Earnings call transcript Q4 2022

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Operator

Hello, everyone and welcome to the O-I Glass Full Year and Fourth Quarter 2022 Earnings Conference Call. My name is Davie and I'll be coordinating your call today. [Operator Instructions]

I would now like to hand the call over to your has Chris Manuel, Vice President of Investor Relations, to begin.

So Chris, please go ahead.

Christopher Manuel

welcome, quarter the earnings and year Glass Dave fourth and call. you, everyone, O-I to full Thank

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

our discuss developments key Today, we and will review financial business results.

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

over call to who now like the I'd turn on start X. Andres, Slide to will

Andres Lopez

morning, your Good interest O-I. everyone in and thanks for

are in achieved exceeded We very commitments. our pleased our of performance with we XXXX, and O-I's guidance key results all

Last more guidance. and we share exceeded adjusted increase per year $X.XX which than results night, represented earnings from reported of XX% the prior

see across have The As levers. key initiatives. with operating expansion the on business momentum, growth we growth, margin volume execution adjusted years. Earnings performance past well from several net the good and solid good all left, consistent our reflected price very earnings as over significant as business sales benefited results you strong can

Full business Importantly, flow free results fourth outlook. most our year also exceeded quarter cash recent and

met represents this fact, we the or have XXth consecutive Street consensus. In exceeded quarter the

profitable all enable a growth performance, to expansion we that and strong XXXX. our In addition Margins up to key we includes of MAGMA also operating strategic achieved our were in capacity plant. greenfield objectives initiated program first our

legacy our Paddock as is portfolio structure as we related program. our improved result significantly also optimization liabilities best We and completed

past healthiest sheet the now decade. the have a we balance result, As in

on financial as we bit a continue will our performance John XXXX and business further will in momentum, outlook strategy. solid Reflecting expect improve performance we advance our our expand later. to

review X recent Page as trends. to move Let's volume sales we

X% from onset about increased XXXX volumes significant the when XXXX rebounded in of pandemic. the in shipments following growth expected, As

Volume in and and most end capacity a NAB inventory While unplanned to in robust North the with has key Brazil, limited were glass given inventories with Consistent in X% down across record wine was Growth record Americas, shipments America healthy, production down. and X.X%. strong spirits, notable while prior beer comparison were planned year Shipments and volumes and constraints. constraints use demand our demand declined food across growth primarily a nearly were in Latin markets. by been due X% amid underlying slightly Europe in and downtime X% we lower up quarter categories, were and reflecting categories guidance, supply contended the up about while low remains the challenging low levels increased all when fourth America.

would indicating up anticipate leverage X% Looking key markets flat to shipment Euromonitor annual Overall, as to illustrated we we projections, XXXX. X% of expect by the future, our X% we XXXX. in in average demand through healthy the continued serve to growth be

first The of new program phase much expansion capacity. our will needed add

capacity changes conditions will given However, shipment activity in monitor new comes chain and we patterns benefit seen low online. be of of maintenance recession. tempered supply slightly as inventory in levels this initiatives and to [ph]. by XXXX continue as asset not project the levels Stronger anticipated demand have but the normalize higher are Overall, market we'll impact significant risk more record

were top we our strategic objectives. On Let's turn for we as operating exceeded points XXX key to also Segment performance, realization price margin Page expansion strong up achieved XXXX initiative both X. targets net margins all of the benefits. basis and recent profit

well. our well greenfield weighted market the progressing broken our capitalize MAGMA well proceeding as are first strongest of full-scale ground Likewise, have and efforts in our fundamentals ultra-light MAGMA at noted, we capacity on expansion in on new glass development the All advancing least trial XX As projects years. solution are Kentucky. is we

efforts Advocacy Glass and continue ESG to advance. Our

we significantly our Paddock portfolio our as improved program. optimization wrapped we liabilities discussed, up is legacy asbestos-related As result and structure

strategy key advancing to for O-I and achieving team all I objectives the in thank want our XXXX.

XXXX, We earnings have objectives should established from another and set Page in O-I's expansion as strategy price initiatives. to a margins and Higher X. ongoing on shown and ambitious of benefit realization achievable strong advance net margin our

focused you annual America. across we see, advance now can in have North operations a As target to than set performance which our includes $XXX targeted increased more initiative primarily million to of initiatives

Currently, ongoing Efforts future. in that process closed in within expansion the in are forgers supported distributing low-margin one are volume furnace more near recently the growing program. include we markets America, North low-margin the Likewise, in of our attractive we by and X closing network.

improve We over and agreements position which we price price recover current significant period with also prior terms implement and more of commercial our customer favorable inflation. formulas as cost XX% reset to adjustment intend our will

the MAGMA are continue first we as enable We to phase half growth. of year complete program off the and first projects as to greenfield Peru our expect during profitable projects of as the and in Kentucky. the our well Colombia in aim to advance expansion capacity Canada and races our Brazil, next We to Scotland

will Additionally, initiatives on in Gen the the to we set and both to will ULTRA top the respectively. advance We X accelerate X commercialization help emissions MAGMA of we that expand a rates. reduce complete our intend pave technologies Gen will greenhouse in gas use Colombia to expect deployments. of XXXX XXXX, qualification to of recycling future key Likewise, way development for enable efforts that and of

increasingly advance build and will prioritize Glass with to campaign O-I We BXB connections the brand Advocacy makers. decision our

ratio O-I. our XXXX. and these efforts the highly end confident expect we continue will of to capital reduce net we strategy will by as advance our Finally, continue transform I'm to the Xx improve leverage to below structure to

Page X. to Turning

in initial is commercialization We are our by very excited and Magma yet for which Kentucky by mid-XXXX. greenfield Gen plant about first on track of X Bowling mid-XXXX Green,

digitized pilot facility slide Volvo the further demonstrate and review that key invite value customer the the and the This MAGMA in include MAGMA be the designing created well that system. action weighting and scalable high-performance we recent melter will demonstration a This will plan generations, you machine. state-of-the-art a I melter, Located to structure. highly to MAGMA next-generation the of investor locations fully operating the will of demonstrate to a many trail, will in near important discusses a collaboration, new are plant next-generation video ultra-light with sustainability link our forming plant attributes. and new includes that include We as visits eventually be features be hub all of facility video. will showcase batch system all advanced these capabilities. for shows with further This It will as [indiscernible] O-I's capabilities.

to it financial Now, over review on I starting turn to matters John Page X.

John Haudrich

exceeded good year reported the guidance everyone. and morning, per Andres, and full $X.XX increased prior earnings of from XX% Thanks, year. share O-I which adjusted

profit performance Europe fact, several the operating as operating key growth segment asset as improved million, both net sales improved higher to performance financial in well reflecting left. Earnings Americas despite project modest In measures, as solid strong price and and across $XXX illustrated as on increased volume the realization expense.

as fourth divestitures of prior prior from Paddock Turning the quarter, the reported up year basis given segment up increased was exceeded $XXX per and boosted prior basis from X% which quarter points. Results earnings and than net and sales adjusted year share for when was profit the down $X.XX on expected, price XX% the to million, increased FX more year adjusting Strong adjusted in as about comps. an XX% guidance. was volume Fourth interest earnings XXX funding we challenging Trust. margins

adjusted of $XX reflecting million Finally, the volume while project activity. segment The Earnings operating basis. Americas favorable primarily operating sales costs on reported activity. from X% asset amid project was an net from was down year down benefited elevated were elevated profit which up, price, prior

expansion were As our by margin expected, higher initiatives. offset operating costs partially

costs operating The the $XXX highly macro prior million, additional on provides were favorable delivered and boosted an improvement from million earnings items. profit strong despite volatile company price again, adjusted segment while Europe, basis. was up In noted. as margin Yet environment. details the $XX net earnings up chart on nonoperating Very year the operating

Page sheet, Let's turn and X. balance to Page cash X, the I'm on rather, now flow

free expansion left, the investment. which free an million, demonstrating prior guidance, increase due $XXX cash of the we CapEx, from year strategic on excludes $XXX which flow flow As shown was yet cash year, project the the prior totaled performance. Adjusted to given reported CapEx down from O-I's exceeded operating million higher improved

was well of XX%, cash to around At our the ahead fact, sheet significantly In goal. flow position. we time, improved our conversion have XX% XX% our same balance

the total while As earnings, Trust. around shown year, down X.Xx the on leverage This funding cash from and last proceeds reflects optimization higher from Paddock of XXXX. our end from Xx and Xx generation portfolio flow solid year the right, free improvement at program, the financial was

schedule. balance of in fact, leverage balance best a Investor place and have Day rating improved In both we decade. our increased in in achieved Recognizing and progress, summary, our sheet year cash is X.Xx sheets rigid ahead XXXX S&P Moody's In goal credit of one well our the of sector. and core the operating flows better packaging this now our the we

price expansion modest Overall, our be strong will realization business to now elevated have partially flat up discuss sales margin XXXX Earnings on Let's momentum net new should benefit into project to asset by and very heading offset from outlook. activity, growth. costs I'm of benefit we the Operating volume XX. Page good the due year. initiatives.

exceed anticipate billion, $X.XX increase we XX% should As XXXX. a result, an adjusted from EBITDA of

and $X.XX exceed per effective over the in X share, price XXXX. offset annual price very peak improvement, inflation XXXX. from year benefit course the be by earnings expense. in realization will good front-loaded should earnings partially of the likely the formulas will first will Overall, prior reflecting adjusted year earnings as elevated we increases price that expect increases we January new prior Full year. year EBITDA interest recapture in half of adjustment lap Likewise, Net

half be comparable we the up such, will nicely could anticipate of be during while XXXX levels. second first results to As the earnings year, half more

net our guidance is to first revaluation due prior can $X.XX that year, the of benefit of $X.XX which see inventory to and a share reflected strong increase quarter You elevated significant the reflecting from per price inflation. in

levels the to there do greater earnings once we than or clarity. a Given range base macro uncertainty XXXX EPS an X recession, providing performance at is time. in risk year quarter market and intend range We guidance full rather of an for this are introduce

least as the million Higher $XXX should down million supply reflects project cash which as at flow well Adjusted increase to year expansion million $XXX improve. is at and CapEx CapEx activities elevated from investments approximating cash $XXX chains flow due maintenance $XXX prior be free increased normalized to free least should million. to as

should continue as we optimistic As to enter interest leverage uncertainty. despite year momentum below focus Xx expense continued the a our amid and we balance sheet XXXX on ratio ongoing are positive macro end higher Andres improvement as Overall, mentioned, we environment. expect

of half prepared to have as we year, done back the we the X While are the on elevated intentionally volatility cautious over manage past through well years.

and we Investor already our key all at recent as ahead our schedule guidance XXXX financial achieved Day, exceeded well goals. of XXXX those of Importantly, our have targets, presented most

good introduce new improvement to Given and and the have anticipate long-term foundation stabilize. targets momentum, continued we beyond in XXXX established expect macro performance and we once

up I'm Let structure on by XX. me capital capital restating capital remains allocation our our now priorities. priority. our Improving top wrap Page allocation

will the leverage expect below we end noted, Xx. year As

few continue to expect the liabilities our reduce path and next to with will our X.Xx years. net debt eliminate unfunded to We glide pension leverage consistent over

debt could Our second current portfolio which profitable expansion seek we do also optimization or includes as help program. fund million growth. We increase modest anticipate our to continued with This expansion. ROIC priority is reduction to $XXX

Returning our value priority. shareholders is to final

we our evaluate structure as continue share capital will we reinstate closer additional share Likewise, repurchases dividend repurchase objectives. or our may to program. We anti-dilutive get

to turn and it back I'll you Andres remarks. for Thank concluding

Andres Lopez

in year than pleased performance are our we increased the Thanks, share and more summary, exceeded John. from earnings very prior XXXX. guidance. In per with Adjusted XX%

earlier, met As XX the have for exceeded quarters. Street consecutive noted consensus we or

all strong company. in to achieved structure year. strategic initiated objectives addition advanced In and of significantly breakthrough the technologies past margins, also We key the performance, expansion increased program, our capacity we the improved

year. strong into new a have momentum the We heading

expect we strategy XXXX advance and such, to beyond. results continue as in we As higher our

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

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

and questions. you your ready to Thank address we're

Operator

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

Ghansham Panjabi

versus the mean, Anders, XXX at gas margin specific from and structure year-over-year, points standpoint, more prices year Europe to And think I example, basis or European broadly lot obviously, so forth. natural on gas towards from of if, segment Europe do basis, for on a so standpoint chaos with and energy How revert was natural significantly levels? this you level. a looking margin evolves last pre-war was a costs back a up up XXXX pre-COVID there

Andres Lopez

at very and if Well, wine in Ghansham. spirits all users, you, the Thank well. In we beer quite they're in Europe, XXXX, demand solid. look performed food, fundamentals and AB

happening is and markets beer and across users. Champagne, markets very wine large it And markets and the X Spirits this in very example, So across Europe strong. so are at and you end Prosecco, strong, Italian When U.K. the wine in demand, look we these particularly relevant in France is know O-I. too. for for Italy, is

this the a to I And that, going in to shortage by the years mentioned, -- supply. plus million X Europe is growth be several with are driven along right? locations before, all believe glass Now we that large about tons, X% resolved, take of we there of that is mentioned that X% total up to capacities this is

likely we continuing. And the futures, at gas is we will When is a those continuously look this be going we're looking most milder the we is winter. This facing they that replenishing to dynamic. look futures. a are we this that dealing a TTF change time. prices, So to still -- that going standpoint, be from to at we're suggest And winter demand the that when see multiyear us -- to go, at there today, at with storages, dynamics

drop bought XXXX. little think bit, we've will will today take in half many expect second likely unfolds. a see that So users natural of But when the of prices to positions most they're gas I most buying you that this how care likely and got position

look So back we're dynamic. we following be suggest they out years. the futures, going them, to of is this year into a to at But when this the TTF multiyear

and Since European we've has and trend. we're performance, returns. And back XXXX, margins long-term been been that. improvement every up seeing to the year, performance a earnings Europe of And the in continuation

in we're drive important Europe very organized I of market. prepared value and well very that think to out really

Ghansham Panjabi

inventory Can That's expansion quarter, a the very helpful. terms you the that's then pointing then year being the revaluation first towards for that, plus driven by? million of benefit? quantify $XXX to to us more just margin bit related And what initiatives benefit. in And you for you're color as can also give

John Haudrich

Yes Ghansham, this is John.

have we in the course But $X.XX if sheet of relative you inflation not about know, the quarter have first the we properly have doesn't inventories adjustment. it balance we higher or revaluations. on It of adding almost mind, the year. this year, given we to flushes inventory on inventory year over our the as of kind full in just to of state that that do So revaluation, and to really is through the these level periodically, $XX affect keep have did that the million

our full for it contribute business. So doesn't to meaningfully year the outlook

of in $XX at $XX margin the XXXX in had look we target expansion at we we initiatives, million, at if million. as million, that, And you a look $XXX came

did that things pricing, feel can OpEx well optimization focused and continue our do been our to is the the million, benefits noted price should we is well cost initial bring the that we've will cost-related of add, plant that give we America. is revenue value-based activity we transformation the us that But get Andres early of this number. things. particular, resetting in different So a as -- various to benefits that what $XXX in we we do activity of side North comments, certainly like as which combination prepared And elements to to getting lot confident through to a the in to on well to ability some the the as contributing profitability more plant, continue which activities margin as in call Anders test which over mentioned doing

Andres Lopez

Yes. North highlight long-term that commercially And in move. of I it's think is the conditions to important America resetting a

and the few structurally. we're So last this pressure over significant market has been years on this working under a

So very the large returns margins back effort potential to get important this we're earnings working and and to market. on a of turnaround

is move. we're in from long-term side, the what perspective, doing our a commercial So

Operator

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

Andres Lopez

George?

John Haudrich

are George, there? you

Operator

move from question. We're so any I'll not the more to on getting you George, next

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

Bryan Burgmeier

This for sitting Bryan is actually Burgmeier in Anthony.

on is Europe any kind due based been projects in and of about by Europe by saying seen And the do in Have capacity and gas the O-I rates come elevated capacity X% on reduced online more You've lower? a operating announced in you nat with have you to costs. competitors? back industry XXXX view moving

Andres Lopez

tons, X% capacity supply. is there the of So to about up adding shortage X million of of a

point, capacity at the But in Italy are of At some back. also into coming as take France, this seen come North some haven't importers the you will will Europe, got all Central point consideration back, and back. to an even it it and We example come that time.

X into that volume that every beyond million So a significant those tons, there markets. is is imported year

that So of our Inventories resolved. O-I and situation to with going the growth think be circumstances And when The is players to This this to are to take I issue. keep including go are capacity still up is several perspective, time long-term up. able going is in large. backlog building with you a quite to the see can capacity to dislocation capacity. Europe of in those from -- Europe be be

Bryan Burgmeier

bit earnings growth? any XXXX? guess Thanks to have it. I Got do question in Last equity just for XQ. were you attribute that up what color. for that me. on a you thoughts quite in Equity do And earnings

John Haudrich

Yes, sure.

Again, to caters the and X have strategic X in that the and Europe been over trends in have we over have, Those Europe. we And JVs X over joint that about higher-end for X, lot have a particular, venture well that doing buoyed or spread seeing of that have quite in then been up globe. we the in across Europe the business. So X Mexico. in we've categories

in ventures also. our We expect XXXX in good continued progress joint

Operator

Roxland is Securities. question Mike Truist from from next Our

Mike Roxland

Congrats on a year. solid quarter and a solid

Andres Lopez

you, Thank Mike.

Mike Roxland

I far had And to of you you made allow and terms setting you is, that North along you question I then you in in doing America. the think John, those previous inflation? some a recover How of allow comment comment made a well First mentioned do contracts in that? cover as you to contract are inflation. --

that partially? we're So process, historically? those the I'm year around you allow and the inflation last in some if you to seeing wondering if where you to just anything more experienced are you're they recover color fully contracts recur a able Just

Andres Lopez

Well, so impacting we of XXXX, done. mostly And had the total sizable a a reset starting contracts business. plan to percentage it that's is

inflation to through record the expect We PAF.

going to contracts but recovery. PAF's the addition those come that's into So also XXXX resetting in to we're of conditions inflation

it's to healthy large important this effort healthy returns So recover a margins, in market.

John Haudrich

thing North X, One contracts one, add Mike, I of that has Yes. we're years is windows. referring America would that on type is long-term to the that contracts, X-plus

were the number addressing So at time we're are call saw America [ph] which the that a with of something with some on it, most that in that. as we of as like marketplace X.XX, the that environments challenging ones seltzer. hard right X.XX North the was beer set, well going now mega what

seeing constructive growth attractive the conditions. set premium were new We're more of pretty categories in they the and categories in much lot challenging in So that a we're North. a economic environment as seeing other

better place as contracts. those a in so set we're much we And

Mike Roxland

it. Got

And anything doesn't retroactively allow, so it [ph]? John, for

John Haudrich

these prior about would had inflation that of that pricing formulas the Andres The that. had XXXX better terms new measurably agreements I will And than terms Yes. that what to is recapture rebounding. the was the -- adjustment are significantly of we say obviously terms spoken price

attribute step-up that historic value that inflation creation You more you it or, a that getting value of overall apportion can on to just in we're can is business. the to it but recovery

Mike Roxland

question, made energy Got can the our it. us update you an with And just European then adding the my progress flexibility you've provide plants. second to on and

say, flexibility. few either last this targeting year for years. year late already the with to have into were will just you've And only energy you contracts or entered likely switching as that pre-COVID, energy think XX% I next that the then equipped

fact gas is position you're Given it to your Europe? similar enter where into European type given natural to contracts are are that hedge we that assume options lower, energy fair today, the prices exploring to in

Andres Lopez

Yes.

final current the improving. making with to [ph]. progress. have assets target So or circumstances adding been XX the use is we're on to The regards progress very fuels, alternative enabling good The

in very us that that a bit is this to So little at and early process. relief time good that started very more necessary. But place year point able if in last to a give be we in respond we're

John Haudrich

energy just a Then We've structural little question taken background a the other procurement. the on sophisticated for the everybody. energy to for contracts, on approach years

the well that the energy a this result, of established to This number contracts cost -- was long-term last few long-term seen in a years we run-up years. best-in-class beyond alluded you done that position ago, the As current as we've prior and to, extends the in year.

the So time. we should we higher And enduring directly period here competitive just not need inflation that mind, CapEx things inflation, like have inflation have in and keep believe seeing only that. SG&A for but this. advantage that we're rates, interest of we an It's we do

need marketplace. in don't at this So, time, the the to get into feel point we

Europe megawatt of at numbers to little hour. still gas hour of off around And compared of it though kind to megawatt a pre, year. €XX maybe €XX pandemic call hour its in per it elevated even last has come is averaged off is, per Anders quite per natural megawatt high, alluded it, earlier It's €XXX

time, still believe this a we're of but we Europe And little that given So, on lower at of point probably still there's window quite a challenge warm a the elevated. seeing over in structural it's in course, energy. bit winter

into to pressure I again, the don't get think any we market. So feel

Operator

from White Bank. Deutsche from next comes today question Our Kyle

Kyle White

future it looking demand? guidance here strong introduce year that on and more I you provide just inflation? a mentioned detail is the Is more to decision? can you range actual to What more market the an the consumer first, you're -- strong for are you think on behind guess year. and quarter Is Just on? Congrats I you get as it full it waiting more clarity. any gain clarity

John Haudrich

Yes.

it has all the do I macros. with think to

the think and is We implications. looking midyear I than really in any more don't business. any anything wire of the in particular the back first in the we're variable is of tripping likelihood see our the now half what at year, recession between that

we don't just the into visibility the have year. of Now half back the

So the we've showing tapped what the because here intentionally of down of and in our uncertainty. expectations half back we're that year

And effect and so obviously, on everything has like harder how big potential that on and rates a what that. happens soft interest things people economy like view the and landing

that's big or whether a I drip not. recessionary of, we obviously, So into determinant pressures think,

clearly we're our of So customers. watching the and that course, sentiment and activity volume from

Kyle White

segments on sense have And the you volumes, weakness, best for your of region? the at range quarter would consumer by looking it And target the it. Appreciate the just volumes I or decline Or destocking? was Americas, inflation? giving was result driver what's appreciate by this Just do sense the XXXX also here? given any kind if the if of of for you're any then a

Andres Lopez

Yes.

support So Americas other able we those are to the as good. importing players remain building very to as in and Latin the it importing fundamentals when why that's well fact, to America, we're we capacity with comes markets. glass be those are -- very And large markets, demand backlogs in glass and are in

coming very well decline in that premium the quite has are premium in been second stable. of MEGA there slowing. The we of beer or North, the XX% stabilizing. was So North a quarter the tough 'XX. price performance have products in The back good beer with inventories XXXX. were increase comps the place. is too, was of growing first very been and a America The QX Americas from The we quarter is we time issue pandemic increased will, that is when has the the That where

with So we're that. dealing

inventories low. On top are our of it,

can we out -- So did of incremental inventories, demand more anymore, before. we ship as now incremental

limiting is we activity point the higher markets is of also level to And a ship. this these So some in situation which at our of tight. ability then have asset

going is in of So -- are this together. on capacity come forecast. operation, effect time, in things proceeding all we as we're those point the see And That's into positive everything At that demand. expected. as comes we to

John Haudrich

And an aspects question there. kind of other of your

If the back in X% going Americas Brazil had significant you there, what inventories are activity. quarter, were a and activity Andres' North to own comments both where was fourth maintenance the in volumes and And happened levels to in rebuild our activity the attributed at record given that America. look on just down that We low the it, in the meet as to opportunity that -- in difficult adding think to overall, I new And volume was all dealing very we capacity probably Colombia more in probably XXXX, Canada. growth given look the are but are we there's with levels demand. inventory mean primarily we Americas Americas, over markets in Europe low and

Americas. to allow that bit more have the in come and growth little online will So a

Operator

Markets. today question Capital Viswanathan from comes from Arun RBC next Our

Arun Viswanathan

I long-term guess medium-term and wanted context just of targets. earnings in the your understand I to

So of that you here. number noted ahead 'XX you time expectations your in reached 'XX

can of of of as so income guidance in though concerns, would year about a are would kind base kind XX levels the heightened even which a since growth? we operating new think characterize it. to think And is, to range on 'XX of this is Would your XX% the So X% characterize many 'XX kind you for that in about out that quarters in how beat you just 'XX full on of the kind and some noted apply you'd now range, you that is the you're maybe, would it reach the way Street you where macro of [indiscernible] those I expectations you margin years, going a growing row. X% new outlook Is level? in about below above 'XX? And

John Haudrich

had would expect business. of Yes. say comments, is, the not only mean lot in we we continued also but you in, indicated in 'XX parts. a improvement levers and We're There's What 'XX. lot our I in earnings I managing moving included a prepared of

Most business. discussed that we raising course, will And prices, of as XXXX. your nice and expansion we're Of we've targeting in are categories. to come are before. online more point, our but growing we profitably XXXX capacity

and able with So particular, there to We focusing expansion to to MAGMA on in be of starting that years' those benefit of that focusing bit know the we the way. got of going in a of And be trying should that the initiatives margin position more in change got XXXX, up more starts coming a particular worth will ongoing we position terms in margins little favorable the capital as intensity online couple we that and inch you capital profiling margin the to organization. We're longer opportunity we're North also company regard. on. course, that a structure, improve and America. There's while were

lot think got a to I quiver able drive continue be of we've of improvement in to the going to levers, forward. lot So arrows a

not and little time, a like that in things in point this At see we're macro. we'll once reintroduce and necessarily bit providing we once those stabilization our long-term -- guidance the of

Arun Viswanathan

quick free And as then then. just flow on cash follow-up a

cash you're it still to in free raw some say, that 'XX just [ph] So the of that positive be approach given there a be some Working you capital. materials? of and in going slight a I how 'XX in that's other drag? building from for million $X.XX to would Or the a could is possibility see the way pullback evolving, maybe? the imagine 'XX, Is do in inventory flow $XXX

John Haudrich

investments. continued in that would [indiscernible] mean out changes the cash capital progress So takes expansion our in first I say adjusted expect of we due to that flow. all, free I allocation

planned at for So is The XXXX. we now, CapEx. $XXX the leaves there, in what that least right the activities we did improvement continued Considering of drivers million $XXX XXXX, has expansion big in EBITDA. we've have XXXX in million CapEx, a noted, as obviously, about with

a so drop that's So And should and flow the off, cash go business. benefit right? that the of position

on Some goes level other year. obviously, what happens expense, with at levers, up stabilizes that there. what quite its this Hopefully, interest see in or and a see rates is we'll bit particular

pretty ability flow, we're And improved so generate the about I particular. in cash think optimistic to

in cash XXXX. an this be year what adjusted over Just million the and saw that's free to or reinforce improvement $XXX higher we flow will

Operator

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

Gabe Hajde

questions. the just I contrast on had, call and quick of the relative in in last sort I your to, of down guess, we there. specific instability Brazil there customers And Brazil. it, down and to the what compare of couple pack Congrats they're to regional the you're production mix saw I beer trying X I and just on then some, guess political what One, guess, year months the year down seeing with different managing as quarter.

there think folks to might reusable. on to the are then again, needs resalable If are something that inventories So some economic maybe be replenished? fleet pretty where insight any into down back the guys be that's adding in Andean go capacity you side. tougher times And you Appreciating that tight.

Andres Lopez

Yes.

in the have for November XXXX was we year-to-date beer. that entire Brazil So data And to that to through X%. data, for glass for point, growing year close

continues but increases, despite driven of performance of the the by good strong. quite supply. it's are has returnable capacity driven that's performance all both end the by is very and So users. of very It's beer short also Overall, good very one which Brazilian Imports way. been large performance glass to be across in market, and

So both address both challenge. able quite boat. this performing market are and both to that [indiscernible] to users. markets They of are They're that same short we're capacity building well in markets and end across the be in

have for quite can are is is, reasons. of the because generate containers doing reasons. well returnable This consumers for One X reasons. The for sustainability you best sustainability affordability and they're better they better container

consequence that's which of and they're of doing at we X brands containers incremental containers Mexico, are there [indiscernible] before. that, returnable As case and too. in a in If the emphasizing the those customers wasn't example, those it for for expansion look market, reasons -- sizable driving premium our use of even demand that the is a

in So good. outperformance the built. all is all, is being capacity There in quite Brazil

and come we and So online to our there help expect continue it's going there. to that we'll volumes from

Gabe Hajde

hearing terms travel consumption in But But to extent and get of X from effects on-prem, year All maybe during knock-on it's right. visibility. just we Europe -- and pandemic. on another from a active for that you're of challenging know maybe Or lot prepared folks I the about talked head? reopen spirits locked off-prem China that And over the being we I a lot that have is from of, that? up while a that in made something customers guess, duty-free, China that where my just and through sort is to up sold for want be been of in your they

Andres Lopez

Well, the restaurants with on-premise channel they back. what call hotels [ph] is back is catering -- the is Horeca channel Horeca [ph] and which

So driving good very that's demand.

used X different -- a premise the in resilience is in glass both the to shift last to is to what on-premise that believe on-premise good. we resilience packaging or Something learn when the that we of very compared to years, over

the where reopening to direction on factoring and it I Europe. level any to something didn't think levels an too, there, but pull energy the mention to is top before to in and we've see but are going water expectation to got glass So going for of going we that because got storage be to that's With on there higher That's China, issues well. activity. the prices of in goes this regards play moves, from which is perform prices

-- demand all to pandemic be off-premise. remained than will very The the also to altogether has it it on-premise but in all, than healthy that well. higher in consumption performed so be that at-home we the is remain. pre-pandemic. in used higher is it's And Europe the and channel, in So expectation used now It

John Haudrich

ultimately China what gets in or as out Europe reminder, the whatever. markets, as of actually such the Americas exported Europe we a just other or make And into of about XX% into

in those those of any in support well more market activities. So could export particular bode activities, reopening China for

Operator

Michelle from next question Our Jefferies. from is Instructions] Filipe [Operator

Unidentified Analyst

your terms you similar on in can into on before share year? maybe European in for negotiations of business. price X increase been on XXXX both question. XXXX, entering insights now Can the also, just It's expectation is you have and And what price if to quantum I us your through refresh timeline? later but focused asked sales and has rough

John Haudrich

Yes.

comment the obviously don't increases, go, increases the at can for price purposes. the So reports. that we on and on the price our generally But have marketplace specific information look we competitive in specifically that financial you into we put

the revenue overall as number XX%, basis look were think up I FX-adjusted enterprise. on is available. think an you an I we believe, that at enterprise, take And if a on I

in year obviously, over Europe average on that. would I and the bigger think full exit it's than for rate be XX% the

Andres Lopez

but And in with whole regards on, to XXXX, price Europe largely just negotiations across market. the are not

John Haudrich

second open of -- to Europe are our year. And or pricing least business time and question, at people we of most in stand where to we agreements tend as at is reset XX% process your familiar, annual market [ph] get in the the is do those the

We are largely through that but not complete.

it's -- effort continue but pretty it's so And we I said, with like advanced. that

Operator

We have follow-up Gabe Fargo. Wells question Hajde from from a

Gabe Hajde

follow-up. quick X Just

think something sure, you can't want mean, a of -- guys recent be deal of but case know been I kind asbestos. in the stuff another a to news reopened. is make trust agreement a guys have I to and in this I tangential that the in I amongst regards on litigation terms to And funding and parties that you with was some there's have that bilateral all answer the to headlines the just that

John Haudrich

yes. Yes,

closed. case Just be funded included that clear the Chapter consensual We is the a to trust. XX agreement. That Paddock

closed. that injunction We fully place, is XX so in have the channeling Chapter

Operator

today question last Leithead comes Mike Barclays. from Our from

Mike Leithead

on A give we of just appreciate, for quick there? step broadly high so just into watermark the I a sense Can outlook. trajectory 'XX of XXXX. nice be the back should 'XX? the we're down rough quarter. us kind CapEx still in of it should you again, see beginning Real But CapEx

John Haudrich

Yes.

So the obviously aspects and the level. investment there's that CapEx are X the strategic driving then as maintenance well It's CapEx.

being last in So things due the like to years chain range maintenance and COVID and supply that our the materials, getting XXX with this all we after the below to indicated few is as low activity disruptions. had issues up that for

we best one the that that we fair from levels It think be. side, then reasonable next year our We So based of upon our place estimate a ebb off timelines probably it's in $XXX could the tail then should level. but be do million and the $XXX in on and this And flow to different to XXXX, million million million have $XXX of probably is dropping now. program that spent around a end of period $XXX announced that expansion to

crests would that, that So that and forward. goes suggest

Of that's course, particular opportunities we'll forward we what at announced at look this have then going but time. any

Mike Leithead

X quick to just follow-on maybe And that. Great.

the when -- priorities laid you hit everything to capital Xx think returning we of today, about As we this your a potential should year. mean, end just and think about Slide if you return XX be allocation to of you'll kind of kind I value by out under shareholders,

you'd to more more? or want you talking about when do that out think Just that start flushing

John Haudrich

Yes.

second bullet path to would is that the point work that I So to we're say X.Xx to trying this leverage. glide there

flow or something or value years to then to And like that so to we'll I back where from be out comfortable pick profile will another economic uncertainty, ability those comfortable think will our X, through and particular on But knock as half of get see everything the of the year in number. shareholders. to or year we're shareholders the emphasis think play the a that, right trying return the probably now, the hit situation out things that ability to lines, that. along return about to couple more our we once get of about up I think we in able I Obviously,

Operator

is the This have we for time questions today. all

So I'll remarks. any now for Chris over hand back to closing

Christopher Manuel

conference you, choosing call. a Thank you. Okay. earnings safe, This by for scheduled XX. our memorable everyone. moment note glass. Thank our remember, quarter concludes make call first April sustainable is And Please it

Operator

joining call. Thank for everyone you today's

and day. your lovely now You lines a have may disconnect

O-I Glass (OI) 1 Feb 232022 Q4 Earnings call transcript