it you has the that price as also, players has other just have have that talk market as that that And Europe? was due were -- because lost that share of Can been been about And you aggressive above? acknowledged share on gain share it to or factors

Andres Lopez

just material. give several NPS has Net measuring customers that that. quite perspective NPS been material. is -- The on we've you now. means, me Score, how And Let one for material us Promoter the the And in years it which And been improvement in is see high multiple customers.

of as customers them being come of one and a to many reasons, So, O-I that strategic because us today built is I one. partner think

the us are improved planning for Now, They're have our too, inventories system. significantly. tight but in tight processes

terms inventories become So, with working in lot effective we have efficient of lower a and more service.

John Haudrich

we're you the of business. our tell increase the the get trying margins, what profitability of We segment trying topline, every I have out We're the all company serve and of is different, profits, environment increase is things bit relative that. our business, those. that a prices, little different increase of to Obviously, Yes. I on -- would mean increase to there. like question to book the and business, markets our done. a accomplished But competitive the I'll increase increase they different that volume add

Operator

question from from Anthony Our Pettinari next Citi. comes

Your line is open.

Anthony Pettinari

morning. good Hi,

to there? the million you've target. divestitures, the maybe sort on remaining On -- around but active more billion of sale incremental you Can does opportunities likely glass leaseback, $X.X Thanks. -- the or just kind and to away caused you been I maybe has divestitures you're potentially? -- or is it $XXX that comment strength then from that think maybe still come you're reconsider seeing on in of And through divestitures broadly

John Haudrich

sure. Yes

for So, we've $X.X our billion about of billion completed program. $X.X clarity

near relatively we left, sales We million leaseback future. accomplish one to final that's that $XXX the in expect have here

now of a look to forward, been after years, as a fine-tuning couple we portfolio expanding we've that's As Americas. opportunities filed of the we indicated period our going for the in

best in valuation get network really been always is we our I But divestitures later we've stages evaluate. I our for at we to business the the Now as liking the able understand that think there's have. the will to we're also how that, said marketplace is We're best we be to looking fine-tuning mean But need etcetera. good. receptivity continue I opportunities to market now. any that

on we're our now Of more fine-tune focused course, there's to company. operating but opportunities

Anthony Pettinari

That's then follow-up to the just Okay. on very potentially. And gas Mike's a switching to oil helpful. question Nat

kind higher would a it with higher potentially would Is I mean in the look higher increases. that could the you have you said recover those think the or the that potentially costs market You confidence something that is cost, you is cost that at and to something that's that year? just full year that but really that come -- potentially outlook, impact of within margin can at recover price you

John Haudrich

Yes.

I believe for in comments we now. represents said situation the right fairly we exposure. company the Even think marginal prepared issue it's our a that limited

behaviors. this their good it take could by consumption to a you be A XX%. through is chunk at reduce the done look trying of EU If

heating You're Germany the homes longer temperatures pools -- them things and for no cutting out seeing, dictates people and asking reduce like already offices in [ph] and example in that. to

about centigrade X%. total the one-degree the facility change actually heard consumption in I've heating by of reduces example, For

behavior there. lever pretty consumer are out a activities the So, big

effect well all allocations, think You of exposure have many to not what low we those glass. to the that markets believe the by about of the received low. switching nature and pass allocations the there be our on ultimately And go with the items to and back -- essential do net in nature with it you oil things will product is relatively we of to the that, like and those Overall, ability relatively and throw then if mention some that marketplace through. is

the and at that's helps. we're all So that of pieces pie how different kind hope looking the of

Operator

Our from Kyle Deutsche next White from question comes Bank.

go line is Please ahead. open. Your

Kyle White

behavior from changes Any because seeing inflation glass consumer any taking of curious Thanks impact kind morning. good is products? guys the you I'm potentially Hey elasticity for question. of price kind of yet? for demand or if just impacting that spending are

Andres Lopez

Yes.

far, So the our any side consumer in change behavior haven't impact we a of on seen demand. in

to what can highlight beyond that is our serve and drivers Now by demand important today. it driven is are that we underlying fundamentals

give to demand. today. end When plenty markets markets are And Andean buy to brands, a factors the cannot example is with the that got don't plus Brazil, that in local already which the production. that healthy and customers volume a that that, market markets international or of all there together in of going localization those for like there us competitors market you transferred provide those to put you we demand in in just serve cushion users imports is into of So an and be global other or even others is

the of demand. going So, capacity protection locally the in let's consumer produced to the future. have Europe in are of because a provides we X% because than the of kind our in in for that behavior cushion that assume markets those more Europe, cushion changes conflict of displacement of The be now of

that we have of margin why multi-year about going online substantial capacity next balance the performance expansion is come our demand. with the to So And positive support year. spread. comfortable the year, the the even new it's help us can so to it's perspective our that and initiatives on the feel but XXXX, John underlying also mentioned, that's growth It's

of coming and pretty So help together balance us all good the expect the XXXX. these things are a for to year performance

John Haudrich

The add would back is the looked And luxuries Recession business XXXX back in lot fine. quite held under what up and premium we fact, and to they're the and the category the and go was did Great a of and what of is was our in found in affordable categories XXXX I thing those performance at well. behavior One did happened really one mega-beers. we US pressure that

ourselves indicated more we in attractive more now. know categories. all that's And to to volume the X% and for mixed managed as As Andres fact, company down we've right

a suggest And in different the market addition that all so it's to all, we've fundamentals seen past. maybe in landscape very the than would that in strong

Andres Lopez

in the volumes is right Even into first brands. of of and through going going US and help half year, the is in the localizations now next localization are And of those we North international to which one market global America. there

Kyle White

of say needs contracted into That's then how you is you to much going needs hedged helpful. And year Europe, are very will and on if secured energy in next your your able already for energy or XXXX?

John Haudrich

For that gas competitive say We've managing numbers before overall. energy purposes, that been take pandemic. to we throw in is we're approach comfortable. We long-term a even out don't doing the regard. what But would very structural I

is of So would again we're I say there. in Again, confident favorable having spread XXXX. in shape good what we're

Operator

Mark from Bank comes question from Wilde next of Our Montreal.

open. is line Your

Mark Wilde

choice well terms, Thanks. prices? quarter last I over the if whole this as of extent the on and right you're like moment one chase down hedged careful of on probably really and in I a what not the wanted mix feel at are you range have you that some need now? To progress bit and about just question it do Kyle's peers Good Europe competitive to few raising morning. to are Good for good it's can. element little but around your years. gas any further be fact like as the does initiatives in don't benefiting you seem I the know

John Haudrich

market the something half in like sales I in in say half they more mean is second X% our Europe so X.X% environment not I up there's an massive of changes X.X% the or would volumes And share the where were This year. Mark first the year. like that on. again, up or of going or were

massive from share But little given do the I We've think the day, regard. Asia bit end I been that think imports with the supplementing ability overall market at the in of there isn't a movements supply-demand just to the dynamics. in actually was oversold.

Mark Wilde

prices right hedged because market at just margin over this out no there's of there's in kind at current gas somebody the you capacity who's -- for go John, seeing not now point? Europe, are of actually

John Haudrich

Yeah, Mark.

between that. marginal Ukraine those war X% believe capacity Russia about and have X% in about offline they've total. and overall, come And the of we We seen players, we that believe

shared smaller are who kind of So there for niche the being. players have operations time some

Andres Lopez

the there happened year. down. in never that was those Those And were Yeah. and earlier repairs there -- happen are to repairs furnaces were

shortage to that the coming Russia. and from Ukraine up adds So

all to in these So of other footprint Obviously, Ukraine whole things plus. top and on up to the And it. and million add are one Russia scattered add close X%.

Operator

We now move to Adam Josephson from Markets. Capital KeyBanc

go line Your Please is open. ahead.

Adam Josephson

John, good and Andres morning. Hey,

Andres Lopez

Good morning, Adam.

John Haudrich

morning. Good

Adam Josephson

John, what that et cost happens next comments is destruction there that, gas oil to goes Europe, year And you'll be hold substantially question that even irrespective up assuming in well? what in that demand if price one you is Implicit price cetera. to cost the made about be economic confident Is prices you're of nat that glass major downturn positive next on wouldn't everyone demand severe so you tracking I if assume. expect why would fact into that? you're up is a Europe year that in if going

John Haudrich

structure, overall type in behavior If maintain in project a relevant pretty range different the in of in we're on Well, outlook the where of some marketplace. our like we're marginal time say going environment moderated, two are Europe can't if a right changes for seeing that change in some Europe this the can't reasonable in of NG things to point now. for now projections seeing the of the that Sigma where going we structure the of we is about back spread type is demand, is But net three comfortable ability an But because results an all, that, business, throw to where again over a we at out first forward. and that of normalcy, our foresee effect in supply event positive business reduction event scenario, based upon it business that can't to the around cost XX% I environment trying feel level right there's deal. plan -- would the or you

Andres Lopez

And and driven we continuously we that all that small and to fundamentals in manner. or consumers first And strong. significantly questions go before a Yeah. comes taking negative. the elasticity. pretty up are are opening are a they supply impacted put And of caution. some they're together, described that down, by are not drivers highlighted in includes the glass demand necessarily And in can we We've that through go serve. very GDP either all got model Remember as than the been of all into that the answering we we an several that a demand customers larger and we important actions that the remarks, scenarios we when all price of of risk include see

is the million for example, Europe And so the won't for in to that together. we corner. thing a And, around all It one got model challenging replacing industry. pretty be tons the

Adam Josephson

that. -- to John Right. And MAGMA plan. capital just and I can appreciate back you the

projects So you're some inventories availability, at you're talking about attributing how if I of it's are you'd anyway, this your money capacity time. why by record projects yet what some up of would you the with year, get to chain lows, call capacity attributing you cost labor ahead in constrained inflation if not a you're inflation, spend I a supply cost to with more and and mean, you're it these are little because just problems. delaying think can't demand go keep to up which

for a reasons help basic at saying primary level me how So you're the are? are what again just delays supply particularly given constrained can you understand you these

John Haudrich

Yeah.

this greenfield the So that of a all go do, with big delayed allows projects than to because first otherwise we complex in to -- because are change structure. us of have smaller type faster it's the of projects been steel, availability bring all, that we the are availability, labor would able things complex big

do you're projects, that slowed more weren't smaller big complexity scale planned, faster. if we we clear able trying those So element. we do get bottleneck we're able doing get you inability more a a there's are to trying projects bigger have let with elements. handful demand in but mean, that. those those that part to really these that be if to that because But a and larger those are actually to delayed It's changes complex because That's complex the by you rather we're behind here. with all enable there one of of the right? give example, originally in the market to be lines, still just you're do China dealing less that smaller an and stops, along that scale growth hampering what over that scale going it's dealing just associated whole were with We're with ones. and project number me something not To getting in in greenfields I to to parts all to than going if the or can of you're project major of missing you particular is or deal bottlenecks

Andres Lopez

course. all is incremental that projects quite for is course, good positive in capacity XXXX a are the good the support very that Something

John Haudrich

sense, Does that makes Adam?

Adam Josephson

Yeah.

Operator

next Fargo. from Our question comes Hajde Wells from Gabe

Your line is ahead. open. Please go

Gabe Hajde

Hi, Andres. for John, Chris, question. good the morning. taking Thanks

John Haudrich

morning. Good

Gabe Hajde

environment. of, a one you given had like displeased review if North curious I competitors bit initiating being I potential of head about kind a can with me heard for of and consolidated well was -- pretty feel the their of week multiple restructuring times, it's market. price American portfolio talked I or scratcher, a I your think, last -- It's

as you of there's kind kind a of of across the look but you business alluded mispricing? know like I answer going business. potential mean if feel was? kind forward to-date is, question. is that I you see similar on And for to improvement repricing do two-part So of there based I on your a One, results potential? of level I do like you mean feel it,

Andres Lopez

Yeah.

years go -- our doing to changing to And able those been and we've footprint. food, or to six that year. growing accessing been the consistently So beer. categories that from our by to it We've position footprint categories. premium like be diversify And investing in change NABs to away increase we beer ago started not in every spirits, about implies, only mega the

we've Now as we that too. that, do footprint updating been

that consistently. been doing we've And so

actively obviously the to do And so conditions, on following in that. happening we'll so we're on Now that And to working commercial third continue today. year year. been to going regards working changes that are through with we've with many

it some that X-X mega quite we've used So implying to with of this share that proactive example this what market is today for half beer XX% It's has had change. been market. That be. only about is

us is indexed anymore. America So not that North this for so to market

fact growth. In a good premium that are categories are quite very seeing growth performing beer for including well, we these which are there

Gabe Hajde

And want guess a of I I of maybe simplistic positive it. think to I is year-to-date basis, this kind on too way But a XX kind say on look cost. plus then, to Okay. at you're price

You talked about similar the second things John for half.

think just we as us mean, freeze lower you looks I would so. you And more this is year, year, be like we because can next looking going it, was [ph] is input just of a obviously into six give a should up activity months extrapolate they Colombia And into of expect kind it then, lot of or by you to Europe ramping Because or are similar next something that cost today delayed I So year? out. teased next with project preliminary kind start-up out any maybe view us volatile costs? on if then, appreciating view of kind

expect what magnitude be activity and maybe So just of order of rebuild on an costs you would start-up like. kind

John Haudrich

Yeah. Sure.

Okay.

in there. those elements of Let few me a unpack

of over were price first quarters. we two we mode don't the the had each increases here, half continue second the to Because extrapolate first-of-all, net So the the on realization, in for ramp-up price the of that use and the half. first quarter price second course with

expect a illustration bit quarter run can't would half then the volume X% third nor both think in we I in of should particular annualization which XXXX, just a year more of So have second to on the overall specific the you're we X% growth. too first little the of year. better looking be time. that quarter looking amounts rate is dollar we But obviously And point of than just to at at I and the is the at think this fourth kind

a just anticipate continuing prepared achieve. on not quite we been we've expansion spread As in initiatives included in continued as our successfully that yet. And comments, margin quantify we expect we do to to position positive able

lot that call of we're as to $XX worth probably types there's and is do we in the these So and If labor we we the we elevated costs projects. million probably million and $X.XX look everything a the $XX that do end particular ramp of thing that on at to year, costs $X.XX out of this go there's asset comment enablement a take costs, more it your have to have that. engineering that tune the something incurring maintenance of costs start-up there of one front up

robust goes like see year marginally. activity these of be provides down. particular I But in Maybe for. projects of year so another taken that obviously for second year that next Now, going information things a going you're it peak you up including we've is the when half and and don't big step up in looking this that we that the activity. have the Hopefully year to

Operator

next question from Our Sachs. comes Mayers Jay from Goldman

Please is go Your ahead. open. line

Jay Mayers

slide demand Good driving that morning how follow-up like, everybody. of try the competition in extent kind current kind I large demand competitor was time feel about just have from North kind American situation the demand the the for mentioned of that I kind had to increased do the question more its out to could a products in was wondering kind is extent you Thank the you you the this and And a premium mix guys to the market? there competitor premium seen growth towards that shift drivers. of of we market. about the about you see deck. there of some on all see the do that details talk morning you of quick the if the last

Andres Lopez

Yes.

of very obviously has important And the And been and think provide United of what premium impacting States, that produced opportunity, too. seeing growth been we're the abroad a important. numbers. is growth I global brands imported and the important which that highlight the in is has our is it to localized volume quite beer the

years Our past diversifying focus now. six on beer away from mega

this that's business, process because very that year continue tons are to and be is matching to the have Kentucky which volume imported. important, all develop. that has a a that first-line market But been up that -- And matching a premium consistently And time OIPS has is good is that well going adds premium to through business very as market. spirits, way the million -- access through is that the that. also X.X is MAGMA, this OIPS, By every with distribution and OIPS on a to So takes also we quite that we will we've and serving which as OIPS, market. working which we

be So done we we've still lot now. actively we're been on on And and working there this years that. good to we'll for And is continue focus progress. a feel making to

Jay Mayers

it. you. item just And then a John housekeeping you. Got quick for Thank

the In moved Paddock on so this terms was imply does the draw? guys of Trust that also And the funding, that you the actually quarter? down cash drew Paddock to so delayed if

John Haudrich

that. million The from the on Yes, on funded Paddock both came that draw, $XXX so we pulled XX, fully the accounts. On we July Trust with million. $XXX of delayed

now. right stand we where that's so And

Operator

questions. I'll back Vice to further hand We Chris no of have Investor Relations remarks. now Manuel, for President final

Chris Manuel

by our Thank November glass. concludes our as moment reminder, call choosing a you Thank note scheduled memorable quarter That is you. for make Please call. And earnings everyone. third a currently sustainable safe it X.

Operator

like concluded. We'd to Today's call participation. has you thank your now for

your disconnect You may now lines.

O-I Glass (OI) 3 Aug 222022 Q2 Earnings call transcript