O-I Glass, Inc.

Hello and welcome to the OIGlass first quarter 2023 earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can press star followed by one on your telephone keypad. If you'd like to withdraw your question, you may press star followed by two. I'll now hand over to your host, Chris Manuel, Vice President of Investor Relations. Please go ahead.

Thank you, Alex, and welcome everyone to the OIGlass first quarter 2023 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'll host a Q&A session. Presentation materials for this 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 to announce exceptionally strong first quarter earnings, which significantly exceeded prior year results as well as guidance. Last night, OI reported adjusted earnings of $1.29 per share, which was more than double prior year performance and represents record first quarter results. Adjusted earnings benefited from very strong net price realization across the enterprise, as well as from our margin expansion initiatives. Likewise, operating performance exceeded our expectations despite disruption from a number of external events. As expected, sales volume was down given challenging prior year comparisons among other factors. In addition to very strong results, we continue to advance our strategy and efforts to improve margins are all ahead of plan. Importantly, our capacity expansion plans the technology developments for Magma and Ultra, and our deleveraging actions all remain on track. Given very strong first quarter results, we have increased our full year 2023 business outlook and now expect adjusted earnings will range between $3.05 and $3.25 per share. We are also providing second quarter guidance and expect adjusted earnings will range between $0.80 and $0.85, which is a solid increase from last year. John will expand on our financial performance and outlook a bit later. Let's move to page four and discuss recent sales volume trends. Entering the year, we expect that first quarter shipments will be down some, even a very challenging prior year comparison. As you can see on the left, volumes were up a robust 6.4% in the first quarter of 2022. During that period, shipments increased as we recovered from prior year global supply chain challenges. IY's customers secure glass inventory at the onset of the Russia-Ukraine war, and we ship out of inventory in some markets, giving very strong demand. During the first quarter of 2023, actual shipments were down about 8% from last year, which was softer than we originally anticipated. We expect the volume will be down 3% to 4% faced with a challenging prior year comparison amid record low inventory levels, especially in Southern Europe. In addition, shipments were impacted by temporary events such as general strikes in France, civil unrest in Peru, and flooding in Northern California, which we believe represented around 2% of our decline. Volume was further impacted by some customer stocking across the supply chain, as well as softer consumer demand in a few markets, which together we estimate accounted for an additional 2% to 3% of our lower shipments. These trends were most notable across the mainstream beer, food, and NAB categories in North Central Europe and Mexico. While there are many moving pieces here, we believe underlying demand was down about 2% to 3% during the first quarter. Looking at the segments, volume was down about 5% in the Americas compared to 3% growth in the prior year quarter as civil unrest in Peru and flooding in Northern California contributed to lower volumes. In Europe, shipments were down 12% compared to 10% growth last year. Importantly, we remain oversold in the wine category across southern Europe, yet the social situation in France, punctuated by weekly strikes on pension reform since January, has strongly penalized our results in that market. Overall, we now expect sales volume will be down low to mid-single digits in 2023. While we will contend with modestly lower treatments this year, given macro pressures, we expect long-term glass demand will continue to benefit from key megatrends such as premiumization, health and wellness, and increased interest in sustainability. As we look to the future, we believe glass demand should grow between 2% and 3% a year across the key markets that we serve, as illustrated on the right. We have established another set of ambitious and achievable objectives to advance OISA's strategy in 2023, and we are off to a fast start as shown on page five. First quarter segment profit margins topped 22% and benefited from $180 million of net price realization and $37 million of margin expansion initiative benefits, which included very good progress in North America. While we expect that performance will be front-loaded in 2023, We are ahead of pace for these key efforts and expect upside benefits. Our plans for profitable growth also remain on target. The new line in Canada is now operational, and our Columbia brownfield should be online late in the second quarter. Likewise, we have kicked off our next expansion projects in Brazil, Peru, and Scotland, which should be operational next year. Finally, our first magma green field in Bumbling Green also remains on track. and should be commissioned around mid-2024. Importantly, magma development is proceeding well, and our first ultra bottles are undergoing market testing with final qualifications expected in the second quarter. Finally, our ESG and glass advocacy efforts are progressing well, and net debt leverage should end the year comfortably below three times leverage. I'm highly confident these efforts will advance our strategy as we continue to transform Hawaii. Let's turn to page six. Certainly, we are happy to report strong performance and solid progress advancing our strategy. We are also proud of how our transformation is having a big positive impact on Hawaii and the communities in which we serve. As you can see in the middle, we recently celebrated the official groundbreaking for our first magma green field plant in Bowling Green, Kentucky. which will serve the growing spirits category as well as our OIPS distribution business. In France, we completed a sizable investment at our bear plant that will significantly reduce our CO2 emissions. Likewise, we are partnering with many customers and communities to increase glass recycling across the U.S., and our progress in ESG has been recognized by EcoWise, Sustainalytics, and Newsweek magazine. Finally, we have launched a number of award-winning and disruptive offerings as part of our expanding new product development effort. These are just a few success stories as we continue to transform OI and benefit the communities in which we serve. Now, I'll turn it over to John to review financial matters, starting on page seven.