Earnings call transcript Q1 2023

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Operator

Hello, and welcome to the O-I Glass First Quarter 2023 Earnings Conference Call. My name is Alex, I'll be coordinating your call today. [Operator Instructions]

I'll now hand over to your host, Chris Manuel, Vice President of Investor Relations. Please go ahead.

Chris Manuel

welcome, call. the and quarter Glass Alex earnings XXXX you, everyone, O-I to first Thank

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

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

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

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

Andres Lopez

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

prior quarter pleased which as first record We announce night, of more are very year to results. guidance. quarter our share, as exceeded exceptionally O-I results performance strong year and per first adjusted earnings was $X.XX earnings, represents prior reported Last significantly which well than

number benefited our earnings as well operating our Adjusted realization price very despite net expectations enterprise disruption external performance from across initiatives. as the a margin of Likewise, exceeded events. expansion from strong from

As was down prior other challenging expected, sales among volume year factors. comparisons given

to continue strategy improve to to efforts ahead advance are addition very we all and plan. margins strong of our In results,

Importantly, our MAGMA actions ULTRA for remain technology capacity the deleveraging our plans, on track. developments all and and expansion

full first we strong per between range quarter expect Given very adjusted will business have year increased results, outlook our XXXX earnings now $X.XX and $X.XX share. and

from a financial increase and a earnings our range will outlook later. solid and year. expand guidance which adjusted second expect bit are quarter is providing and We also between $X.XX John performance $X.XX, on last will

year, we comparison. shipments challenging first and discuss even prior recent year Let's volume will a move Entering some, quarter sales X that to the very trends. expect be down Page

a in left, of As volumes first the were on quarter you robust can X.X% up XXXX. the see

global challenges. supply During recovered that prior shipments we chain increased year from as period,

O-I's, ship the given strong of Russia-Ukraine glass we demand. very inventory onset some out and secure in at the war, of inventory markets, customer

last from about we softer actual year, of than shipments quarter X% first were originally XXXX, the anticipated. which During down was

prior We amid Europe. expect low to levels, X% challenging inventory year comparison be with a Southern will that record in volume around X% phase especially

as In strikes well in mainstream in decline. trends North Central chain civil for we together, X% customer further supply Mexico. These Europe we in in of impacted addition, as flooding Northern Peru shipments events an which, of few represented such believe X% unrest destocking which by Volume X% across California, softer as and impacted our temporary were across general notable around to by consumer demand France, Beer, was estimate and some and in most categories markets, accounted additional our the lower NAB Food a shipments. were the

we the pieces during are there here, first X% down about believe many While to quarter. demand was moving X% underlying

in as to California contributed lower growth Looking Americas, at X% was the in the civil down the compared Peru about to in flooding volumes. prior and X% year unrest quarter volume segments, in Northern

In to growth Europe, shipments year. were down compared XX% last XX%

in results we pension our un-traded remain Southern market. social January category strikes the on Europe, France, the oversold in situation since strongly that has across yet by reform Importantly, wine in weekly penalized

XXXX. expect digits Overall, now low-to-mid-single we will sales down be in volume

health we long-term megatrends demand glass sustainability. will macro interest While modestly year, this in continue to lower benefit as contact from given pressures, we will such with shipments premiumization, increased expect wellness key and and

X% right. between that the on we serve as key across the to future, we look believe demand the and year X% we markets a glass As should grow illustrated

are XXXX, of and a and we We objectives off O-I's as have page on achievable advance established strategy another set shown faster in start, ambitions to X. to

of realization progress margin million very benefits, $XXX America. in and million segment and First XX% topped of good $XX North which margins quarter price profit initiative from expansion benefited net included

key XXXX, upside efforts we that While will benefits. expect for front-loaded in these and performance ahead expect pace be we are of

in plans also quarter. brownfield should now operational be year. online on Our new and in and which Peru Likewise, late is The target. we in projects Brazil, next Scotland, next Canada be our Colombia profitable second for kicked our should in the off operational expansion growth remain line have

Bowling Finally, our mid-XXXX. should Green also on first around remains MAGMA and commissioned greenfield be in track

quarter. is first Importantly, well qualifications MAGMA development in proceeding barrels are market the final our expected testing and undergoing ULTRA with second

that Finally, comfortably net and progressing end below our O-I. year ESG three well, transform highly and will glass times our the continue I'm to strategy advance leverage as advocacy confident should efforts these debt efforts levered. we are

advancing Let's progress strong performance page are a our turn to X. Certainly, happy to and report strategy. solid we

how We O-I proud and which a the we in communities on is big having transformation our of also are positive impact serve.

the see As and distribution in business. official celebrated Greenfield category as which for middle, groundbreaking will plant well the the growing sales can MAGNA our first in Green, spirits recently Bowling serve we O-I as Kentucky our you

Likewise, communities EcoVadis, In and customers across France, been partnering beer our glass progress we Newsweek and we has emissions. completed that many Sustainalytics a at sizable to and reduce with will COX investment plant by the recognized recycling U.S., Magazine. are significantly ESG our our in increase

award-winning transform Finally, offerings few the have communities product stories continue we just our and serve. and new are we that which effort. development launched part O-I success of expanding a in to we a disruptive as These number of benefit

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

Speaker X

John Haudrich

Thanks, reported significantly guidance. and adjusted O-I has good morning, both year per exceeded of quarter earnings results first $X.XX Andres, which everyone. prior and share,

at compared financial prior year. significant on in of the $XXX segment increased across year-over-year as improvement noted range we $XXX the left, wide Americas million the profit and to in Europe As a both measures. million Earnings posted operating improved

inflation our annualized recovery with contracted primarily of year price, strong agreements XX% that the to first price on pertain consistent on recently the quarter. inflation favorable as Strong offset which past new price a years. market we inflation benefit few year, to well includes Europe. net from on inflation. this energy Around remaining America. prior recover dynamics, and reflected cost renegotiated basis, broader increases higher over long-term XX% prices North which price long-term increases sales in improvement contracts increases year's results is this net given open this related incurred long-term reflected lagging last period unprecedented the This our Higher of as the of incremental in in contracts effect of also the market The

Additionally, segment profit reflected benefited performance earnings from operating favorable initiatives. our factory costs expansion good very margin as and

years. In fact, which elevated per contributed the or five project first offset inventory performance manufacturing activity. share, revaluation the million over impact past quarter $X.XX was second best the the $XX Furthermore, of

nicely year. good Earnings which The the was As down. execution, commercial Andres while volume benefited the year. prior Americas sales of was operating segment from contract discussed, prior from up was from profit down reported $XXX sales volume million,

and Colombia results higher operating mostly planned offset Solid due project activity to elevated costs Canada. in

operating chart understand exceeded volume earnings profit revaluation provided details million, non-operating our was between segment Europe, Higher The while up dynamics, and have results was we of from operating prior actual significantly down. outlook. Actual year. boosted the selling prices, these performance sales In provides $XXX and inventory reconciliation To performance better guidance. items. favorable a additional significantly quarter first high-level

realization while most execution elevated solid Actual cost moderated As some. of price gross you upside. can our estimate, exceeded the drove original commercial inflation see,

company volume, performance tax again, environment. a and and stronger operating These partially expected delivered macro rate, boosted were the earnings strong mix. despite earnings margin regional a softer-than-expected given favorable earnings given than pressures. offset benefits improvement better noted, volatile highly Yet along earnings sales As with lower by macro

at billion. $X.XX our approximate Let's discuss results. share. we to outlook, business updated will guidance adjusted our We least strong $X.XX X and now page move very adjusted to share, per guidance to expect more and $X.XX from earnings Likewise, given our has EBITDA $X.XX increased our year per up than of have outlook full quarter prior first

strong as well operating be as while Overall, we modestly sales and cost will year. down good performance anticipate volume price continued this net

three We as end cash outlook, net and debt have the comfortably also leverage will Andres our increased year below we our anticipate mentioned. flow times, ratio

Furthermore, we new as and operating Looking second year expense. to the modestly. be revaluation be not prior per prior we volume be interest due repeat. earnings quarter, capacity, adjusted expect results down the should will price yet up higher Likewise, share, will to commission as year benefit results will net at will approximate unfavorable favorable from will see will $X.XX costs inventory elevated the $X.XX we sales reflect

we results. This quarter quarter up key be a second will will first on few due elements. a results earnings expect be record basis, to do year-over-year While is sequentially, given some down

First, the the benefit in second not of repeat quarter. inventory will revaluation

be Next, reflecting up capacity by And partially we of seasonally will higher progression we will sales expect the commission as incrementally interest be higher operating rates. volume. elements finally, expense These in offset stronger new costs Colombia.

performance are control. taking across necessary all operating drive to the the can we leverage upside We steps

second given the half the balance outlook our uncertainty, conservative Yet on especially the of elevated year macroeconomic is in year. the intentionally of

cash regular more a capital our intend optimistic improvement strong we outlook we guidance performance flow levels. and on XXXX. working continued remain clarity gain and in as and we our business As expect result, updates on Overall, XXXX provide in to volume especially,

Moving to strong. quarter results X. Page were Certainly, exceptionally first

some several agile planning. While improvement. building hard at mix the have over structure. a organization systems by business like business flow we and improved and established was new in We supported years and sustained effective unique for operating ways, capabilities been quarter this simple, engine We past past work our the earnings advanced and cash integrated

pension profit legacy risk categories. asbestos and operations non-strategic reduced from debt exited and O-I liabilities resolving obligations. away low lowering and shifted Furthermore, by we

initiatives America. consistently come, benefits for Our to have margin margins million net we over improved years have improvements delivered expect in since including Likewise, our XXXX, expansion continued in Europe in $XXX XXXX. benefits since and North

breakthrough at innovations profitable future will once we will years future and R&D of as we meaningful are the implemented. investment, the more costs capital decades, reduce of and After several forefront investing earnings we by intensity. growth first that profitable our in are believe million expect $XXX operating growth Ultra at deploying than in For that lower time we support fully MAGMA now boost such

by flow intensity expansion lower run, EBITDA we by Over MAGMA. due to growth, realization the capital driven and profitable Likewise, favorable expect higher cash the initiatives. expansion stronger we price margin earnings combination supported net generally improvement expect continued long continued and at of

Page This value. place solidly XX. generating engine Turning to is in and

enable and As sustained meaningfully last levels. operating approach reflects cash the performance earnings is balance and to we delivered structure. performance trend have This the consistent you flow improved comprehensive see, can we key a across improvement all and years. earnings several up, have over capital favorable sheet Adjusted

expectations quarters. result, met or a consecutive either we XX exceeded As have Street for

improvement are will the future. flow into and confident sustained XXXX and earnings efforts enable we Importantly, cash our in

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

continue X.X to times and path our we leverage end below to noted, glide the reduce will leverage few we will times, year the over expect years. As three consistent with next leverage

program. expansion million is to shareholders value priority priority. Returning growth, including second our $XXX Our profitable final our to fund our current is

anti-dilutive objectives. our reinstating In may repurchase to or we as repurchases our capital addition share additional close ongoing we structure program, share consider to a get dividend

Now to concluding on Page XX. for Andres remarks back

Andres Lopez

In John. was are pleased year performance our we more summary, results. Thanks, earning's first with prior double than adjusted very as quarter

strong to many very performance, strategy, tracking we with key good our plan. are to advance our to continue initiatives In the of to addition year a favorable start

business We full year reflecting first have our excellent outlook, increased quarter results.

improvement future continued established leverage earnings the the as we in over Likewise, strong years. foundation past we years, several expect

in profitable Finally, ULTRA successfully position MAGMA rate O-I enable and leverage as opportunity our like technology new and through win leverage long-term attractive program, sustainability advanced represent's our and our investment and financial transformation to further believe, green execute we economy. I an innovations strengthened the profile, growth,

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

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

Operator

[Operator Bank for is now line comes George, today you. of America. go from open. of Staphos Our Please ahead. your question Thank first Instructions] George

George Staphos

the on And would team. statistics glass Thank have the seen to are various capacity given morning. if the and top Good which Andres, at about things be X their Andres to-date. all right had XX start they it your weaker-than-expected outlooks into growing and how does deployment that that your for relatedly, shows XXXX, growth of to this is that? Thanks shipment of But year understanding Thanks. volume you lots I that X% my for use all? volume data, you show change everyone. line or we've I Euromonitor that now, also and details outlook X% would you question agree Hi, to guess, would the at of customers, your there if think contributed

Andres Lopez

Thank you. Thank George. you,

are into building we -- utilization There that. going any point, don't have next and we'll we the about multiple the concern of are year. this reasons So that for capacity be at

of For which example, the support volume. if global in we capacity is Canada, brands, of are look there at localization terms new already to in that

don't we've need of create sustain to importing in a we we able countries, were to markets. those So look to the been a area. that be lot When at volume new Andean

is all this be records, only offset So into and strong will the very volume and go able in but purposes, slowdown in we're we these -- at seeing utilize that which for point capacity imports, temporary, time, to remains the quarters we're that the those going full. to future as

in happens same The Brazil.

fact, for multiple by very players. and high glass very strong In primarily continues imports be this are by Brazil to point, -- at

We are that high-end we lot supply of in it serve market is is the reporting spirits. very to itself look segment Scotland, of that, a at a little market When to the growing capacity demand. missing

quite growing serve Well, spirits comfortable. new business very the United in feel we So the also, going is line is to the States and well. which MAGMA

this forward. to the glass talked very different they going is solid. glass comfortable, very They're used very demand They're consumption. utilize the capacity fundamentals. Euromonitor to we're about consumer So the the going projections, and to we be regards able and With be before preference to than we're favored

So, been a presentation we comfortable the having projections market. feel of third those with

George Staphos

And John. ahead, say that -- go your customers would

that. about Sorry

John Haudrich

Yeah.

a little bit have we in that keep for mind that to add by long-term substantially is is, expansion the covered Just there agreements.

that backstops think I that So, expansion the programs.

Andres Lopez

And to are those requirements expansions customers. the these of responding

George Staphos

Okay.

get just and off follow-on, And I'll clarification line quick so here. a and the

do basis? would operational growing John, expect an terms for X% X% Good the of outs you annual again, in the usage an the then, cost years, in guys. on So luck say, And customers your basis do ongoing Thanks to categories. relevant few you they think, in can to what be next quarter. their on

Andres Lopez

about. even Yes. kind cases, talking that In some growth more we're is which of customer

John Haudrich

Yes.

of we're as on through Just here. note the point, opportunities -- looking that, the George say to amount over a still things with our just like and and project having to the expansion CapEx number be of capital at term customers last long allocation

demand on and that desire us growth. So, for support think pent-up to to there's their with I grow capacity still the ability them

substrate. So I the think that underscores of other support

as We $XXX say, initiatives. wide the covers as range our cost bumped because last expansion million this far the several over I added focus averaged America year elements. goes, we've million, in As in $XX to that years, of to of just a the at margin $XX million you look North would that up

the the that that many the expansion process. on because next probably is few the years, years, as improvement takeout too, the think of we continued the multiyear I fundamental opportunity the be And in in for mentioned Americas margin of should north prepared initiatives -- improvement I cost range improvement a end think for margin for has comments. I legs

improvement years margin we very I of few here think opportunities. got cost So, a and strong

George Staphos

Thank you, so much.

Operator

you. Thank

open. Our your next question Anthony from Anthony, from comes now ahead. Citi. is line Please Pettinari go

Anthony Pettinari

morning. good Hey

Just following up on George's question.

I I'm where being slight then maybe around I'm wondering, you've separately, think last you've talked now. of XQ capacity that around And think sold globally. the removed stands about now following European year. I maybe X% past, in the wondering, over stands where about slowdown? X% being that talked

Andres Lopez

Yes.

capacity let me So in about talk Europe. the

So, capacity was removed.

is it of back. Some coming

at growing implemented. Now, the after capacity, consume the that not year is comeback, the we partial only coming steadily European market that back, a one capacity which been all that but pace been just is has that new has year can

Anthony Pettinari

updated I globally, mean, is think your how of in with position And forecast, in we oversold just of about Okay. should volume then that? sort balance now terms the or that

Andres Lopez

Yes.

the remain a remained what come building, this in the seeing to time, I-day fundamentals temporary we're back going same. and our So because this valid. to we At were -- point projections the it that then we're temporary will rep pause is go in shared

our a… and we will accurate are there projections So, feel be

Anthony Pettinari

turn Okay. it That's helpful. I'll over.

Operator

you. Thank

comes next Baird. Ghansham Our from question from Panjabi

Your line is go now open, please ahead.

Ghansham Panjabi

Thank everybody. Good you, morning operator.

Andres Lopez

morning. Good

Ghansham Panjabi

something globally? far Some point? patterns. think do you broadly, elasticity companies you have this just spending similar the seeing more also of lower and thus starting towards food in consumer Are portfolio beverage your to down big how exhibit purchase dynamic against consumer at positioned in a the that Europe pointed trade is and reported And dynamics

Andres Lopez

Yes.

listen going seeing this underlying -- down multiple chain time, in point of mixed So, on as From conference signals from the perspective, destocking. we're supply because at our primarily releases earnings the companies. the calls we is to or demand

-- I driving consumers down. determine slow But think might this demand. doing. the they it's point, quarter, destocking We'll some what what underlying drastic early and what's are to we've that a chain is. far seen for At that see supply pretty that's so

John Haudrich

the would of just having conservative the we've our the I there, half we add side. Ghansham, Yes. a of a as on in remarks, view year back ball taken in performance not crystal prepared indicated financial that

event slower. So, prove the things in

think an benefit and inventory bounce event back upside. we're destocking normalize, on things things I covered I the because in could the this we think is

Ghansham Panjabi

for relates as as early, then a a then do we think it's earnings higher XXXX, XXXX, what we -- then $X we to in on see And do than our XXXX being should at related higher it. very for XXXX? you what about currently potential Got path you for basis? for in keep point, OI for almost it XXXX to headwinds we see earnings update year-over-year but And think you this basis, than mind what models in I as know be

John Haudrich

and ago, updated than we higher to guidance think for yes, So few yes, do at our this their a Ghansham there. clarity, consistent even be comments XXXX in expect just XXXX, I point with time, against minutes

are should macro company. before, provide clearly while mentioned be we what There adding new and much now good a anticipate there. bounce-back the let's that year. effect, pressures, So, headwind good capacity, volumes we the even right a happens see could growth is accretive without to due next sales as for would volume that, But needed we

-- we've we to on continued last especially that cost in And margin confident previous America. pay the on we've years, to price, out do we're inflation call while considered we're this price comments, on again, of seven back the had or recovery those it, not still the strong facing six even net tailwinds we're the so expansion had counting said, with favorable initiatives, North seven years. net But X% Likewise, year.

business know, with that agreements is you next year. formulas of our in XX% long-term as kick price we'll And under to cover that adjustment

good a that's So, boost also.

commercial we're don't we moderate will we Now, expect know overall, we than XXXX with that confident pretty it what elements, But inflation be other higher like those don't looks could and whether know be. to activities XXXX.

Andres Lopez

And add improve. will to performance, that I the opening has described continue And performance is five in performance to in impact the continues XXXX. this delivering will and that, time, one to capabilities that to the over second operational this years. the is all the as responding which And expected we of the built last that remarks, John -- one been best improved

Ghansham Panjabi

Got Thanks much. it. so

Andres Lopez

Thanks.

Operator

from Hajde Fargo. comes from please Wells your ahead. now question Our line open, next go Gabe Gabe, is

Gabe Hajde

Chris, morning. John, good Andres,

Andres Lopez

Good morning.

Gabe Hajde

I maybe little can was of bridge. second quarter the guess, you a on clarity hoping just, bit give I us

finer I and these by then missed think, in So mentioned you. you Thank in higher inventory million some of headwind And QX. system if revaluation QX about talked elevated that if of recur can put benefit think would a But occurred a activity not maybe across seasonally I John, the point being volumes. that you you and items other $XX anything? then I partially on offset

John Haudrich

yes. Yes,

you there to bigger want $X.XX sequential it the So, in probably pieces, be a will call inventory that some it's to that, $X.XX speak, pieces to of so moving change revaluation. if headwind,

So through. the comes biggest component that that's

have here probably $X.XX of we least to activity and of because $X.XX interest another as it's headwind. new operating of wave closer then kind as probably elevated And cost stand quarter-over-quarter large maintenance capacity at we a today. is look time The at expense, we also commissioning probably

those yes, but we'll stronger a partially that volume sales So will are big pieces. have the seasonally moving offset that,

Gabe Hajde

XXXX, I'm EBITDA. Okay. are And earnings interpreting next I guess as but just talking being appreciate guys year. that -- again, April I about up you

think, we year, guess And I to as cash supposed was to I CapEx. for peak that so translate down be this

anything I EBITDA being whatever down, I million the if So any million. assume number we that working to mean know, million items $XXX capital $XXX of CapEx with $XX million, million Are business? $XX will there and for that there of? up the cash the I is, call be be kind don't $XX start with or it, other flow required the is should mindful

John Haudrich

getting specific the into like into Yes. a se. And -- to early get little numbers said, I mean, I it's without per

our adds projects look of take still strategic any whether us. we a capital in at take pieces, any obviously, have, spending got a of a to we've adjustments, the has some you and at or If maintenance that's whether of level moving the the that's front or bit plan look little there's

sales receivables side to obviously, on that and to that do Now via inventory. have working capital have you the you the degree growing, through will support

are think all little parts, cash a the give those flows. of gave So moving early XXXX texture to us it I but

Gabe Hajde

Fair enough. Thank you.

Operator

next comes from Thank Arun you. Viswanathan question from [Operator Our Instructions] RBC Markets. Capital

Your open. now Please line ahead. is go

Arun Viswanathan

Good for question. taking morning. Thanks my

on volume outlook. the curious Just

is like actually in does areas constrained. are the the weak been a of that kind you it So certain We've in regions. consumer certain bit seem -- little guys capacity also hearing

You the macro year. potential Thanks. especially are or little seeing capacity are snapback that that you trajectory a your for about term, how next additions? Is intermediate environment, better a the thinking the for on volume given described dependent next you

John Haudrich

Yes. Yes.

macro so snapback, irrespective that a expansion Just but further is next through right growth to that speak, a of to we volumes for comes a believe we the be program contingent because have up benefit should snapback. clarity, our I on next year, -- of majority year. it's think will from our boost next really outlook, year, the adding If snapback don't capacity now as

Arun Viswanathan

that and of that that the you see maybe prior expect or side, are some don't is Is price and you go-forward that this are environment? future. should gain still John. again, noted at the Would a you catch-up these kind given of Okay. to, kind moving - through you we consider that the on Thanks, year on kind we Europe that consider, in should oversold. increases pricing basis? from actions price just then earnings put lot a And level structural accurate, cost hold you on deflationary much how to of power a are of potentially And of price

John Haudrich

Yes.

just saw formulas or quarter incremental would our cost in adjustment increases like first in period really incremental confident to incremental prior say first you I price of to that the So pertained the reiterate, we position. majority price you are what said, were response inflation. price activities the then all we -- and inflation the I did in that mean, in to quarter

also benefit -- And not into still don't going market us. whether a where only that X% forget right? doesn't is the thing whether and is It's luxury in an picture. that this is world so formulas a we're or not say it adjustment business. still seeing or price inflation, it next this on open is look-back year, would It's basis I a And tell one our price net full should is

cycle goods, really so have at we manage look to on inflation capital higher the cycle. inflation on the position, expense, also cash cash our cover for inflation to SG&A, need interest and through We through

And shouldn't net competitively at look so able we dynamic through the to on being going price about what's is just cycle. manage

like that to manage able we it's need a So I something is think, cash to not be luxury cycle. said, the I

Arun Viswanathan

And I if quick can. just one, one more

guidance be free number flow so kind Just and number. providing be closer expect cash cash flow, you will of your million, of to on one adjusted $XXX the do you that free when just

John Haudrich

the flow capital. and flow of cash of it demonstrate operationally, underlying cash free is the what is the deducts So mind, business maintenance keep to the in adjusted cost

So in it I I'm not include capital. that netting capital. of the think sorry, expansion does of is yes, Included impact the the maintenance

always that be there. So will

IRR expansion investments we'll related of always some level the So business. think I have growth-related in

you the important up the we're of total cycle all But flow want or virtuous and if eventually, now, caught believe is of the the that And we is for right? But EBITDA. of they know then I don't I cash ultimately don't we're flow doing business end free that trying business. close totally surpass get projects to, that So adjusted should to strategic up what a lift free that's So this level true bucket aspire actually cash cash gap. point the the the in of one the through day, ever creating at to the another. -- right

Arun Viswanathan

All right

Operator

Thank you.

Mike question now Roxland Truist Our is from next ahead. comes open. Please of Mike, line Securities. go your

Mike Roxland

John. Thank good Chris, you. Andres, Thank congrats a on very you. quarter.

Andres Lopez

Thanks.

Mike Roxland

thoughts your to fundamentals. Just on glass wanted get

the glass I normalized XX basis, last whatnot. you to as a break at destocking, a years. mentioned its guiding least on little in think and whether you've in seen were still there's consumer strong fundamentals But as due call, Obviously, here, of you're the demand. slower to a bit growing

skis, can some things balances, So its is through make ahead you getting walk currently given company to sure and us doing internally, just favorable of industry checks the that of not you're the dynamics?

Andres Lopez

the that We bounce this bit consumers by down once Yeah. economy ladder a that we're seeing of time, the But that consumers typical trading We pass. a think might recession. these little of very point at the the dynamics create Obviously, macro a glass again. will up fundamentals we've valid. been move then remain in is describing see back

the are, preferences will been a and responding to what their kick they've fundamentals of So will continue pause. influencing then evolution And our the what because again the in temporary we taste, demand. see they is consumer

John Haudrich

years And one that the expansion the program now, our few if of still, those over market thing amount Mike, to you to share market below look right of growth at add position set the next that, a underway growth of expected we is have enables take frankly, assumptions. under that our is capital of

as So market position our still ourselves is concerned of about as investment share of below our ahead that under far getting growth. skis, we're -- still

Mike Roxland

[indiscernible] Sorry.

Andres Lopez

Go ahead, sorry.

Mike Roxland

apologies. Andres. No, My go please ahead,

Andres Lopez

you there lost I Mike, we think Sorry, hear didn't

Mike Roxland

the Okay. you're on is doing I stress forecast. that question anything internally was -- I the I to guess, test mean

test. you because the forecast material to different as peers what I'm little are your customers And that the appropriately of you're a sure is forecast. a internally substrates, -- sure Your anything you to in in wondering, here, stress and to forecast in just aggressive whether just make some so actually dynamics accurate forecasts going make given that that like doing their their turn your and

Andres Lopez

X% that advanced of the we that continued seems But say be as look at I a so, sensitivity hey, to we But able capability this the agreements. would and understand normalized growth that this of more we if where we said they be all could a is did we wanted all do business. if what back to, intelligence would Well, to still variables to got to also past, in our recessionary our in I pretty go many, and secured the one those does environment. And many look it different we the at in business through the the down things business, were before I take of impact growth point dynamics, long-term forecast point fundamental are we to it. a doing? of business or

commit that our over So in going beyond are sense, don't SKUs we're going I what think to to. or the willing that customers

Mike Roxland

Got just one it. And quick follow-up.

believe like Just that costs lowering Could the you the last couple for few of just I this and expand on of years we in you're pursuing, the revenue opportunities year, focus next on you're plus terms other years. price MEI SG&A $XXX reduction in for see targeting million in obviously, cloud. whether the to optimization. initiatives,

that some you is getting of the million have next few be for years? that will seen things for those you that may So -- $XXX responsible to

Andres Lopez

more this revenue take this we've doing say end performance, productivity. we We've the program for of business. of cost very really which I you good few value-based a would years. contract balanced. looking is would transformation What is front on I optimization, benefits type pretty that we are year as reduction that a performance which compliance the at for and factory And our here, got is pricing, said, operating good, say SG&A is Yeah. Yeah. been a year, look the if got

So for we're out of looking that. benefits good

on, I mean, comprehensive restructuring two the speed automation, like logistics year PTP took out furnaces things and -- benefit we're reduction, and we energy around program network on did we've last some working and we that and optimization, underperforming a pretty got improvements. labor, getting that

that and we're America the very And part North -- finally, doing important holistic is that's in what too. maybe incremental now, most right is

very the mentioned renegotiations spectrum I a as within a of to contract and well As clear that our business. we other was before, as benefit operating there, that and elements quarter, good wide got first start factors in a

Mike Roxland

of very Got balance year. good and for the luck it. Thanks much the

Andres Lopez

Thanks.

John Haudrich

you. Thank

Operator

Thank you.

Mike next line is Leithead Please now go open. Barclays. Mike, your question ahead. comes from Our of

Mike Leithead

Good morning nice start Thank Great. you. to and year. congrats on the

so, year. were So of, -- this my They quarter, do just historically well. what sustainable just margins you ran before as at European range But, reval or you But double a how margins. taking few first obviously, XX% in question EBIT cost added think assuming are this on say, points there. sort underlying I'm last inventory out mid-XX% is you're

margin do levels think So just are? these how current sustainable you

John Haudrich

a quarter was clearly, let first crack first take Well, strong. very that me the Clearly, Yeah. at one.

just to margins me back company think overall talk step a segments. the going they're as where Let about and and that where this go we year we think major in

mid-teens, basis the in in go XXXX, margins were. segment pre-pandemic the XXXX year, margins much profit we So you be our overall where exactly to would that's back be and which to pretty should if with line expect this

going be it's In it crack the in XX%. Europe, to probably lower and the Americas, should teens,

So activities two segment next in in future margins think teens. some further or a with little the this been overall profit -- should doing, year mid that to look into about the a we've take bit talking more call during high the and of like but we're we be things the if we the

especially recovery to course, the mid-teens, up something to up in the then America, that there. higher we And, in Europe. And bring continue over so or of and build from then margin would Americas potentially continue low XX% with from North

a that company. we're take on to trying view insights normalized and the hopefully, more some you So gives

Andres Lopez

has to improving And margin that year since a would year in We started been the Yeah. improvement back Europe like improve highlight I been we've in then. XXXX, and dynamic. to multiyear after

Mike Leithead

housekeeping. Great. then just second, And Thank you. little a

cash about I $XX think moved EBITDA bumped full you year by million. million, $XXX free by flow about higher

parse can you just a other capital any John, help there? there is out So or moving maybe working offset, pieces

John Haudrich

flow, To million. free up $XX $XXX EBITDA up your more is indeed. than more Yeah, in million cash point, than

a is So, outlook thing difference to free our in cash floor. there's is a One obviously, keep flow there. mind

that better, our anticipate probably or so And intent. that's we like to do hit

think the trend. will what capital To curve performance the your and point, is sales reflect volume of we shape working

We on through to out that, the out plays right conservative play to accounts of it's towards on softer going hey, things over a the through that's conservative year. and prudent view inventory So now balance most the year. and approach the keep receivable how think of the the that, -- balance that is to taking which continue be

where quarter, that. up demand back example, actual the half for fourth actually of receivables, and in the picks you're like things rebuilding the But

swing capital that. best $XX we prepared it in right bounce we back better you And working So, conservative as at time, and looks curve keep factor I updated approach But a ideally, like. probably is a this in as we sense said probably think see that million the what comments, take than now. of to sooner point is in we'll our a business

Mike Leithead

much. so Okay. Thank you

Andres Lopez

Thank you.

Operator

no We you. have Thank questions. further currently

remarks. So Chris to back I'll for hand further Manuel any

Chris Manuel

earnings quarter August call. for making Please remember for Alex. sustainable X, interest. you safe, note your Thank a choosing is second memorable currently That our and call Thanks, concludes glass. that, moment our scheduled by

Operator

for you joining Thank today's call.

now lines. may your You disconnect

O-I Glass (OI) 26 Apr 232023 Q1 Earnings call transcript