O-I Glass Inc Q3 2024 Earnings Call Transcript

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

Question: Arun Viswanathan - RBC Capital Markets Wealth Management - Analyst : Sorry about that, thanks for taking my question. I guess, first question would be, when you think about some of your bridge items, it looks like -- for EBITDA, would it be possible to potentially add in the $175 million Fit to Win benefits for '25 on top of, say, the lower end of your guidance, maybe [$1.1 billion]? And so, starting point could be kind of in that [$1.25 billion to $1.75 billion] range. What are some of the headwinds to that kind of math when you think about '25? Thanks.

Question: Arun Viswanathan - RBC Capital Markets Wealth Management - Analyst : Okay, thanks for that, John. And similarly, on the free cash flow bridge, so you went from a source of $75 million at the midpoint down to a use of $150 million, so kind of a $225 million swing there. So, when you think about free cash flow going forward, should you be free cash flow-positive in '25 or does this kind of slower inventory depletion, push that out a year or two into '26 or '27? How are you thinking about that as well? Thanks.

Question: Arun Viswanathan - RBC Capital Markets Wealth Management - Analyst : And, sorry, one more, if I could. On just CapEx, are you still pursuing -- what kind of MAGMA spending do you have in that CapEx number? Is there a way to potentially bring that CapEx down even further or does that encapsulate both MAGMA and any capital projects you have? Thanks.

Question: Arun Viswanathan - RBC Capital Markets Wealth Management - Analyst : Thank you.

Question: Richard Carlson - Wells Fargo Securities, LLC - Analyst : Hi, good morning guys. This is actually Richard Carlson in for Gabe. It's a very useful slide on slide 12, so I just want to ask a couple of questions there. So first on sales volume, it sounds like you talked about seeing some green shoots and maybe seeing some more signs of being positive, but you're cautious going into next year. So just want to get some of the puts and takes, what areas are you actually feeling more cautious about and what areas are you starting to get confident? And what could the shape of that look like for next year? And then my second question is going to be on net price because also, I guess, it looks like you're cautious going into the year. But at this point, what is your visibility into pricing for 2025? And what percentage of your contracts are already signed? And what could move that number a little bit as we get into the year? Thank you.

Question: Richard Carlson - Wells Fargo Securities, LLC - Analyst : Great. Thank you.

Question: Josh Spector - UBS Securities LLC - Analyst : Yeah, hi, good morning. I want to kind of follow up on the net price but maybe think a little bit more medium to longer term. So I guess, as you look at your Fit to Win and your longer-term goals of generating $300 million higher EBITDA from savings, how does net pricing play into that, understanding that there's some hedges that roll off in Europe? And when you talk about glass price competitiveness, how does all this square together, prices coming down to become more competitive and you guys growing EBITDA at the same time and your costs going up? So any thoughts there would be helpful.

Question: Josh Spector - UBS Securities LLC - Analyst : Thanks, that's helpful. I guess, if I could just follow up on SG&A, I mean, it's a pretty big target in terms of what you're hoping to save overall. I mean, it looks like maybe a 20% reduction. I guess, if you look at benchmarking yourself versus peers, does that put you closer to peers? Would you be

Question: Josh Spector - UBS Securities LLC - Analyst : Got it, thank you.

Question: Anthony Pettinari - Citi Investment Research (US) - Analyst : Hi, good morning. Gordon -- hey, I was wondering if you could talk about, maybe at a high level, the improvement in forecasting that you're looking to drive, what enables that and what gives you confidence you can kind of improve forecasting?

Question: Anthony Pettinari - Citi Investment Research (US) - Analyst : Got it, got it, that's very helpful. And then, just one quick follow-up, you talked about evaluating closure of, I think, 7% plus of capacity by middle of next year. I guess, at first glance, 7% plus looks like 7% or 8% or maybe 9%. But -- I mean, is there a possibility that you could have to close, or a meaningfully larger percentage, 10%, 15%? Just trying to frame that 7% or more, and then just kind of the contingency planning around that.

Question: Anthony Pettinari - Citi Investment Research (US) - Analyst : Got it, got it. Thank you.

Question: Niccolo Piccini - Truist Securities - Analyst : Yeah. Hi guys. This is actually Nicco Piccini for Mike Roxland. I guess just starting out back to the margin discussion, I think you mentioned mid-teens in total for the total company with obviously higher in Europe, lower in Americas has normalized as a next step. I'm just, I guess, curious, is that next step, like, '25 or after 2027? And the reason I ask is, one of your closest European peers posted, I think, 24% EBITDA margin, while you were lower than that. And I just was wondering why there's such a big delta, and if that can be overcome through Fit to Win.

Question: Niccolo Piccini - Truist Securities - Analyst : Got it, understood. I guess just then switching gears to curtailments and closures, does retrofitting MAGMA at the end of life for some of these furnaces either now or in the future? Does that come into play when deciding, I guess, where your closures are?

Question: Niccolo Piccini - Truist Securities - Analyst : Okay, thank you very much. I appreciate it.