O-I Glass Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ghansham Panjabi - Robert W. Baird & Co. Incorporated - Analyst : Thank you. Good morning, everybody. Hey, Andres, congrats on your retirement and also on your very impressive legacy you're leaving behind. I wish you well for the future.

Question: Ghansham Panjabi - Robert W. Baird & Co. Incorporated - Analyst : Yes. So I guess first off, in terms of the volume adjustments relative to prior guidance, are there any notable categories that are driving that sort of

Question: Ghansham Panjabi - Robert W. Baird & Co. Incorporated - Analyst : Got it, thank you. And then in terms of the destocking specific to wine and spirits, what sort of time line is realistic as it relates to the the destocking component? And then also, just given the weakness you're seeing across the board, I know you have a lot of contracted business, but just touch on maybe the competitive activity across the different regions, just given sort of a lower for longer dynamic? Thank you.

Question: Ghansham Panjabi - Robert W. Baird & Co. Incorporated - Analyst : Thank you.

Question: Michael Roxland - Truist Securities, Inc. - Analyst : Thank you, Andres, John, and Chris, for taking my questions. And Andres, congratulations and best of luck in your retirement.

Question: Michael Roxland - Truist Securities, Inc. - Analyst : So my first question, in terms of the accelerating curtailment activity, is that mostly occurring in the Americas? Is that something that specifically happened because you have always had a little more confident last quarter, you also were at a conference in late February where you reiterated your guidance. So I'm wondering if something happened between the timeframes or versus last quarter that where you become more cautious -- and I understand the backdrop is volatile, the consumer's volatile, but has something really happened more recently, you increase your cautiousness entry and negative effect your outlook?

Question: Michael Roxland - Truist Securities, Inc. - Analyst : Got it, thank you for that color. And then just my follow up, can you mention or comment on any additional opportunities you have in MAGMA to partially offset this additional demand? Because you mentioned regulatory awards totaled $175 million for the year. It sounds like you've accomplished a number of projects to achieve that target thus far. But what else I mean, what above and beyond the $150 million doing about $175 million how do you have at your disposal to help offset some of the persistent demand weakness? Thank you.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great. Thanks for taking my question. I guess again, I just wanted to go back to the volume front. So do you think it's possible that we revert to say a flattish or a [zero] or 1% growth trajectory maybe in the back half of this year, especially facing easy comps, Q3, Q4, and maybe some capacity additions and your MAGMA build-out? And then is that kind of where you place long term glass demand? Or do you think there's been some structural weakness now that we should revert to maybe a lower growth rate?

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great. And then a follow-up quickly on price-cost so I think you know, you may have addressed this, but you wanted to hold on to say two thirds of your pricing and that was put in place over the last couple of years. Do you still feel comfortable with that cadence, especially given that we've potentially seen some further deflation on the raw side? Or how would you kind of characterize your outlook for price cost after this report? Thanks.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Thanks.

Question: George Staphos - BofA Securities - Analyst : Thanks so much. Hi, everyone. Good morning. Thanks for the details. Andres again, congratulations on your retirement and everything that you accomplished at O-I, and the support of our research. And I guess I wanted to come back from to the extent that your customers had a view on this. What was the reason in your view that March wound up being a little bit weaker than anticipated? You're not alone in that regard, not trying to pick on O-I. It seemed like March was a little bit softer than expected even when adjusting for days for a lot of our companies. What was your customer base saying in that regard and why you feel comfortable that things do in fact, improve into 2Q? Second question again related to what your customers are saying and to some degree you've already covered it, saying it's too early to call it perhaps is that as you look out the next couple of years, what worries you most about the volume outlook? What gives you the most confidence in the volume outlook? Destocking or a recovery from destocking, consumption and or its recovery, and or changing consumer tastes. There's been some discussion in the trade about changing consumer tastes, trade down, and consumers moving away from traditional spirits. What are your customers saying in that regard relative to your demand outlook? Thank you.

Question: George Staphos - BofA Securities - Analyst : Thank you, gentlemen.

Question: Bryan Burgmeier - Citigroup Inc. - Analyst : It's actually Bryan Burgmeier, sitting in for Anthony. Thank you for taking the question. Maybe just following up on Arun's question. If I think about O-I having maybe up 10% of capacity on the sidelines this year, when does that start to create some risks for year end pricing negotiations in Europe? I'm just thinking about sort of the historical relationship between curtailments and price. And I guess does this level of curtailment usually support positive price for O-I?

Question: Bryan Burgmeier - Citigroup Inc. - Analyst : Got it, makes sense. And maybe John just touched on this, but I'm just wanted to dig into the trade downs that you flagged in the prepared remarks a little bit. I'm just trying to think of it. Are you referring to people maybe moving from wine to beer, is it moving from a higher end bottle to a lower-end bottles or moving from glass to a different substrate? Just any detail there? Thanks. I'll turn it over and good luck in the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Gabrial Hajde - Wells Fargo Securities, LLC - Analyst : Andres, congratulations, John, Chris, good morning.

Question: Gabrial Hajde - Wells Fargo Securities, LLC - Analyst : But maybe it looks like you all are focusing on the controllables, maybe on focusing just on the sort of more near term outlook. It wasn't clear if April volumes, whether on a day adjusted basis or otherwise were positive for you all in terms of shipments. And then, just your confidence level in the near term kind of second quarter view that it looks like from the chart shipments will be flattish, maybe we'll start there.

Question: Gabrial Hajde - Wells Fargo Securities, LLC - Analyst : Okay. One country, you guys talked about the Andean region and Colombia, but we didn't hear much about Brazil. Again, a lot going on there in terms of what we're hearing from a competing substrate. Things like aluminum is maybe better hedged this year or maybe cheaper from a sourcing standpoint, just as that happens and we get more sanctions and things like that and costs move up. Just curious how long, maybe the lead time you have in terms of discussions with your customers for pack mix down in Brazil? And then just maybe commentary on what you're seeing. Thank you.

Question: Gabrial Hajde - Wells Fargo Securities, LLC - Analyst : Okay, thank you.