Q4 2023 O-I Glass Inc Earnings Call

Emily: 6 cold ones in a refrigerator, one drop to pop and save 5 for later. Can't help but drink them like my dad, it tastes better in a glass. Thanks for watching! Hello everyone and welcome to the OI Glass full year and fourth quarter 2023 earnings call. My name is Emily, and I'll be facilitating your call today. After the presentation, there will be an opportunity for any questions, which you can ask by pressing start followed by the number one on your telephone keypad. I will now turn the call over to Chris Manuel, Vice President of Investor Relations. Please go ahead.

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Emily: Hello, everyone and welcome to the <unk> like Australia in fourth quarter 2023 earnings Conference call. My name is Emily and I'll be facilitating Yoko today. After the presentation there will be the opportunity for any questions that you can ask by pressing star followed by the number one on your telephone keypad.

Emily: I'll now turn the call over to Chris Manuel Vice President of Investor Relations. Please go ahead.

Chris Manuel: Thank you, Emily, and welcome everyone to the OI Glass year-end and fourth quarter 2023 earnings conference call. Our discussion today will be led by Andres Lopez, our CEO, and John Haudrich, our CFO. Today we will discuss key business developments and review our financial results. Following prepared remarks, we'll host a 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-GAAP financial measures included in those materials. Now I'd like to turn the call over to Andres, who will start on slide 3.

Chris Manuel: Thank you Emily and welcome everyone to the O I glass yearend and fourth quarter 2023 earnings conference call. Our discussion today will be led by Andres Lopez, our CEO and John <unk>. Our CFO today, we will discuss key business developments and review our financial results.

Andres Alberto Lopez: Following prepared remarks, we will host a Q&A session presentation materials for this earnings call are available on the Companys 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 Andreas who will start on slide three.

Andres Alberto Lopez: Good morning, everyone, and thanks for your interest in OI. We are pleased to announce a strong 2023 result. Our year-adjusted earnings were $3.09 per share, as results improved significantly from the prior year and exceeded our most recent guidance. OI is now a more disciplined and agile organization that is capable of navigating elevated market volatility. We again demonstrated our improved operating effectiveness as we posted the highest adjusted earnings in the past 15 years and finished 2023 with the best balance sheet in nearly a decade. Likewise, we achieved a strong net price, record margin expansion initiative benefits, and the best manufacturing trends in more than two decades. These efforts more than offset the impact of lower chipments as macro conditions soften over the course of the year.

Andreas: Good morning, everyone and thanks for your interest in Oi.

Andreas: We are pleased to announce a strong 2023 results.

Andreas: Adjusted earnings were $3 nine per chair as results improved significantly from the prior year and exceeded our most recent guidance.

Andreas: Why is now a more disciplined and agile organization that is capable of navigating the elevated market volatility.

Andreas: We again demonstrated our improve operating effectiveness.

Andreas: We posted the highest adjusted earnings in the past 15 years and finished 2023 with the best balance sheet in nearly a decade.

Andreas: Likewise, we achieved strong net price record margin expansion initiative benefits and the vast manufacturing trends in more than two decades.

Andreas: These efforts more than offset the impact of lower shipments as macro conditions have softened over the course of the year.

Andres Alberto Lopez: We anticipate 2024 adjusted earnings with lag will be a historically high performance last year, given the continuation of softer macros into the first half of the year. However, we believe the most challenging market conditions are behind us as we are beginning to see early signs of improvement. Importantly, we have already completed most of our annual price negotiations, and we expect to retain the largest share of the strong net price achieved over the past few years.

Andreas: We anticipate 2024 and adjusted earnings with lack Arctic historically high performed much last year.

Andreas: And the continuation of softer micro dosing through the first half of the year.

Andreas: However, we believe the most challenging market conditions are behind us as we are beginning to see early signs of improving.

Andreas: Importantly, we have already completed most of our annual price negotiations and we expect to retain the lion share of the strong net price achieved over the past few years.

Andres Alberto Lopez: Building on our strong track record, we are confident our 2024 margin expansion benefits will surpass last year's record savings. Overall, we expect stronger demand, significant initiative benefits, and favorable operating performance will provide OI good momentum as markets strengthen over the course of the year. Our business capabilities are strong, and our talent base is solid.

Andreas: Building on our strong track record we are confident our 2020 for margin expansion benefits will surpass last year's record savings.

Andreas: Overall, we expect a stronger demand significant initiative benefits and favorable operating performance will provide oi growth momentum as market has strengthened over the course over the year.

Andreas: Our business capabilities are strong.

Andreas: Our talent base is solid our culture is focused on agility performance and delivering on our commitments.

Andres Alberto Lopez: Our culture is focused on agility, performance, and delivering on our commitment. Importantly, we anticipate stronger future earnings as both sales and production volumes are more fully recovered, which we will discuss a bit later in our remarks. We continue to consistently execute our strategy, which includes investing in long-term growth and developing breakthrough technologies. After several years of R&D, we will ramp up our first magma greenfield site in mid-2024 to serve the growing spirits business in the Kentucky area.

Andreas: Fortunately, we anticipate a stronger future earnings has both sales and production volumes more fully recovered, which we will these costs later in our remarks.

Andreas: We continue to consistently execute our strategy, which includes investing in long term growth and developing breakthrough technologies. After several years of R&D, we will ramp up our first magma Greenfield site in mid 2024 to serve the growing our spirits business in the Kentucky area.

Andres Alberto Lopez: Customers, investors, and employees will have the opportunity to see firsthand the first benefits of this new technology. In parallel, development of our Generation 3 magma solution is going well, and we expect to deploy our first Gen 3 site in 2025, with commercialization in early 2026. We are very excited about the long-term future for life as we aim to disrupt the glass industry. Turning to page 4, let's review all the market trends, which are key to understanding our recent and future performance. As discussed last quarter, we face a unique set of circumstances throughout 2023, leading to lower shipments of glass containers. Initially, this was driven by moderately lower consumer consumption, followed by significant inventory stocking across the food and various supply chains.

Andreas: Customers investors and employees will have the opportunity to see firsthand the.

Andreas: First benefit of this new technology in parallel development of our generation III Magna solution is going well and we expect to exploit our first gen. Three sites in 2025 with commercialization in early 2026.

Andreas: We are very excited about the long term future for Hawaii as we aim to disrupt the glass industry.

Andreas: Turning to page four let's review of all the market trends, which are key to understanding our recent and future performance.

Andreas: As discussed last quarter, we face a unique set of circumstances throughout 2023, leading to lower shipments of glass containers and.

Andreas: Initially these west driven by moderately lower consumer consumption, followed by significant inventory destocking across the food and beverage is supply chain.

Andres Alberto Lopez: We have updated the chart on the right with our shipment trends through the fourth quarter and the most current Nielsen retail data. It also includes our current expectations for future consumption and glass shipments in 2024. Looking at the past four quarters.

Andreas: We have updated the chart on the right with our chip inventories through the fourth quarter and the most current Nielsen retail data.

Andreas: It also includes our current expectations for future consumption in glass shipments in 2024.

Andreas: Looking at these past four quarter.

Andres Alberto Lopez: We anticipated glass shipments would be down 12 to 15 percent, yet actual shipments were down 16 percent, reflecting some acceleration in the stocking activity across the value chain. With that said, I'm encouraged by early signs of recovery and believe the worst is behind us. Let me share a few of the reasons for this initial optimism. First, consumer consumption trends have steadily improved over the course of 2023, as you can see with the green bars on the chart. While some categories still have challenges, consumption trends have turned positive in the beer and NAB categories in many markets. Importantly, we have seen little change in market share or shift to other substrates, except for some modest and temporary trade-down limited to beer in Eastern Europe. According to Nielsen data, glass has actually gained share versus cans in certain categories in Brazil, Colombia, and the Netherlands.

Andreas: We anticipated glass shipments will be around 12% to 15% yet actual shipments were down 16%, reflecting some acceleration in their stock in activity across the value chain.

With that said I'm encouraged by early signs of recovery and believe the worst is behind US let me share a few of the reasons for BC in ECL optimism.

Andreas: Consumer consumption trends have steadily improved over the course of 2023 as you can see with the green bars on the chart.

Andreas: While some categories are still have challenges consumption trends have turned positive in the year on NAV categories in many markets in.

Andreas: Importantly, we have seen little change in market share or shift to other substrates, except for some modest and temporary trade down limited to beer in eastern Europe.

Andreas: According to Nielsen data glass has actually gained share versus Wisconsin certain categories in Brazil, Colombia, and the Netherlands.

Andres Alberto Lopez: Next, we believe the worst of the stalking is done, especially in beer and NABs, while wine and spirits might linger into 2024. As an example, we have included a Federal Reserve chart in the appendix that illustrates the declining wholesale inventories for alcoholic beverages in the U.S. Overall, Glass entered the stocking phase behind many other industries, which have already started to see a rebound, which provides additional confidence that Glass will indeed improve this year. Demand for new product development has also surged over the past few months, as many customers look to jumpstart their brand. Currently, we are working from a backlog of over half a million tons of qualified NPD projects. Finally, glass demand trends improved in January, as shipments were down about 10% compared to a 16% decline in the fourth quarter.

Andreas: Next we believe the worst of those stocking has done, especially in beer and <unk> white wine <unk> spirits might linger into 2024.

Andreas: As an example, we have included a federal Reserve chart in the appendix that illustrates that declining wholesale inventories for alcoholic beverages in the U S.

Andreas: All glass entered the stocking phase behind many other industries, which have already started to see a rebound which provides additional confidence last will indeed improve this year.

Demand for new product development has also surged over the past few months as many customers look to jumpstart their branch.

Andreas: Currently we are working from a backlog.

Andreas: Half a million tons of qualified MPD projects.

Andreas: Finally glass demand trends improved in January as shipments were down about 10% compared to a 60% decline in the fourth quarter.

John A. Haudrich: In conclusion, these factors support our belief we have passed the bottom and are increasingly confident in low to mid-single-digit volume growth in 2024, with additional improvement in 2025. Now, I'll turn it over to John, who will review our performance and 2024 Outlook in more detail, starting on page 5. Thanks, Andres, and good morning, everyone.

Andreas: Conclusion. These factors support our belief we have positive items and are increasingly confident in the low to mid single digit volume growth in 2024 with additional improvement in 2025.

Andreas: Now I'll turn it over to John who will review our performance in 2024 outlook in more detail starting on page five.

John: Thanks, Andrew and good morning, everyone building off previous comments Oi reported historically high earnings in 2023 with favorable performance across most financial measures sales improved over $7 1 billion.

John A. Haudrich: Building off previous comments, OI reported historically high earnings in 2023, with favorable performance across most financial measures. Sales improved to over $7.1 billion. Both EBITDA and segment operating profit increased more than 20%, while segment margins increased 280 basis points to over 17%. As noted, adjusted EPS exceeded our most recent guidance and represented the highest adjusted earnings since 2008. Free cash flow was $130 million, which slightly exceeded the midpoint of our guidance range.

Both EBITDA and segment operating profit increased more than 20% while segment margins increased 280 basis points to over 17% as noted adjusted EPS exceeded our most recent guidance and represented the highest adjusted earnings since 2008.

John: Free cash flow was $130 million, which was which slightly exceeded the midpoint of our guidance range as.

John A. Haudrich: As expected, cash flow is down from 2022 levels, primarily due to elevated capital spending as part of our long-term expansion program. Finally, leverage ended the year at 2.8 times, which was below our target. Strong 2023 performance highlights the company's improved agility and capability to manage through challenging market conditions. Our foundation is sound, and we are well-positioned to drive higher performance as demand improves over the course of 2024. Next, I'll expand on our full-year earnings performance, starting in the slide section. In 2023, adjusted earnings totaled $3.09, which represented a 34% increase from the prior year results. As illustrated on the left, higher segment profit boosted earnings, which was partially offset by non-operating items, principally higher interest expense. Segment operating profit totaled nearly $1.2 billion and increased more than $230 million from the prior year as results improved in both the Americas and in Europe.

John: As expected cash flow was down from 2022 levels, primarily due to elevated capital spending as part of our long term expansion program.

John: Finally leverage ended the year at two eight times, which was below our target.

John: Strong 2023 performance highlights the company's improved agility and capability to manage through challenging market conditions. Our foundation is sound and we are well positioned to drive higher performance as demand improves over the course of 2024 next I'll expand on our full year earnings performance starting on slide six.

John: 2023, adjusted earnings totaled $3, nine which represented a 34% increase from the prior year results as illustrated on the left higher segment profit boosted earnings, which was partially offset by non operating items principally higher interest expense.

John: Segment operating profit totaled nearly $1 2 billion.

John: And increased more than $230 million from the prior year as results improved in both the Americas and in Europe.

John A. Haudrich: In the Americas, segment profit was $511 million as earnings increased 8% from 2022. Strong net prices boosted results while earnings reflected 10% lower shipment levels as growth in NABs and RTDs mitigated softer demand in other categories. Operating costs were elevated as the benefit from our margin expansion initiatives partially offset the impact of higher production curtailment to balance supply with softer demand as well as additional commissioning costs for expansion projects in Colombia and Canada. Europe posted a segment profit of $682 million, which was up 40% from last year.

John: In the Americas segment profit was $511 million as earnings increased 8% from 2022 strong net price boosted results, while earnings reflected 10% lower shipment levels as growth in <unk> and RTD mitigated softer demand in other categories.

John: Operating costs were elevated as the benefit from our margin expansion initiatives, partially offset the impact of higher production curtailment to balance supply with softer demand as well as additional commissioning costs for expansion projects in Colombia and Canada.

John: Europe posted a segment profit of $682 million, which was up 40% from last year strong net price and a slight FX tailwind more than offset the impact of 15% lower sales volume as shipments were down across nearly all markets given widespread macro pressures likewise operating costs were up due to elevated production curtail.

John A. Haudrich: Strong net price and a slight FX tailwind more than offset the impact of 15% lower sales volume as shipments were down across nearly all markets given widespread macro pressures. Likewise, operating costs were up due to elevated production curtailment to balance supply with softer demand. Overall, the company posted very strong 2023 results, despite significant market volatility and challenging macro conditions that emerged over the course of the year. Let's discuss fourth quarter results on page 7. As expected, fourth-quarter results were down from the prior year, given market pressures that were most pronounced in the back half of the year.

John: Element to balance supply with softer demand overall the company posted very strong 2023 results despite significant market volatility and challenging macro conditions that have emerged over the course of the year, let's discuss fourth quarter results on page seven.

John: As expected fourth quarter results were down from the prior year given market pressures that were most pronounced in the back half of the year with that said fourth quarter adjusted earnings of <unk> 12 per share exceeded our original guidance of approximately <unk>.

John A. Haudrich: With that said, fourth quarter adjusted earnings of $0.12 per share exceeded our original guidance of approximately $0.03. While shipments were down 16% from 2022 levels, which was softer than expected, cost and operating performance surpassed our expectations. Likewise, results did benefit $0.02 from a modestly lower tax rate. However, as illustrated on the left, earnings were down from $0.38 last year due to lower segment profit and unfavorable non-operating items, including elevated interest expense, which was partially offset by favorable FX. Overall, segment profit declined $38 million as performance improved in the Americas, while earnings were lower in Europe.

John: While shipments were down 16% from 2022 levels, which was softer than expected cost in operating performance surpassed our expectations. Likewise results did benefit from a modestly lower tax rates.

John: As illustrated on the left earnings were down from 38 since last year due to lower segment profit and unfavorable non operating items, including elevated interest expense, which was partially offset by favorable FX overall segment profit declined $38 million as performance improved in the Americas, while earnings were lower in Europe and the <unk>.

John A. Haudrich: In the Americas, segment profit was $93 million, up 12% from the prior year; strong net prices offset 12% lower sales volume, 10% lower sales volume, and elevated operating costs linked to capacity curtailment. In Europe, segment profit was $75 million, compared to $123 million in 2022. Strong net price partially mitigated 22% lower sales volume and significantly higher capacity curtailment efforts, which were concentrated in the fourth quarter. As noted in our press release, OI did take a sizable goodwill impairment charge in its North America operation during the fourth quarter. While we saw solid operating improvement in 2023, this adjustment primarily reflected changes in macro conditions, resulting in lower sales volume and a smaller operating base following recent restructuring activities. Likewise, valuation was negatively impacted by a higher weighted average cost of capital given elevated interest rates.

John: Erika segment profit was $93 million.

John: Up 12% from the prior year strong net price offset 12% lower sales volume, 10% lowest lower sales volume and elevated operating costs linked to capacity curtailment efforts in Europe segment profit was $75 million compared to $123 million in 2022 strong net price partially mitigate.

John: 22% lower sales volume and significantly higher capacity curtailment efforts, which were constantly traded in the fourth quarter.

John: As noted in our press release <unk> did take a sizable goodwill impairment charge and its North America operation during the fourth quarter.

John: While we saw solid operating improvement in 2023, this adjustment primarily reflected changes in macro conditions, resulting in lower sales volume and a smaller operating base. Following the recent restructuring activities. Likewise valuation was negatively impacted by higher weighted average cost of capital given elevated interest rates we remain.

John A. Haudrich: We remain highly confident in our current plans to further boost operating performance in North America that will generate significant future value. In addition to generating strong earnings, the company continued to advance its long-term strategy over the past. On page 8, you can see how 2023 results compared to the key strategic objectives we set at the beginning of the year. We significantly exceeded our margin expansion objectives due to very strong net price realization and initiative benefits. We continue to position the company for long-term profitable growth. Our expansion projects in Canada and Colombia were completed both on time and under budget. As Andres highlighted, our first magma greenfield line remains on target for mid-2024. As noted, we have deferred a few expansion projects for a couple of quarters to better align with the timing of the expected market recovery. All MAGMA and ULTRA development efforts remain on track, and we successfully qualified our first ULTRA bottles in Columbia in the past year, which paves the way for future ULTRA deployments.

John: Highly confident in our current plans to further boost operating performance in North America that will generate significant future value.

John: In addition to generating strong earnings the company continued to advance its long term strategy over the past last year on page eight you can see how 2023 results compared to the key strategic objectives. We set at the beginning of the year, we significantly exceeded our margin expansion objectives due to very strong net price realization and initial.

John: The benefits, we continue to position the company for long term profitable growth our expansion projects in Canada, and Colombia were completed both on time and under budget.

John: As Andrew has highlighted our first magma Greenfield line remains on target for mid 2024 as.

John: As noted we have deferred a few expansion projects a couple of quarters to better align with the timing of the expected market recovery.

John: All Magna and ultra development efforts remain on track and we successfully qualified our first ultra bottles in Colombia in the past year, which paves the way for future ultra deployment.

John A. Haudrich: We also updated our long-term ESG plan, which is aligned with our science-based targets and is now fully incorporated into our business strategy and into our future capital allocation plan. Consistent with prior comments, the capital structure is sound, with leverage ending below our 2023 target. Overall, we posted solid progress in 2023, which will provide tangible benefits in the. Let's discuss our 2024 business outlook starting on page 9. Revenues should be up modestly as low to mid single-digit volume growth more than offsets a slight decrease in average selling price. We anticipate adjusted earnings should range between $2.25 and $2.65 per share.

John: We also updated our long term ESG plan, which is aligned with our science based targets and is now fully incorporated into our business strategy and into our future capital allocation plans.

John: Distant with prior comments the capital structure is sound with elevated.

John: With leverage ending below our 2023 target overall, we posted solid progress in 2023, which will provide tangible benefits in the future.

John: Let's discuss our 2024 business outlook, starting on page nine revenue should be up modestly as low to mid single digit volume growth more than offset a slight decrease in average selling prices. We anticipate adjusted earnings should range between $2 25, and $2 65 per share.

John A. Haudrich: Importantly, earnings should meet or exceed the 2024 goal established at our last I-Day, reflecting significant operating progress in earnings improvement over the past three years. Our guidance range is wider than normal, reflecting the potential rate of market improvement, and we intend to tighten the range over time. As you can see, results will likely be down from historically high earnings in 2023, while free cash flow should improve from the prior year. I will discuss earnings and cash flow trends more on the next page. Having significantly improved our balance sheet over the past few years, we intend to maintain a healthy leverage ratio of between two and a half and three times. As we look to 2024, we expect macro conditions will strengthen over the course of the year.

John: Importantly earnings should meet or exceed the 2024 goal established at our last I day, reflecting significant operating progress in earnings improvement over the past three years.

John: Our guidance range is wider than normal, reflecting the potential rate of market improvement and we intend to tighten the range over time.

John: As you can see results will likely be down from historically high earnings in 2023, while free cash flow should improve from the prior year I will discuss earnings and cash flow trends more on the next page.

John: Having significantly improved our balance sheet over the past few years, we intend to maintain a healthy leverage ratio of between two five and three times as.

John: As we look to 2024, we expect macro conditions will strengthen over the course of the year and importantly, we have significant future earnings upside as both sales and production volumes more fully recover. This recovery, we will provide additional sales contribution and boost asset utilization rates as we eliminate the overhang of very expensive temporary.

John A. Haudrich: Importantly, we have significant future earnings upside as both sales and production volumes more fully recover. This recovery will provide additional sales contribution and boost asset utilization rates as we eliminate the overhang of very expensive temporary production curtailment. Over the course of 2023 and 2024, we are navigating many market forces that are affecting the evolution of selling prices, sales volumes, and production volumes. As such, it can be difficult to assess financial performance in any given quarter or fiscal year.

John: Production curtailments.

John: Over the course of 2023 and 2024, we are navigating many market forces that are affecting the evolution of selling prices.

John: Sales volumes and production volumes as such it can be difficult to assess financial performance in any given quarter or fiscal year. However, we are confident earnings will ultimately rebound to over $3 per share as macros normalize in sales and production recover to pre pandemic levels in the future.

John A. Haudrich: However, we are confident earnings will ultimately rebound to over $3 per share as macros normalize and sales and production recover to pre-pandemic levels in the future. Turning to page 10, we have provided more details on the key business drivers for both earnings and cash flow. As illustrated on the left, we expect 2024 earnings to approximate $2.25 to $2.65 per share. The impact of lower net price and higher interest expense will be partially offset by low- to mid-single-digit sales volume growth and the benefits from our robust $150 million Margin Expansion Initiative program. The lower net price will likely reflect about a 1% decline in average gross selling price amid a more normal 3% cost inflation environment.

John: Turning to page 10, we have provided more details on our key business drivers for both earnings and cash flow.

John: As illustrated on the left we expect 2024 earnings will approximate $2 25 to $2 65 per share the impact of lower net price and higher interest expense will be partially offset by low to mid single digit sales volume growth and the benefits from our robust $150 million margin expansion initiative program.

John: Lower net price will likely reflect about a 1% decline in average gross selling price amid a more normal 3% cost inflation environment, Yes, we do anticipate retaining about 75% of the very favorable net price realized over the previous two years.

John A. Haudrich: Yet, we do anticipate retaining about 75% of the very favorable net price realized over the previous two years. Going forward, we intend to provide only annual guidance, given elevated short-term market volatility and our preference to focus on long-term performance. With that said, we have included our current view on expected quarterly earnings distribution over the course of the year and will update this view if conditions materially shift over time. On the right, we reconcile our EBITDA and free cash flow outlook. EBITDA should range between $1.325 and $1.4 billion.

John: Going forward, we intend to provide only annual guidance given elevated short term market volatility and preference to focus on long term performance with that said we have included our current view on expected quarterly earnings distribution over the course of the year and we will update this view if conditions materially shift over time.

John: On the right, we reconcile our EBITDA and free cash flow outlook.

John: EBITDA should range between one three to five and $1 4 billion.

John: Currently it is unclear if working capital will be a modest source or use of cash as this will depend heavily on the rate of sales volume recovery over the course of the year and reduction in currently elevated inventory levels.

John A. Haudrich: Currently, it is unclear if working capital will be a modest source or use of cash, as this will depend heavily on the rate of sales volume recovery over the course of the year and the reduction in currently elevated inventory levels. Cap-Ex spending will be down from elevated levels in 2023, yet we do anticipate tax and interest payments will increase by $120 million combined. Higher tax payments follow strong earnings in 2023, as well as a one-time tax claim settlement in one jurisdiction. Higher interest reflects the forward curve and current payment schedules following recent refinancing activities. All their uses of cash are pretty consistent with history.

John: Capex spending will be down from elevated levels in 2023, yes, we do anticipate tax and interest payments will increase by $120 million combined.

John: Higher tax payments fell a strong earnings in 2023 as well as a one time tax claim settlement in one jurisdiction higher interest reflects the forward curve and current payment schedules. Following our recent refinancing activities. Other uses of cash are pretty consistent with historic trends overall, we expect free cash flow will range between 105.

John: <unk> million dollars and $200 million in 2024 as with earnings there is significant operating leverage upside as volumes recover that should generate higher future cash flows.

John A. Haudrich: Overall, we expect free cash flow to range between $150 million and $200 million in 2024. As with earnings, there is significant operating leverage upside as fines recover, which should generate higher future cash flow. Let me wrap up with the key strategic objectives that we have set for 2024. Long-term margin improvement remains a top priority, and we intend to stay agile as the company navigates changing market conditions. We have established a very robust margin expansion program to help mitigate most of the expected net price headwind. As noted, we are targeting at least $150 million in benefits, which represents the highest objective in the eight-year history of this program.

John: Let me wrap up with the key strategic objectives that we have set for 2020 for long term margin improvement remains a top priority and we intend to stay agile as the company navigates changing market conditions. We have established a very robust margin expansion program to help mitigate most of the expected net price headwind as noted we are targeting.

John: At least $150 million of benefits, which represents the highest objective in the eight year history of this program.

As a reminder, the three buckets for this program our revenue optimization factory performance and cost transformation. Importantly efforts include accelerating the ongoing network optimization across North America.

John: As already noted 2024 will be a hallmark year as we commissioned our first magnet Greenfield site and advanced development of our future. Gen. Three solution. We also expect to enable other expansion programs and are in attractive geographies and markets overtime.

John A. Haudrich: As a reminder, the three buckets for this program are revenue optimization, factory performance, and cost transformation. Additionally, efforts include accelerating the ongoing network optimization across North America. As already noted, 2024 will be a hallmark year as we commission our first magma greenfield site and advance the development of our future Gen 3 solution. We also expect to enable other expansion programs in attractive geographies and markets as they recover. Likewise, we intend to deploy our ultra lightweight lightweighting solution at a couple of our sites in Europe this year. In addition to light-weighting, we will enable our ESG footprint by accelerating the deployment of low-carbon solutions, such as gas-oxy-fueled furnaces, and increasing renewable energy and coal utilization rates.

John: As they recover likewise, we intended to deploy our ultra lightweight light weighting solution at a couple of our sites in Europe. This year. In addition to light weighting, we will enable our ESG footprint by <unk>.

John: Accelerating deployment of low carbon solutions, such as gas oxy fueled furnishes and increase renewable energy and call. It utilization rates. It will be another active year as glass ethics on the glass efficacy front as we focus more on b to b connections after significantly reducing our leverage over the past several years, we intend to maintain a healthy balance sheet.

John: Leverage between two five and three times as you can see we have established another set of aggressive but achievable key objectives in 2024, as we advance our long term strategy and importantly, our capital allocation priorities are well aligned with the strategy as we continue to improve our capital structure fund profitable growth and return value to our shareholders.

Andres Alberto Lopez: It will be another active year on the glass efficacy front as we focus more on B2B connections. After significantly reducing our leverage over the past several years, we intend to maintain a healthy balance sheet with leverage between two and a half and three times. As you can see, we have established another set of aggressive but achievable key objectives for 2024 as we advance our long-term strategy. Importantly, our capital allocation priorities are well aligned with this strategy as we continue to improve our capital structure, fund profitable growth, and return value to our shareholders over time. Now I'll turn it back to Andres for final remarks starting on page 12. Thanks, John.

Over time now I'll turn it back to Andrew for final remarks, starting on page 12, Thanks, Sean.

Andrew: Over the past several years, we have significantly transformed the company and we are now a much more disciplined igl and capable organization. As a result, we have significantly improved performance and delivered on our commitments quarter after quarter.

We again demonstrated our improve operating effectiveness in 2023, as we successfully weathered difficult macro conditions that developed over the course of the year reporting the highest adjusted earnings since 2008 and finished the year with diverse balance sheet in nearly a decade.

Andrew: As a result, we are entering 2024 with a solid foundation.

Andres Alberto Lopez: Over the past several years, we have significantly transformed the company, and we are now a much more disciplined, agile, and capable organization. As a result, we have significantly improved performance and delivered on our commitments quarter after quarter. We again demonstrated our improved operating effectiveness in 2023 as we successfully weathered difficult macro conditions that developed over the course of the year, reporting the highest adjusted earnings since 2008 and finishing the year with the best balance sheet in nearly a decade.

Andrew: And are well positioned to capitalize as markets recovered over the course of the year.

We have completed more than 80% of our annual price agreements and expect to repaying approximately 75% of the very favorable net price achieved over the past few years supporting adequate returns.

Andrew: Consumer demand is trending in the right direction and our customers are increasingly more constructive on their business outlook.

Andrew: We are seeing early signs of improvement with good sequential volume improvement in January.

Andrew: Otherwise, we are working with their strongest MPD pipeline I can remember to help drive future growth.

Andres Alberto Lopez: As a result, we are entering 2024 with a solid foundation and our wealth position to capitalize as markets recover over the course of the year. We have completed more than 80% of our annual price agreements and expect to retain approximately 75% of the very favorable net price achieved over the past few years, supporting adequate returns. Consumer demand is trending in the right direction, and our customers are increasingly more constructive in their business outlook. We are seeing early signs of improvement with good sequential volume improvement in January. Likewise, we are working with the strongest MPD pipeline I can remember to help drive future growth. As discussed, we expect demand will recover over the balance of the year, and OI has significant operating leverage as sales volume normalizes to pre-pandemic levels. Importantly, execution is already underway on our aggressive but achievable Margin Expansion Initiative target, which is the highest in the program's eight-year history. We are confident we will deliver on this target given the capabilities we have built over the years and the maturity of our program. Our balance sheet is the healthiest in years, reflecting a very good capital allocation this year.

As these costs, we expect demand will recover over the balance of the year on Oi has a significant operating leverage as sales volume normalize to pre pandemic levels.

Andrew: Importantly execution is already underway on our aggressive but achievable margin expansion initiative target, which is the highest in the programs a year history. We are confident we will deliver on these targets given the capabilities. We have built over the years and the maturity of our program.

Andrew: Our balance sheet is the healthiest in years, reflecting very good capital allocation basically and.

Andrew: And finally 2024 will be a key milestone photo ies, we commissioned our first Mac My Greenfield site later this year and continue to advance the R&D efforts for <unk> III as well as developing ultra.

Andrew: Business conditions are beginning to turn in our favor and I'm confident our earnings should rebound to greater than $3 per share as volumes normalize to prep pandemic levels over time.

Speaker Change: Thank you and we're now ready to address your questions.

Speaker Change: Thank you. Thank you I would like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered you can with Julia so from the queue by pressing star and then K. We ask that you. Please limit yourself to one question and then one follow up question.

Emily: And finally, 2024 will be a key milestone for OI as we commission our first MAGMA greenfield site later this year and continue to advance the R&D efforts for MAGMA Gen III as well as develop ultimates. Business conditions are beginning to turn in our favor, and I'm confident our earnings should rebound to greater than $3 per share as volumes normalize to pre-pandemic levels over time. Thank you, and we're now ready to address your questions. Thank you. If you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind, or you feel like your question has already been answered, you can withdraw yourself from the queue by pressing star and then... We ask that you please limit yourself to one question and then one follow-up question and then please repeat if you have any further questions.

Speaker Change: And then please re queue. If you have any further questions.

Speaker Change: Our first question comes from Ghansham Panjabi with Baird. Please go ahead.

Ghansham Panjabi: Hey, guys good morning.

Ghansham Panjabi: Hey, good morning.

Ghansham Panjabi: Yes, I guess first off on the on slide 10, we have the EPS waterfall 23 versus <unk> 24.

Ghansham Panjabi: Net price looks like about 85, or so negative on an EPS basis.

Ghansham Panjabi: Wondering.

Ghansham Panjabi: How.

Ghansham Panjabi: How is that that number is there is still variability associated with it and also will this be a multi year issue and then maybe you could just give us a sense as to the big question right, which is supply demand on a global basis. The industry. Obviously you had some disruptions in Europe, you capacity started coming in.

Ghansham Panjabi: Where we are on supply demand.

And how that relates to pricing on a multiyear basis.

Speaker Change: Okay, maybe I can kick that off and address the first the first two elements of that as you take a look at the net price.

Ghansham Panjabi: Our first question comes from Ghansham Panjabi with Baird. Please go ahead. Hey guys, good morning. Good morning. Yeah, I guess, you know, first off on slide 10, where you have the EPS waterfall, uh, 23 versus 24, uh, net price looks like about a, you know, 85 cents or so negative on an EPS. Just wondering, how set that number is, is there any variability associated with it, and also will this be a multi-year issue, and then maybe you www.globalonenessproject.org The As you take a look at the net price, you know, texture for 2024, what you have is the combination of, you know, we got two books of business. We have our long-term contracted business, a little bit more than half of our business. You know, that's pretty much the price that is secure and in place.

Speaker Change: Texture for 2024, while you have in there is the combination we got two books of business, we've got our long term.

Speaker Change: Contracted business, a little bit more than half of our business that's pretty much the pricing that is secure and place. The other call. It 45% of our business tends to be open market contracts and as Andrew mentioned in his prepared remarks, we're about 80% plus complete and negotiating in that environment. So ghansham I would say that we're getting written.

Speaker Change: Very close to being in the position on the gross price.

Speaker Change: Situation and as we mentioned in the prepared remarks gross price is probably off 1% this year after <unk>.

Speaker Change: Strong double digit improvement over the last few years and then what you're left with then is.

Speaker Change: Inflation and so inflation, we've been seeing coming down I mean last year was kind of mid single digits. We're targeting about 3%. This year. So that kind of gives you something in the $125 million to $150 million range on cost inflation.

John A. Haudrich: The other, call it 45%, of our business tends to be open market contracts, and as Andres mentioned in his prepared remarks, we're about 80% plus complete in negotiating in that environment. So, Ghansham, I would say that we're getting very close to being in the position on the gross price situation, and as we mentioned in the prepared remarks, gross price is probably off 1% this year after a strong double-digit improvement over the last few years. And then what you're left with is, you know, inflation. And so inflation, we've been seeing coming down. I mean, last year it was kind of mid-single digits.

Speaker Change: We see the majority of our cost inflation now being labor related inflation, which I think is pretty set given contracts and unions and things like that but you could see some variation in the remaining component. So so hopefully that gives you a little bit of texture about.

Speaker Change: The solidity of them net price, which we think is fairly solid in that regard.

Speaker Change: Yes, the pricing.

Speaker Change: <unk> has been.

Speaker Change: Quite positive and in line with our expectations.

Speaker Change: Slightly more than 80% of the open market agreements already negotiated.

Speaker Change: We are retaining about 70% 75% of the benefits that we have accumulated over the last couple of years now we're doing that at the lowest point in volume from this point on through 2020 forward on into 'twenty five volumes will go up which we believe will support prices even better when we.

John A. Haudrich: You know, we're targeting about 3% this year, so that kind of gives you something in the $125 to $150 million range for cost inflation. We see the majority of our cost inflation now being labor-related inflation, which I think is pretty stable, given contracts and unions and things like that. But you could see some variation in the remaining component.

Speaker Change: Look at supply and demand in a global basis first ally is balanced and at this point in time, we're taking all the measures to be able to achieve our inventory targets in 2024 taken into consideration that demand projections that we have if there is need for more action will adjust but we believe we already in a good place when we look at the.

Andres Alberto Lopez: So hopefully, that gives you a little bit of texture about, you know, the solidity of the net price, which we think is fairly solid in that regard. Yeah, the price evolution has been quite positive and in line with our expectations, with slightly more than 80 percent of the open market agreements already negotiated. We are retaining about 75 percent of the benefits that we have accumulated over the last couple of years. And now, we're doing that at the lowest point in volume.

Speaker Change: Lowell.

Speaker Change: Landscape, we are seeing.

Speaker Change: Lots of curtailments, taking place around the world.

Speaker Change: In Europe in particular, where it is required the most we're seeing a lot of vaccines in that regard so.

Speaker Change: The balance is going to depend on how quickly.

Andres Alberto Lopez: From this point on, through 2024 and into 2025, volumes will go up, which we believe will support prices even better. When we look at supply and demand on a global basis, first, OI is balanced. And at this point in time, we're taking all the measures to be able to achieve our inventory targets in 2024, taking into consideration the demand projections that we have. If there is a need for more action, we'll adjust, but we believe we are in a good place. When we look at the global landscape, we are seeing lots of cuts taking place around the world. In Europe, in particular, where it is required the most, we're seeing a lot of actions in that regard.

Speaker Change: That demand that capacity comes back to support demand, but at this point in time with the amount of curtailments, we say we see.

Speaker Change: We're seeing a trend towards violence help supply and demand in Europe and globally.

Speaker Change: Just to build maybe one comment on top of that is if you look back at the history of this company, we have actually very good pricing power.

Speaker Change: Looking at the previous six years, five or six years, we had achieved positive net price and so we believe that as volumes as Anders talked about normalized we will go back into that consistent history, then of being able to price through inflation going forward.

Speaker Change: Okay very comprehensive thank you for that and then your comments on January down, 10% I mean, we'll do that would be an improvement, but we are.

Andres Alberto Lopez: So the balance is going to depend on how quickly that demand and that capacity come back to support demand. But at this point in time, with the amount of curtailments we see, we're seeing a trend toward a balance of supply and demand in Europe and globally. And just to build maybe one comment on top of that is, if you look back at the history of this company, we actually have very good pricing power. You know, if you look at the previous six years, five of the six years, we have achieved positive net prices. And so we believe that as volumes, as Andres talked about, normalize, we will go back into that consistent history of being able to price through inflation going forward. Have you, High End Liquor, Cognac, etc., any color?

Speaker Change: Maybe just give us a sense as to your own inventory levels and then as you kind of think about the customers' inventory pause. If you will are there any particular categories that are still going through an aggressive destocking cycle.

Speaker Change: Relative to the down 10% that Youre seeing is it is that high end liquor cognac et cetera, just any.

Speaker Change: Color there would be helpful.

Speaker Change: Yes, so we are seeing.

Speaker Change: The destocking activity pretty much thorn in beer and.

Speaker Change: In fluids.

Speaker Change: The categories that are still to complete that cycle artist spirits, and wine, which we expect will.

Speaker Change: Improve over the course of the second quarter and should be more normal normalized by the middle of the year.

Andres Alberto Lopez: Yeah, so we're seeing... The stalking activity is pretty much done with beer and NAB and food. The categories that are still to complete that cycle are spirits and wine, which we expect will improve over the course of the second quarter and should be more normalized by the middle of the year. Our inventories obviously increased last year, and as I mentioned before, we are taking all the actions to bring those inventories back down as per our current business plan for 2014. Yeah, maybe just to build on that and build on some details for Andres' comments there, you know, as we entered the softness that really was, that occurred for us kind of in January or February of 23, our inventories were probably too low. We had low 40s IDS, and we were stocking out.

Speaker Change: Our inventory is obviously increase last year and as I mentioned before.

Speaker Change: We are taking all the actions to bring those inventories back down as per hour.

Speaker Change: Our core business plan for 2004.

Speaker Change: Yes, maybe just to build off that and building on some details for andrea's comments there as we entered the softness that really was that occurred for us kind of January February of 'twenty. Three our inventories are probably too low we had low forty's ibs on and we were stocking out as you recall back then we weren't able to serve a number of different mark.

Speaker Change: That's all.

Speaker Change: Our inventories ended 2023 at about 60 days, which is a little higher than we would like over the course of 2024, we're managing our system to get back into the low <unk>, which we believe is a pretty healthy place for the business.

Speaker Change: Okay.

Speaker Change: Okay. Thanks very much.

Speaker Change: The next question comes from George Staphos with Bank of America. Please go ahead.

George Leon Staphos: Hey, Thanks, Hi, everyone. Good morning, Thanks for the details.

Maybe my two questions first of all segue on the inventory comment that was brought up earlier so.

John A. Haudrich: And as you recall, back then, we weren't able to serve a number of different markets. Our inventories ended in 2023 at about 60 days IDS, which is a little higher than we would like. Over the course of 2020, we're managing our system to get back into the low 50s, which we believe is a pretty healthy place for the business. Thanks very much. This question comes from George Staphos with Bank of America. Please go ahead. Hey, thanks. Hi, everyone. Good morning.

George Leon Staphos: When you say you expect to be done on wine and spirits inventory destocking or at least your customers will be.

George Leon Staphos: Be done so.

George Leon Staphos: To what degree do you expect that having.

George Leon Staphos: <unk> built up inventories to too high of a level within the supply chain that your customers will actually destock below what would be normal below what would be sort of appropriate, but nonetheless means a another layer of volume decline or progression that you need to manage through so that's question number one what's baked in to your goals and forecast.

George Leon Staphos: Thanks for the details. You know, maybe my two questions. First, we'll segue on the inventory comment that was brought up earlier. So, when you say you expect to be done with the wine and spirit inventory destock, or at least your customers will be, be done so. To what degree do you expect that having built up inventories to too high of a level within the supply chain, your customers will actually de-stock below what would be normal, below what would be sort of appropriate, but nonetheless means another layer of volume decline or progression that you need to manage through? So that's question number one. What's baked in to your goals?

George Leon Staphos: Well to customers' willingness to where potential to have inventories lower than normal.

George Leon Staphos: The second thing on the $150 million of margin enhancement that you are projecting for this year can you talk to what the buckets are.

George Leon Staphos: In that 150, and what is sustainable on a going forward basis.

George Leon Staphos: In other words, how much longer can you keep putting up a $100 million or better types of margin enhancement over the next few years. Thank you guys and good luck in the quarter.

Speaker Change: Yes, let me answer first the <unk>.

Speaker Change: Western on margin expansion initiatives, so that our three walcott revenue optimization factory performance on cost transformation.

George Leon Staphos: The forecast relative to customers' willingness or potential to have inventory lower than normal. The second thing, on the $150 million of margin enhancement that you're projecting for this year, can you talk about what the buckets are in that $150 million and what is sustainable on a going forward basis? In other words, how much longer can you keep putting up $100 million or better types of margin enhancement over the next few years? Thank you, guys, and good luck in the quarter.

Speaker Change: Greg enabled year on year margin expansion in a multi year period. So that's what we intended to do when we created this initiative and our goal at the time was to have a solid process on capabilities in place bottoms up top down well articulated globally.

Speaker Change: And all the way down to a chop dror.

Speaker Change: Now we wanted to that we will be able to quickly and effectively identify projects executed on them and then replicate them across Hawaii.

Speaker Change: We have successfully on that.

Andres Alberto Lopez: Yeah, let me answer first the question on the margin expansion initiative. So there are three buckets: revenue optimization, factory performance, and cost transformation. They enabled year-on-year margin expansion over a multi-year period, so that's what we intended to do when we created this initiative. And our goal at the time was to have a solid process and capabilities in place, bottoms up and top down, well-articulated globally, and all the way down to the top floor. Now, we wanted to do that to be able to quickly and effectively identify projects, execute on them, and then replicate them across Hawaii.

Speaker Change: And that is why the us to the confidence that this is not only.

Speaker Change: A multiyear program going forward, but we kind of achieved the target that we find for this year to 150 million orders event.

Speaker Change: And George on your first comment is.

Speaker Change: As far as the market appetite given the higher level of inventories than they are right now.

Speaker Change: That's what we're specifically addressing right now if you take a look in the fourth quarter or our capacity was down our temporary curtailments equated to about 20%.

Andres Alberto Lopez: We have successfully done that, and that is what gave us the confidence that this is not only a multi-year program going forward but that we can achieve the target that we set for this year of $150 million. And George, on your first comment, as far as the market appetite given the higher level of inventories in there right now, that's what we're specifically addressing right now. If you take a look at the fourth quarter, our capacity was down. Our temporary curtailment equated to about 20% of our total global capacity. And in fact, it was probably scooted higher to that in Europe, where you see those longer supply chains, www.globalonenessproject.org. Yeah, I need some of this information. John, you're doing fourth quarter inventory management. Yeah, thanks, Andres. Basically, he's trying to keep in mind that your customers may go below normal. Is that the right takeaway? Yeah, exactly. I mean, we don't know exactly whether people are going to land right where they want to be, whether they will overshoot or undershoot, right?

Speaker Change: Our total global capacity and in fact, it was probably skewed higher to that in Europe, where you see those longer.

Speaker Change: Longer supply chains, such as wine and spirit. So I think we are taking a category by category view and taking a look at that trying to understand.

Speaker Change: The commercial.

Speaker Change: Components and considerations there to make sure that we're addressing things to get our inventories down in the right place by market by category going forward.

Speaker Change: Yes, so John Yamana, where competitive inventory.

Go ahead, John your fourth quarter inventory management, yes. Thanks, Andres basically is trying to keep in mind that your customers may go below normal.

John A. Haudrich: Is that the right takeaway.

John A. Haudrich: Yes exactly.

John A. Haudrich: We don't know exactly whether people are going to land right, where they want to be whether they will overshoot or undershoot right. So we have to be very dynamic and we would rather be quite aggressive on the front end like we were doing here in the fourth quarter to make sure that we're managing the inventories appropriately.

Speaker Change: Okay and within the <unk>, what I was getting at what what's in each of those those three buckets that comprise 150. This year. Thank you.

George Leon Staphos: So we have to be very dynamic, and we would rather be quite aggressive on the front end, like we were doing here in the fourth quarter, to make sure that we're managing the inventories appropriately. Okay, and within the 150, and Andres, this is what I was getting at, what's in each of those three buckets that comprise the 150 this year? Thank you.

Speaker Change: Yes. So in revenue optimization is primarily improving the quality of our revenue and making sure that we capture all day value as the final <unk> agreement in our agreements in the factory performance is all the productivity.

Speaker Change: That goes up for with the asset base and in the cost transformation is reorganization is changing our organization structure is making it simpler more effective more agile.

Andres Alberto Lopez: Yeah, so in revenue optimization, it's primarily improving the quality of our revenue, making sure that we capture all the value as defined in our agreements. In factory performance, it's all the productivity that goes up with the asset base. And in the cost transformation, it's reorganization, it's changing organization structure, it's making it simple, more effective, more agile, and there is still a lot of potential in those three boxes. And George, to build off specifically on some of the numbers there for the $150 million, we have about more than $100 million in the factory performance component that Andres was talking about. That's the shop floor improvements and things like that. But probably half of that is restructuring activity, mostly focused north. And that's substantially done, okay, or in very late stages. So we're very comfortable with that.

Speaker Change: And there is still a lot of potential in those three buckets.

Speaker Change: And George to build off of that specifically on some of the numbers there for the $150 million. Thank you we have about.

George Leon Staphos: About more than $100 million in.

The factory performance component onerous was talking about that Thats, the shop floor improvements and things like that understanding probably half of that is restructuring activity, mostly focused in north and thats substantially done okay. So so or very late stages. So we're very comfortable with with that the next biggest bucket is what we call the <unk>.

George Leon Staphos: Cost transformation, which is the Opex reduction and we did complete a reduction in force program in the fourth quarter.

George Leon Staphos: So thats, providing the majority of that call it $30 million improvement and so again very comfortable with executing and achieving that and then the last component is a little bit on the revenue optimization. It is a little skewed differently in the past, where maybe theres a little bit more revenue optimization going on when we were seeing that the stronger gross price realization.

John A. Haudrich: The next biggest bucket is what we call the cost transformation, which is the OPEX reduction. And we did complete a reduction in the FORGE program in the fourth quarter. So that's providing the majority of that, call it $30 million improvement. And so again, very comfortable with executing and achieving that.

George Leon Staphos: Initiatives.

George.

George Leon Staphos: I would like to highlight in previous calls.

Andres Alberto Lopez: And then the last component is a little bit on revenue optimization. It's a little skewed differently from the past, where maybe there was a little bit more revenue optimization going on when we were seeing the stronger gross price realization. George, there is something I would like to highlight.

George Leon Staphos: At the point of.

George Leon Staphos: Manufacturing operations, the strength of those operations, because we elevate performance.

George Leon Staphos: And when I look at the manufacturing operations with <unk> I can say to you that I am.

George Leon Staphos: <unk> performance capability related to execute.

Andres Alberto Lopez: Manufacturing operations, the strength of those operations because we elevate performance. And when I look at the manufacturing operations of Y2A, I can say to you that I'm seeing the best performance capability and ability to execute in more than two decades. So our capability is such that it gives us confidence we can deliver on performance improvement. We've been doing so for the last few years, and there is still room for improvement, and we have very good plans in place to do that. Thank you very much, Andres. Thank you. Thank you. The next question comes from Anthony Pettinari. Please go ahead.

George Leon Staphos: More than two decades, so our capability is such that it gave us the confidence we can deliver on performance improvements we've been doing so for the last few years and there is still room for a prelim and we have very good plans in place to do that.

Speaker Change: Thank you very much thank you John.

Speaker Change: Yes.

Speaker Change: The next question comes from Anthony Pettinari with Citi. Please go ahead.

Anthony Pettinari: Hi, good morning.

Anthony Pettinari: Good morning, John.

Anthony Pettinari: John.

Anthony Pettinari: You give any detail on the current Nat gas hedging position now.

Anthony Pettinari: We're obviously able to hedge well ahead of Nat gas Spike in Europe. That's flat can you talk about your current position and then maybe somewhat related there was another glass producer who talked about Mexico energy as a major headwind in 'twenty for that they expect to recover.

Anthony Pettinari: Oh, good morning. Andres, John, hey, can you give any detail on the current NatGas hedging position now? You know, you were obviously able to hedge well ahead of a NatGas spike in Europe, but that's over. Can you talk about your current position? And then maybe somewhat related, you know, there was another glass producer who talked about Mexico Energy as a major headwind in 24 that they expect to recover contractually in 25. I'm not sure if that's specific to that producer. There's anything you call out from the Mexico side as well.

Anthony Pettinari: We're actually in 25 I'm not sure if that's specific to that producer.

Anthony Pettinari: Theres anything you'd call out from the Mexico side as well.

Speaker Change: Yes, I can address both of those thanks Anthony.

Speaker Change: First on our Nat gas.

Speaker Change: It's not a hedge as long term contracts.

Speaker Change: Some detail clarity there again for everybody's benefit we had entered into a very favorable long term energy agreements before the run up in natural gas before the Russia, Ukraine engagement.

John A. Haudrich: Yeah, I can address both of those. Thanks, Anthony. You know, first on our nat gas, it's not a hedge, it's long-term contracts for just some detailed clarity there. Again, for everybody's benefit, we had entered into very favorable long-term energy agreements before the run-up and natural gas before the Russia-Ukraine engagement or confrontation. So that's when you know the natural gas prices were called 20 to 25 euros per megawatt hour.

Speaker Change: Our compensation so that's one.

Speaker Change: Natural gas prices were call it 20% to 25 million euros per megawatt hour and those contractors were long term as we included in our public filings. They continue through at a very high level of coverage through the end of 2025, okay. So so as we stand here, we got two years left of those very favorable energy positions.

Speaker Change: Now the best case scenario for US is that those contracts shielded us from very high energy prices that clearly spiked over the last two years and allowed allowed us to benefit from that and the best solution also is that energy prices actually trail off to more historic levels when those contracts roll off at the end of.

John A. Haudrich: And those contractors were long term, as we will be included in our public filings; they will continue at a very high level of coverage through the end of 2025. Okay, so as we stand here, we've got two years left of these very favorable energy prices. Now, the best case scenario for us is that those contracts shielded us from very high energy prices that clearly spiked over the last two years and allowed us to benefit from that. And the best solution is that energy prices will actually trail off to more historic levels when those contracts roll off at the end of 2025. As you take a look at the forward curve right now, granted anything can change on any given day, but if you look at it right now, the forward curve for natural gas in 2026 and 2027 is pretty close to what those contracts are.

Speaker Change: 2025, as you take a look at the forward curve right now granted anything can change at any given day, but you look at it right now the forward curve for natural gas in 'twenty five 'twenty six 'twenty seven is pretty close to what those contracts are so we're in a pretty good advantaged position right now of having to have had those contracts.

Speaker Change: When when the prices were high and then the timing of them Rolling off right now kind of syncs up with.

Speaker Change: The market is seeing right now is a little bit more normalization of energy prices.

Speaker Change: And then on the Mexican side, Yes, I think everybody is facing the same situation with the higher higher prices in Mexico.

John A. Haudrich: So we're in a pretty good advantageous position right now of having to have had those contracts when the prices were high, and then the timing of them rolling off right now kind of syncs up with what we see the market seeing right now, which is a little bit more normalization. And then on the Mexican side, yeah, you know, I think everybody's facing the same situation with the higher prices in Mexico. That is part of our, you know, total net price position that: http://TheBusinessProfessor.com. Great, great, that's extremely helpful. And then just one quick one, if I could.

Speaker Change: That is part of our.

Speaker Change: Total net price position that we've laid out here and again, yes, our pis would look to pick that up in the next year. So so it's part of the natural cycle that we see.

Speaker Change: Great Great. That's extremely helpful. And then just one quick one if I could there was a trade case on imports of I think.

Speaker Change: <unk> models from Latam and China into the U S. I'm, just wondering if thats impactful to you at all and if you could just generally talk about important dynamics and in North America.

Anthony Pettinari: There was a trade case on imports of, I think, wine bottles from LATAM in China into the U.S. I'm just wondering if that's impactful to you at all, and if you could just generally talk about import dynamics into North America and any impact. Yeah, I mean, obviously, that's out there.

Speaker Change: Any impact Oi.

Speaker Change: Yes.

Speaker Change: Obviously that's out there.

Speaker Change: We continue to monitor and look at that assertion.

Speaker Change: We can't really comment on that much further.

John A. Haudrich: We continue to monitor and look at that assertion. We can't really comment on that much further. What I would say is that, you know, North America has always faced a large amount of imports coming in from different markets, primarily Asia being one of them. And from time to time, you know, the competitive elements of that have been challenging.

Speaker Change: Say as that.

Speaker Change: North America has always faced a large amount of imports coming in from different markets, primarily Asia being we're being one of them and from time to time, the competitive elements of that have been challenging.

Speaker Change: So that's probably as far as we can go right now with that one.

Andres Alberto Lopez: So that's probably as far as we can go right now with that one. And something that we're seeing in the market is a growing concern with regard to imports of empty glass by our customers due to potential supply chain disruptions, which should favor local supply, and that's all primarily in the wine. Okay, that's very helpful. I'll turn it over. Our next question comes from Gabe Hajde with Wells Fargo. Please go ahead. Andres, John, and Chris, good morning.

Speaker Change: It's something that we're seeing in the market as a growing concern with regards to imports of empty glass by our customers.

Speaker Change: Due to potential supply chain disruptions.

Speaker Change: Which should favor local supply.

Speaker Change: And that's primarily in the wireless space.

Speaker Change: Okay. That's very helpful I'll turn it over.

Speaker Change: Exactly.

Speaker Change: Our next question comes from Gabe <unk> with Wells Fargo. Please go ahead.

Gabe: Andres John Chris Good morning.

Gabe: Good morning.

Gabe S. Hajde: Good morning. I wanted to talk about maybe capital intensity of the business and this year, CapEx being a little bit less cash flow, maybe a little bit depressed. But just when I look at your four to five or four hundred.

Gabe: I wanted to.

Gabe: Talk about maybe capital intensity of the business in this year.

Gabe: Capex being a little bit.

Gabe: Thus cash flow, maybe a little bit depressed, but just.

Gabe: When I look at your 4% to 400.

Gabe S. Hajde: Excuse me, $400 to $450 million of maintenance capital expenditures. And then later on in your slide presentation, you talk about 75 million to 150 million, excuse me, um, of CapEx to fund profitable growth or maintain market share, I think is what you'd call it there. You know, picking midpoints there, we're talking about $500 million or so of CapEx that would be expected. And so I guess maybe is that the right or wrong conclusion to draw from that? And then a peer announced something yesterday; they obtained financing for a pretty substantial investment here in North America. And, again, just maybe, as you look across your system, do you feel like it's well-capitalized? You can probably default to yes, because...

Excuse me $400 million to $450 million of maintenance Capex.

And then later on in your Slide presentation, you can talk about $75 million to a 150 excuse me.

Gabe:

Gabe: Capex to fund profitable growth or maintain market share I think is what you call. It there.

Gabe: I guess picking midpoint, there, we're talking about $500 million or so.

Gabe: Capex that would be expected and so I guess, maybe is that the right or wrong conclusion to draw from that and then.

Gabe: Appear announced something yesterday, they obtained financing for a pretty substantial investment here in North America.

Gabe: And again, just maybe as you look across your system.

Gabe: Do you feel like it's well capitalized I mean, I think you're probably defaulter, yes, because your operating performance has been pretty impressive here of late given the.

John A. Haudrich: Your operating performance has been pretty impressive here, given the market conditions, but just, I'm trying to think about medium-term cash flow generating capability for the organization. Thank you. Yeah, yeah, but Gabe, this is John. I can address elements of that.

Gabe: Market conditions persist.

Gabe: Im trying to think about medium term cash flow generating capability for the for the organization. Thank you.

Gabe: Yes, Gabe this is Sean I can address as elements of that first of all.

John A. Haudrich: First of all, in the last few years, our maintenance spending activity has ebbed and flowed as part of it has been a function of the pandemic and the ability to execute maintenance. And then more recently, with the softness that we experienced in the downtime, we've kind of been able to defer some maintenance because if, you know, facilities are down, you don't need to spend the maintenance dollars. So, I think a more normalized one, at least for the next few years, is somewhere between $400 and $500 million of maintenance capital as we come through this cycle, and it could just really depend on the timing and the health of any particular asset. And then, yeah, I mean, $75 million to $150 million of growth capital, CapEx, is required to keep up with, say, like a 2% kind of, you know, backdrop growth in the business. It could be kind of lumpy.

Sean: In the last few years, our maintenance spending activity has ebbs and flows part of it has been.

Sean: A function of the pandemic and the ability to execute and maintenance.

Sean: And then more recently here with the softness that we experienced in the downtime, we've kind of being able to defer some maintenance because of.

Sean: The facilities are down you don't need to spend maintenance dollars. So I.

Sean: I think a more normalized one lease for the next few years is somewhere between 400 $500 million of maintenance capital as we come through out of this cycle in and it just really depends on the timing and the health of that any particular asset.

A group of assets that need to be addressed in any given year.

Sean: And then yes $75 million to $100 million $150 million of growth Capex is required to keep up let's say like a 2% kind of.

Sean: Backdrop of growth in the business.

Sean: It could be kind of lumpy that's why there's a range. There ultimately over time, we do believe that with magma that brings that range down because of the capital intensity of of that solution is better.

John A. Haudrich: That's why there is a range there. Ultimately, over time, we do believe that with MAGMA, that brings that range down because the capital intensity of that solution is better than the legacy systems. But one thing I'd also want to point, as we think about just general CapEx, I mean, just general cash flow, is that I believe there is trapped free cash flow in the business right now, probably close to $200 million of trapped cash flow, in the sense that our volumes are still well below, you know, pre-pandemic levels, and returning our system back to that level probably adds $125-plus million of cash flow net of the working capital requirements You know, as we also indicated in the prepared marks, we are looking at some unusually high levels of tax and interest payments right now, so maybe half of that $50, $60 million ultimately comes back.

Then the legacy systems.

Speaker Change: But one thing I'd also want to point as we think about just general Capex I mean, just to general cash flow is I believe that there's trapped free cash flow in the business right now.

Speaker Change: Probably close to $200 million of trapped cash flow in the sense that our volumes are still well below pre pandemic levels and returning our system back to that level, probably adds 125 plus million dollars of cash flow net of the working capital requirements.

Speaker Change: As we also indicated in the prepared remarks, we're looking at some unusually high level of tax and interest payments right now that maybe half of that $50 million to $60 million. Ultimately comes back and we are also looking at probably a heavier restructuring year in 2024, So maybe $25 million comes back. So I think in the terms of more normalizing of that.

John A. Haudrich: And we are also looking at probably a heavier restructuring year in 2024, so maybe $25 million comes back. So, think in terms of more normalizing that, but also some of those ebbs and flows of the CapEx as a broader... And with regard to the peer investment. That announcement came out, and some flexibility characteristics are highlighted. Those characteristics or capabilities are commercially available. We have them in some locations in Europe and Latin America.

Speaker Change: But also some of those ebbs and flows of the Capex is a broader picture.

Speaker Change: And with regards to the peer investment.

That announcement came out some flexibility characteristics are highlighted.

Speaker Change: Those.

Speaker Change: Electorate sticks or capabilities are commercially available.

Speaker Change: We have them in some locations in Europe, and Latin America now as you know our focus in.

Speaker Change: In North America has been optimizing our asset network.

Speaker Change: So we're doing that so we can improve returns in this business.

Andres Alberto Lopez: Now, as you know, our focus in North America has been on optimizing our asset network. So we're doing that so we can improve returns in this business. We're focused on margin expansion initiatives with very good opportunities in North America. We are improving commercial conditions, and we're focused on deploying Magma. As you know, Magma has a number of characteristics that will create a competitive advantage that is not available today in the market. For example, it can be co-located or near-located.

Speaker Change: Focus on the margin expansion initiatives with very good opportunities.

Speaker Change: In North America, we are improving the commercial conditions and we're focused on deploying Mcmanus Youll know Mcnamara Hudson a number of characteristics that will create a competitive advantage that are not available in the market. For example, it can be co located or near located it can be relocated.

Speaker Change: Lower capital intensity lower total cost of one or two one off capabilities, which is good to deal with seasonality or economic downturns and will feeding a commerciality warehouse.

Andres Alberto Lopez: It can be relocated. 2010 All Rights Reserved. We'll fit in a commercial warehouse off the shelf short of time to market as a result of that. So, that's our focus, and our first move in that direction is the Kentucky line that we are planning, a startup in the middle of the. Thank you, Andres. Two quick follow-ups, hopefully. One is on the open market business that you all referenced. I think, historically speaking, those are one year in nature. I'm just curious if you can comment on the duration of that.

Speaker Change: Of the Charles Church with time to market as a result of that so that's our focus and our first move.

Speaker Change: That direction is that Kentucky line that we are planning tool.

Speaker Change: Got up in the middle of the year.

Speaker Change: Thank you Andreas two quick follow ups hopefully one is on the open market business that you all referenced.

Andreas: I think historically speaking those are those are one year in nature Im just curious if you can comment on the duration of that.

Speaker Change: Yes, yes, yes, those are one year agreements primarily.

Gabe S. Hajde: Yeah, yeah, those are one-year agreements, primarily, you know, small customers, mostly concentrated. Okay, and then John, I apologize that I missed it. You mentioned seeing a path to getting back above $3 of EPS. I don't think you put a time frame on it. I suspect that was intentional, but just any more color around that comment.

Speaker Change: Small customers it mostly concentrated in Europe.

Speaker Change: Okay, and then John I apologize if I missed it you mentioned seeing a path to getting back above $3 of EPS.

Speaker Change: I don't think you put a timeframe on it.

Speaker Change: That was intentional but just.

Speaker Change: Any more color around that comment thank you guys.

John A. Haudrich: Thank you guys. Yeah, so what I would say is, and we intentionally just want to be clear on the timeline, which is a little bit uncertain because it's a function of getting the volumes back to pre-pandemic levels. So if you take a look at our volumes, our volumes are down 12% in 2020. A 10% recovery off of that base would get us back to pre-pandemic levels.

John A. Haudrich: Yes, so what I would say is and we are intentional just to be clear on the timeline is a little bit uncertain, because its a function of getting the volumes back to pre pandemic levels. So let me take a look at our volumes our volumes were down 12% in 2023.

At 10% recovery off of that base would get us back to pre pandemic basis. Okay. So we're not.

John A. Haudrich: OK, so we're not, you know, so what I'm referring to here, getting over three dollars doesn't mean that we need to get back to the volumes of 2022, just the volumes of 2000. The Bulletproof Executive, 2013, And if you take a look at the volume that we're getting back in 2024, call it low to mid-single. That would still suggest that there's mid-single digits plus of volume still to be recovered above what we're assuming in our current outlook for the business. And the contribution margin that we get on the additional sales, but more importantly, bringing back the curtailment, you know, curtail capacity, and the operating leverage of that, that's at least 75 cents worth of additional revenue. www.globalonenessproject.org. We Our next question comes from Mike Roxland with Turist Security. Mike, please go ahead.

John A. Haudrich: So what I'm, referring to here getting over $3 doesn't mean that we need to get back to the volumes of 2022 and just the volumes of 2019 for example.

John A. Haudrich: And if you take a look at that.

John A. Haudrich: Volume that we're getting back in 2024 call. It low to mid single digits that would still suggest that there is mid single digits plus of volume still to be recover above what we're assuming in our current outlook for the business and the contribution margin that we get on the additional sales, but more importantly, bringing back of the curtailment.

John A. Haudrich: Curtail capacity and the operating leverage of that Thats at least 75 worth of additional earnings potentially more when you look at the combination of those two getting back into a more normalized level. So if you take a look at the guidance that we have right now and you look at that type of sensitivity. That's what gets you comfortable with over $3 per share.

We're ready for the next question.

Mike Roxland: Yeah, thank you, Andres, John, and Chris, for taking my questions. Congratulations and a good year, despite the backdrop. Thank you. Sorry, one quick question on price. Um, obviously... 1% net decline in selling prices, so obviously you've given back a little. I'm just trying to understand the context of why.

John A. Haudrich: Our next question comes from Mike Matson with curious Securities Mike. Please go ahead.

John A. Haudrich: Yes.

Mike Matson: Thank you Andres John.

Mike Matson: Taking my questions.

Mike Matson: Congrats on a very good year with like the backdrop.

Mike Matson: Jim.

Speaker Change: Just one quick.

Speaker Change: Sorry, one quick question is on pricing.

Speaker Change: Obviously.

Speaker Change: Good morning.

Speaker Change: And 1% net decline in selling prices, obviously, you've given back a little I'm just trying to understand the context of why.

John A. Haudrich: For what's really driving the weakness in selling prices is more because, John, you mentioned, labor is going up. And inflation is still growing 3%. I guess it's growing at a smaller rate relative to last year and the year before, but still going up. So is the price that you've given back more a function of supply and demand? Because certainly some of your inputs still remain elevated, and some are still going, you know, still increasing. Yeah, I mean, I'll take a stab at that one.

Speaker Change: Or what's really driving the weakness in selling prices is more because John you mentioned in your labor is going up inflation still growing 3% I guess it is growing at a slower rate relative to last year and the year before but still going up so is the price that you've given back more a function of supply demand you certainly some of your inputs to remain elevated in <unk>.

Speaker Change: <unk>.

Speaker Change: It was still increasing.

Speaker Change: Yes, I mean, I'll take a stab at that one.

John A. Haudrich: First, let's understand the context. Gross prices have been up a strong double digit over the last few years. And so, you're really looking at a great run on price. Now, when you take a look at the texture of that 1% decline that we're talking about, keep in mind, there are two books of business, right? There is the long-term contract business, and then there's the open market.

First let's understand the context.

Speaker Change: Gross price have been up a strong double digit over the last few years and so you are really looking at a great run on price now when you take a look at the texture of that 1% decline that we're talking about keep in mind. There's two books of business right. There is the long term contract business and then there is the open market business.

John A. Haudrich: So the long-term contracted business is going up low single-digit. That's passing through PAFs and things like that; that's structural in place. So, but we are seeing a low to mid-single-digit decline in open market agreements, and that's primarily over in Europe. And I think the biggest challenge is that we were negotiating those prices over the last few months in the backdrop of a pretty soft macro condition. And as we saw just a few weeks ago, we were negotiating those prices over the last few weeks. www.globalonenessproject.org. Correct me if I'm wrong, but it also occurred at the same time that we were out in the marketplace negotiating prices. And that's why we're confident as we go and the value is more normalized over the course of the year and into the future, that the competitive backdrop will improve and allow us Got it. Very, very helpful. I appreciate the color. And then just one quick follow-up on your European energy position. Obviously...

Speaker Change: So the long term contracted business is going up low single digits, that's passing through apps and things like that that structure in place.

Speaker Change: But we are seeing a low to mid single digit decline in open market agreements and Thats, primarily over in Europe, and I think the biggest challenge is that is that we were negotiating those prices over the last few months and the backdrop of a pretty soft macro condition and as we saw just even in the fourth.

Speaker Change: Quarter in Europe volumes were down 22%. So I think what youre seeing right now is a fairly acute short term.

Speaker Change: Softness that will.

Speaker Change: Correct itself because of the substantially supply chain driven but it also occurred at the same time that we're out in the marketplace negotiating prices and Thats why we are confident as we go and values more normalize over the course of the year and into the future that the competitive backdrop will improve and allow us to be able to price through inflation going forward.

Speaker Change: Got it very helpful. Appreciate the color and then just one quick follow up on your European energy position obviously.

John A. Haudrich: Very good timing with the contract that you had, in terms of those contracts being able to shield you from the energy swings of the last few years. You mentioned the forward curve for NATGETS in 2027 being similar to what you have currently. Why wouldn't you, or maybe you had, it doesn't sound like it, but why wouldn't you have extended the contract that you have?

Speaker Change: Great timing with the contracts that you had.

Speaker Change: In terms of Wisconsin Shields, you from the swings in last few years.

Speaker Change: You mentioned the forward curve for Nat gas in 2022, and 2020 and being similar to what you have currently.

Speaker Change: I wouldn't you maybe you have.

Speaker Change: But why wouldn't you have extended the contract.

Speaker Change: If the pricing is similar to what you currently have like why wouldn't you want to further enter into more contracts just to hedge yourself against increase in volatility.

Mike Roxland: If the pricing is similar to what you currently have, like why would you want to go further and enter into more contracts just to hedge yourself against increasing volatility in your, I would say that, you know, our view, and we've explained further in our 10k for details if you want to refer, we always take a five-year view of energy going forward, okay? And so we will be opportunistic when we see periods when energy prices drop and things like that. We've got a great energy team.

Speaker Change: In Europe in energy.

Speaker Change: I would say that.

Speaker Change: Our view in.

Speaker Change: It's been explained further in our 10-K for for details. If you want to refer we always take a five year view of energy going forward and so we will be opportunistic when we see periods when energy prices dropped and things like that we've got a great energy team just a great energy team.

John A. Haudrich: And they're very, very sophisticated in this regard. So Mike, I would expect us to continue to layer in contracts and things over time. But certainly, we want to be opportunistic. And the good thing is the position that we have allows us to be very opportunistic because we don't really have a gun to our head because we're good for the next.

Speaker Change: And they're very very sophisticated in this regard so so Mike I would expect us to continue to layer in contracts and things over time, but certainly we want to be opportunistic and the good thing is the position that we have allows us to be very opportunistic because we don't really have any gun to our head because were good for the next couple of years.

Speaker Change: Got it.

John A. Haudrich: And one final question, if you don't mind, just any update on the Italian Antitrust Authority? www.thevenusproject.com. You know, we are aware of the investigation by the Italian Competition Authority. We don't really comment on ongoing legal matters. I would say that OI is committed to compliance with the laws of each jurisdiction in which we operate, obviously. It's all part of our global code of ethics and et cetera.

Speaker Change: Questions.

Speaker Change: Don't mind, just any update on the Italian antitrust authority.

What kind of to be there.

Timing of when you may be complete their review.

Speaker Change: Yeah.

Speaker Change: We are aware of the investigation by the Italian competitive competition authority.

Speaker Change: We don't really comment on ongoing legal matters and I would say that Oi is committed to compliance with the laws of each jurisdiction in which we operate obviously, it's all part of our global code of ethics, and et cetera. It's all clearly out there on our website. So we always intend to behave in accordance with our with our policies.

John A. Haudrich: It's all clearly out there on our website, so we always intend to behave in accordance with our policies. We have time for one more question. Yeah, thanks. Our final question today comes from Arun Viswanathan with RBC. Please call...

Speaker Change: Hello, everyone. My question, yes.

Speaker Change: Yeah. Thanks, Thanks, Mike.

Speaker Change: And our final question today comes from Arun Viswanathan with RBC capital. Please go ahead.

Arun Viswanathan: Sorry, thanks for taking my question. I just wanted to, I guess, ask about the maybe medium-term demand outlook that you guys have for each category. So, obviously, you've gone through some volatility through COVID and supply chain issues and then de-stocking. So, when you look at the, you know, down double-digit volumes for 23, I guess, is there a way you can really attribute a portion of that to de-stocking and how much would that be versus primary demand? And then, when you look at, you know, maybe, say, 25, what are you expecting, kind of? Should we think about, say, 1 to 2 percent volume growth across your different regions? Or how do you think about how you sit now in glass?

Arun Viswanathan: Alright, Thanks for taking my question just wanted to I guess to ask about the.

Arun Viswanathan: Maybe medium term and.

Arun Viswanathan: Outlet.

Arun Viswanathan: <unk> four category so obviously.

Arun Viswanathan: Some volatility through Covid and supply chain issues and then destocking.

Arun Viswanathan: So when you look at the down double digit volumes for 'twenty three.

Speaker Change: I guess is there a way you can really attribute a portion of that to destocking and how much would that be the primary demand and then when you look at me.

Speaker Change: Maybe say 25, what are you expecting kind of we think about a 1% to 2% volume growth.

Speaker Change: Across your different regions or how should we think about.

Speaker Change: Now in glass and I know it will vary by high food.

Andres Alberto Lopez: And I know it'll vary by food and beverage in different categories, so maybe that's kind of more what we're looking for. Thanks. Yeah, I think one slide that will be a good reference, slide number four, which is showing how consumer consumption has evolved over this period of time. You see that it started to improve back in the second quarter of 2023, while stocking activity started to increase in Q1 2023. So the largest driver of the lower achievements for OI has really been the stocking activity.

Speaker Change: Food and beverage in different categories. So maybe that's kind of more what we're looking for.

Speaker Change: Yes, I think one.

Speaker Change: That would be a good reference.

Speaker Change: To have a slide number four that is showing how consumer consumption has evolved over this period of time, you'll see that they just started to improve back in the second quarter of 2023, while they're stocking activity started to increase.

Speaker Change: In Q1, 2023, so the largest driver of the lower shipments for July has been really they're stuck in activity and I will say.

Andres Alberto Lopez: And I would say in the last part of the year, the second half, inventories are going back to a more normal position. We see that in beer, in NAB, in food, it's already pretty much there. Wine and spirits will take a little longer, but that will normalize.

Speaker Change: In the last part of the year in the second half being up at around 80% of that.

Speaker Change: Now inventories are going back to a more normal position.

Speaker Change: We see that <unk> be in full which is already pretty much. There is why notice periods will take a little longer.

Speaker Change: That will normalize now something that chose.

Andres Alberto Lopez: Now something that shows that the interest in glass is pretty high is the high level of new product development activity. We have a pipeline at this point in time that is very large, of very high probability projects, 500,000 tons. All of that will come into the stream to support demand through 24 and going into 25. Yeah, you know, one thing I would just build off of that, you know, Arun, to your other question, subject of question: what is Andres Lopez, John Haudrich, Debbie Jones, Arthur Almeida, Owens-Illinois Inc. Interim Target to get by his back, pre-pandemic levels themselves. So, and it will obviously be following our customers. Great, thanks.

Speaker Change: That the interesting lastly is pretty high as the high level of new product development activity. We have a pipeline at this point in time that is very large or very high probability projects. These 500000 tons all of that would come into the stream to support them on.

Speaker Change: Through 'twenty, four I going into 'twenty five.

Speaker Change: Yes, one thing I would just build off of that Arun to your other question. Subsequent question with what's the what's the trajectory going forward. Obviously in the first quarter you can see on that same chart. We do anticipate volumes to be down, it's probably a transitional quarter for us and start to build off of that.

Speaker Change: Ultimately, we do whether it's 25, but we don't know the timeline, we do believe that the <unk>.

Speaker Change: <unk> returned to pre pandemic levels. So that again adds another mid single digit type of growth over what we're kind of projecting right now for this year.

Speaker Change: Most of our customers when you hear them speak are also talking about is at least an interim target to get volumes back to to pre pandemic levels themselves. So we'll be following obviously our customer's path.

John A. Haudrich: And then just as a quick follow-up, so then if you go to the midpoint of the range this year, you know, that puts you around $1360 or so for 2040 EBITDA. It looks like, given, you know, maybe a potential path towards $3 in EPS, that you'd continue to see kind of mid-single-digit EBITDA growth on that low single-digit volume growth going forward. Is that kind of a fair assumption on the leverage you'd get given how well you're operating? Or how should we think about, you know, kind of the EBITDA growth? Yeah, what I would say is, you know, back to the previous comment, that, you know, to get over $3 per share, or the value of getting volumes back to pre-pandemic levels, that's that 75 cents. I. That's anywhere between $150 to $200 million of additional EBIT. The timing of that is the question. And I believe that once you get to that, you get segment profit margins of around 20% per year, around 15% or so in the Americas, which, again, is very close to our long-term targets. Obviously, we've got to see the volume recover, and we'll follow the macros as well.

Speaker Change: Great. Thanks, and then just as a quick follow up. So then if you go to the midpoint of the range this year.

Speaker Change: That puts you around $13 60 or so.

Speaker Change: For 2000 and for EBITDA.

Speaker Change: It looks like given maybe a potential path towards $3 in EPS that you're continuing to see kind of mid single digit EBIT EBITDA growth on that.

Speaker Change: Low single digit volume growth.

Speaker Change: Going forward does that does that kind of a fair assumption on.

Speaker Change: The leverage you get given how well youre operating or how should we think about kind of the EBITDA growth.

Speaker Change: Yes, what I would say is back to the previous comment.

Speaker Change: To get over $3 per share or the value of getting the volumes back to pre pandemic basis. That's at 75 cents I had mentioned that that's anywhere between $150 million to $200 million of additional EBIT. The timing of that is the question.

Speaker Change: And I believe that once you get to that you get segment profit margins.

Speaker Change: That around 20% per year around 15% or so in the Americas, which again is very close to our long term.

Speaker Change: <unk>, obviously, we got it we got to see the volume recover and we'll follow the macros as we recover.

Arun Viswanathan: Great, thanks a lot. We have no further questions, so I'll turn the call back to Chris for closing. Okay, that concludes our earnings call. Please note that our first quarter call is currently scheduled for May 1st, 2024. And remember, make it a memorable moment by choosing safe, sustainable glass. Thank you, www.globalonenessproject.org. Thank you everyone for joining us today. This concludes our call, and you may now disconnect your lines. Hey,

Speaker Change: Great. Thanks, a lot.

Speaker Change: We have no further questions I'll turn the call back to Chris for closing comments.

Chris Manuel: Okay that concludes our earnings call. Please note that our first quarter call is currently scheduled for May one 2024, and remember, making a memorable moment by choosing safe sustainable glass. Thank you.

Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Thanks Colin.

Speaker Change: Great.

Speaker Change: Ron.

Speaker Change: Great.

Speaker Change: Turning to me.

Speaker Change: It takes us.