O-I Glass, Inc.

Thank you for standing by. My name is Gabby and I will be your conference moderator today. At this time, I would like to welcome everyone to the OI Glass second quarter 2026 earnings conference call. After today's prepared remarks, We will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I would now like to turn the call over to Chris Manuel, Vice President of Investor Relations. Please go ahead.

Thank you, Gabby. Good morning, everyone, and welcome to the OI Glass second quarter 2026 earnings conference call. With me today are Gordon Hardie, our CEO, and John Haudrich, our CFO. After prepared remarks, we will open the line for Q&A. Our press release and earnings materials are available on the company's website. Please review the safe harbor statements and disclosure regarding our use of non-GAAP financial measures included in those materials. Today's remarks do include forward-looking statements, and actual results may differ materially from our current expectations. With that, I'll turn the call over to Gordon, who'll begin on slide three.

Thank you, Chris, and good morning, everyone. Today, we will review our second quarter results, discuss market conditions, and provide an updated view of our 2026 outlook and 2027 targets. Before I begin, I want to thank our OI colleagues around the world for their continued commitment and flexibility during a challenging operating period. Let me start with a straightforward assessment. We are clearly disappointed with our first half performance. Europe has not delivered the expected results as outlined in our investor day framework. We own those results. We are taking decisive action. We also think it is important to distinguish between a strategy that is not working and one where value realization has been delayed. We will address that distinction throughout today's discussion. With that, let me turn to recent performance. Second quarter net sales were stable, while adjusted earnings were $0.09 per share compared to $0.53 per share last year. Performance varied significantly by region. Strong America's result helped offset substantially lower earnings in Europe, while an unusually high adjusted tax rate reduced results by 18 cents per share. Thank you very much. We do not believe this is a structural issue with the business or our strategy. Rather, we believe the shortfall reflected three main factors. Elevated competitive pressure affecting selling prices, higher energy costs related to Middle East conflict, and unanticipated operational inefficiencies following restructuring across multiple EU plants along with two furnace events. We believe these issues are largely transitional and should improve as market conditions recover and we work through the remaining restructuring challenges

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Good morning again, everybody. No comment on recent performance. Second quarter net sales were stable, while adjusted earnings were 9 cents per share compared with 53 cents per share last year. Performance varied significantly by region. Strong America's result helped offset substantially lower earnings in Europe, while an unusually high adjusted tax rate reduced results by 18 cents per share. Thank you very much. Europe was significantly below our expectations and prior year performance. We do not believe this is a structural issue with the business or our strategy. Rather, we believe the shortfall reflected three main factors. One, elevated competitive pressure affecting selling prices. Two, higher energy costs related to the Middle East conflict. And three, unanticipated operational inefficiencies following restructuring across multiple EU plants along with two furnace events. We believe these issues are largely transitional and should improve as market conditions recover and we work through the remaining restructuring challenges. Global demand was also softer than expected with shipments down approximately 4.5% year over year. However, trends improved through the quarter and June volumes were flat with last year. Operational disruptions also limited sales opportunities and accounted for for about half of that decline. We believe fit to win remains a key driver of value creation. We have delivered significant savings year to date despite operational disruption and inefficiencies. In light of these near-term challenges, we have adjusted our 2026 fit to win target, while our three-year target is now in line with our original expectations of 650 million. Given these factors, we have updated our 2026 guidance and recalibrated our 2027 targets from last year's investor day. Importantly, we believe firmly in our strategy. We are realigning the timing to achieve our goals, not changing the strategy. Let's now discuss the top line on slide four. Net sales remain relatively stable in the quarter. Volume performance continued to reflect soft demand, although trends improved as the quarter progressed. As noted, global shipments declined approximately 4.5% year on year, while June volumes were flat with last year. Recovery has been difficult to predict, given sluggish consumer demand and customer destocking in certain markets. In the Americas, shipments were down 7%, reflecting challenging prior year comparisons, exiting some unprofitable business, and a furnace event that limited sales opportunities. In Europe, shipments declined 2%, primarily due to operational disruption that constrained sales. Excluding that impact, underlying trends were roughly flat in Europe. We continue to see pockets of strength across the portfolio. Non-alcoholic containers remain a standout performer and several geographies exceeded local market trends in prior year levels. The Andean Group delivered double digit growth while Brazil was up low single digits. In fact, we outperformed the market in the majority of category and market clusters amid generally sluggish demand. We continue to expect second half growth supported by easier comparisons and new business wins while maintaining a more cautious recovery outlook. Thank you very much. while the recovery remains gradual, improving momentum and portfolio optimization strengthen our confidence in delivering profitable growth. Let's now move to slide five. Fit to Win remains central to our strategy and continues to generate meaningful benefits. We believe the program is improving our cost position, strengthening our competitiveness, and building the foundation for long-term profitable growth. Since launch, Fit2Win has generated more than 400 million of net benefits. Through the first half of 2026, we delivered 85 million of benefits. This is net of 30 million of direct operating inefficiencies, and the total impact of disruption was approximately $45 million when including constrained opportunities and additional logistics costs. Phase A execution remains strong. Announced plant closures are complete and we are advancing the final stages of organizational restructuring. Phase B continues to progress, although operational disruption has delayed TOE benefits. We are also advancing supply chain, procurement and energy initiatives that should deliver increasing benefits over time. Thank you very much. Thank you very much.

Thanks, Gordon, and good morning, everyone. The top line was fairly stable, while second quarter results were below our expectation given challenges in Europe. Net sales were nearly $1.7 billion, down about 2% from the prior year. Favorable currency and stable consolidated selling prices partially offset lower sales volumes. Adjusted earnings were $0.09 per share compared with $0.53 last year. Thank you for joining us. Thank you for joining us. The impairment was triggered by the decline in the company's share price during the quarter, and it reflects Europe's current challenges from an accounting perspective. These charges do not affect cash flow, operating plans, or fit-to-win milestones. Our priority is to bring the same discipline and execution to Europe that have improved performance in the Americas, while recognizing that progress is taking longer than expected in a tough macro environment. Regarding the balance sheet, leverage is up some given lower EBITDA. However, liquidity is very good at $1.5 billion. We have no maturities until 2028, and we have ample headroom on our senior security covenant. Let's turn to slide seven. Segment operating profit was $171 million compared to $225 million in the prior year, as strong performance in the Americas was more than offset by continued pressure in Europe. In the Americas, net sales were $949 million, up about 1%. Higher selling prices and favorable currency more than offset a 7% decline in volumes. Segment operating profit increased 22% to $165 million, and margins expanded by around 300 basis points to 17.4%. Thank you for watching. In Europe, net sales were $704 million, down 5%, with shipments down 2% as disruption limited sales opportunities. Segment operating profit was $6 million compared to $90 million last year. The decline primarily reflected unfavorable net price from competitive pressures and higher energy costs. Europe delivered solid gross fit-to-win benefits, but temporary operational disruption and inefficiencies prevented those benefits from translating into net savings. Let's turn to slide 8. Thank you for joining us. We continue to anticipate strong performance in America, with results expected to be up nearly 60% in 2026 versus 2024. As Gordon noted, lower current year guidance is primarily driven by three factors in Europe. Continued market challenges, including additional price pressure and higher energy costs related to the Middle East conflict. Adjusted fit-to-win timing due to temporary operational disruption and additional costs at a few specific plants. We believe the revised outlook better reflects current operating conditions and the environment we expect through the balance of the year. Importantly, we believe performance in Europe should improve sequentially over the second half. Let's turn to slide nine. We are also realigning our 2027 targets to reflect the same factors affecting our 2026 outlook. We now expect adjusted EBITDA of $1.2 to $1.3 billion in 2027, reflecting a more gradual improvement path in Europe. from our revised 2026 guidance, 2027 should benefit from at least $150 million of additional fit to win savings. Potential upside could come from market improvement in Europe and energy price normalization following an eventual resolution of the Middle East conflict. and, importantly, we remain committed to the original adjusted EPA target of $1.45 billion. We continue to believe that target is achievable, but it will likely take longer than originally anticipated. With that, I'll turn it back to Gordon on slide 10.

Thanks, John. Before we close, I want to reinforce several key points. Thank you very much. Europe is about a year behind the Americas on fit to win. Ultimately, we believe Europe should improve to mid-teen segment profit margins within the next two years. This should be achieved through initiating recovery of excess cost inflation, addressing temporary disruption and normalizing energy market, and completing our fit to win implementation. In Horizon 2, improved competitiveness is supporting profitable growth with new business opportunities expected to build volume momentum through the second half of 2026 and into 2027. In Horizon 3, we are evaluating strategic options to strengthen the portfolio, improve our position in the value chain, and preserve flexibility for long-term value creation. In short, we are addressing near-term challenges with urgency while staying focused on the strategy we believe will create sustainable long-term value. With that, let me conclude on the next slide. To close, second quarter results were below expectations, primarily due to Europe. We understand the drivers and are addressing them directly and with urgency. At the same time, the Americas performance highlights the earning potential of effectively executing our strategy. Demand remains soft, but volume trends improve through the quarter, and we expect gradual improvement in the second half. Fit2Win continues to deliver meaningful value even with near-term disruption. Most importantly, our strategy remains intact. We are recalibrating timing, not changing direction. Our focus is clear, restore performance in Europe, improve execution, and create sustainable long-term value. Thank you for your time this morning. We will now take your questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please unmute your device. Please stand by while we compile the Q&A roster. The first question comes from the line of Gansham Punjabi with Baird. Your line is now open. Please go ahead.

Hi, Gordon and John. This is William Katsan for Gansham. I think my first question, just what gives you confidence on 2027's plan? You know, obviously, 2026 has shook out meaningfully below your initial expectations. So just some more color on 2027 would be great.

And then I'd follow up. Yeah, I'll take that first. And when we talk about moving from 26 to 27, first of all, we've obviously rebased 2026 for the factors that we talked about. As we look going forward, we are highly confident of the $150 million plus of fit-to-win benefits. Even in a disrupted environment, we're going to generate $200 million or more this year. So we're confident, especially as we get through the disruption elements and the benefit of exiting from and some one-time elements into the next year. With that said, there are probably more upside opportunities with ultimately the resolution of the war and the normalization of the energy markets, as well as with a better background in that regard, in affordability elements, consumer consumption, and not to mention us putting into effect our horizon to profitable growth and the forward opportunities that we have on a number of the new wins that we have in the new businesses that Gordon mentioned. So, Those underpin our view of 2027, which of course has been rebased from the original expectation.

And just to build on that, William, we see what we can deliver in the Americas with the tight execution of the strategy and fit to win, as we've said on previous calls and here again today. Europe is about a year behind the fit to win implementation. And so we expect that to improve sequentially through the next four to six quarters. And that also is an underpinning of our thinking around our 2027 result.

Okay, great. That's super helpful. Thank you. And then just one more on and many more.

and we're seeing the early benefits of that coming through. I think last time, or last outing we mentioned, we had picked up 15 pieces of new business that equated to about one, one and a half percent of volume. We've subsequently picked up more business that will start to flow in the back half of this year and into next year, which represents about 2% of volume. So we're gaining traction, we're becoming more competitive in the market When we look at it, we see it sequentially improving through this quarter and into the fourth quarter. So all the early signs are positive that we're becoming more competitive and we're translating that competitive into profitable volume growth.

I'll add just a couple data points on there, William. The new contracted business, as far as what we expect, it's going to ramp up in the second half of the year. It probably adds something like 1% to 1.5% annualized run rate in the back half of the year as we then build into 2027 when you see the full 2% being realized. So that comes as a tailwind. and then to your question on July, basically all of our markets are performing kind of in line with what we saw in June, net-net in total. The one thing that we got to say is that there's still a little, in one geography, we're still dealing with a little bit of Okay, great, great. That's super helpful. Thanks, guys.

Your next question is from Mike Roxland with Truist Securities. Go ahead, your line is now open.

Yeah, thank you, Gordon, John, Chris, for taking my questions. Good morning, Mike. Good morning. Just wanted to follow up to provide some more color on those operational efficiencies along with the two furnace events in Europe. More color around what they are, what disruptions were, when they started to occur, and what your plan has been to get them fixed and where that plan currently stands. Thank you.

So the events took place in Europe, one in France, one in the UK. One was a fire, one was a leak. And that caused us to short-ship into the market and put extra pressure on the network in the context of and many more. Thank you very much. There were the main issues, but when you're changing the supply network as we were with three planned closures in the first and second quarter, that disruption did add pressure into the network at a time when As I said, costs were rising. There was less available logistics capacity. That caused us to have to pay more for what was available. So that really was the root cause of that. We did also experience kind of and a number of small one-time events around rail transport not being available in France and having to shift to road freight. That also caused us a bit of disruption and certainly put a significant chunk of cost. Again, that's a once-off and we don't see that reoccurring as we go through the back half of the year.

Maybe just one other comment, Mike, on top of that, just to show, compare that to the Americas where we did have a furnace event and the segment was able to fully offset it and deliver. It just shows the resilience in the business that once you do get through all the restructuring and activities and then you get the TOE and the operations where you want it to be, we're confident that while this is a blip that occurred because of the combination of the furnace events and and many more.

Yes, absolutely. We're past those events. The rest of the fleet in Europe is performing well, and we expect that performance to, you know, to sequentially improve through the next four quarters as we embed, you know, the TOE, the total operating efficiency methodologies into the plant at the same level we have embedded them into the US. As I said, you know, Europe is about a year behind the implementation of Fit2Win, and we expect the catch-up is occurring as we speak.

Got it. And then just one quick follow-up. You mentioned, Gordon, that you don't believe that what you're seeing in Europe is structural. What gives you confidence that it's really not a structural issue in Europe? And what I'm trying to get at is when I look at some of your peers that recently reported, one of your peers reported close to a 30% EBITDA margin in the first half. So there obviously are benefits to be had in the European market. It seems like you guys are a little bit behind that. What are you trying to do to maybe catch up from a portfolio perspective, from an earnings and market perspective, to what some of your peers have been posting in terms of their earnings and their margins? Thank you.

Okay. First of all, let me just give some context around Europe. It's a very large market, very attractive market, 22 million tons and over $2.5 billion of profit pool in the region. Our peers are running businesses that are not going through a restructuring as we are in Europe. I come back to our original thesis. The business was uncompetitive, and we are going through the actions required to get this business more competitive in Europe. So we're in transition and executing that. Yes, we've had a stumble. Thank you very much. and we have the right resources and governance around that. We expect, you know, within two years to be back at kind of high teens margins and, you know, that's assuming, you know, Thank you very much. Running the operations and the supply chain in as fit a manner as we are now running it in the Americas. We've also upgraded substantially our energy procurement, our energy risk management and our energy usage capabilities in all these plants and we expect those benefits to flow through in the coming quarters. and to give you a data point on that in terms of energy usage we've put in a new system across all of the plants and some of our plants in Europe are now generating you know savings of anywhere between five and seven percent year on year in energy usage so There's a lot of good things happening in Europe. We're making a lot of progress in a lot of areas. But we did have this stumble that is sort of masking that. We feel we're working through that. By year end, we'll have settled the supply chain significantly and we'll start to extract the full value of the restructuring and the capacity optimization. So we have a lot of data points we feel gives us confidence that we can execute. in a way that delivers into the high teens over the next 18, 24 months. Go ahead.

Thank you.

Your next question comes from Aaron Viswanathan with RBC Capital Markets.

Hey, Aaron. Hey, Aaron.

Great. Thanks for taking my question. I hope you guys are well. You know, I just wanted to ask about Europe. I think you went into the quarter expecting a slight improvement there, but then I think you were down slightly. So what kind of drove that? Would you say that there's some structural weakness in wine? Do you think this is more transitory in nature? I know the affordability issues have continued to linger, and obviously we've had the conflict going on as well, but How do we see volumes improving? Is there anything else under your control, whether it be business wins or anything else that you could do to potentially drive some of that volume? And if it does not improve, what kind of footprint optimization actions would you be in a position to take? Thanks.

Hey, Aaron, this is John. I'll just kick that off. For clarity, during the quarter, we expected Europe's performance would be about $25 million better than where it was. Okay. You know, the majority, about 80% of that had to do with You know, the operating disruption one way or another, okay? The other, maybe $5 million was a little bit of extra pricing pressure. But keep in mind, as we indicated, you know, our volumes are down 2%, but they were flat, you know, if it wasn't for the disruption. So we didn't really have a meaningful commercial difference in the environment. It was more of an operating element. But I'll turn it over to Gordon.

Yeah. So, you know, As I said, you know, large market, over 22 million tons and a very large profit pool. But one way to maybe look at Europe is, and this is broad strokes, but bear with me. If you look at Northern Europe, it tends to be spirits dominated. Yeah, spirits and food. If you look at kind of middle Europe, so across northern France, Benelux, you know, into Germany and Poland is very much beer and food. And then in southern Europe, much more kind of wine dominated, obviously with some beer. You know, what we're seeing is wine in all markets, not just in Europe, but across the world is under significant pressure. And we do think there are some structural issues in that category. We've taken what we feel are appropriate network optimization actions and that to make sure that our footprint mirrors what we feel we can supply at an economic profit. In spirits, I think spirits generally are under pressure because the two largest markets, North America and China, have been underperforming for some years now. We see over the next probably 12 months, Thank you very much. The bright side on spirits is travel retail continues to grow, tends to be more premium, maybe a bit less volume, but it is growing. And then if you look at Europe, kind of what I call middle Europe, beer performs strongly. Thank you very much. and many more. So you put all that together, we have a lot of confidence in the medium, long-term market opportunities in Europe. We see our margins improving. We know how to do that. We've demonstrated that in the Americas. We actually have pockets of Europe where we're executing very well and we see the margins coming through, particularly in Southern Europe. So you put all that together, we're bullish on Europe over the medium, longer term. Thank you very much.

Okay, thanks for that. And then just as a quick follow-up, or not so quick, but I did want to ask about some broad strokes for 27. I think you mentioned that not calling for a big recovery, but how should we think about net price? And then, you know, obviously the incremental fit to win benefits as well. And would there be any other, you know, larger bucket items you can kind of help us with to frame where you can see 27 EBITDA land versus the original $1.45 billion guidance that you provided previously.

Yeah, this is John. I can give you a little bit more color in that regard. As we look to 2027 and the levers there, from a net price standpoint, at this point in time, we're thinking kind of neutral-ish. So keep in mind, we've had a very large amount of inflation this year and 55% of our businesses Thank you very much. We believe that we would have a neutral to even maybe modestly positive net price as we look forward. That does not include any other actions that might occur. It doesn't include the potential of a resolution of the war, in which case then energy prices could go down and that could be a bigger tailwind. On a sales volume standpoint, and many more. And then you have your $150 million worth of, you know, plus of fit to win benefits, which are going to be substantially over. They'll be scoot over to Europe as we work through the, you know, the disruption this year. And we complete the program, which is, like we said, is a little bit further along to go. Thank you so much.

Your next question comes from George Staffos with Bank of America. Please go ahead. Your line is open.

Hi, everyone. Good morning. Thanks for the details. So I wanted to dig into the operations a bit with Fit2Win and, you know, in particular Europe. So with Fit2Win, Gordon, You obviously made a lot of progress last year and the first portion of this year. Frankly, you made a lot of progress this year. But we've seen a bit more, you've acknowledged it, challenges in delivering as we've gotten into phase B. Does that have in any way, from your vantage point, reflect that it gets tougher and tougher to do the operational within Fit2Win, especially Given the nature of making glass, given how fixed cost leveraged it is, in some ways how abusive the process of making glass is in the first place, you know, you're pulling tons through a furnace, is there anything in Fit2Win that you're finding it's maybe a little bit tougher, given your past experiences, to execute in making glass, just given how challenging manufacturing glass is in the first place? and then I had a quick follow-on to that.

Sure. Let me address that in two ways. If I look at the Americas, I think it's You can see the results coming through. I think we were about ahead. We kind of started the phase B in the Americas. Fundamentally, you're changing culture, you're changing culture and plants, and you're changing some processes. And with that comes some challenges. The process we have is, it's pretty simple in many ways, but it requires a lot of discipline and it requires some change management. And I think we've executed that well in the Americas. You are right, George. I mean, glassmaking is pretty unforgiving, you know. and the parameters need to be tightly controlled and you know a miss on some of those parameters sometimes can throw you out for a week or or two weeks and then if you have a furnace event it tends to unsettle the whole network because you've then got to produce in in maybe plants that wouldn't normally produce a particular product and that causes some some disruption right So that has unsettled us a bit this year and particularly in Europe. Europe was really the last to go on the TOE disciplines. We're still betting them in. And the disruptions did have an impact on... Well, the disruptions were probably in two plants. It probably impacted six. You're also kind of redirecting expert resources to... Thank you for joining us. We see consistent improvement around TOE, availability increasing, quality improving, speed of lines improving. We are making improvements. Remember, some of our plants were already... very high performing. So in the high performing plants, there's probably a chunk less to improve that notwithstanding. I think weighted average, we are seeing significant improvements across the fleet. And what happens is, and I think I lay this out as an idea, these kinds of transformations are not linear and you'll always get some sort of bump along the way. but what I found in my experience is once you get through that the kind of Thank you very much. I'm not worried about that, if I could put it that way. I'm frustrated that we've had these stumbles, particularly in Europe, right in the middle of when we were reconfiguring the network to have two plants go down for, you know, I appreciate the thoughts on that, Gordon. They're well taken. What's that? Well-taken point. That's a well-taken question.

No, we appreciate it. I had a follow-on related. I think I know where you'll go with this, but nonetheless, I do want to ask the question. So traditionally, glassmaking, if you ran 92, 93% utilization rates, those were very, very good. When you ran over 95%, The view was that you would stress the furnaces. You would pull too quickly. Is any of that filtering into what we've seen or not? I know you're trying to change the paradigm in Glass, and so maybe not. And as we think about Europe and some of the changes in the organization that we've seen over there, has that been because of alignment on the direction and the strategy or just execution and going out of parameters in terms of the execution. Thanks and good luck in quarter.

Right. So two things. I'll take the second piece first, if you don't mind. I think one of the things that, you know, became apparent as we moved through the second quarter is the extent to which we needed to work cross-functionally. And I did flag up on the idea that, you know, Thank you very much. Thank you very much. Both in France, the UK and indeed the US is probably a result of what we would in the industry call over pulling on the furnace over years. And what we've done in our new system of TOE is, you know, we have strict pull rates depending on the kind of furnace. And part of TOE is to make sure that we do not overpull and therefore damage or burn down these furnaces more quickly than they should be. and that's a very rigorous discipline and that's looked at every day now whereas in the past I think that was uncontrolled and you had plants over pulling and therefore burning down the furnaces more quickly or indeed under pulling and using way too much energy and we have tremendous visibility on that on a daily basis that's looked at on shift by the day at the plant manager level and then that rolls up through the organization Thank you very much. Thank you very much. and, you know, increase slightly on a per ton basis. So this is really cultural change, process change that we're betting in. We have huge support from the plants on TOE and huge support from people on the line. They see their lives getting easier in managing these plants. So I think we're in a good place. We stumbled in Europe. No question about that. We own that. Thank you very much, Gordon. Thanks, George.

Your next question is from Anthony Pettinare with Citi.

Hey, Anthony.

Please go ahead. Your line is open.

Hey, good morning. This is actually Brian Bergmeier on for Anthony. Thanks for taking the question. Just on the fit-to-win savings, I know you're looking for another $120 million in the back half. I was just curious, maybe how much of that is sort of already locked in based on actions you've already taken in the first half? And then as we start to think about 2027, you're looking for another $150 million, just sort of the same question. Is it possible to say how much could be sort of locked down by the end of the year and would just be maybe like a rollover benefit?

Yeah, so anything we publish here and anything that's part of our value office program here is we have We have clear activities around timing, proper project management and resources around that. I would say that as a governance piece. None of this is aspirational and none of it is we have a number but we don't know how to get there. We do have further ideas on how to add more value. We just haven't figured out the path on some of those above the 150 for next year. But everything you're seeing and everything we're published there, they're deliberate programs and actions taking place day in, day out to deliver on that. So that's by way of kind of process. John?

Yeah, yeah. I would add on there, just looking at specifically at the numbers here, you're right. We have about $115, $120 million in the back half. Just under half of that is pretty much already locked and loaded because we've done the restructuring, we've done the SG&A actions, by and large, things like that. The remaining component has to do with what we call more on that phase B activity, more of this improving the operations, addressing the things that we're talking about in Europe, as well as moving forward some of those programs around on energy usage that Gordon was talking about and other factors. So, yeah, so going in the next year, too, in the 150, there's a decent number. I don't have a specific number. I would say probably a third of it off the top of my head is probably locked and loaded because it's just a carry-on effect, an annualization effect of things that are already done, and the remaining component has to do with more operational improvement. Again, focus more on your...

with the programs are set you know they're set by plan by by supply chain so it's it's a function of executing the month by month yeah got it got it thanks for that um and then just one follow-up uh you know it seems like South America Brazil did pretty well in the quarter just kind of curious your assumptions there for the second half you know I guess some other beverage packagers maybe sound a little conservative in the second half so maybe Just curious how much of that kind of volume, momentum could carry through. Thanks. I'll turn it over.

Yeah. And Brian, is that in reference to Latin America or overall?

South America and Brazil specifically. Thanks.

Yeah. You know, our business is performing, you know, exceptionally well in Brazil and in the Andean region and indeed Mexico, albeit of lower volumes. So the teams there, you know, executing are fit to win. Thank you very much. So, yeah, demand is good for us. You know, if I give you a view, we're up in spirits in Brazil, we're up in food, we're up in RTDs, and when I say we're up, we're growing ahead of the market, and then we're growing at market in beer. Thank you very much. Head of the market in RTDs and growing at market in food. So very strong performance there. In Mexico, volumes are a bit off due to tequila exports being down and Mexican beer imports into the US. Thank you very much.

There are no further questions at this time. I will now turn the call back to Chris Manuel for the closing remarks.

Thank you. That concludes our earnings call. Please note our third quarter call is scheduled for Wednesday, October 28, 2026. And remember, make it a memorable moment by choosing safe, sustainable glass. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.