O-I Glass, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the OI full year fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your host, Mr. Chris Manuel, Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, Jerome, and welcome everyone to the OI Glass Fiscal Year and Fourth Quarter 2020 Earnings Conference Call. Our discussion today will be led by Andres Lopez, our CEO, and John Hodrick, our CFO. Today, we will discuss key business developments and review our financial results. Following prepared remarks, we will host a Q&A session. Presentation materials for this call are available on the company's website at o-i.com. Please review the Safe Harbor comments and disclosure of our use of non-GAAP financial measures. Some of these financials we are presenting today relate to non-GAAP measures such as adjusted earnings per share, free cash flow, segment operating profit, and leverage ratio, which excludes certain items that we consider not representative of ongoing operations. A reconciliation of gap to non-gap can be found in Arne's press release and in the appendix to this presentation. I'd now like to turn the call over to Andres, who will start on slide three.

Good morning, everyone. We appreciate your interest in OIGlass. Let me begin by thanking the OI team for its dedication and agility as we contend with the pandemic and service the critical food and beverage supply chain. Likewise, we are grateful for so many in our communities who are working every day through very challenging circumstances, especially medical and other frontline workers. 2020 really tested our organization. As we concluded the year, I'm proud of how OI has navigated all the short-term implications of the pandemic while advancing long-term initiatives that included several bold and structural improvements. As a result of these efforts, there was a tangible improvement in our ability to execute. As we reported last night, our four-quarter earnings, adjusted earnings were 40 cents per share, which exceeded guidance of 30 to 35 cents. Additionally, we generated free cash flow of $146 million in 2020, a solid improvement from the prior year and ahead of our expectations. Our four-quarter achievements were flat with the prior year, and full-year volumes were down 4%. The deep in demand was concentrated in the second quarter when the initial wave of the pandemic drastically impacted the supply chain. Otherwise, quarterly demand trends were fairly stable. The strong operational performance and cost performance boosted our earnings and cash flows above our original guidance. Despite a disruptive environment, we continued to advance our strategy and I'll expand on this in a minute. Of course, significant uncertainty remains given the course of the pandemic. With that said, we remain optimistic about 2021, and we expect both earnings and cash flows will significantly improve. John will review our financial results and outlook later in his remarks. Let's move ahead to slide four to discuss recent volume trends. As I noted earlier, Chipments were down 4% for full year 2020, but that is certainly not representative of trends during the second half of the year. As shown on the left, glass chipments were pretty stable with the prior year except for the second quarter. While volumes fell sharply towards the end of March, demand rebounded nicely starting in June. As illustrated on the right, retail purchase activities across key and used categories remain relatively strong. which helped mitigate the drop in on-premise consumption. Of course, activity was elevated in the second quarter given significant lockdowns and as a result of pantry stuffing. There are a few important takeaways worth highlighting. First, the significant decline in demand during the second quarter of 2020 was largely influenced by drastic government orders in some countries and large supply chain adjustments. Consumption of products in glass containers improved starting at the end of the second quarter and remained steady through the balance of the year, despite a shift between on- and off-premise channels. Third, glass is benefiting from emerging consumer preferences for premium products at home cooking and consumption, localization of global brands, and conversion from returnable to one-way containers in some markets. And last, Customers are stabilizing and protecting their supply chains from present and future volatility as they leverage the experience gained from the second quarter of 2020. Overall, we expect demand for glass containers will grow in 2021. Nevertheless, glass shipment levels will likely remain a bit choppy and inconsistent across the markets we serve. For example, our total shipments were down about 2% in January. The decline was concentrated in a few markets in Europe that implemented more restricted lockdowns impacting hotels and restaurants. On the other hand, shipments increased in the Americas. Importantly, we are not seeing the drastic lockdowns we experienced in the second quarter of 2020. As I noted, our customers and the supply chain are doing a good job minimizing the impact of any lockdowns by leveraging the experience gained last year. Given these uncertainties, our cost control measures continue, which fully offset the impact of lower volumes in January. Looking at the full year, we expect total shipments will increase 2 to 4 percent in 2021 compared to 2020. This reflects a partial to full recovery back to 2019 levels. Naturally, trends will likely be softer earlier in the year and improve over the balance of the year. Of course, these assume markets gradually reopen as vaccination rates increase. Likewise, these growth projections include a few markets that will remain in an oversold position going forward. As such, we are evaluating expansion opportunities in those markets. 2020 required a number of short-term actions to successfully manage through the pandemic. Simultaneously, we also focus on long-term efforts to drive value. As a result, we would like to highlight some of the key accomplishments in 2020. I'm now on page five. We divested our A&Z business at an attractive valuation and continue to advance our tactical and strategic portfolio review despite the market disruptions. When fully completed, we anticipate total sales proceeds will exceed $1.1 billion, which are being used to improve our balance sheet. Likewise, we enhanced financial flexibility supported by our free cash flow and sales proceeds. We reduced debt, achieved record high liquidity, and extended bond maturities. We implemented and executed a robust COVID response plan that quickly aligned supply with demand, reduced IDS by nine days, and ended the year at historically low inventory levels, which we expect to maintain. As part of our COVID-19 response plan, we accelerated our turnaround initiatives to improve margins and delivered $115 million of savings, which helped mitigate the impact of lower production. Next, we continue to advance magma as we seek to revolutionize glass. The full-scale Generation 1 line located in Germany will be live within weeks. This will represent a major milestone and pave the way for broader deployments starting next year. Finally, PARAC filed for Chapter 11 in January 2020 to establish a fair and final resolution to legacy asbestos liabilities. Overall, we are pleased with the progress that we made. Many of our efforts are visible, like the accomplishments we just discussed. But just as important, we have been hard at work in creating advanced capabilities that are improving our ability to execute both in the short term and long term. On page six, we have included a number of these capabilities. For the past year, we have shared our renewed focus on capital structure discipline and on portfolio optimization. After nearly three years of implementation, we are now fully utilizing a new management system called Integrated Business Planning, or IBP. This system synchronizes our demand, supply, and financial performance management across a three-year planning horizon. Importantly, IBP is improving our ability to deliver on commitments. Our turnaround initiatives evolve into multi-year margin expansion programs and are fully embedded across OIT. We have significantly upgraded our sales, marketing, and innovation capabilities as we seek to improve the top line. Likewise, we have elevated our ESG leadership with an increased focus on recycling in North America that leverages our experience from the highly successful European glass recycling system. As we advance Magma, we are leveraging a unique third-party developer's network to support faster invention and rapid implementation. Finally, we streamlined the organization model in mid-2020 as we aim to improve agility and performance. In conclusion, I believe we hit an inflection point in 2020, resulting in a step change improvement in our ability to consistently perform. Let me take the opportunity to expand on one of these areas, how we are accelerating ESG at OI. I'm now on page seven. Last quarter, I explained that we were elevating our sustainability ambitions, and let me highlight some key elements. We are focused on being the most innovative, sustainable, and chosen supplier of brand-building packaging solutions. As you know, OI was the first packaging company to issue a green bond, and in 2020, we were the first glass packaging maker to have an approved emissions target from the Science-Based Target Initiative. We also appointed a chief sustainability officer. Now, I would like to take you through some further steps we have taken to continue our leadership in this space and to bring our vision to life. On the governance side, we enhanced the rigor of our board governance on ESG, established a global sustainability network, and created an Executive Diversity and Inclusion Council. As shown on the top of the slide, we expanded our sustainability initiatives to include nine different dimensions and set several new goals. We have refreshed our sustainability web page, which will provide additional color in these areas. And we will have a new sustainability report later this year. Our magma technology will reinvent how glass is made and solve such that the glass sustainability profile will improve across several dimensions. The startup in Holtzminden brings us one step closer to this new future for glass. Our glass advocacy campaign aims to rebalance the dialogue about packaging and, in particular, the sustainability of glass packaging. We have increased our focus on creating and funding glass recycling solutions and are working closely with industry partners towards the goal of increasing U.S. glass recycling rate to 50 percent by 2030. Finally, we continue to engage with our communities by encouraging our employees to volunteer and by giving back, including through our 80-year-old Hawaii Charities Foundation and donations to support COVID-19 vaccination efforts. On slide eight, we have outlined our key priorities for 2021, which build on the accomplishments from 2020 and leverage the capabilities we have previously discussed. Our objective remains the same. We are taking bold structural actions to improve OI's business fundamentals. This includes three platforms. First, we are focused on margin expansion through strong operating performance and cost efficiencies. Our turnaround initiatives have evolved into structural programs that expand revenue, operating costs, and SG&A. During 2020, we accelerated activity and generated $115 million in benefits. 85 million or 75% of these benefits are long-term sustainable savings. On top of this base, we expect around 50 million of additional benefits in 2021. Second, we will continue to revolutionize glass. As noted, we expect to validate magma through the new line in Germany resulting in further commercial line implementations starting in 2022. This revolutionary development will be complemented by repositioning ESG and by expanding our glass advocacy digital marketing campaign. Third, we will further optimize our structure. In addition to completing our original tactical divestiture program, Hawaii is also evaluating growth initiatives which could be funded by incremental tactical divestitures. Likewise, PAROC will continue to advance Next, we intend to accelerate service center capabilities, which aligns with the new organization model implemented last year. Finally, increasing cash flow and reducing debt remain our top financial priorities. We look forward to another successful year advancing the enterprise. Rather than host one investor day, we expect to host at least two investor workshops later this year, to lay out our longer-term plans and discuss magma in greater detail. Next, let me turn the presentation over to John, who will provide some details on the financials.