Q3 2023 O-I Glass Inc Earnings Call

[music].

Nadia: Hello everyone and welcome to the O.I. Glass third quarter, 2023 earning confidence call. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question, please press star in the bow one on your telephone keypad.

Hello, everyone and welcome to the O I glass third quarter 2023 earnings conference call. My name is not yet and I will be coordinating the call today.

Speaker 1: Hello, everyone, and welcome to the OI Glass third quarter 2023 and conference call. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Chris Manuel, Vice President of investor relations to begin. Please go ahead.

If you would like to ask a question. Please press star followed by one no telephone keypad.

Chris Manuel: I will now hand over to your host, Chris Manuel, vice president of investor relations again. Chris, please go ahead. Thank you Nadia and welcome everyone to the O.I. Glass third quarter conference call. Our discussion today will be led by Andres Lopez, our CEO and by John Haudrich, our CFO. Today we will discuss key business development and review our financial results. Following prepared remarks, we will host the Q&A session. Presentation materials for this earnings call are available on the company's website. Please review the safe harbor comments and disclosure of our use of non-gap financial measures included in those materials.

I will now hand, habitual hoist, Chris Manuel Vice President of Investor Relations to begin please.

Please go ahead.

Thank you Maria.

Speaker 2: Thank you, Nadia, and welcome everyone to the OI Glass third quarter conference call.

And welcome everyone to the O I glass third quarter conference call.

Speaker 2: Our discussion today will be led by Andres Lopez, our CEO , and by John Hodrick, our CFO . Today, we will discuss key business developments and review our financial results. Following prepared remarks, we will host a Q&A session.

Our discussion today will be led by Andres Lopez, our CEO and by John <unk>. Our CFO today, we will discuss key business developments and review our financial results.

Following prepared remarks, we will host a Q&A session.

Speaker 2: Presentation materials for this earnings call are available on the company's website. Please review the safe harbor comments and disclosure of our use of non- GAAP financial measures included in those materials. Now I'd like to turn the call over to Andre, so we'll start on slide three. Good morning everyone and thank you.

Presentation materials for this earnings call are available on the company's website. Please review the safe Harbor comments and disclosure of our use of non-GAAP financial measures included in those materials now I'd like to turn the call over to Andre who will start on slide three.

Andres Lopez: Now I'd like to turn the call over to Andres who will start on slide three. Good morning everyone and thanks for your interest in O.I. We are pleased to announce a strong third quarter results as the company continues to execute well in a challenging macro environment. For I reported adjusted earnings of 80 cents per chair, which exceeded our expectations and represented a 27% increase from the prior year. The company benefited from a strong enterprise realization and solid operating performance amid softer than expected demand.

Good morning, everyone and thanks for your interest in Hawaii.

Andres Lopez: As a result, the top line was up as we improved our segment operating profit, our margins and our adjusted earnings. In addition to solid results, we continue to advance our strategy. Our margin expansion efforts are well ahead of target and our first magma greenfield plant in Bowling-Green Kentucky remains on track for a mid-2024 ramp up. Likewise, we achieved our full-year balance sheet objective ahead of plan. We expect strong 2023 results with adjusted earnings up 30% from the prior year, which will represent the best performance in the past 15 years.

Speaker 3: We are pleased to announce a strong third quarter results as the company continues to execute well in a challenging macro environment.

We are pleased to announce strong third quarter results as the company continues to execute well in a challenging macro environment.

Speaker 3: OI reported adjusted earnings of 80 cents per share, which exceeded our expectations and represented a 27% increase from the prior year.

<unk> reported adjusted earnings of <unk>, 80 per share, which exceeded our expectations and represented a 27% increase from the prior year.

Speaker 3: The company benefited from strong net price realization and solid operating performance amid softer than expected demand.

The company benefited from strong net price realization and solid operating performance.

Softer than expected demand.

Speaker 3: As a result, the top line was up as we improved our segment operating profit, our margins, and our adjusted earnings.

As a result, the topline was up as we improve our segment operating profit our margins and our adjusted earnings.

Speaker 3: In addition to solid results, we continue to advance our strategy. Our margin-span-sion efforts are well ahead of target and our first magma greenfield plant in Bowling Green Kentucky remains on track for a mid-2024 ramp.

In addition to solid results, we continued to advance our strategy. Our margin expansion efforts are well ahead of target on our first medical my Greenfield plant in bowling Green, Kentucky remains on track for a mid 2020 for ramp up.

Speaker 3: Likewise, we achieved our full year balance sheet objective ahead of us.

Likewise, we achieved our full year balance sheet objective ahead of plan.

Speaker 3: We expect strong 2023 results with adjusted earnings up 30% from the prior year, which will represent the best performance in the past 15 years.

We expect a strong 2023 results with adjusted earnings up 30% from the prior year, which will represent the best performance in the past 15 years.

Andres Lopez: We will share our view on recent market trends. Chipmins have been softer than anticipated as the man has temporarily decoupled from consumer consumption due to significant inventories talking across the value chain. While we are not immune to the broader macro dynamics, we are executing effectively and taking a number of actions to derive a strong performance as conditions record.

We shared our view on recent market trends.

Speaker 3: Shipments have been softer than anticipated as demand has temporarily decoupled from consumer consumption due to significant inventory of stock in across the value chain.

Shipments have been softer than anticipated as demand has temporarily that coupled from consumer consumption due to significant inventory stocking across the value chain.

While we are not immune to the broader macro dynamics, we are executing effectively and taking a number of actions to drive a strong performance as conditions recover.

Speaker 3: While we are not immune to the broader macro dynamics, we are executing effectively and taking a number of actions to drive a strong performance as conditions recover.

Andres Lopez: We will conclude with our initial thoughts on key business drivers for 2024.

Speaker 3: We will conclude with our initial thoughts on key business drivers for 2024.

We will conclude with our initial thoughts on key business drivers for 2024.

Speaker 3: Now I'll turn it over to John who will review our recent performance and 2023 outlook in greater detail starting on slide 4.

John Haudrich: Now, I'll turn it over to John who will review our recent performance and 2023 outlook in greater detail starting on a slide four. Thanks, Anders, and good morning, everyone. Building off our earlier comments, OI delivered strong third quarter results. The top line was up. We generated double-digit improvement across adjusted EBITDA, segment operating profit, and adjusted earnings while margins were up 160 basis points. Likewise, free cash flow increased nicely from the third quarter last year.

Now I'd like to turn it over to John who will review, our recent performance and 2023 outlook in greater detail starting on slide four.

Speaker 4: Thanks, Anders, and good morning, everyone. Building off our earlier comments, OI delivered strong third quarter results. The top line was up. We generated double-digit improvement across adjusted EEP-DA, segment operating profit, and adjusted earnings while margins were up 160 basis.

Thanks, Andres and good morning, everyone building off our earlier comments Oi delivered strong third quarter results. The top line was up we generated double digit improvement across adjusted EBITDA segment operating profit and adjusted earnings while margins were up 160 basis points Likewise free cash flow increased nicely.

Speaker 4: Likewise, free cash flow increased nicely from the third quarter last year. And finally, our balance sheet position improved with net debt leverage down to 2.8 times, which is now better than our full year target of three times.

From the third quarter last year.

John Haudrich: And finally, our balance sheet position improved with net debt leverage down to 2.8 times, which is now better than our full-year target of three times. Overall, we post a significant year-over-year improvement across our key financial measures, despite difficult market conditions.

And finally, our balance sheet position improved with net debt leverage down to two eight times, which is now better than our full year target of three times.

Speaker 4: Overall, we post a significant year over year improvement across our key financial measures despite difficult market conditions.

Overall, we posted significant year over year improvement across our key financial measures despite difficult market conditions.

John Haudrich: In addition to strong results, we continue to advance our long-term strategy, and the appendix includes our current scorecard on key 2023 strategic objectives.

Speaker 4: In addition to strong results, we continue to advance our long-term strategy, and the appendix includes our current scorecard on key 20223 strategic objectives. Next, I'll expand on our strong third quarter performance, starting on slide five.

In addition to strong results, we continue to advance our long term strategy and the appendix includes our current scorecard on key 2023 strategic objectives next I'll expand on our strong third quarter performance starting on slide five.

John Haudrich: Next, I'll expand on our strong third quarter performance, starting on slide five. Both the top line and bottom line improved in the third quarter. Net sales increased and earnings improved 27% as strong net price realization and solid operating performance offset software demand. Revenue increased to $1.74 billion as the combination of higher average selling prices and favorable effects, more than offset software sales volume. Third quarter adjusted earnings of $0.80 per share was up nicely from the prior year, mainly reflecting higher segment operating profit.

Speaker 4: Both the top line and bottom line improved in the third quarter. Net sales increased in earnings improved 27% as strong net price realization and solid operating performance offset software demand.

Both the topline and Bottomline improved in the third quarter net sales increased in earnings improved 27% as strong net price realization and solid operating performance offset softer demand.

Speaker 4: Revenue increased to $1.74 billion as the combination of higher average selling prices and favorable effects more than offset softer sales.

Revenue increased to $1 $74 billion is a combination of higher average selling prices and favorable FX more than offset softer sales volume.

Speaker 4: Third quarter adjusted earnings of 80 cents per share was up nicely from the prior year, mainly reflecting higher segment operating costs.

Third quarter adjusted earnings of <unk> 80 per share was up nicely from the prior year, mainly reflecting higher segment operating profit.

Speaker 4: non-operating items were a mildest benefit as lower corporate costs and tax rate more than offset elevated interest.

John Haudrich: Non-operating items were a modest benefit as lower corporate cost and tax rate more than offset elevated interest expense. The lower tax rate included the resolution of a tax matter in Europe that added about $0.04 versus our guidance. FX was a modest tailwind and consistent with our outlook.

Non operating items were a modest benefit as lower corporate costs and tax rate more than offset elevated interest expense.

Speaker 4: The lower tax rate included the resolution of a tax matter in Europe that added about 4 cents versus our guidance. FX was a modest tailwind.

The lower tax rate included the resolution of a tax matter in Europe that added about <unk> <unk> versus our guidance.

FX was a modest tailwind and consistent with our outlook.

John Haudrich: Let's turn to slide six where we discussed recent performance trends across our two business segments. Segment operating profit exceeded $300 million, which represented a 13% increase from last year, as margins improved 160 basis points. Results were down in the Americas, while up significantly across Europe.

Speaker 4: Let's turn to slide six where we discussed recent performance trends across our two businesseft 13 minutes and.

Let's turn to slide six where we discuss recent performance trends across our two business segments.

Speaker 4: segment operating profit exceeded $300 million, which represented a 13% increase from last year as margins improved 160 basis.

Segment operating profit exceeded $300 million, which represented a 13% increase from last year as margins improved 160 basis points.

Speaker 4: Results were down in the Americas while up significantly across Europe . In the Americas segment operating profit was $116 million compared to $130 million in the prior year. The benefit of higher net price and the slight effects advantage partially offset the impact of lower sales volume and higher operating costs.

Results were down in the Americas, while up significantly across Europe.

John Haudrich: In the Americas, segment operating profit was $116 million, compared to $130 million in the prior year. The benefit of higher net price and the slight effects advantage partially offset the impact of lower sales volume and higher operating cost. Shipments were down 15% and we noted double digit volume declines across nearly all markets and geographies, reflecting significant destocking activity with more pronounced pressure and wine spirits as well as beer. Andress will discuss market trends further in a few minutes. Cost increased around $40 million due to temporary production for tailwind to balance supply with lower demand and we incurred additional expense due to elevated planned maintenance activity.

In the Americas segment operating profit was $116 million compared to $130 million in the prior year the benefit of higher net price and a slight FX advantage, partially offset the impact of lower sales volume and higher operating costs.

Speaker 4: Shipments were down 15% and we noted double-digit volume declines across nearly all markets and geographies reflecting significant destocking activity with more pronounced pressure and wine spirits as well as beer. Andress will discuss market trends.

Shipments were down 15% and we noted double digit volume declines across nearly all markets and geographies, reflecting significant destocking activity with more pronounced pressure and wine spirits as well as beer.

<unk> will discuss market trends further in a few minutes.

Speaker 4: Cost increased around $40 million due to temporary production curtailment to balance supply with lower demand, and we incurred additional expense due to elevated planned maintenance

Costs increased around $40 million due to temporary production curtailment to balance supply with lower demand and we incurred additional expense due to elevated planned maintenance activity.

John Haudrich: Europe posted segment segment operating profit of $185 million, which was up 36% from last year. Strong net price and the slight effects tailwind more than offset the impact of lower sales volume and moderately higher operating costs. As with the Americas, shipments were down 15% and we noted double digit declines across nearly all markets and geographies, reflecting significant destocking activity. Likewise, we saw more pronounced pressure and wine and food. Higher cost reflected last year's $13 million benefit from Italian energy credits, which did not repeat in 2023. Despite the challenging conditions, the company yet again significantly improved its segment performance.

Speaker 4: Europe posted segment operating profit of $185 million, which was up 36% from last.

Europe posted segment operating profit of $185 million, which was up 36% from last year strong net price and a slight FX tailwind more than offset the impact of lower sales volume and moderately higher operating costs.

Speaker 4: strong net price in the slight FX tailwind, more than offset the impact of lower sales volume and moderately higher operating costs.

Speaker 4: As with the Americas, shipments were down 15%, and we noted double digit declines

As with the Americas shipments were down 15% and we noted double digit declines across nearly all markets and geographies, reflecting significant destocking activity.

Likewise, we saw a more pronounced pressure and wine and food <unk>.

Speaker 4: higher cost reflected last year's 13 million dollar benefit from Italian energy credits, which did not repeat in 2023.

Higher cost reflected last year's $13 million benefit from Italian energy credits, which did not repeat in 2023.

Speaker 4: Despite the challenging conditions, the company yet again significantly improved its segment performance.

Despite the challenging conditions the company, yet again significantly improved segment performance.

Speaker 4: Thus, discussor updated full year 2023 business outlook. Please move the slide set.

John Haudrich: Less discussor updated full year 2023 business outlook. Please move to slide seven. We now expect adjusted earnings will approximate $3 per share, which represents a 30% increase from last year. Free cash flow should range between $100 and $150 million and as noted, leverage should end the year below our annual target.

Let's discuss our updated full year 2023 business outlook, please move to slide seven.

Speaker 4: We now expect adjusted earnings will approximate $3 per share, which represents a 30% increase from last year.

We now expect adjusted earnings will approximate $3 per share, which represents a 30% increase from last year.

Speaker 4: Free cash flow should range between $150 million, and as noted, leverage should then be lower annual target.

Free cash flow should range between 101 hundred $50 million and as noted leverage should end the year below our annual target.

Speaker 4: We have revised our full year and fourth quarter outlook, primarily due to lower than expected sales and production loss.

John Haudrich: We have revised our full year and fourth quarter outlook primarily due to lower than expected sales and production loss. With our strong performance this year, we have decided to accelerate temporary production curtailment activity given softer demand. As a result, we intend to curtail about 20% of our global capacity in the fourth quarter, which will impact earnings by approximately 30 cents per share more than previously planned. At the same time, we have accelerated a number of margin expansion initiatives to partially mitigate lower sales and production volumes. Despite these adjustments, we expect a historically strong 2023 performance.

We have revised our full year and fourth quarter outlook, primarily due to lower than expected sales and production levels.

Speaker 4: with our strong performance this year. We have decided to accelerate temporary production per-calman activity given softer demand.

With our strong performance. This year, we have decided to accelerate temporary production curtailment activity given softer demand.

Speaker 4: As a result, we intend to curtail about 20% of our global capacity in the fourth quarter, which will impact earnings by approximately 30 cents per share more than previously planned.

As a result, we intend to curtail about 20% of our global capacity in the fourth quarter, which will impact earnings by approximately <unk> 30 per share more than previously planned.

Speaker 4: At the same time, we've accelerated a number of margin expansion initiatives to partially mitigate lower sales and production.

At the same time, we've accelerated a number of margin expansion initiatives to partially mitigate lower sales and production volumes.

Speaker 4: Despite these adjustments, we expect a historically strong 2023 performance.

Despite these adjustments we expect a historically strong 2023 performance.

Andres Lopez: Now I'll turn it back to Andres, who will share our view on recent market trends, review the actions we are taking to drive strong performance as vines begin to recover, and discuss our initial view on 2024 business drivers. Please turn to page 8. Thanks, John. Let me start by sharing our view on recent market trends. We are facing a unique set of conditions that have led to a temporary decoupling of consumer consumption patterns and demand for glass containers.

Speaker 4: Now I'll turn it back to Anders who will share our view on recent market trends. Review the actions we are taking to direct strong performance as values begin to recover and discuss our initial view on 2024 business drivers. Please turn to PJ.

Now I'll turn it back to Andrew who will share our view on recent market trends review. The actions we are taking to drive strong performance as volumes begin to recover and discuss our initial view on 2024 business drivers. Please turn to page eight.

Speaker 3: Thanks, John . Let me start by sharing our view on recent market trends.

Thanks, John.

Andres Lopez: Overall, our chipmins are down primarily due to a significant inventory that's talking about modestly softer consumer consumption. While we have seen some temporary trade down in certain markets, especially in beer, we anticipate little share shift through the cycle. The chart on the right illustrates Nilsson retail consumer consumption trends for the categories that we serve, and why is glass chipmins since mid-2022? We also include our current view of future patterns through 2024.

Let me start by sharing our view on recent market trends.

Speaker 3: We are facing a unique set of conditions that have led to a temporary accompling of consumer consumption patterns and demand for glass containers.

We are facing a unique set of conditions that have led to a temporary accompanying of consumer consumption patterns and demand for glass containers.

Speaker 3: Overall, her treatments are down primarily due to a significant inventory of stocking and with modestly softer consumer consumption.

Our treatments are down primarily due to a significant inventory stocking on modestly softer consumer consumption.

Speaker 3: While we have seen some temporary trade-down in certain markets, especially in beer, we anticipate little chair shift through the site.

While we have seen some temporary three down in certain markets, especially in beer, we anticipate little share shift through the cycle.

Speaker 3: The chart on the right illustrates Nilsson retail consumer consumption trends for the categories that we serve. Anoise glass cheapness since mid-2020.

The chart on the right illustrates Nielsen retail consumer consumption trends towards the categories that we serve on OIS glass shipments since mid 2022.

Speaker 3: We also include our current view of future patterns through 2024.

We also include our current view of future patterns through 2024.

Andres Lopez: As you can see, consumer consumption is down to mid-down load to mid-single digits across the categories that we serve, yet glass chipmins has been measurably below this level. We have noted widespread inventory as talking across the value chain as our customers, distributors, and retailers adjust their inventory management practices. We believe this change is adjusting for high initial inventories in the supply chain, as well as current tax-logist consumption. Likewise, supply chains are recalibrating for more moderate future growth and higher interest rates, which push up the carrying cost of inventory.

Speaker 3: As you can see, consumer consumption is down to mid, down low to mid single digits across the categories that we serve, yet glass cheapments has been measurably below this level.

As you can see consumer consumption is down to meet.

Down low to mid single digits across the categories that we serve yet glass shipments has been measurably below these levels.

Speaker 3: We have noted widespread inventory as talking across the value chain at our customers, distributors and retailers at just their inventory management practice.

We have noted widespread inventory destocking across the value chain at our customers distributors and retailers adjust their inventory management practices.

Speaker 3: We believe this change is adjusting for high initial inventories in the supply chain as well as current as logist consumption.

We believe these changes adjusting for high ECL inventories in the supply chain as well as current as sluggish consumption.

Speaker 3: Likewise, supply chains are recalibrating for more moderate future growth and higher interest rates, which push up the carrying cost of inventory.

<unk> supply chain side, we're calibrating for more moderate future growth on higher interest rates, which push off the carrying cost of inventory.

Andres Lopez: While October volume trends remain down, we are seeing some sequentially improvement compared to trends in August and September. The rate of decline has started to reverse in segments like food and NAB in North America, and in certain segments in southern Europe, including beer and NAB. Furthermore, the Indian market has already transitioned from decline to a strong road supported by our recent expansion initiatives.

While October volume trends remain down we are seeing some sequential improvement compared to trends in August and September.

Speaker 3: While October volume trends remain down, we are seeing some sequentially improvement compared to trends in August and September .

Speaker 3: The rate of decline has started to reverse in segments like food and NAB in North America and in certain segments in Southern Europe including beer and NAB.

The rate of decline has started to reverse in segments like food on in North America.

Certain segments in southern Europe, including beer on NAV.

Speaker 3: Furthermore, the Indian market has already transitioned from decline to a strong road supported by our recent expansion in Indonesia.

Furthermore, the Andean market has already transitioned from decline to a strong growth supported by our recent expansion initiatives.

Andres Lopez: Again, we believe the current situation is temporary, and we expect demand will rebound as we go into 2024. In summary, we expect load to mid-single digit sales volume growth in 2024.

Speaker 3: Again, we believe the current situation is temporary and we expect the man will rebound as we go into 2024. In summary, we expect load to meet single digit sales volume growth in 2024.

Again, we believe the current situation is temporary and we expect demand will rebound as we go into 2024.

In summary, we expect low to mid single digit sales volume growth in 2024.

Andres Lopez: Let's move to slide 9. Why is a much more agile and capable organization than in the past? This reflects significant structural changes embedded in our transformation journey, which is illustrated in the top chart. As a result, we have executed well to overcome each challenge, where the past several years and have consistently improved our performance as noted in the bottom chart. In fact, these quarter marks the 13 consecutive quarter, we have either met or exceeded our expectations.

Let's move to slide nine.

Speaker 3: Why is a much more agile and capable organization than in the past?

Hawaii is a much more agile and capable organization none in the past.

Speaker 3: This reflects significant structural changes embedded in our transformation journey, which is illustrated in the top chart.

These reflect significant structural changes embedded in our transformation journey, we choose illustrated in the top chart.

Speaker 3: As a result, we have executed well to overcome each challenge over the past several years and have consistently improved our performance as noted in the bottom chart.

As a result, we have executed well to overcome each challenge over the past several years and have consistently improved our performance as noted in the bottom chart.

Speaker 3: In fact, this quarter marks the 13th consecutive quarter we have either met or exceeded our expectations.

In fact, this quarter marks the 13th consecutive quarter, we have either met or exceeded our expectations.

Andres Lopez: We are again acting with agility to navigate the current market situation and taking for specific steps. First, we are curtailing capacity given subter demands to adjust inventory levels as we head into 2024. Second, we are accelerating plan network optimization actions across North America. For the past year or so, we have eliminated four high cost furnaces, including the recently announced wake-up plan closure. We continue to evaluate further optimization opportunities to further boost earnings and growth.

Speaker 3: We are again acting with agility to navigate the current market situation and taking forward specific steps.

We are again acting with ideally to navigate the current market situation and taking four specific steps.

Speaker 3: First, we are curtailing capacity given softer demands to adjust inventory levels as we head into 2024.

First we are curtailing capacity, given softer demand to adjust inventory levels as we head into 2024.

Speaker 3: Second, we are accelerating plan network optimization actions across North America.

Second we are accelerating planned network optimization actions across North America.

Speaker 3: For the past year or so, we have eliminated four high cost furnaces, including the recently announced wake-up land closure.

Over the past year or so we have eliminated four high cost furnaces, including the recently announced Waco plant closure.

Speaker 3: We continue to evaluate further optimization opportunities to further boost earnings and ROIC.

We continue to evaluate further optimization opportunities to further boost earnings and ROIC.

Andres Lopez: Ultimately, we aim to reposition our North America business towards more profitable, fragmented categories which are a great feat for magma in the future. Our first magma greenfield will serve key spirits customers to craft the Steelers along the Kentucky Volvo Trail, as well as our OIPS distribution unit, and is a great example of the future direction of this business. Third, OI is expanding and accelerating our margin expansion initiatives. This includes numerous automation and productivity projects as well as additional organization restructuring actions.

Speaker 3: Ultimately, we aim to reposition our North America business towards more profitable, fragmented categories, which are a great fit for magma in the future.

Ultimately, we aim to reposition our North America business towards more profitable fragmented categories, which are a great fit for our Mac month in the future.

Speaker 3: Our first magma greenfield will serve key spirits customers, the craftest dealers along the Kentucky Volvo Trail, as well as our OIPS distribution unit. And it's a great example of the future direction of this business.

Our first Magnum Greenfield will serve key experienced customers that crop this theaters, along the Kentucky Bourbon trailers as well as our own Ips distribution unit.

It's a great example of the future direction of these business.

Speaker 3: Third, Hawaii is expanding and accelerating our margin expansion in issue.

Third.

<unk> is expanding and accelerating our margin expansion initiatives.

Speaker 3: This includes numerous automation and productivity projects, as well as additional organization restructuring actions.

This includes numerous automation and productivity projects as well as additional organizational restructuring actions.

Speaker 3: Fourth, we are reducing our capital expenditures. We remain focused on completing our Magma Greenfield Plan by mid-2024, yet we have extended the timeline of our expansion projects in Brazil, Peru, and Scotland by 6 to 12 months to better align with the market recovery.

Andres Lopez: Fourth, we are reducing our capital expenditures. We remain focused on completing our magma greenfield plan by mid-2024, yet we have extended the timeline of our expansion projects in Brazil, Peru and Scotland by six to twelve months to better align with the market recovery. While we most contain with the macros, we are again taking proactive measures to drive improvement across the business layers that we control, as we aim to deliver strong performance next year.

Fourth we are reducing our capital expenditures, we remain focused on completing our magma Greenfield plan by mid 2024, yet we have extended the timeline of our expansion projects in Brazil, Peru, and in Scotland by six to 12 months to better align with the market recovery.

Speaker 3: While we are most content with the macros, we are again taking proactive measures to drive improvement across the business layers that we control as we aim to deliver strong performance next year.

While we most contained with the macros, we already gained taking proactive measures to drive improvement across the business levers that we control as we aim to deliver a strong performance next year.

Andres Lopez: This leads to our initial discussion on 2024. I'm now in slide 10. Consistent with prior years, we will provide our 2024 financial outlook during our four quarter call. However, we are chairing our preliminary review on the five key layers that drive our business performance. Keep in mind, we have good line of sight on the layers that we can control, such as cost management and graphics, while it will take some time to gain clarity on certain market-driven factors.

This late start initial discussion on 2024 I am now on slide 10.

Speaker 3: This leads to our initial discussion on 2024. I'm now on a slide 10.

Speaker 3: Consistent with prior years, we will provide our 2024 financial outlook during our four-quarter call. However, we are sharing our preliminary view on the five key levers that drive our business performance.

Consistent with prior years, we will provide our 2024 financial outlook during our fourth quarter call.

However, we are sharing our preliminary view on the five key levers that drive our business performance keep in mind, we have good line of sight on the levers that we can control such as cost management and Capex, while it will take some time to gain clarity on certain market driven factors.

Speaker 3: Keep in mind, we have good line of sight on the levers that we can control such as cosmanagement and Catholics, while it will take some time to gain clarity on certain market driven facts.

Andres Lopez: As discussed, we expect low to mid-single digit sales volume growth next year. Following aggressive efforts to reduce inventories in the four quarter, we anticipate some temporary production containment in 2024 to maintain inventory levels, but it's too early to be precise here. It will likely take more time to get a clear view on net price. Importantly, net price realization should be favorable on the 55 percent of our business covered by long-term contracts, which include price adjustment formulas that record inflation on a lagging basis.

Speaker 3: As discussed, we expect low to mid-single digit sage volume growth next year.

Of these costs, we expect low to mid single digit sales volume growth next year.

Speaker 3: Following aggressive efforts to reduce inventories in the fourth quarter, we anticipate some temporary production containment in 2024 to maintain inventory levels, but it's too early to be precise here.

Following aggressive efforts to reduce inventories in the fourth quarter, we anticipate some temporary production containment in 2020 forward to maintain inventory levels, but it's too early to be precise here.

Speaker 3: It will likely take more time to get a clear view on net price. Importantly, net price realization should be favorable on the 55% of our business covered by long-term contracts, which include price adjustment formulas that record inflation on a lagging basis.

It will likely take more time to get a clear view on net price importantly, net price realization should be favorable on the 55% of our business covered by long term contracts, which include price adjustment formulas that record inflation on a lagging basis yet.

Andres Lopez: Yet net price realization on the remaining 45 percent of our business covered by annual price agreements will be subject to future market dynamics, especially the rate of demand improvement. Importantly, Europe represents one-half of our open market agreements, and we expect to negotiate most terms starting later this month and standing into early next year. Operating costs are expected to be down, reflecting our enhanced margin of expansion initiatives and accelerated restructuring actions, while on favorable inventory of evaluation and lapping one-time energy credits are known headwinds.

Speaker 3: Yet net price realization on the remaining 45% of our business covered by annual price agreements will be subject to future market dynamics, especially the rate of demand improvement.

Yet net price realization on the remaining 45% of our business covered by annual price agreement will be subject to future market dynamics, especially the rate of demand improvement.

Speaker 3: Importantly, Europe represents one half of our open market agreements and we expect to negotiate most terms starting later this month and standing into early next year.

Importantly, Europe represents one half of our open market agreements and we expect to negotiate most firms. Starting later this month and extending into early next year.

Speaker 3: Operating costs are expected to be down reflecting our enhanced margin expansion initiatives and accelerated restructuring action.

Operating costs are expected to be down, reflecting our enhanced margin expansion initiatives and accelerated restructuring actions, while unfavorable inventory revaluation and lapping onetime energy credits are known headwinds.

Speaker 3: while unfavorable inventory revaluation and lapping one-time energy credits are known head.

Andres Lopez: Our initial CAPX plan approximates $550 to $575 million, which is down substantially from around $700 million this year as we proceed with the magma greenfield and adjusted timing of a few expansion projects until markets record. Finally, interest expense should be consistent with prevailing rates. As you can see, we are taking active measures to drive performance across several business layers.

Speaker 3: Our initial CAPEX plan approximates $550 to $575 million, which is down substantially from around $700 million this year as we proceed with the magma greenfield and adjust the timing of a few expansion projects until markets recover.

Our initial capex plan approximate $550 million to $575 million.

Which is down substantially from around $700 million. This year as we proceed with the <unk> Greenfield and adjusted timing of a few expansion projects until markets recovered.

Speaker 3: Finally, interest expense should be consistent with prevailing rates. As you can see, we are taking active measures to drive performance across several business lawyers. We expect to provide full year 2024 guidance during our year-end earnings call.

Finally interest expense should be consistent with prevailing rates as you can see we are taking active measures to drive performance across several business leaders, we expect to provide full year 2024 guidance during our yearend earnings call.

Andres Lopez: We expect to provide full year 2024 guidance during our year-end earnings hold.

Andres Lopez: Let's turn to slide 11. As we take a longer-term view, I firmly believe our strategy will create significant stakeholder value as we further strengthen our financial profile, successfully execute and leverage our transformation program, enable long-term profit our growth, advance rate through innovations like magma and ultra, and execute our enterprise sustainability roadmap, which is now fully integrated into our overall business plan. Our capital location priorities are well aligned with this strategy as we continue to improve our capital structure, fund profit our growth and return value to our shareholders over time.

Let's turn to slide 11.

Speaker 3: As we take a longer-term view, I firmly believe our strategy will create significant shareholder value as we further strengthen our financial profile, successfully execute and leverage our transformation program, enable long-term profitable growth, advance breakthrough innovations like Magma and Ultra, and execute our enterprise sustainability roadmap, which is now fully integrated into our overall business plan.

As we take a longer term view I firmly believe our strategy will create significant shareholder value as we further strengthen our financial profile.

Fully execute and leverage our transformation program enable long term profitable growth.

<unk> breakthrough innovations like Magna and ultra and execute our enterprise sustainability roadmap, which is now fully integrated into our overall business plan.

Speaker 3: Our capital location priorities are well aligned with this strategy as we continue to improve our capital structure. Fund profit our growth and return value to our shareholders over time.

Our capital allocation priorities are well aligned with our strategy as we continue to improve our capital structure fund profit our growth and return value to our shareholders over time.

Andres Lopez: Let me conclude on slide 12. I continue to execute well in a challenging environment. We are pleased with our third quarter of performance which exceeded both our expectations and prior year results as we continue to advance key strategic objectives. We expect a strong 2023 results with adjusted earnings up about 30% from the prior year, representing the best performance in the past 15 years. Why we contain with elevated market uncertainty. We are taking action to drive a strong performance as markets record. Finally, we remain highly focused on executing our compelling strategy to create a long-term stakeholder value.

Speaker 3: Let me conclude on slide 12, Hawaii continues to execute well in a challenging environment. We are pleased with our third quarter performance which exceeded both our expectations and prior year results as we continue to advance key strategic objectives.

Let me conclude on slide 12, Oi continues to execute well in a challenging environment. We are pleased with our third quarter performance, which exceeded both our expectations and prior year results as we continue to advance key strategic objectives.

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

Operator: Thank you.

Speaker 3: We expect a strong 2023 results with adjusted earnings up about 30% from the prior year, representing the best performance in the past 15 years.

We expect a strong 2023 results with adjusted earnings up about 30% from the prior years, representing diverse performance in the past 15 years.

Speaker 3: While we contain with elevated market uncertainty, we are taking action to drive a strong performance as markets record.

While we contend with elevated market uncertainty, we are taking action to drive a strong performance as markets recover.

Speaker 3: Finally, we remain highly focused on executing our compelling strategy to create long-term shareholder value. Thank you. And we're ready to...

Finally, we remain highly focused on executing our compelling strategy to create long term shareholder value.

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

Speaker 1: you if you would like to ask a question please press star followed by one on the telephone keypad if you choose to retract your question please press star followed by

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When the time to ask a question. Please ensure your side of the meter lately.

Occupying commit yourself to one question and one follow up if you wish to ask another question. Please rejoin the queue.

Operator: We ask you please limit yourself to one question and one follow-up. If you wish to ask another question, please redone the key.

And our first question Ghansham Panjabi of Baird. Please go ahead your line is open.

Speaker 1: And our first question goes to Gantam Panjabi of Baird. Please go ahead, your line is open.

Ghansham Panjabi: And our first question is to Gantam Pandabhi of Baird, please go ahead. Your line is open. Hey guys, good morning. I guess for us, why don't you just give us a bit more color of the sequencing volumes throughout the third quarter, you know, down nine percent? How did that play out? I mean, was there any sort of dislocation in particular during the quarter, anything from a regional standpoint that you might want to call out as a quarter sort of unfolded?

Hey, guys good morning.

I guess can you just give us a bit more color on the sequencing of volumes throughout the third quarter.

Speaker 5: So, I thought, you know, wouldn't you just give us a bit more color of the sequencing of volumes throughout the third quarter?

One 9%.

Speaker 5: How did that played out? Was there any sort of dislocation in particular during the quarter, anything from a regional standpoint that you might want to call out as a quarter sort of unfolded? And then as a relates to production, curtailment specific to the back-up.

That played out I mean was there any sort of dislocation in particular during the quarter anything from a regional standpoint that you might want to call out.

As of quarter sort of unfolded and then as it relates to production curtailments specific to <unk>.

Ghansham Panjabi: And then as it relates to production, curtailment, specific to the back after the including 3Q, how did that play out geographically? I heard the comment about 20 percent in the fourth quarter, globally, but was there anything unique with 3Q? I'm just trying to understand the margin divergence between the seconds. Thanks, Ghansham.

Back half of the year, including <unk>.

Speaker 5: How did that play out geographically? And I heard the comment about 20% in the fourth quarter globally, but what...

How did that play out geographically.

I heard the comment about 20% in the fourth quarter globally, but was there anything unique with <unk> I'm just trying to understand the margin divergence between the segments.

Speaker 3: Thanks, Gancham. So we saw improvements, sequential improvement during the October . As we look back to the quarter, it was increasingly lower volume as we went through across the quarter. So August was higher than July , as well as September higher than August .

Thanks, Ghansham, so we saw improvement sequential improvement.

Andres Lopez: So we saw improvement, sequentially improvement during October. As we look back to the quarter, it was increasingly lower volume as we went through the quarter. So August was higher than July, as well as September higher than August. But October showed an improvement in certain regions. And if we look at this route originally, in Europe, we saw some normalization in beer and NAB when we compared to 2022 lyrics. And in North America, we saw some stability in food and NAB.

During October as we look back to the quarter.

Increasingly.

Lower volume as we went through it.

So all of those west higher than July Azuela September higher than August.

Speaker 3: that have forward showed an improvement in certain regions. And if we look at this route up originally, in Europe we saw some normalization in beer and in AB when we compared to 2022 layered.

Polar chose on in preliminary in certain regions and if we look at these <unk> and regionally.

In Europe, we saw.

Some normalization in beer on maybe when we compare to 2022 loads.

Speaker 3: And in North America, we saw some stability in food at the Navy.

And in North America, we saw some stability in food at an a b.

Andres Lopez: And as we described in the opening remarks in the Indian, we moved from a strong decline to a strong road. And that's now leveraging the investment that we made in that region, which was substantial. And that investment is in full operation and with full of police utilization at this point. Cortelvin is pretty much evenly distributed across all our geographies in the fourth quarter.

Speaker 3: And as we described in the opening remarks in the Andean, we move from a strong decline to a strong growth. And that's now leveraging the investment that we made in that region, which was substantial. And that investment is in full operation and with full of police utilization at this point.

And as we described the opening remarks in the Andean we move from his strong decline through a strong growth and Thats now leveraging the investment that we made in that region.

Which was substantial.

And that investment is in full operation and with full of lease utilization at this point.

Speaker 3: Cortelvin is pretty much evenly distributed across all our geographies in the four quarters.

Curtailment has pretty much evenly distributed across all our geographies.

In the fourth quarter.

Speaker 4: I can add on that. And on the third quarter, most of our curtailment activity was focused in the Americas. As you may recall, earlier in the year, we had seen very low inventory levels in Europe , and we were stocking out across Southern Europe . So more of that curtailment activity started to kick in more like in the September window, but as we go in the fourth quarter, and we look at 20% curtailment, we're gonna see it pretty equally spread between the Americas and Europe .

John Haudrich: Yeah, Ghansham, I can add on that. And on the third quarter, most of our curtailment activity was focused in the Americas. As you may recall earlier in the year, we had seen very low inventory levels in Europe, and we were stocking out across southern Europe. So more of that curtailment activity started to kick in more like in the September window, but as we go in the fourth quarter, and we look at 20% curtailment, we're going to see it pretty equally spread between the Americas and Europe.

Yes, Ghansham I can I can add on that in the third quarter. Most of our curtailment activity was focused in the Americas as you may recall earlier in the year, we haven't seen very low inventory levels in Europe, and we were stocking out across southern Europe. So.

More of that curtailment activity started to kick in more like in the September window, but as we go into fourth quarter, and we look at 20% curtailment, we're going to see it pretty equally spread between the Americas and Europe.

Speaker 5: great thanks for that. And then in terms of, you know, your current curtail miniature, the inventory reduction.

Okay, great. Thanks for that and then in terms of your current curtailment inventory reduction if you will for the fourth quarter do you anticipate that will be enough as it relates to realigning supply and demand by the end of the year or will there be any spillover into.

John Haudrich: Okay, great. Thanks for that. And then in terms of your current curtailment, inventory reduction, if you will, for the fourth quarter. Do you anticipate that will be enough as it relates to realigning supply and demand by the end of the year, or will it be any slower into the first quarter of next year as well? Well, while we're doing in the fourth quarter is that we made the decision to curtail adjust inventory support cash and better position the company to go into 24th.

Speaker 5: You anticipate that will be enough as it relates to realigning supply and demand by the end of the year or will it be any slower in two?

And through the first quarter of next year as well.

Speaker 3: Well, while we're doing in the four quarter is we made the decision to to curtail adjusting the authorities who forecast and better position the company to go into 24. How far do we need to go with curtailments in 24 will depend on how they manned the wall as we go into the year. But what we're doing Q4 is a significant adjustment. That's why it adds up to 37 cents impact.

Well, what we're doing in the fourth quarter is we made the decision to curtail adjust inventories report cash and better position the company for <unk> into 'twenty four.

John Haudrich: How far do we need to go with the curtailment in 24 will depend on how the man evolves as we go into the year, but what we're doing Q4 is a significant adjustment. That's why it adds up to 37 cents impact. It's pretty much what's changed the performance of the quarter versus our arena guy. Yeah, I would add their ganchum if we look at the end of 2022, the IDS and our business was in the low 40s, and which is probably too low.

How far do we need to go with the curtailments in 'twenty four will depend on how they manage their wallets as we go into a year, but.

But we're looking in Q4 it is a significant adjustment that's why.

Up to 37, <unk> 30 cents impact.

Speaker 3: which is pretty much what's changed the performance of the quarter versus our arena guy.

Which is pretty much what's changed their performance over the quarter versus <unk>.

<unk> guidance.

Speaker 4: Yeah, I would add their Ganchum, if we look at the end of 2022, the IDS and our business was in the low 40.

Yes, I would add there ghansham if we look at the end of 2022, the ideas and our business was in the low <unk> and which is probably too low.

Speaker 4: which is probably too low. And as I mentioned before, we were seeing some stockouts when we were at that type of level. Probably the more effective level for us is about 45 to 50 days. We'll probably end the year plus or minus that 50 zip code. It really, you know, there's...

John Haudrich: And as I mentioned before, we were seeing some stockouts when we were at that type of level, probably the more effective level for us is about 45 to 50 days. Well, probably in the year plus or minus that 50 zip code. It really, you know, it was hard to be super precise in this regard, but that level I think is an effective position for the company. And, you know, as we go forward from that, you know, if we were able to achieve that in the fourth quarter, we should be able to keep curtailments kind of in line to maintain inventory levels rather than having to take another slug down.

As I mentioned before we are seeing some stock outs. When we were at that type of level, probably the more effective level for US is about 45 to 50 days, we will probably end the year plus or minus that 50 ZIP code it really to me.

Speaker 4: It's hard to be super precise in this regard. But that level I think is an effective position for the company. And as we go forward from that, if we were able to achieve that in the fourth quarter, we should be able to keep curtailment kind of in line to maintain inventory levels rather than having to take another slug down. But it's a little too early to be super precise given the level of variability out there. And what I would say overall is entering the year we thought working capital would be about a 50 million or so use of cash. It will probably be close to a $100 million use of cash. Again, because the inventory might be a little higher on that range than the mid pointer lower of the target is an idea.

It's hard to be Super precise in this regard, but at that level I think is an effective position for the company.

And.

As we go forward from that.

We're able to achieve that in the fourth quarter.

We should be able to keep curtailments kind of in line to maintain inventory levels, rather than having to take another slug down.

John Haudrich: But it's a little too early to be super precise given the level of variability out there. And what I would say overall is entering the year we thought working capital would be about a 50 million or so use of cash. It'll probably be close to a $100 million use of cash again, because the inventory might be a little higher on that range than the mid pointer lower of the target at IDS point. Okay, understood. Thanks so much.

It's a little too early to be Super precise given the level of variability out there and what I would say overall is entering the year, we thought working capital would be about a $50 million or so use of cash it will probably be closer to a $100 million use of cash again, because the inventories might be a little higher on that range in the mid <unk>.

Operator: Thank you.

Point or lower of the targeted Ibs point.

Understood. Thanks, so much.

Speaker 6: Thank you.

Thank you.

Speaker 1: Thank you on its question, guys, who George Staffos of Bank of America. George, go ahead, your line is open.

George Staphos: Thank you, Annette, for questioning those who George Staphos of Bank of America.

Thank you. Our next question comes from George Staphos of Bank of America. George. Please go ahead. Your line is open.

John Haudrich: George, you go ahead, your line is open. Thanks very much, everyone. Good morning. Thanks for the details. I recognize we'll get more color as the year goes on in February when you do your fourth quarter, but it is a figure that you say you have a better line of sight on if I'm on flight 10 in terms of operating costs. So at this juncture, what do you think you should be able to drive in terms of margin enhancement that is within OIs control for 2024 and then I had a quick follow on.

Speaker 7: Thanks very much, everyone. Good morning. Thanks for the details. Good morning. I recognize we'll get more color as the year goes on in February when you do your fourth quarter. But is there a way, it is a figure that you say you have a better line of sight on if I'm on flight 10 in terms of operating costs. So at this juncture, what do you think you should be able to drive?

Thanks, very much hi, everyone. Good morning, Thanks for the details good morning, I recognize we'll get more color as the year goes on in February when you do your your fourth quarter, but is there a way. It is a figure that you say you have a better line of sight on if I'm on slide 10 in terms of operating costs.

So at this juncture what do you think you should be able to drive in terms of margin enhancement that is within our control for 2024.

Speaker 7: that is within a wise control for 2024. And then I had a, uh,

And then I had a.

Yes.

Quick follow on.

Speaker 4: Yeah, Georgia, I mean, not well, while I'm not going to provide a specific dollar, I can give you a kind of a sense of the magnitude. As you know, on historic years, our margin expansion is, as you were targeting about 50, 90, year and generally did better than that. This year, we're targeting $100 million. And again, doing better than that with a lot of improvement coming out of North America.

John Haudrich: Yeah, George, while I'm not going to provide a specific dollar, I can give you a sense of the magnitude. As you know, on historic years, our margin expansion issue is we were targeting about 50, 90 years and generally did better than that. This year we're targeting $100 million and again doing better than that with a lot of improvement coming out of North America. As we said in prepared comments, we're looking to accelerate that.

Yes, George I cannot worldwide is not going to provide a specific dollar I can give you a kind of a sense of the magnitude as you know on historic years, our margin expansion initiatives, we were targeting about $50 million a year and generally did better than that this year, we're targeting $100 million and again doing better than that with a lot of improvement coming out of North America.

Speaker 4: As we said in prepared comments, we're looking to accelerate that. So I think another strong year, stronger year in 2024 on operating costs is very likely.

As we said in the prepared comments, we're looking to accelerate that so I think another strong year stronger year in 2024 on operating costs.

John Haudrich: So I think another strong year, stronger year in 2024 on operating costs is very likely. And as alluded to in the comments, we continue to take an aggressive position on the costs on the margin expansion initiatives and accelerating the restructuring activities. As you know, there's a handful of our plans that we've closed some plans right that were actually a negative earnings territory and then we close those out. That will provide a nice boost in the next year in addition to whatever addition restructuring activities that we do going forward. So it should be a robust year in operating cost improvement.

It is very likely.

Speaker 4: And as alluded to in the comments, we continue to take an aggressive position on the costs on the margin expansion initiatives and accelerating the restructuring activities. As you know, there's a handful of our plants that we've closed some plants right there, we're actually a negative earnings territory and then we close those out. That will provide a nice boost in the next year in addition to whatever addition restructuring activities that we do going forward. So it should be a robust year in operating cost improvements.

And as alluded to in the comments, we continue to take an aggressive position on the cost and the margin expansion initiatives and accelerating the restructuring activities. As you know there is a handful of our plants. We've closed some plants that were actually a negative earnings territory and then we close those out that will provide a nice boost in the next year in addition to whatever.

Additional restructuring activities that we do going forward. So it should be a robust year and the operating cost improvement.

Speaker 7: Thanks, that's on it. And maybe related to that, and then quick follow-out, and I'll turn it over. So again, I recognize it's going to have to wait until February . But you mentioned we have the margin expansion.

Thanks, John.

And maybe related to that and then a quick follow up and I'll turn it over so again I recognize it's going to have to wait until February but you mentioned, we have the margin expansion.

George Staphos: Thanks, John. And maybe related to that and then quick fall out and I'll turn it over. So again, I recognize it's going to have to wait until February, but you mentioned we have the margin expansion. You have some curtailments perhaps at a linger into next year. You're still working through net price, but you know for 55% of your business. It should be a positive at this juncture. Would you expect 24 is a better year than 23 or is it more likely that it would be down and then just take a step back.

Speaker 7: You have some curtailments perhaps at a linger into next year. You're still working through net price, but you know for 55%.

Have some curtailments, perhaps at a linger into next year.

You are still working through net price, but you know for 55% of your business.

Speaker 7: It should be a positive at this juncture. Would you expect 24 is a better year than 23, or is it more likely that it would be down? And then just take a step back, the volume trends for OIS. We've heard about these stocks.

It should be a positive at this juncture would you expect 24 is a better year than 2003 or is it more likely that it would be down and then just taking a step back the volume trends for for OIS, we've heard about destocking.

George Staphos: The volume trends for for oh, yes, we've heard about the stocking throughout the packaging and paper porch sector for less several quarters, but your numbers have been, you know, seemingly a bit worse in that regard. So why do you think last and you are going through a greater amount of destocking versus other substrates if you've been able to analyze it or maybe disagree with the premise of the question and it's so explain why.

Speaker 7: throughout the packaging and paper porch sector for the less several quarters, but your numbers have been...

Throughout the packaging in paperboard sector for the last several quarters, but your numbers have been.

Speaker 7: you know, seemingly a bit worse in that regard. So why do you think glass and you are going to a greater amount and destocking versus other substrates if you've been able to analyze it? Or maybe disagree with the premise of the question and it's so explain why. Thanks guys, good luck in the quarter.

Seemingly a bit worse in that regard. So why do you think glass and you are going through a greater amount of destocking versus other substrates, if you've been able to analyze it or maybe you disagree with the premise of the question and so explain why thanks guys. Good luck in the quarter.

John Haudrich: Thanks guys. Good luck in the quarter. Yeah, when we compare volume just to the second part, volume trends, we compare with other glass suppliers. I think our performance is quite similar. The difference comes from the marketing which we operate. So all companies are not exactly in the same market, therefore they won't have the same total number. But when we disaggregate that to the extent we can, we identify similar trends for why does the market in general is how.

Speaker 3: Yeah, when we compare volume just to the second part, volume trends, we compare with other glass suppliers. I think our performance is quite similar. The difference comes from the marketing which we operate. So all companies are not exactly in the same market, therefore they won't have the same total number. But when we disaggregate that to the extent we can, we identify similar trends for why does the market in general is

Yes, when we compare volumes just really the second part.

Volume trends, when we compare with other glass suppliers.

I think our.

Performance is quite similar difference comes from the markets in which we operate.

So all companies are not expecting the same market therefore, they won't have.

The same total number but when we disaggregate that to the extent we can.

We identified similar trends.

Total.

Now as the market in general what you're showing.

John Haudrich: Yeah, so on the first point, George, as far as what to expect in 2024 to 2023, I think we laid out the major drivers pretty well there. You know, Vine should be up, you know, a good operating cost improvement, although the wild cards that we just can't really call right now is included in the elections, is what will, the inflection point be on volumes, and how will that be, is it the low end, or the high end of that range, and that's, you know, it does impact the earnings, you know, potential of the current year, as well as, you know, the negotiations of price in Europe, which haven't even begun yet.

Yes. So on this on the first point George as far as what you expect in 2024 to 2023, I think we laid out the major drivers pretty well there volume should be up.

Speaker 4: Yeah, so on the first point, George, as far as what to expect in 2024 to 2023, I think we laid out the major drivers pretty well there. Vine should be up, a good operating.

Goods operating cost improvement.

Speaker 4: Although the wild cards that we just can't really call right now is included in the comments is what will the inflection point be on volumes and how will that be? Is it the low end or the high end of that range and that's you know, it does impact the earnings in a potential of the current year?

Although the Wildcards that we just can't really call right. Now is included in the comments is what will the inflection point be on volumes and how will that be at the low end or the high end of that range and that does impact the earnings potential of the current year as well as the negotiations of price in Europe.

Speaker 4: as well as the negotiations of price in Europe , which haven't even begun yet. And so it's hard to make a call on those.

We haven't even begun yet and so it's hard to make a call on those.

John Haudrich: And so, it's hard to make a call on those. A couple of things I would say is I think the second half of the year was going to be, you know, definitely stronger than the first half of the year, and probably show a pretty good run rate in the business, as we clearly go past that inflection point. And another thing I would say is, you know, we're taking a, is painful as this right now, we're taking a pretty big hit on, you know, the operating leverage of the company with lower sales and production volume, but it also means that we got very good operating leverage to recovery, you know, we're probably kind of be over 300 and some low as that recovers, that's a pretty good operating leverage on the upside. It's just the timing that's particularly difficult to be able to call right now.

Speaker 4: A couple of things I would say is I think the second half of the year was going to be definitely stronger than the first half of the year and probably show a pretty good run rate in the business as we clearly go past that inflection point.

John Haudrich: Okay. John, thank you.

Couple of things I would say is I think the second half of the year was going to be definitely stronger than the first half of the year and probably show a pretty good run rate in the business as we clearly go past that inflection point and the other thing I would say is we're taking as painful as is right now we're taking a pretty big hit on the.

Speaker 4: Another thing I would say is we're taking a, is painful as this right now. We're taking a pretty big hit on, you know, the operating leverage of the company with lower sales and production volume, but it also means that we got very good operating leverage to recovery.

Mike Roxland: Thank you.

Operating leverage of the company with lower sales and production volume, but it also means that we got very good operating leverage to recovery.

Speaker 4: You know, we're probably kind of be over 300 and some of million dollars impact in lower sales and production buying this year. So as that recovers, that's a pretty good operating leverage on the upside. It's just the timing that's particularly difficult to be able to call right now.

We're probably going to be over 300, and some odd million dollars impact and lower sales and production volume. This year. So as that recovers that's a pretty good operating leverage on the upside. It's just the timing that is particularly difficult to be able to call right now.

Okay, John Thank you.

Okay.

Thank you. Our next question, Mike Rocks rocks, Glenn of Chile Securities. Mike. Please go ahead. Your line is open.

Speaker 1: Thank you. Our next question goes to Mike Roxland of Truist Securities. Mike, please go ahead. Your line is open.

John Haudrich: Our next question goes to Mike Roxland of Truist Securities. Mike, please go ahead. Your line is open. Thanks. And thank you. Thank you, Andre's John and Chris for taking my questions. Just wanted to follow up on George's question regarding the MEI acceleration. It sounds like a lot of this is, you know, plant optimization or end of our pure cost. Take out of your sandwich with respect to plants. So can you help us frame the different buckets that you're targeting for the MEI acceleration? And can you let us know if there are any costs associated as you accelerate MEI?

Okay.

Speaker 8: Thanks, and thank you, thank you, Andreath John , and Chris, for taking my questions. I just wanted to follow up on George's question regarding the MEI acceleration. It sounds like a lot of this is either your plant optimization or end-or-pure cost, take out of your sandwich with respect to plants. So it gives a couple of frames to different buckets that you're targeting for the MEI acceleration. And can you let us know if there are any costs associated as you accelerate MEI?

Thanks. Thank you. Thank you Andres, John and Chris for taking my questions.

Just wanted to.

Follow up on George's question regarding the.

Acceleration.

It sounds like a lot of this plant optimization.

And our pure cost takeout as you said with respect to plan. So can you just help us frame the different buckets that you are targeting we're targeting for the <unk> acceleration and can you let us know if there are any costs associated.

As you accelerate.

Yes.

John Haudrich: Yeah, I would say that there's probably four buckets there. One is on the commercial side. You know, we have what we have are called our pro initiatives price revenue optimization. And in particular in today's environment, those can be valuable. It's making sure that you're compliant with contracts. It's your, that you're doing value based pricing. And you're getting things really down to down to the nub and specifically an account by account basis.

Speaker 4: Yeah, yeah, I would say that there's probably four buckets there. One is on the commercial side.

Yes, I would say that Theres, probably four four buckets. There one is on time on the commercial side.

Speaker 4: You know, we have what we have, our call, our pro initiatives, price revenue optimization and particularly in today's environment, those can be valuable. It's making sure that you're compliant with contracts. That you're doing value-based pricing and that you're getting things really down to, down to the nub and specifically, you know, account-by-account basis. That tends to provide benefit.

We have what we have our call it our pro initiatives price revenue optimization and in particularly in today's environment. Those those those can be valuable, it's making sure that your complaint with contracts.

Youre doing value based pricing and youre getting things really down to down to the nub in specifically account by account basis that tends to provide benefits.

John Haudrich: That tends to provide benefits. You know, I just alluded to two, two areas to one is accelerated automation activities. And that one does have some additional costs embedded into capex. We're probably will scale up labor automation. You know, palatizers, those types of projects to be able to take labor costs out, which as we all know right now are quite elevated. The fourth one is on plant productivity, speed, efficiency, things like that. We made really great strides over the last year on those particular categories. And we continue to think that there's legs on that.

Anders alluded to two areas too.

One is accelerated automation activities and that one does have some additional costs embedded into capex, we probably will scale up labor automation.

Palletize those those types of projects to be able to take labor costs out, which as we all know right now are quite elevated the <unk>.

Speaker 4: The fourth one is on plant productivity, speed, efficiency, things like that. We made really great strides over the last year on those particular categories. And we continue to think that there's legs on that. And then the last one would be on the OPEX side on the organization element.

Fourth one is on plant productivity speed efficiency things like that we made really great strides over the last year on those particular categories and we continue to think there's legs on that and then the last one would be on the Opex side on the organization element and maybe a fifth <unk> is particularly what are we doing it in North America.

John Haudrich: And then the last one would be on the op-ex side on the organization element. And maybe a fifth then is particularly what are we doing in a North America? You know, where we are looking at a pretty wholesome set of activities. It's, you know, it's the price realization on our contracts. That have been renegotiated in the last year. It is, again, very focused performance going on in that business. We've seen very good operating improvement across a lot of the base.

Speaker 3: And maybe a fifth then is particularly what are we doing in North America? You know, where we are looking at a pretty wholesome set of activities, it's the price realization on our contracts that have been renegotiated in the last year. It is again very focused performance going on in that business. We've seen very good operating improvement across a lot of the base. That's allowing us to close higher cost capacity and move that volume and to hire more efficient, highly more efficient, more profitable facilities. That all has a very good ebit boost to it when you do that too. So while there's some one time restructuring costs associated with that, those are usually paybacks of nine to 12 months or something like that. So, you know, those are the kind of different pieces. Some things to compliment that the everything we're doing.

Where we are looking at a pretty wholesome set of activities.

It's the price realization on our contracts that have been renegotiated in the last year. It is again very focused performance going on in that business. We've seen very good operating improvement across a lot of the base, that's allowing us to close higher cost capacity and move that volume into higher more efficient.

John Haudrich: That's allowing us to close higher cost capacity and move that volume into higher, more efficient, you know, highly more efficient, more profitable facilities. That all has a very good ebit boost to it when you do that too. So while there's some one time restructuring costs associated with that, those are usually, you know, paybacks of nine to 12 months or something like that.

Highly more efficient more profitable facilities that all has a very good EBIT boost to it when you do that too so while there are some one time.

Restructuring costs associated with that those are usually.

Paybacks of nine to 12 months or something like that so.

Andres Lopez: So, you know, those are the kind of different pieces. Something to compliment that the everything we're doing on the restructuring side for the North America market will be followed by a strategically deploying magma to access high margin fragmented, and this is already starting with the three-feeling Kentucky, which has been exactly a high margin business growing segments. Thank you for that.

Those are the kind of different pieces.

Something to complement.

Everything we're doing.

Speaker 3: on the restructuring site for the North American market will be followed by a strategically deploying magma to access high margin fragmented discs.

On the restructuring side for the.

North America market will be followed by strategically deploying magma to access high margin fragmented business.

Speaker 3: And this is already starting with the three-feeling Kentucky, which has been exactly a high margin business growing second.

And this is already starting with the Greenfield in Kentucky.

Which is Serbian exactly.

High margin business growing segments.

Speaker 8: got a thank you for that just one quick fall um... would be a couple of weeks of your in-bombs an economic down to the taking uh... any america's kiddie comment on how canada and columbia are currently operating and then realizing that you're pushing out the cap as deferring brazil uh... peru's god do you feel that it those deferrals put you at a disadvantage when it's and when volumes return ma'am

Got it.

Thank you for that just one quick follow up.

Mike Roxland: Just one quick follow-up would be, in terms of the week that your volumes and economic downturn, you're taking any America's kitty comment on how Canada and Colombia are currently operating. And then realizing that you're pushing out the cat-back from deferring Brazil, Peruzcal, did feel that those deferrals put you at a disadvantage when it's and when volumes return.

Would be just in terms of the weakness in volumes and economic downtime that youre taking.

In the Americas can you comment on how Canada and Colombia.

We're currently operating.

And then realizing that you're pushing out the capex deferring Brazil routes.

Do you feel that.

Those deferrals put you at a disadvantage when if and when volumes return thanks very much.

Andres Lopez: Thanks very much. Yeah, so Colombia is doing quite well. We made a large investment for expansion for profit our growth. Earlier in the year, we faced the same volume slowdown that we're facing in other markets. It was quite pronounced, but it already reverted 100% to growth. And at this point in time, we're growing either high single digits or low double digits. So it's pretty healthy. And with that, then that operation is in full utilization.

Yes, so Colombia is doing quite well, we made a large investment for expansion or appropriate order growth.

Speaker 3: Yeah, so Colombia is doing quite well. We made a large investment for expansion for profit I would grow.

Speaker 3: Earlier in the year, we faced the same...

Earlier in the year, we pace the same.

Speaker 3: Volume is low down that we're facing in other markets. It was quite pronounced

Volume a slowdown that we are facing in oil markets was quite pronounced.

Speaker 3: but it already reverted 100% to growth.

It already reverted a 100% of growth.

Speaker 3: And at this point in time, we're growing either high single digits or low double digits. So it's pretty healthy. And with that then, that operation is in full utilization. It's operating really well. We're very happy with the investment that we made.

At this point in time, we are growing.

Either high single digits or low double digits, so it's pretty healthy and that with that then.

That operation using full utilization of these operating really well, we're very happy with the investment that we made.

Andres Lopez: It's operating really well. We're very happy with the investment that we made. The situation in Canada, that's to serve localization of global branch, which is a trend that is taking place around the world. So that has secure volume. It's been completed and it's now in operation and is doing well too.

Speaker 3: The situation in Canada, that's to serve localization of global branch, which is a trend that is taking place around the world. So that has secured volume. It's been completed and it's now in operation and is doing well too. So we're very pleased with the evolution of those two investments.

The situation in Canada that set to serve localization of global brands, which is a trend that is taking place.

Around the world. So that has secured volume has been completed and is now.

And operationally is doing well too. So we're very pleased with the evolution of those two investments.

John Haudrich: So we're very pleased with the evolution of those two investments. In the case of Brazil, Peru, and Scotland, we are to serve high margin growing businesses with all those investments. What we want to do with them is time time them properly where the evolution of demand at this point demand is down. So it doesn't make any sense to accelerate this. So we're just timing the investments with demand. And we will move forward with the advantages that those markets offered in the Scotland.

Speaker 3: in the case of Brazil, Peru and Scotland.

In the case of Brazil, Peru, and Scotland.

Speaker 3: We are to serve high margin growing businesses with all those investments. What we want to do with them is time them properly.

We are to serve high margin growing businesses with all of those investments, while we wanted to deal with them is timely and appropriately.

Speaker 3: where the evolution of demand at this point in demand is down. So it doesn't make any sense to accelerate this. So we're just timing the investment.

The evolution of demand at this point demand is down so it doesn't make any sense to accelerate this so we're just timing the investments.

Speaker 3: with demand and we will move forward with the advantages that those smart kits offer.

With demand and we will move forward with the advantages that those markets offer.

Speaker 3: In Scotland, for example, this Scotland investment, we are supporting this high value spirits business, which is a growing category. So we will move forward with that as soon as demand recovers.

John Haudrich: For example, it's caught on investment. We are supporting this high value experience business, which is a growing category. So we will move forward with that as soon as demand recovers. One thing that I'd add on the later part there is when we take a look at the CAPEX, we're not just walking off the job sites of those particular facilities. We're actually, you know, seeing in our CAPEX and the fourth core, it's still elevated.

Scotland for example.

Any thoughts on investment we are supporting this hy.

High value spirits business, which is a growing category. So we will move forward with that as soon as demand recovers.

Speaker 4: One thing I'd add on the later part there is when we take a look at the capex, we're not just walking off the job sites of those particular facilities. We're actually in, you'll see it in our capex in the fourth quarter. It's still elevated. We are positioning those projects.

One thing I would add on the later part there is when we take a look at the Capex, we're not just walking off the job sites of those particular facilities, we're actually youll see it in our capex in the fourth quarter. It's still elevated we are positioning those projects. So that when we get the volumes are returning we can quickly get back there and finish them up and bring.

John Haudrich: We are positioning those projects so that when we get to find the vines returning, we can quickly get back there and finish them up and bring them online rather than having to kind of start off scratch, so to speak. So I think that's an important element as we think about it going forward. And as you embedded in our 50 to 575 next year is the fact that towards probably a later part of the year or something like that, we are putting in some more CAPEX into those facilities and wrapping them up.

Speaker 4: so that when we get the signs of returning, we can quickly get back there and finish them up and bring them online rather than having to kind of, you know, start off from scratch, so to speak.

Them online rather than having to kind of start off from scratch so to speak.

Speaker 4: So I think that's an important element as we think about it going forward. And as you embedded in our 50 to 575 next year, it's the fact that, probably the later part of the year or something like that, we are putting in some more CAPX into those facilities and wrapping them up. So some of that finalization costs will be in the back half of next year, a little bit might drag into 2025, but we wanna make sure that we're able to respond pretty.

So I think thats, an important element as we think about it going forward and is embedded in our $550 to $5 75 next year is the fact that towards probably the later part of the year or something like that we are putting in some more capex into those facilities and wrapping them up so.

John Haudrich: So, you know, some of that, you know, finalization costs will be in the back after next year, a little bit might drag into 2025. But we want to make sure that we're, we're able to respond pretty quickly.

Some of the Finalization cost will be in the back half of next year, a little bit might drag into 2025, but we want to make sure that we're able to respond pretty quickly.

Andres Lopez: Yeah, there are a couple of additional data points. Thank you, Audrey. I just wanted to compliment that the whole demand landscape. So we're seeing a significant level of activity on new product development in the Americas. Lucas. And so that's something that should support recovery. And one of that is taking in the Indian countries in the markets in which there is significant opportunity for premium products to develop me. And when we look at Brazil, the consumer consumption is quite healthy.

Speaker 3: Yeah, there are a couple of additional data. Thank you, Andres.

Yes, there are a couple of additional data point you Andres <unk>.

Speaker 3: I just wanted to compliment that the whole demand landscape. So we're seeing a significant level of activity on new product development in the America.

I just wanted to complement that the whole demand landscape. So we're seeing a significant level of activity on new product development in the Americas.

Speaker 3: And so that's something that should support recovery. And one of that is taking in the Andean countries in the markets in which there is significant opportunity for premium products development. And when we look at Brazil, the consumer consumption is quite healthy.

So thats something that <unk>.

Support recovery.

And one of that is taken into in the Andean countries and the markets in which there is significant opportunity for premium.

Product development and when we look at Brazil, the consumer consumption is quite healthy.

Speaker 3: and glass, however, all is doing quite well in that market and it's been growing in line with premium beer growth for the one-way containers which is in the mid-10s.

Andres Lopez: And glass, however, is doing quite well in that market. And it's been growing in line with premium beer growth for the one-way containers, which is in the mid-teens. And return our containers are emphasized. So the challenge over there is not consumer at all. It's just the stocking, which is driven by a significant amount of imports that happen when the supply change, where it is ruptured. And now it's been consumed. So the local orders are lowered, but that's a temporary issue. But the consumer itself is in a very good place. So we won't move forward with the investment over there as soon as we clear all these demands of research.

And glass how it all is doing quite well in that market and it's been growing in line with premium beer growth before the one way containers, which using the mid teens and returnable containers are emphasized so the challenge over there is not.

Speaker 3: and return our containers are in FASI. So the challenge over there is not consumer at all. It's just the stocking, which is driven by a significant amount of imports that happen when the supply chains were disrupted and now it's being consumed. So the local orders are lower, but that's a temporary issue. But the consumer itself is in a very good place. So we won't move forward with the investment over there as soon as we clear all these demands of choice.

<unk> at all it's just these destocking, which is driven by a significant amount of imports that happen when the supply change.

We're disrupting.

And now is being consumed so the local orders are lower but that's a temporary issue that the consumer itself is in a very good place. So we wouldn't move forward with the investment over there as soon as we clear all of these.

Demand fluctuations.

Mike Roxland: Very helpful. Thanks very much, guys. Good luck in the quarter.

Very helpful. Thanks, very much guys. Good luck in the quarter.

Operator: Thank you.

Speaker 9: Thank you. Thank you.

Thank you. Thank you.

Speaker 1: Thank you. Our next question goes to Anthony Pettinari of City. Anthony, please go ahead, your line is open.

Thank you our next question.

Anthony Pettinari: On its question, go to Anthony Petanari of City. Anthony, please go ahead. Your line is pinned.

Pettinari Citi. Anthony. Please go ahead your line is open.

Andres Lopez: Good morning. This is Brian Bergmeyer. I'm Brandon. Thanks for taking the question. I appreciate all the color you've provided on 2024. Just wondering if you can add any detail on some of your low-to-bit single-digit volume growth assumption. I think slide eight points to maybe a two-q inflection in both retail consumption and OIs production. What are your customers telling you this sort of makes you feel confident that target data?

Good morning. This is Brian Birchmeier mom brands. Many thanks for taking the question.

Speaker 4: Morning, this is Brian Bergmeyer, I'm Brandon, thanks for taking the question. You know, I appreciate all the color you've provided on 2024. Just wondering if you can add any detail on how to treat your load of it single digit volume growth assumption. You know, I think slide eight points to maybe a two-q inflection in both retail consumption and OIs production. You know, what are your customers telling you that sort of makes you feel confident in that target?

I appreciate all the color you've provided on 2024.

Wondering if you could add.

Any detail on sort of your low to mid single digit volume growth assumption I think slide eight points to maybe a <unk> inflection in both retail consumption.

<unk> production what are your customers, telling you that sort of makes you feel confident that target date.

Andres Lopez: Let me provide some input first in with regards to the supply change. So we identified two different supply change in our system. The one for the short supply chain that we call which is related to year or food or NABs. We are expecting that that supply chain will start to normalize as we exit this four-quarter of 23. There is also a launch supply chain which is spirits and wine. For that one, we expect that normalization will start as we exit the first quarter of 24.

Speaker 3: Let me provide some input first in regards to the

Let me, let me provide some input first thing with regard to the.

Speaker 3: the supply chain. So we identified two different supply chains in our system. The one for the short supply chain that we call, which is related to beer or food or NABs. And we are expecting that that supply chain will start to normalize as we exit this four quarter of 23.

The supply chain. So we identified two differential apply change in our system. They want for the chart the supply chain that we call <unk>.

Which is related to year or food or in <unk>.

And we are expecting that that supply chain will.

Start to normalize as we exited the fourth quarter of 23.

Speaker 3: And there is also a launch supply chain, which is a spirit and wine. And for that one, we expect that normalization will start as we exit the first quarter of 24. So that's incorporated in our projections at this point. And we are seeing some evidence of that behavior. So the short supply chains are already starting to show some initial signs of normalization.

And there is also a long supply chain, which use this period to Hawaiian them for now and we expect that normalization will start as.

As we exited the first quarter of 2004, so thats incorporated in.

Andres Lopez: That's incorporated in our projections at this point. We are seeing some evidence of that behavior. The short supply change. I don't know if it's not in Pucho. You need to have signs of normalization. As you can expect right now, we're having a lot of conversations where the customers understand what their intentions are and building off a hundred such comments. Some are pointing that, hey, we're coming to the end right now towards the year or the fourth quarter.

In our projections at this point.

And we are seeing some area and so that behavior. So the chart the chart supply change that already starting to show some.

Initial signs of normalization.

Speaker 4: Yeah, as you can expect right now, we're having a lot of conversations where the customers understand what their intentions are and building off a hundred such comments. Some are pointing that, hey, we're coming to that, and right now towards here the fourth quarter, some point to the first quarter, some point to the second quarter. So our outlook is based upon looking at macro information, looking at industry data that points to trends and whatnot. And it also.

As you can expect right now, we're having a lot of conversations with their customers to understand what their intentions are and building off of honors. His comments. Some are pointing that hey, we're coming to the end right now towards here in the fourth quarter. Some point to the first quarter some points for the second quarter. So our outlook is based upon.

Andres Lopez: Some point to the first quarter, some point to the second quarter. So our outlook is based upon looking at macro information, looking at industry data that points to trends and whatnot, and it also relies very heavily on what our customers are telling us in that regard. It's really looking at all three of those variables to come to this conclusion. Of course, nobody has a crystal ball, but it seems to try quite well with all the different inputs that we're hearing from those, and different sources. Got it. Thanks for the detail.

At macro information looking at industry data that points to trends and whatnot and it also.

Speaker 4: Realize very heavily on what our customers are telling us in that regard. So it's really looking at all three of those variables to come to this conclusion. Of course, nobody has a crystal ball, but it seems to try and like quite well with all the different inputs that we're hearing from those.

Relies very heavily on what our customers are telling us in that regard. So it's really looking at all three of those variables to come to this conclusion of course, nobody has a crystal ball, but it seemed to triangulate quite well with all the different inputs that we're hearing from those different sources.

Speaker 4: Got it, thanks for the detail. And the last question for me, with CAPEX, they're coming down a little bit next year. What do you view as it's like the best use of cash here? Is this the time to maybe buy back some shares? Do you want to maybe see that leverage closer to two and a half times?

Got it thanks for the detail and last question for me with Capex, maybe coming down a little bit next year.

John Haudrich: And you know, last question for me, you know, with CapEx, they'll be coming down a little bit next year. You know, what do you view as it's like the best use of cash here? Is it the time to maybe buy back some shares? Do you want to maybe see that leverage closer to two and a half times, give any bull times, maybe in the pipeline? There's any thoughts you can provide to be helpful? Thanks.

What do you view as the best use of cash here is is it time to maybe buy back some shares do you want to maybe see that leverage closer to two five times.

Speaker 10: give any bolt-ons, maybe in the pipe line. There's any thoughts you can provide if you're helpful. Thanks, I'll turn it.

Do you have any bolt ons, maybe in the pipeline.

Just any thoughts you can provide would be helpful. Thanks, I'll turn it over.

John Haudrich: I'll turn it over. Yeah, sure. I think our intention, as we've communicated consistently in the past, is that, you know, we're looking right now to reduce debt to that line of sight at two and a half times, leverage, or we're getting close. You know, you know, we had indicated before that, you know, the inflection for looking at other more, you know, returning value to shareholders through either dividend or share buy back could be something that we approach here and sometime in the next year.

Speaker 4: Yeah, sure. I think I think our intention is we've communicated in a consistently in the past is that, you know, we're looking right now to reduce debt to that line of side at 2.5 times leverage or we're getting close.

Yeah sure I think I think our intention as we've communicated consistently in the past is that we're looking right now to reduce debt to that line of sight at two five times leverage or we're getting close.

Speaker 4: You know, we had indicated before that, you know, the inflection for looking at other more, you know, returning value to shareholders through either dividend or share buyback could be something that we approach here and sometime in the next year. That very well could be valid. Of course, I think, you know, with the macros being what they are, it might take another quarter or two for things to stabilize itself out in which case. Then, once you got good line of sight to that two and a half, again, we're not that far away from it. I think we're entering in this territory of looking at those other actions.

We had indicated before that.

Inflection for looking at other more.

Returning value to shareholders through either dividend or share buyback could be something that we approach here in sometime in the next year that very well could be valid of course, I think with the macros being what they are it might take another quarter or two for things to stabilize itself out in which case then once you got good line of sight to that two and a half again, we're not that far away from it.

John Haudrich: That very well could be valid. Of course, I think, you know, with the macros being what they are, it might take another quarter or two for things to stabilize itself out in which case. Then once you got good line of sight to that two and a half, again, we're not that far away from it. I think we're entering in this territory of looking at those other options. Ultimately, of course, this is a decision for the board of directors.

Operator: Thank you.

I think we're entering in this territory of looking at those other options ultimately though of course. This is a decision for the board of directors.

Speaker 4: Ultimately, of course, this is a decision for the board.

Speaker 1: Thank you. Our next question is your Aaron Ganesin or RBC capital markets. Aaron, please go ahead and line his open.

Thank you our next question.

Operator: On the next question, as you are. Nice. I'll be see capital markets are in place.

Well Nathan.

<unk> capital markets. Please go ahead your line is open.

Andres Lopez: The headline is open. Thanks. Yeah, I asked about the volume trajectory. So, maybe you could walk us to how you're thinking about 24. I understand. Maybe some guidepost there, but are we really looking for maybe a couple of points of growth off new capacity, maybe some. Resumption of growth in premium categories, and maybe the end of destocking in some of the lower velocity areas like foreign spirits. Maybe you can just walk us through how you're thinking about how volume falls in the next 12 to 18 months.

Speaker 11: Thanks. Yeah, I already asked about the volume trajectory. So maybe you could walk us through how you're thinking about 24. I understand maybe without some guideposts there. But.

Thanks.

Yes.

Turning to ask about the volume trajectory so.

Maybe you could walk us through how youre thinking about 'twenty four I understand.

Maybe put some guideposts there but.

Speaker 11: Are we really looking for maybe a couple of points of growth of new capacity, maybe some resumption of growth in premium categories, and maybe the end of destocking in some of the lower velocity areas like foreign and spirits? Maybe you can just walk us through how you're thinking about how volume evolves of the next day, 12 to 18 months. Thanks.

Are we really looking for maybe a couple of points of growth from new capacity, maybe some resumption.

Resumption of growth in premium categories.

And maybe the end of Destocking in some of the lower velocity areas like wine and spirits.

Maybe you can just walk us through how you're thinking about how volume evolves over the next say 12 to 18 months. Thanks.

Andres Lopez: Thanks. Yeah, I mean, I think it's, it's obviously a complex set of activities right now. We do believe that building off of what understood indicated before. Some of those faster value chains, you know, the beers, the NAPs, you know, the food categories, probably, you know, start to show a growth sooner rather than later. Obviously, every segment has its own and every market has its own set of dynamics. Whereas spirits and wine, for example, might take longer.

Yes, I mean, I think it's obviously a complex set of activities right now.

Speaker 4: Yeah, I mean, I think it's obviously a complex set of activities right now. We do believe that building off of what Anders indicated before, some of those faster value chains, the beers, the NAPs, the food categories, probably start to show a growth sooner rather than later. Obviously, every segment has its own and every market has its own set of dynamics.

We do believe that building off of what Anders indicated before some of those faster value chains.

<unk>.

Food categories, probably start to show growth sooner rather than later, obviously every segment has its own in every market has its own set of dynamics, whereas.

Speaker 4: Whereas spirits and wine, for example, might take longer. They entered into their destocking process later than we had seen with some of the other ones. And so, and that's consistent also with what we're hearing from our customers.

Spirits and wine for example might take longer they entered into their destocking process later than we had seen with some of the other ones and so and that's consistent also with what we're hearing from our customers I think the view is Latin America, obviously, hasnt really seen significant downside.

Andres Lopez: They entered into their destocking process later than than we had seen with some of the other ones. And so, and that's consistent also with what we're hearing from our customers. I think the view is Latin America, obviously, hasn't really seen the significant downside. And so, as Anders indicated before, we're already seeing robust growth coming in with the expansion and the Colombian marketplace. The American, you know, the northern part of North America, et cetera, is actually doing fairly well.

Speaker 4: I think the view is Latin America obviously hasn't really seen the significant downside. And so, as Anders indicated before, we're already seeing robust growth coming in with the expansion in the Colombian marketplace. The North America, etc., is actually doing fairly well. I think the European markets might take a little bit longer to recover at least in some of the different categories. It's the longest value chain category is overall.

So as <unk> indicated before were already seeing robust growth coming in with the expansion in the Colombian marketplace.

In the northern part of North America, et cetera is actually doing fairly well.

Andres Lopez: Now, I think the European markets might take a little bit longer to recover at least in some of the different categories. It's the longest value chain category is overall. And I think the key segment we've got to follow or track closely is the wine segment in France. That's really where the largest slowdown is at this point in time.

Now I think the.

European markets might take a little bit longer to recover at least in some of the different categories. It's the longest value chain categories.

Andres Lopez: So as we continue to update, we'll look at that more specifically. Great. Thanks.

Overall.

Speaker 3: And I think the key segment we got out.

And I think.

The key segment, we got.

<unk>.

Follow or track closely is the.

Speaker 3: follow or track closely is the white segmenting friend.

Wind segment in France.

Speaker 3: That's really where the largest slowdown is at this point in time. So as we continue to update, we'll look at that more specifically.

Really where the.

Largest of slowdown at this point in time.

So.

As we continue to update and we'll look at that more specifics.

Speaker 11: Great, thanks. And then as a follow-up, I was hoping to ask about your energy hedges, apologies if I missed this earlier, but could you just update how we think about price versus, you know, energy costs over a similar range, maybe next 12 to 18 months, and what you're doing to maybe roll out or extend some of those hedges? Thanks.

Great. Thanks, and then as a follow up.

John Haudrich: And then as a follow-up, I was hoping to ask about your energy hedges, apologies if I missed this earlier. Could you update how we think about price versus energy costs over a similar range maybe next 12 to 18 months and what you're doing to maybe roll out or extend some of those hedges? Thanks. Yeah, sure. For clarity, we take a three year view minimum on our energy contracting position. So as we stand here right now today, we have contracted substantially through 2025, for example.

I was hoping to ask about <unk>.

As your hedges apologies if I've missed this earlier, but could you just update how we think about price versus <unk>.

Energy costs.

And similar range, maybe in the next 12 to 18 months and what you're doing to maybe.

Maybe rollout or extend some of those hedges.

Speaker 4: Yes, you're, for clarity, we take a three year view, minimum honor, energy contracting position. So as we stand here right now today, we have contracted substantially through 2025, for example.

Yes sure.

For clarity, we take a three year view minimum honor energy contracting physicians, so as we stand here right now today.

We have contracted substantially through 2025 for example.

Speaker 4: And those were done at very favorable rates as we mentioned in the past, you know, more indicative of rates before the pandemic or before the Ukraine war. So those rates are favorable. What we had seen is...

John Haudrich: And those were done at very favorable rates as we mentioned in the past, more indicative of rates before the pandemic or before the Ukraine war. So those rates are favorable. What we had seen is energy. If you look at just TTF over in Europe, which is probably the most dynamic one, rates were coming down to, they were over 50 euros per megawatt hour. They dropped down into the 30s here more recently.

And those were done at very favorable rates as we mentioned in the past more indicative of rates before.

The pandemic, where before the Ukraine War so.

Those rates are favorable what we had seen is.

Speaker 4: you know, energy, if you look at just TTF over in Europe , which is probably the most dynamic one, rates were, you know, coming down to, you know, they were over 50 euros per megawatt hour. They dropped down into the 30s here more recently, but frankly, with the advent of the Israeli Hamas conflict, we've seen things jump back up to 50 again, and if you look at the forward curves, they stay in the 50s over through 2025, and then start to tail off in 2026.

Energy if you look at just ETF over in Europe, which is probably the most dynamic one rates.

Rates were coming down to they were over 50 euros per megawatt hour they dropped down into the <unk> here more recently.

John Haudrich: But frankly, with the advent of the Israeli Hamas conflict, we've seen things jump back up to 50 again. And if you look at the forward curves, they stay in the 50s over through 2025 and then start to tail off in 2026. So even though the spot markets are very elevated in energy, probably two and a half times what are contracted at. We aren't exposed to that level of variability. Thanks.

Frankly, with the advent of the Israeli Hamas.

Conflict, we've seen things jumped back up to 50 again and if you look at the forward curves they stay in the fifties over over through 2025, and then start to tail off in 2026, so even though the.

Speaker 4: So even though the spot markets are very elevated in energy, probably two and a half times what are contracted at, we aren't exposed to that level of variables.

<unk>.

Spot markets are very are elevated and energy, probably 225 times, what our contract of that.

We aren't exposed to that level of variability.

Thanks.

Sure.

Gabe Hadji: Thanks, you are next question. Is you Gabe Hadji of Wells Fargo Securities. Gabe, please go ahead and on this open. Thank you, Henry, John, Chris, good morning. I wanted to maybe, I guess, ask or carry on to that, that talking point there, John, in terms of cost competitiveness of glass, appreciating that, you know, filling can't be switched overnight, these things take investment. Any thoughts indoor visibility, either based on order patterns or anything like that, they can offer up in terms of more on the beer side, I'm thinking, you know, potential for substrate shift and any of your markets.

Thank you. Our next question Gabe <unk> of Wells Fargo Securities. Please go ahead. Your line is open.

Speaker 1: question, is you Gabe Hadji of Wells Fargo Securities? Gabe, please go ahead, your line is open.

Thank you Andres John Chris Good morning.

Hi, Good morning, Good morning, I wanted to maybe I guess.

Speaker 7: Bum morning morning. I wanted to maybe I guess

Speaker 7: ask or carry on to that talking point there, John , in terms of cost competitiveness of glass.

Ask or carry on to that the talking point there John in terms of cost competitiveness of glass.

Speaker 7: appreciating that you know, filling can't be switched overnight. These things take investment.

Appreciating that filling can't be switched overnight.

Take investment.

Speaker 7: Any thoughts, indoor visibility, either based on order patterns or anything like that, they can offer up in terms of more on the beer side I'm thinking, you know, potential for substrate shifts.

Any thoughts <unk> visibility either based on order patterns or anything like that.

And you can offer up in terms of.

More on the beer side I'm thinking.

Potential for substrate shift.

Speaker 12: and any of your markets and in response to that, you know, potential, you know, internally you're planning for if some of those orders don't necessarily come back, your ability to kind of close those plants. And the curtailment that you're talking about, are those sort of one, still the furnaces, or have you taken any cold shots at this point?

And any of your markets.

Gabe Hadji: And in response to that, you know, potential is, you know, internally you're planning for some of those orders don't necessarily come back your ability to kind of close those plants. And the portrayal that you're talking about, are those sort of one still the furnaces or have you taken any cold shots at this point. So the competitiveness of glass, this was other packaging in particular aluminum cans is back to pre-pandemic lyrics. So during the last few years that got close a little bit and it went back to where it was back in 2019.

In response to that potential.

Internally in your planning for.

Some of those orders don't necessarily come back.

Our ability to kind of close those plants and.

The curtailments that you are talking about.

Are those sort of warm so the furnaces or have you taken any cold cuts at this point.

Speaker 3: So the comparing the so-of-glass, the Schrozer package, and in particular aluminum cancees, back to prepandemic lyrics. So during the last few years that got close a little bit, and it went back to where it was back in 2019. Now you might have heard the...

So the.

The competitiveness so for glass this was solar packaging and in particular aluminum currencies back to print, but let me clarify so.

Sure.

During the.

Last few years that gap close a little bit and he went back to where it was back in 2019.

Gabe Hadji: Now you might have heard some growth in some regions or markets for aluminum cans. And when we look at that, remember that we mentioned before that glass and aluminum cans play in different lanes and the type of products that drive the growth in cans are products in which we are not present. So I think it's important to highlight that. When we look at Cher, we haven't seen that much cherchipped minima really.

Now you might have there.

Speaker 3: Some growth in some regions or markets for aluminum can.

Some growth in some regions or markets for aluminum.

Speaker 3: And when we look at that, remember that we mentioned before that glass and aluminum cans play in different lanes and the type of products that drive the growth in cans are products in which we are not present. So I think it's important to highlight that.

And when we look at that remember that we mentioned before that glass and aluminum cans play in different lanes.

And the.

Type of products that drive the growth in cans are products of which we are not present so.

I think is important to highlight that when we look at share we haven't seen that much.

Speaker 3: When we look at share, we haven't seen that much church shift, minima really. And it's primarily driven by down trading or promotions. And we consider those to be...

Sure chip minimal really and is primarily driven by down trading or order of promotions and we consider those to be temporary.

Gabe Hadji: And it's primarily driven by down trading or promotion. And we consider those to be temporary. Yeah, you know, I think even on that last point is, you know, you can even see that specifically in the Nielsen data. You know, you look at the volume trends and consumer consumption trends. We can see what the overall trends we can see how that the products are being consumed in glass containers and aluminum cans, for example.

Okay.

Speaker 4: Yeah, you know, I think even on that last point is, you know, you can even see that specifically in the Nielsen data. You know, you look at the volume trends and consumer consumption trends, we can see what the overall trends we can see how that, the products are being consumed in glass containers and aluminum cans, for example. And everything's within like a percent or so of each other. I mean, given the level of variation that we're seeing out there, it's all within a relevant range. So yeah, maybe there's a little bit of downshifting a little bit going on there, but it's not a material difference given, you know, the scale of the change that we're seeing out there.

Yes, I think I, even on that last point is.

You can even see that specifically in the Nielsen data.

Look at the volume trends in the consumer consumption trends, we can see what the overall trends we can see how that the products are being consumed in glass containers in aluminum.

<unk> for example, and everything's within like a percent or so of each other I mean, given the level of variation that we're seeing out there. It's all within a relevant range. So yes, maybe theres a little bit of down shifting a little bit going on there but.

Gabe Hadji: And everything is within like a percent or so of each other. I mean, given the level of variation that we're seeing out there, it's all within a relevant range. So yeah, maybe there's a little bit of downshifting, a little bit going on there. But it's not a material difference given, you know, the scale of the change that we're seeing out there. You know, on the furnace position you asked, we are taking those colds.

It's not a material difference given the scale of the change that we're seeing out there.

Speaker 4: you know, on the furnace position you asked, we are taking those cold so for example, Waco is his closing so it will be a cold furnace and not operating.

On the furnace position you asked.

We are taking those cold.

Gabe Hadji: So for example, Waco is closing. So it will be a cold furnace and not operating anymore. Okay, I'm appreciating that you guys operating in relatively different markets and some of your peers. And I'm more specifically thinking about Europe, but there's been a lot of volatility in that market in the past four years. And I'm just curious again, you know, you pointed out elevated conflict in the Middle East and rising energy costs.

For example, Waco is closing so it will be a cold furnace and that operating anymore.

Speaker 12: Okay, I'm appreciating that you guys operating in relatively different markets than some of your peers. And I'm more specifically thinking about Europe , but there's been a lot of volatility in that market in the past four years. And I'm just curious, again, you pointed out elevated conflict in the Middle East and rising energy cost.

Okay I appreciate that you guys.

Operating and relatively different markets and some of your peers.

Specifically thinking about Europe.

There's been a lot of volatility in that market.

In the past four years and.

And I'm just curious again, you pointed out elevated conflict in the middle East and rising energy costs.

Gabe Hadji: Are you hearing anything from the competitive landscape that some of these smaller folks may not be able to react or have the financial wherewithal? So with stand-in-other shock to the system. And is that a consideration in some of those discussions that you're having with your customers? And then there was also a recent, I think, change of control for one of your peers in Europe. Again, to the extent you can comment anything in terms of competitive landscape that you'd expect to be different there.

Speaker 12: Are you hearing anything from the competitive landscape that some of these smaller folks may not be able to react or have the financial wherewithal with stand-in-out a shock to the system?

Are you hearing anything from the competitive landscape that some of these smaller folks.

It may not be able to react or had the financial wherewithal.

So withstand another shock to the system.

Speaker 12: And is that a consideration in some of those discussions that you're having with your customers? And then there was also a recent, I think, change of control for one of your peers in Europe . Again, to the extent you can comment anything in terms of competitive landscape that you'd expect to be different there.

And is that a consideration and some of the discussions that youre, having with your customers and then there was also a recent I think change of control.

Sure.

For one of your peers in Europe.

And then to the extent you can comment anything in terms of competitive landscape and you would expect to be different there.

Gabe Hadji: Yeah, you know, it's hard to read through to all the competition. I mean, they have to report on their own positions. But you know, when we saw the energy prices, for example, in Europe, go up last year, you saw, you know, the smaller competitors who typically don't have a sophisticated energy management position going offline. So in the event that, you know, there's more escalation and more of an energy shock than I suspect that there is an exposure there for them.

Speaker 4: Yeah, you know, it's hard to read through to all the competition. I mean, they have to report on their own positions. But, you know, when we saw the energy prices, for example, in Europe , go up last year. You saw, you know, the smaller competitors who typically don't have a sophisticated energy management position going offline. So in the event that...

Yes. It is.

Hard to read through to all the competition I mean, they have to report on their own positions, but when we saw the energy prices for example in Europe go up last year you saw.

The smaller competitor, who typically don't have a sophisticated energy management position going offline. So in the event that.

Speaker 4: There's more escalation and more of an energy shock than I suspect that there is an exposure there for them. Obviously, in the discussions with our customers, continuity of supplies always been important. We saw that last year in particular, and I think we did quite well in that regard. We were able to be a solid supplier for our customers out there. And as you take a look at it right now, and we're taking, as I mentioned before, 20% of the procurement procurement, you know, cratailment out there to bounce off inventories. You know, clearly you can research it on your own. But if you take a look at other public information, it seems to be a consistent practice across the process.

Theres more escalation and more of an energy shock and I suspect that there is an exposure there for them obviously in the discussions with our with our customers continuity of supply. It's always been important we saw that last last year in particular and I think we did quite well in that regard we were able to to be a solid supplier.

Gabe Hadji: Obviously, in the discussions with our customers, continuity of supply has always been important. We saw that last year in particular. And I think we did quite well in that regard. We were able to be a solid supplier for our customers out there. And as you take a look at it right now, and we're taking, as I mentioned before, 20% procurement out there to balance off inventories. Clearly, you can research it on your own. But if you take a look at other public information, it seems to be a consistent practice across the marketplace. Thank you.

I don't know for our customers out there and as you take a look at it right now and we're taking as I mentioned before 20%.

Curtailment out there.

To balance off inventories.

Clearly you can research it on your own but if you take a look at other public information it seems to be a consistent practice across the across the marketplace.

Speaker 13: Thank you.

Thank you.

Thank you.

Andres Lopez: Thank you, our next question goes to Roger Schmitz of Bank of America. Roger, please go ahead and line his open. How much of your inventory, your customers typically hold, say in days or weeks, where we were at the beginning of the year and where we might be at the end of the year in rough numbers? Yes, I think when we look at the stocking, the stocking is influenced not just by the inventories of customers, but it's distributors, it's wholesalers, it's retailers.

Speaker 1: Thank you and next question goes to Roger Schmitz of Bank of America. Roger, please go ahead and line his open.

Thank you our next question guys Hey, Joe.

Smith of Bank of America. Please go ahead your line is open.

Speaker 14: much of your inventory, your customers typically hold, say in days or weeks, where we were at the beginning of the year and where we might be at the end.

How much of your inventory your customers typically hold say in days or weeks.

Hi.

We were at the beginning of the year and where we might be at the end of the year in rough numbers.

Speaker 3: Yes, so I think when we look at the stocking, the stocking is influenced not just by the inventories of customers, but it's distributors, it's wholesalers, it's retailers. And it's even consumers, depending on what supply chain we're talking about. So for us, the way to look at this is, short supply chains will record faster and we're starting to see some...

Yes, so I think when we look at the stocking.

Can you see influenced not just by the inventories of customers buddies distributors used wholesalers.

Retailers and consumers depending on what the supply chain, we're talking about.

Andres Lopez: And it's even consumers, depending on what supply chain we're talking about. So for us, the way to look at this is, George supply chains will recover faster, and we're starting to see some early signs of that in some markets, and long supply chains will take longer.

John Haudrich: So the short one, the short supply chain will recover as we exit this quarter, or normalize as we exit this quarter, and the long one as we exit the first quarter of 2024. Yeah, I would say you get such a wide range of different practices by different industries, for example, the distributors in beer and North America hold on a few weeks of inventory, but you take a look at that same wholesaler channel for wine and spirits, it's months up to a year, and certain different categories and things like that.

For us the way to look at this is.

Charged supply chains.

Record faster and were starting to see some.

Speaker 3: early signs of that in some markets and loans supply change will take longer. So the short supply change will recover as we exit this quarter or normalize as we exit this quarter and the long one as we exit the first quarter of 2024.

Early signs of that in some markets and loan supply change will take longer so the chart one.

Supply chain to recover as we exited this quarter will normalize as we exit this quarter and in the long run.

As we exited the first quarter of 2024.

Speaker 4: Yeah, I would say you get such a wide range of different practices by different industries. For example, the distributors in beer and North America hold on a few weeks of inventory, but you take a look at that that same wholesaler channel for wine and spirits its month.

Yes, I would say you get such a wide range of different practices by different.

Industries for example, the the distributors in beer in North America, a hold on a few weeks of inventory, but you take a look at that same wholesaler channel for wine and spirits, it's months up to a year in certain different categories and things like that so it's hard to try to get an average in there I think what we've been able to see is that the.

Speaker 4: up to a year and certain different categories and things like that. So it's hard to try to get an average in there. I think what we've been able to see is that the inventories at the retail level have started to trend down to maybe more historic levels. But then there's still some inventory, higher inventories, more or less in that wholesale channel area that need to be worked down. That's what's kind of supports that there's probably some destocking left for the next few months, but ultimately kind of working its way through the value.

John Haudrich: So it's hard to try to get an average in there. I think what we've been able to see is that the inventories at the retail level have started to trend down to maybe more historic levels, but then there's still some inventory, you know, higher inventories, more or less in that, in that wholesale channel area that need to be worked down. That's what's kind of supports that there's probably some destocking left for the next few months, but ultimately kind of working its way through the value chain. Thank you very much.

Operator: Thank you.

Inventories at the retail level have started to trend down to maybe more historic levels, but then there's still there's still some inventory.

Higher inventories more or less than that in that wholesale channel area that needs to be worked down that's what's kind of supports that theres, probably some destocking left for the next few months, but ultimately kind of working its way through the value chain.

Thank you very much.

Okay.

Speaker 1: Thank you, we have no further questions, and I'll hand back to Chris for any closing comments.

Thank you we have no further questions I'll hand back to Chris take incremental.

Chris Manuel: We have no further questions, and I'll hand back to Chris for any closing comments. Thanks, Claudia.

Speaker 2: Thanks, Nadia. That concludes our earnings conference call. Please note that our fourth quarter in year-end call is currently scheduled for February 7th. And remember, make it a memorable moment by choosing safe, sustainable glass. Thank you.

Thanks, <unk> that concludes our earnings conference call. Please note that our fourth quarter and year end call is currently scheduled for February seven and remember, making a memorable moment by choosing safe sustainable glass. Thank you.

Operator: That concludes our earnings conference call. Please note that our fourth quarter in year-end call is currently scheduled for February 7th, and remember, make it a memorable moment by choosing safe, sustainable glass. Thank you. Thank you, Susan. Please say it's cool.

Okay.

Speaker 1: Thank you, if you have any questions, please stay as cool. Thank you for joining the Immunile Disconnecture Line.

Today's call. Thank you for joining you may now disconnect your lines.

Operator: Thank you for joining the Immunile Disconnector line.