O-I Glass, Inc.

Hello everyone and welcome to the OIGlass first quarter 2024 earnings conference call. My name is Emily and I'll be facilitating your call today. After the presentation there will be the opportunity for you to ask any questions which you can do so by pressing start followed by the number one on your telephone keypad. I will now turn the call over to our host Chris Manuel, Vice President of Investor Relations to begin. Please go ahead.

Thank you, Emily. And welcome, everyone, to the OI Glass first quarter 2024 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. Please review the Safe Harbor comments and disclosure of our use of non-GAAP financial measures included in those materials. Now, I'd like to turn the call over to Andres, who will start on slide three.

Good morning, everyone, and thanks for your interest in OI. Last night, we reported first quarter earnings of 45 cents per share. As expected, results were down from historically robust performance in the prior year period. Lower earnings primarily reflected softer demand due to the market downturn and temporary production containment to balance supply with lower shipments. While net price was down slightly, our margin expansion initiatives are off to a particularly good start this year. Although slower than originally anticipated, consumer consumption patterns are gradually improving, and we are encouraged by the progress in our shipment trends since the fourth quarter of last year. As conditions gradually improve, we are focused on the factors within our control. I'm proud of the continued excellent operating performance across the enterprise, and we have increased our full-year margin expansion initiative target as we seek to optimize our 2024 results amid slower demand. Importantly, we continue to advance Magma to create a long-term competitive advantage for the company, and we are excited for the startup of our first Magma greenfield plant in Bowling Green, Kentucky this summer. As we look to the balance of the year, We are adjusting our full year 2024 outlook to reflect a slower market recovery, which John will review a bit later. Nevertheless, we remain confident about the long-term trajectory for glass demand, as well as stronger future earnings potential as markets recover over time. Let's turn to page four to discuss current market trends. While it's still soft, the commercial environment is gradually improving. As shown on the top chart, our shipments on a year-over-year basis were down 12.5% in the first quarter compared to a 16% decline in the fourth quarter of 2023. Additionally, April shipments show gradual improvement as demand was down about 10% from prior year on a per day basis when adjusting for the shift in the Easter holiday between 2023 and 2024. Consistent with discussions in previous calls, Inventory stocking across the value chain has been a significant driver for lower shipments this past year. The stocking is in the later stages for products with a short cycle, such as beer, NABs, and food, while activity will likely continue for a couple of quarters for longer cycle products, including spirits and wine. Additionally, consumer patterns are improving, but at a slower rate than expected, as illustrated in the bottom chart. Trends improved consistently over the course of 2023, but were choppy during the first quarter this year and lacked our expectations. Software consumption is attributed to the factors we hear about in the news every day, such as cost inflation on food and various products, driving price elasticity challenges, prolonged higher interest rates, and consumer confidence that remains below pre-pandemic levels. Furthermore, we have seen a limited share shift and some trade-down, especially as our customers ramp up promotional activity, which tends to favor more value brands. As we look to the balance of the year, we expect shipments will improve as the stocking activity drops off over the next several months. However, we have revised our 2024 sales volume outlook to reflect a more gradual improvement in demand over the course of the year as we now project a slower rate of consumption recovery than originally anticipated, which is shown in the circle in the lower chart. Overall, we now expect our 2024 sales volume will be flat to up low single digits compared to our prior outlook of low to mid single-digit growth. As markets improve, we anticipate long-term glass demand will continue to benefit from key megatrends such as premiumization, health and wellness, as well as increased interest in sustainability. Overall, we expect glass demand will substantially recover to pre-pandemic levels over time. Importantly, we are well positioned to take advantage of the rebound as it unfolds. Now, I'll turn it over to John, who will review our first quarter performance and updated 2024 outlook in more detail, starting on page five.

Thanks, Anders, and good morning, everyone. OI reported first quarter earnings of 45 cents per share, consistent with our expectations Results were down from historically high earnings of $1.29 per share last year. As illustrated, earnings primarily reflected a decline in segment operating profit, while slightly higher non-operating expense was mostly offset by some favorable effects. Additional details on non-operating items are included in the slide. Let's turn to page six and discuss recent performance across our two segments. The Americas posted segment operating profit of $102 million, which was down from $176 million last year. Net price was a slight headwind and sales volume was down 15%. Elevated operating costs reflected significant temporary production curtailment to balance supply with demand, which was partially offset by favorable margin expansion initiative benefits. In Europe, segment operating profit totaled $133 million, down from $222 million last year. Like the Americas, net price was a modest headwind and sales volumes were down 10%. Higher operating costs reflected the impact of elevated temporary production curtailments, lower JV performance, and prior year energy credits that did not repeat. These headwinds were partially offset by benefits from our margin expansion initiative program. Let's turn to page 7 to discuss our updated 2024 business outlook. As noted on the left, we have adjusted our full-year earnings guidance for a few factors. Net price is stable, yet we have reduced our sales growth expectations, reflecting a longer destocking process and a more gradual improvement in consumer consumption patterns than originally anticipated. Given software demand, we intend to take incremental production curtailments to ensure inventories remain in check. Importantly, we are accelerating our curtailment activity in the second quarter following the softer start of the year. To help mitigate slower sales growth, we have increased our full-year initiative benefit target to at least $175 million. Finally, our outlook has been impacted by unfavorable FX trends, higher interest rates given the change in the forward curve, and a higher tax rate. As a result, we now expect adjusted earnings should approximate $1.50 to $2 per share TAB, Mark McIntyre:" Compared to our prior outlook of $2 and 25 cents to $2 and 65 cents per share and we have updated our view of quarter quarterly earnings allocation. TAB, Mark McIntyre:" Free cash flow should range between 100 to $150 million reflecting lower earnings partially offset by other favorable cash lovers, including moderately lower capex. TAB, Mark McIntyre:" We intend to maintain a healthy balance sheet position and expect to end the year with leverage both in the low threes, which will naturally decrease as volumes and earnings recover. As Andres discussed, we believe current market conditions are temporary. While it will likely take longer than originally anticipated, earnings should rebound when sales and production volumes substantially return to pre-pandemic levels. Now I'll turn it back to Andres, who will provide an update on our key strategic objectives on page 8.

Thanks, John. Despite the market downturn, we continue to execute on the five key priorities we established this year to enable our long-term strategy. We are off to a good start with our margin expansion initiatives, which are helping offset some of the current market pressures. As noted, we have increased our full year target, which includes planned restructuring activities in 2024 that are now substantially complete. We will continue to evaluate our network requirements as future market trends unfold. At the same time, we are expanding our business to enable profitable growth. As I will discuss further on the next page, Our Magma Greenfield project remains on schedule, and we continue to advance attractive expansion projects while others remain on hold pending further market recovery. All Magma R&D is advancing well, and we remain on track for our first Gen 3 deployment in 2026. Likewise, we recently approved two new ultra lines in Europe to support increasing customer interest in lighter weight packaging. Our ESG efforts are progressing well, And our 2024 capital plan includes all key projects that enable our long-term sustainability roadmap. Furthermore, we are excited that the U.S. Department of Energy has selected OI to receive up to $125 million in funding over the next few years to accelerate deployment of industrial decarbonization technologies. Finally, we intend to maintain a healthy balance sheet, as John discussed. Overall, we are off to a good start this year as we advance our long-term strategy. More on magma on page 9. Our heritage network is a great fit for many of the categories that we have served for decades and will continue to serve into the future. However, markets have evolved and we now see greater brand proliferation and increased product fragmentation. Magma reimagines the entire glassmaking process to serve a more differentiated market. Magma is more flexible, scalable, and can be more rapidly deployed. It is smaller and will feed into an industrial warehouse, which lowers future capital intensity and operating costs. Furthermore, magma can be near-located or co-located to reduce logistics costs and is designed around sustainability from the ground up. In short, magma is designed to meet the market requirements for today and into the future. We are nearing an important milestone, and we expect to start up our first magma greenfield in either late July or early August. Located in Kentucky, which includes nearly 100 whiskey distillers, this new plant is an example of how magma can enable profitable growth in attractive fragmented markets. Let's turn to page 10. We believe magma and ultra will increase OI's right to win in the marketplace. In particular, increased flexibility, scalability, and rapid deployment will create key benefits for OI across attractive differentiated markets and categories. Overall, Magna and Ultra together represent a major leap forward and should expand OI's total addressable market by over 30%. We look forward to hosting investors and customers at our new Greenfield facility in the future, which will demonstrate all our innovative technologies. that will create a new competitive advantage for OI and enable Glass to win in the marketplace. Please move to page 11 for some final remarks. OI continues to navigate well through challenging macro conditions and delivers solid first quarter results despite softer than expected shipment levels. While we have revised our current year outlook to reflect a slower than anticipated market recovery, we are taking the right steps to position the company for future success. We are properly aligning supply with lower demand, and we have increased our already record high target for margin expansion initiative benefits. Despite the short-term challenges, we remain confident in the long-term positive trajectory of glass packaging, and we are well positioned for the rebound, which should significantly improve future earnings over time. Importantly, We are excited for the startup of our first Magma Greenfield plant this summer as we align our business to the future of glass packaging. Before we take your questions, I would like to end with a few reflections on my time as CEO. Over the past several years, we have significantly transformed the company, and we are now a much more disciplined, agile, and capable organization. After stabilizing our operations, the team significantly enhanced our ability to execute and we have consistently delivered on our commitments. We rebalanced our network, expanding our America's footprint and divesting non-core assets. We have reduced risk and improved our cash flow profile with the fair and final resolution of our legacy asbestos liabilities, and we have the best balance sheet in nearly a decade. While improving core performance and optimizing our business structure, We also develop new breakthrough technologies that will create a new competitive advantage for years to come. I'm proud of what we have accomplished and would like to thank the OI family for all that we have accomplished together. I would also like to thank each of you in the investment community for the interest in OI over the years. The best is yet to come. Speaking on behalf of Gordon Hardy, our incoming CEO, he's actively engaged in the transition He's looking forward to joining the OI team in mid-May and meeting with the investment community in the near future. Gordon has served on the OI board for over eight years and knows the company well. With his years of experience working in the food and beverage industry, including some of our customers, he's well positioned to lead the company into the future. Thank you, and we're now ready to address your questions.

Thank you. As a reminder, if you would like to ask a question today, you can do so now by pressing Start followed by the number 1 on your telephone keypad. If you change your mind and would like to be removed from the queue, please press Start and then 2. We ask that you please limit yourself to one question and one follow-up and please re-queue for any further questions. Our first question today comes from the line of Gansham, Punjabi with Baird. Please go ahead, your line is now open.

Thank you. Good morning, everybody. And hey, Andres, congrats on your retirement and also on your, you know, very impressive legacy you're leaving behind. Wish you well for the future.

Thank you.

Yeah, so I guess first off, you know, in terms of the volume adjustments relative to the prior guidance, are there any notable categories that are driving that sort of D rating, if you will, or is it just broad based at this point?

I think it is broad based with the exception of the Andean countries. which is the place where we invested on expansion, that is performing quite well. And in fact, Colombia specifically is growing year on year in the mid-teens. Every other market is experiencing this slowdown, with some markets having more stocking impact, for example, spirits in North America or spirits in Mexico because of tequila. But for the most part, it is everywhere, with the exception of the other countries, and specifically Colombia.

Gancham, I would add, if you take a look on a category basis, consistent with what Andres said, we're seeing the best recovery and improvement in the beer category. But it is choppy across the different markets. As Andres mentioned, down in Colombia, for example, it's doing quite well in some other markets. it's still kind of flattish to down a little bit. But overall, we've seen the most improvement in beer, which, again, is one of your shorter cycle areas, as we mentioned. The destocking is substantially complete, and we're seeing that improve. Yet you're still seeing that wine and spirits category still kind of down in that low to mid single digits. And with the expectation it might drag on a little bit longer, given the consumer consumption in that area is softer, and it might take a little bit longer for that area to destock.

Got it. Thank you. And then in terms of, you know, the destocking specific to wine and spirits, you know, what sort of timeline is realistic as it relates to 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, you know, just touch on maybe the competitive activity across the different regions, just given sort of a lower for longer, you know, volume dynamic. Thank you.

So, With regards to the stocking, we're seeing some interesting evolution lately. The band trends are changing as we speak. So we're seeing some interesting evolution. With regards to the spirits and wine, we expect this to continue through the second half, improving along the way, but it should be recovering in the second half overall.

As far as the competitive environment, the only thing I think we can add is that we are managing our businesses as we have over the last several years to really balance supply with demand and be very, very, very crisp on our inventory levels so that we maintain the proper balance within our system. Really can't really comment too much on the competitors. Thank you.

The next question comes from Mike with tourist securities.

Please go ahead, Mike.

Thank you, Andres, John, and Chris for taking my questions. And Andres, congratulations and best of luck in your retirement.

Thank you.

Just on my first question, in terms of the accelerated curtailment activity, Is that mostly occurring in the Americas? Is there something that specifically happened because you were a little bit more confident last quarter? You also were at a conference in late February where you reiterated your guide. So I'm wondering if something happened between the conference or versus last quarter where you become more cautious. And I understand that the backdrop is volatile, the consumer is volatile, but

um has something really happened more recently to increase your cautiousness and negatively affect your outlook so courtainments have been more pronounced in the americas as you mentioned now as we entered the year we had an expectation with regards to the pace of the stocking as well as the consumer consumption levels now q4 With all the data we have, it was the lowest point in the year-on-year comps for us. Q1 showed an improvement versus Q4, and April is showing an improvement versus Q1. Now, we had a pretty slow March, and that's what made the Q1 so low. Now, with all that in mind and with the latest information at hand, we see the stocking is taking a little longer than we originally anticipated, so we are correcting that. And consumer consumption is recurring, but it's recurring at a slower pace. Now, there are some encouraging signs. For example, when we look at the wine in Europe, wine out of Italy, the exports are growing year on year in the latest data that we have, for example. But then we got to see that to continue for the balance of the year. There is some positive evolution in beer and wine inside Italy. At this point, there is improved performance of beer in North Central Europe. So all of this is unfolding as we speak, and that makes it a little bit more challenging. But we believe we now corrected that volume based on the latest information we have and more in line with the actual stocking pace as well as the level of consumer consumption.

Yeah, Mike, what I would add is if you take a look at the curtailment activity, we had about 8% curtailment in the first quarter. which is kind of a line maybe a little higher than the sales volume decline that we were expecting in the first quarter going into the period. Obviously, the actual decline was bigger than that. So we are stepping up the curtailment activity. It'll probably be anywhere between 10% to 12% level of a curtailment over the balance of the year, with probably the peak being in the second quarter here as we catch up for adjusting for a little bit of slowness in the first quarter. As we look to where As Anders mentioned, we have been most active in our curtailment in the Americas, and so probably incrementally more curtailment will be occurring in Europe as we look to rebalance everything over the course of the year.

Got it. Thank you for that color. And then just for my follow-up, can you mention or comment on any additional opportunities you have in magma to probably offset this additional demand weakness? You mentioned raising the target to over $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 or even the 175 do you have at your disposal to help offset some of this persistent demand weakness? Thank you.

Yeah, so we see opportunities in multiple markets. Magma, given its flexibility, scalability, time to market, and many other things, lower capital intensity, lower total cost of ownership. The ability to co-locate or near locate has many opportunities for magma. So, for example, what we're doing right now in Kentucky is to put capacity right where the demand is for these craft distillers, making capacity available for them to be able to guarantee their supply. Like that, you will be able to map similar situations across the United States and in other markets. And there are enough opportunities already identified to support a large-scale deployment starting once Gen 3 is concluded. So we mentioned here that magma is very good for fragmented premium market, which is high value, and that's where we're focusing our efforts and our plans at this point.

And Mike, to your question on what's driving the additional benefits we're looking for in the margin expansion initiatives going from 150 to 175, keep in mind 75 million of that is related to restructuring of various facilities or SG&A reductions that we made decisions on in the fourth quarter of last year. All that work is substantially done, and so we are at the run rate of that benefit already. And so that certainly helped us in the first quarter and gives us the confidence. So we really are looking at another $100 million above that. And if you look at historically how the company has performed on these initiatives, that's in our wheelhouse. One thing I would add, and a big shout out to the operations team, we're seeing the best performance in the operation in seven years. And that is providing us a backdrop of being able to drive more benefits in that regard. And we are shifting some of our capital spend a little bit less on growth right now because of the softness in the market, and a little bit more towards cost-related projects, automation, things like that, that sustain additional benefits this year, but also really build the pipeline for continued benefits and continued margin expansions into the future.

The next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.

Great. Thanks for taking my question. I guess, yeah, 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 1% growth trajectory maybe in the back half of this year, especially facing easy comps and Q3, Q4 and maybe some capacity additions and your magma build out and 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?

So our expectation is that we will go back to pre-pandemic levels and the same is the perspective of our customers. So every customer we talk to is planning to go back to pre-pandemic or slightly higher, depending on the industry in which they are. So now as the stocking finalizes, which is being the largest driver of our sales drop, and consumer comes back up, we should be able to start seeing that level of performance. Knowing exactly where that is going to fall is difficult, but our expectation is that we're going to, later in the year and exiting the year, will be a much different pace when compared to today.

Yeah, to build off of that, Arun, I would say that right now we're in a mode where we are recovering to, as Andra said, that pre-pandemic basis as the consumer gradually starts to improve, as we mentioned. So I think it's a little early to be able to call long-term trends because we have to see a little bit more there. But as we look at what's driving the softness right now, whether it's destocking or whether it's just kind of the macros and things like that, It's too early to make a call that there's any change in the drivers for our business over the long term, so we haven't really changed that perspective yet. Now, to your question about the back half of the year, too, so it's included in our materials on page four. We do expect things in the back half of the year to be up mid-single digits or high single digits. Again, to kind of what you were alluding to, there are easier counts. We were down mid-teens last year, so we will be comping those to be able to give us stronger growth overall to recovering in time to pre-pandemic levels. And then we'll see the longer term trends unfold.

And everything we are describing, answering your question, doesn't include any deployment of magma. Yeah, correct.

Oh, great. And then just real quickly on price costs. So I think, you know, you may have addressed this, but, you know, you wanted to hold on to, say, two-thirds of your pricing. that was put in place for the last couple of years. Do you still feel comfortable with that cadence, especially, you know, given that we've potentially seen, you know, some further deflation on the Roth side? Or how would you kind of characterize your outlook for price-cost after this report? Thanks.

Yeah, what I first say, you know, price-cost this year, as we said, it's stable with our original outlook of some pressure of, you know, call it a little over $200 million or so of price-cost pressure. We have not changed that. What we've seen is a little bit of a softening in cost inflation, right? And most of that's on the energy side, a little bit of raw materials. And price has been adjusted a little bit, primarily because, for example, the energy – adjustments coming in North America get passed through to our customers pretty quickly. As we look to the overall backdrop of cost inflation, we're looking again, low single digit cost inflation coming off a little bit of what we were thinking. And keep in mind, you know, more than half of our business is under long term agreements with price adjustment formulas. So as we go into next year, there should be a natural continued recovery component of that. I think it's a little early to talk about the overall price, uh, you know, marketplace going forward. But I believe that if you take a look at the history of this company over with the exception of, you know, the last year or so here, we've historically been a business that's been either neutral or a little bit of positive on, on net price in a more balanced environment with, with if demand comes back into a little bit more normalized environment. So we believe that that's still the fundamental backdrop for our business. Of course, we just got to work through a little bit of the transition here as we're referring to on the call.

Thanks. The next question comes from George Stafos with Bank of America.

Please go ahead. Your line is now open.

Thanks so much. Hi, everyone. Good morning. Thanks for the details. Andres, again, congratulations on your retirement. and everything that you accomplished at OI and the support of our research. Thank you. I guess I want to come back 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. You're not trying to pick on OI. 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? The second question, again, related to what your customers are saying, and to some degree you already covered it, saying it's too early to call it, perhaps, is that, you know, 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 the recovery from destocking, consumption and or its recovery, and or changing consumer taste. There's been some discussion in the trade about changing consumer taste, trade down, and consumers moving away from traditional spirits. What are your customers saying in that regard relative to your demand outlook? Thank you.

Okay, so it's difficult to know exactly what happened in March, but there are some things that might be impacting the numbers. For example, customers taking the opportunity to drastically reuse inventories before quarter end. And the other thing is some of the customers have a fiscal year that is, it was ending or about to end. So most likely they're taking actions related to that. and then we'll have a more normal operation going into the second half of the year. Because of the excess capacity at this point, we expect that the typical seasonal demand that we see wouldn't necessarily apply because customers have access to product right away. So they didn't need to fill in advance or buy in advance and fill in advance to be prepared for the season. So those are some of the reasons, but it's difficult to know I think what's encouraging for us is that April has been a lot better than March and certainly better than Q1 too. So that's reassuring that we are in the path to improve. Now, obviously, defining exactly the pace and the timing is a little difficult. When we look two years out, there is some talk about changing in trends, but we still got to see that materializing. As we've seen before, some trends come up and then disappear, too. They fade away. So it's a little early to talk about that. I think what's good in our horizon is while we are enduring a significant volume slowdown at this point, the company is in a very good place operationally, and our operating leverage upside is very large. So as volumes come back, we're going to ride the wave. It's going to be positive.

The one thing I would add in that is, and we brought this point up in the last call, is our pipeline for new product development is very, very strong. So to us, that is a signal from our customers that they are looking to invigorate their brands and bring them forward and address whatever changes in consumer taste and trends that are out there. And like Ander said, it's a very volatile environment. You go back into the pandemic and people were drinking very significant amounts. Now there's a little bit of softness that you're referencing. It's very difficult to find out what is a longer-term trend and what is a reaction to a different environment. So time will tell.

And that activity on MPD is in all segments, in all geographies, and it's a lot higher than we've seen in years. And it's both initiated by OI and initiated by the customers.

Thank you, gentlemen.

Thank you.

The next question comes from Anthony Pessinari with Citi. Please go ahead. Your line is open.

Actually, Brian Burgmeier sitting in for Anthony. Thank you for taking the question. Maybe just following up on Arun's question, if I think about OI having maybe about 10% of capacity on the sidelines this year. When does that start to create some risk for year-end pricing negotiations in Europe? You know, I'm just thinking about sort of the historical relationship between curtailments and price. And, you know, I guess does this level of curtailment usually support flat to positive price for OI?

What I would say is at the end of the day, it comes down to balancing your inventories and making sure that the inventory situation is in the right place for whatever the market conditions are. And at OI, that's what we are managing to is to make sure that our inventories in the year in a reasonably snug position. And I can't speak for the broader marketplace, but we believe that that is the most important thing that we as a company can do to position the company for future success.

Got it. Got it. Makes sense. And maybe George just touched on this, but I just wanted to dig into the trade downs that you flagged in the prepared remarks a little bit. I'm just trying to I think if it's, are you referring to people maybe moving from wine to beer? Is it moving from a higher end bottle to a lower end bottle? Is it moving from glass to a different substrate? Just any detail there. Thanks, I'll turn it over and good luck on the quarter.

Yeah, so the trade down activity is concentrated in some markets, so it's not everywhere. And for the most part, it's linked to promotional activity. So every time customers move forward with significant promotions, Those are typically in a lower cost package and that's where the trade down happens. But we've seen also in some of those markets a start of a rebound and the consumption of glass, for example, in April was positive year on year in markets that presented that before.

I think we've seen some mixed trends too. So, for example, we flagged this one last quarter too, is that You know, there was some trade down effect, you know, with beer in Eastern Europe. By the same token, we're seeing very strong, you know, market share position for glass in the Netherlands and in Colombia and in other marketplaces like that. So I think we got, you know, there's no one universal answer about what's going on out there. You see it market by market, category by category.

Before we take our next question, as a reminder, if you would like to ask a question today, you can do so now by pressing Start, followed by the number 1 on your telephone keypad. Our next question comes from the line of Gabe Hajdi with Wells Fargo Securities. Gabe, please go ahead.

Andres, congratulations. John, Chris, good morning. Thank you, Gabe. Maybe much like you all are focusing on the controllables, maybe 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 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.

Dave Kuntz, yeah yeah gave for clarity are our actual shipments in April or up 3% okay that now that also benefited from the timing of Easter, if you normalize for the Easter period, it was down about 10% on a per day basis. Dave Kuntz, And that compares to the first quarter when things were down about 12 and a half percent so we we have seen some some trend and the positive. That's, but that's obviously a little slower of an improvement than what we had originally anticipated. So March was a bit softer as Andres mentioned. April is improving, but also maybe a little slower than we anticipated with the backdrop of, of the, you know, looking at the Nielsen data with a little bit of a slower consumer. But as we take a look at that and you see it on that page four and in the lower right hand corner, we have calibrated our growth expectations for each quarter of the year. for a revised view of a softer consumer recovery pattern. And so we believe, you know, with April being up 3% on an absolute basis, and then things playing out more on a normalized basis over the balance of the month, we should be in that kind of plus or minus, a fairly narrow range of break even in the second quarter, and then stronger volume, reported volumes in the back half as we see that gradual recovery, but also an easier comp against the prior year numbers.

Okay. One country, you guys talked about the Indian 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. It seems 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. I'm just curious how long maybe of a lead time you have in terms of discussions with your customers for PacMix down in Brazil, and then just maybe current commentary on what you're seeing. Thank you.

Yes. So the economy in Brazil has been performing quite stable. So it didn't go through what the other economies are going through. It's been okay. Now, our performance, the performance of glass in beer is very solid. It is driven by premium. And just to give you an idea, year-to-date, first quarter, year-on-year, one-way growth is 5.3%, which is well ahead of growth in the other substrates. Now, it is important to take into consideration that when other substrates talk about their demand, they include carbonated soft drinks in one way. which is a segment in which we don't participate that much. So that's driving a lot of what they are experiencing. But for us, a very important category in the country is beer, and beer is doing quite well. As we said before, the returnability improved over time after the pandemic. So the percentage of the total volume of beer packed in returnable glass increased, and it remains up.

Okay, thank you.

Thank you.

Okay, guys, that concludes our earnings call. Thank you, Emily. That concludes our call. I would note that our second quarter call is scheduled for Wednesday, July 31st. And as a reminder, make it a memorable event by choosing safe, sustainable glass. Thank you.

Thank you everyone for joining us today. This concludes our call and you may now disconnect your line.