O-I Glass, Inc.

Hello everyone and welcome to the OI Glass full year and fourth quarter 2022 earnings conference call. My name is Daisy and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. Please kindly only ask one question and one follow up to allow others the chance. I would now like to hand the call over to your host, Chris Manuel, Vice President of Investor Relations to begin. So Chris, please go ahead.

Thank you, Daisy. And welcome everyone to the OI Glass full year and fourth quarter earnings 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 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. I'd now like to turn the call over to Andres who will start on slide three.

Good morning, everyone, and thanks for your interest in OI. We are very pleased with OI's performance in 2022. As a result, it exceeded guidance and we achieved all of our key commitments. Last night, we reported adjusted earnings of $2.30 per share. which represented more than 25% increase from the prior year results and exceeded guidance. As you can see on the left, we have very good business momentum with consistent adjusted earnings growth over the past several years. The strong results reflected solid execution across all key business layers. Earnings benefited from significant net price, as well as sales volume growth, good operating performance, and our margin expansion initiatives. Importantly, Full-year free cash flow and four-quarter results also exceeded our most recent business outlook. In fact, this represents the 12th consecutive quarter we have met or exceeded street consensus. In addition to a strong operating performance, we also achieved all of our key strategic objectives in 2022. Margins were up, and we initiated our capacity expansion program to enable profitable growth that includes our first magma greenfield plant. We also significantly improved our structure as a result of legacy asbestos-related liabilities, and we completed our portfolio optimization program. As a result, we now have the healthiest balance sheet in the past decade. Reflecting solid business momentum, we expect our performance will continue to improve in 2023 as we further advance our strategy. John will expand on our financial performance and outlook a bit later. Let's move to page four as we review recent sales volume trends. As expected, achievements increased about 1% in 2022 following significant growth in 2021 when volumes rebounded from the onset of the pandemic. While demand remains healthy, our growth has been limited by capacity constraints and record low inventory levels in key markets. Growth was most notable in the spirits, wine, and NAB categories while beer and food were slightly down. Chipments increased nearly 4% in Europe and were up across all end-use categories amid strong underlying demand and glass supply constraints. Volume declined 1% in the Americas, primarily reflecting lower production due to planned and unplanned downtime in North America and Brazil, while we contended with record low inventories across Latin America. Consistent with guidance, four quarter achievements were down about 3% given the challenging prior year comparison when volumes were up a robust 5.4%. Looking to the future, we anticipate continued healthy demand as illustrated by Euromonitor projections, indicating average annual growth of 2 to 4% in the key markets we serve through 2025. Overall, we expect our achievement levels will be flat to up 1% in 2023. The first phase of our expansion program will add much needed new capacity. However, this benefit will be tempered by record low inventory levels and the impact of higher asset project activity as maintenance initiatives normalize and supply chain issues. Stronger achievement levels are anticipated in 2024 as more new capacity comes online. Overall, we have not seen significant changes in demand patterns lately, but we'll continue to monitor market conditions given the risk of recession. Let's turn to page five. On top of a strong recent performance, we also achieved all 2022 key strategic objectives. Segment operating profit margins were up 110 basis points as we exceeded our targets for both net price realization and margin expansion initiative benefits. As noted, our capacity expansion projects are progressing well as we capitalize on the strongest glass fundamentals in at least 20 years. All magma development efforts are advancing well, and we have broken ground on our first magma green field in Kentucky. Likewise, the full-scale market trial of our new ultra-lightweighted solution is proceeding well. Our ESG and glass advocacy efforts continue to advance. As discussed, We significantly improved our structure as part of Result is legacy asbestos related liabilities. And we wrapped up our portfolio optimization program. I want to thank the OI team for advancing our strategy and achieving all key objectives in 2022. We have established another set of ambitious and achievable objectives to advance OI's strategy in 2023 as shown on page six. Higher earnings and margins should benefit from strong net price realization and our ongoing margin expansion initiatives. As you can see, we have increased our annual initiative target to more than $100 million, which now includes a set of focused initiatives to advance performance across targeted operations, primarily in North America. Efforts include growing in attractive markets in North America, supported by our ongoing expansion program. Likewise, we recently closed one low margin furnace and are in the process of closing one more low margin furnace in the near future. Currently, we are distributing that volume within the network. We also intend to improve our commercial position as we reset over 40% of our customer agreements with more favorable price and terms and implement current price adjustment formulas, which will recover significant prior period cost inflation. We are off to the races and expect to advance our capacity expansion program to enable profitable growth. We aim to complete our Canada and Columbia projects during the first half of the year as we continue the next phase of projects in Brazil, Peru, and Scotland, as well as our first magma greenfield in Kentucky. Additionally, we will advance our magma development efforts that will enable commercialization of both Gen 2 and Gen 3 in 2024 and 2024, respectively. Likewise, we expect to complete the all-track qualification in Colombia that will pave the way for future deployments. We intend to accelerate the use of key technologies to help reduce greenhouse gas emissions on top of a set of initiatives to expand recycling rates. We will advance our glass advocacy campaign and increasingly prioritize B2B connections to build the oil brand with decision makers. Finally, we will continue to improve the capital structure and expect to reduce our net debit leverage ratio to below three times by the end of 2023. I'm highly confident these efforts will advance our strategy as we continue to transform OI. Turning to page seven, we are very excited about our first magma greenfield plant in Bowling Green, Kentucky, which is on track for initial commercialization of Gen2 by mid-2024 and Gen 3 by mid-2025. We are designing the plan to be a showcase facility that will demonstrate all of our next-generation capabilities. This new state-of-the-art facility will include the magma melter, new modular batch system, and pilot forming machine. It will be fully digitized with a high-performance operating structure. This highly scalable plan will eventually include all magma generations with advanced sustainability features as well as ultra-light weighting system. Located in the Bourbon Trail, the Bowling Green Plan will demonstrate the value of near location and will be a key hub for further customer collaboration, investor visits, and demonstration of OI's next-generation capabilities. I invite you to review a recent video that we created that shows Magma in action and further discusses its many important attributes. The slide includes the link to the video. Now I turn it over to John to review financial matters, starting on page eight.