The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Josh Spector - UBS Securities LLC - Analyst
: Yeah. Thanks, Gordon. Thanks for that overview. I'll let you come walk over here for a second. But maybe to start on the near-term side of things,
so you said you're not updating guidance. But you had a comment on the slide about sluggish demand, modest volume growth in 3Q. So maybe
just to start, what are you seeing in 3Q demand-wise? And how does that compare to your initial expectations?
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Question: Josh Spector - UBS Securities LLC - Analyst
: And then I guess extending that slightly further, when you talked about '24 and your volume growth, the second half implied mid-single-digit
growth. I guess, what gives you confidence in that and particularly, an acceleration, I guess, in the fourth quarter based on what you're seeing
today?
Question: Josh Spector - UBS Securities LLC - Analyst
: Understood. That makes sense. And I guess, to maybe build on that, looking at some of the consumer data, particularly Nielsen, I mean, it still
appears weaker for glass relative to some of the things we're seeing in plastics and cans. I guess, why is that the case? And what does that mean
for your longer-term view around growth?
Question: Josh Spector - UBS Securities LLC - Analyst
: Maybe just a follow-up on that point. So then what closes the gap? Is it energy prices come down to maybe normalize the price? Or is there
something else that you see that gets that to more of a historical level?
Question: Josh Spector - UBS Securities LLC - Analyst
: Okay. I want to come back to the cost savings on the productivity side. But I think maybe to cap off the demand side, just -- I get the question when
longer term, looking at different markets, what are structural areas of growth that you see for glass, either product or region? But what should give
investors confidence in that 1% growth target?
Question: Josh Spector - UBS Securities LLC - Analyst
: Okay. Shifting over to the productivity side, I guess, when you look at the history of O-I, there's been a lot of cost savings programs, saved a lot of
money over the years. But now Fit to Win is another one. So what's going to be different in your view with this program, how you're approaching
it maybe culturally? Or what do you expect to ingrain?
Question: Josh Spector - UBS Securities LLC - Analyst
: And maybe that dovetails into -- you talked a lot about economic profit and that mindset shift. So maybe tie this together of what that means, how
you approach that differently to add value here.
Question: Josh Spector - UBS Securities LLC - Analyst
: How low is that economic profit mindset going? So the P&L responsibility, is it by region, plant? I guess, what level?
Question: Josh Spector - UBS Securities LLC - Analyst
: That makes sense. And in terms of your EBITDA target, so $250 million, $300 million improvement, can you roughly bucket that into what your
assumptions would be there, volume, price, and kind of what's in your control versus market?
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Question: Josh Spector - UBS Securities LLC - Analyst
: Okay. And I guess, to think maybe a little bit more granular around the cadence over the next few years, obviously, this year has a certain amount
of headwinds in it. But you think about, I guess, the next '25, '26, '27, how should people be layering some of that in if a lot of it is something market
related?
Question: Josh Spector - UBS Securities LLC - Analyst
: Okay. Maybe shifting to some of the growth investments that you're doing or some of the new technologies. So specifically to start with MAGMA,
I don't know if there's any update you can give on Bowling Green. You talked about commissioning. If that's going to plan, any further comments
there?
Question: Josh Spector - UBS Securities LLC - Analyst
: So if that's successful, I guess, how quickly do you think about when you can deploy this more broadly instead of doing some rebuilding of legacy
furnaces? And just how does this process change the cost structure? Is it a cost structure move, or is it -- it enables more local manufacturing where
it's a growth move?
Question: Josh Spector - UBS Securities LLC - Analyst
: How about on ULTRA? I guess, you've talked about it. What are you doing to drive the adoption?
Question: Josh Spector - UBS Securities LLC - Analyst
: Can that be done at the same cost point? Is there a trade-off?
Question: Josh Spector - UBS Securities LLC - Analyst
: Okay. Maybe thinking longer term here, just with the capital structure and what you're talking to do, how long do you think it takes to get to that
2.5 times intermediate target? And then when you get there, what are the priorities for cash?
Question: Josh Spector - UBS Securities LLC - Analyst
: I think that makes sense. And I think with that, we're about up on time. So I want to thank O-I for joining me on stage and everyone for joining us
for the UBS Materials Conference today. Hope everyone has a good rest of their day.
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