Welcome to the Frigoglass first quarter 2022 results conference call. Throughout the call, all participants are in a listen only mode, and afterwards there will be a question- and- answer session. I now pass the floor to one of your speakers, Mr. John Stamatakos. Sir, please go ahead. Thank you all for joining us today. I'm joined today by our CEO, Nikos Mamoulis, and our CFO, Manos Metaxakis. Nikos and Manos will present our first quarter 2022 results, and after that, we will open the floor to your questions. Before we get started, I would like to remind everyone that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements set out in our presentation and press release, which we published earlier today. Please turn to slide four, and I will now turn the call over to Nikos. Thank you, John, and many thanks to everyone joining our call today. Let me start by saying that it was a very challenging and turbulent quarter for Frigoglass due to the conflict between Russia and Ukraine, which affects us extensively in a period where we also face production constraints in Romania. In this very difficult backdrop, we continue to prioritize our actions towards supporting our strategic beverage partners, as well as preserving to the maximum possible extent our company's value. We achieved sales growth of 25% in the quarter with both our segments exhibiting good momentum. In the commercial refrigeration business, we saw sales growing in double digits, being driven by a strong recovery in demand. Our customers increased cooler placements in order to benefit from the fewer restrictions in the on-trade channels. Growth was tempered by the recent geopolitical tensions as some of our customers in Russia canceled or deferred their orders during March. Our performance continues to be headlined by our glass business, where we reached a new sales record. On a currency neutral basis, our sales increased 31% and by 56% on a reported basis. Elevated raw materials and transportation costs, bad debt provision, and the temporarily high energy costs in Nigeria resulted in EBITDA margin contraction in the quarter. We received in the quarter another EUR 10 million insurance reimbursement related to the property damage claim. In April and May, we also received a total of EUR 8 million, an amount that includes part of the business interruption claim. Discussions with the insurance companies are continuing, and expect to finalize the business interruption compensation next month. Free cash flow generation was impacted by the lower operating profitability and an outswing working capital. To secure availability of materials in both segments, we have built up stock in the quarter. In addition, we have faced challenges in dispatching coolers in Europe due to the Russia-Ukraine conflict, which also resulted in higher inventories. Finally, we ended up the quarter with a cash balance of EUR 59 million, compared to EUR 62 million in the first quarter of 2021. Turning to the next slide, I will take you through the key drivers across our geographies in the commercial refrigeration business. In Eastern Europe, sales growth momentum sustained in January and February, driven by a rebound in beverage consumption in the on-trade channels, while March sales were materially impacted by the cancellation of orders in Russia and Ukraine. We continue to face challenges in transportation, which were intensified during March and resulted in delays in delivering coolers to our customers across Europe. In this environment, our sales declined by 3.6% year-on-year. In Russia, sales were up 71% year-on-year in January and February, whereas after the escalation of the Russia-Ukraine conflict, our sales decreased by 22% in March. We had a strong start to the year in Western Europe, supported by easy comparables. Demand increased in the quarter following continued beverage consumption recovery in the on-trade channels and pricing initiatives. Overall, sales were up 57%, mainly driven by incremental cooler placements in Italy, Greece and France. Frigoserve sales remained strong, growing in the mid-50s%, supported by expansion in Switzerland. Sales growth momentum sustained in Africa and the Middle East. Sales increased by 22% reflecting higher investments from a soft drink customer, price initiatives and Frigoserve expansion. In Asia, despite the tough comparable and the outbreak of Omicron variant in the early part of the quarter, we grew sales by 12.5%. We continue to reap the benefits from the expansion of partnerships with distributors and market share gains with key customers. Pricing adjustments also supported our performance in the region. Moving to the next slide and our glass business, which continued to deliver very strong performance. On a currency neutral basis, sales were up 51%. The appreciation of Naira had a positive effect, resulting in a 56% growth on a reported basis. This performance was the result of higher volume and price adjustments. Volume added EUR 7 million of sales, driven by increased orders across all our operations. In our glass container operations, demand was driven from key breweries as well as spirits customers. Orders for our complementary metal crowns and plastic crates business also showed a strong recovery. We did further pricing in the quarter, resulting in a positive contribution of about EUR 4 million on sales. Finally, sales were supported by a favorable currency effect of EUR 3 million. With that, I will turn the call over to Manos for the detailed financial review. Thank you, Nikos, and hello to everyone on the call. Let's turn to slide eight. Starting with commercial refrigeration, sales increased by 15%, supported by higher orders in West Europe, Asia and Africa. Sales in East Europe were significantly impacted by order cancellations and logistics constraints in March. Top line was also assisted by pricing initiatives implemented in 2021 and at the beginning of this year, as well as lower discounts. The gross margin declined by 8.7 percentage points versus the prior year's first quarter. The margin contraction reflects increased raw materials costs, significantly higher logistics costs due to supply chain constraints and lower cost absorption in Romania. On an absolute basis, operating expenses increased versus last year's first quarter, mainly driven by bad debt provisions related to customers in Ukraine, more than offsetting lower employee-related costs. However, due to operating leverage, OpEx as a percentage of sales improved by 90 basis points to 9.6%. All in all, EBITDA was EUR 1.8 million compared to EUR 7.6 million in the first quarter of 2021. Moving to glass. We had a strong start to the year, reaching a new sales record in the quarter. Solid volume growth across all operations and pricing adjustments resulted in a currency neutral growth of 51%. Glass gross margin settled at 28% below the first quarter of 2021. Less favorable energy sourcing mix and increased raw material costs overshadowed the benefits from volume leverage and pricing. The higher energy cost reflects the increased use of diesel following temporary gas outages in one of our plants, mainly in the first two months of the year. Operating expenses as a percentage of sales improved by 100 basis points, reflecting higher year-on-year sales. As a result, glass EBITDA increased by 23% with expected margin narrowing to 34.5%. Turning to the next slide and the group's results. Group EBITDA decreased by 29% to EUR 10.2 million in the quarter. Net finance costs reached EUR 5.7 million compared to EUR 3.4 million in the first quarter of 2021 due to last year's foreign exchange gains caused by the significant devaluation of the Naira. Income tax expense amounted to EUR 0.9 million versus EUR 3.4 million a year ago, reflecting the pre-tax loss versus profit in the first quarter of 2021 and last year's deferred taxes related to unrealized foreign exchange gains. All in all, we reported a net loss of EUR 2.1 million compared to a net profit of EUR 1.2 million in the first quarter of 2021. Turning to slide 10 and the components of the free cash flow. Adjusted free cash flow was EUR -27 million compared to broadly zero last year. Adjusted free cash flow was impacted by lower operating profitability and increased inventories. Given the supply chain challenges, we invested in raw materials in order to secure availability in both segments. Challenges in moving our containers outside of Russia also resulted in increased stock of finished goods in commercial refrigeration. Finally, we built up stock in glass to support demand in the upcoming months. CapEx was around EUR 5 million versus EUR 1 million last year. First quarter 2022 CapEx includes approximately EUR 2.3 million equipment-related purchases for the new plant in Romania. Adjusted net debt was EUR 281 million in March 2022 compared to EUR 257 million in December 2021, assisted by EUR 10 million cash insurance reimbursement. I will now hand over back to Nikos for the business outlook and the concluding remarks. Thank you, Manos. Moving to the final slide and our outlook for 2022. There is no doubt that the conflict has significantly impacted our business in Russia and more specifically, our European operations. We continue to take actions and develop contingency plans to contain disruptions in our production. Lower sales, supply chain limitations, and deflationary pressures on raw materials prices and transportation costs in the commercial refrigeration segment continued in April and May. We believe that these trends will continue to adversely affect our profitability and liquidity for the remainder of the year. In glass, the current market dynamics remain favorable. This allows us to reiterate our guidance for double-digit sales growth in 2022, driven by the solid demand for glass containers in Nigeria, increased export business as well as pricing initiatives. We are also reiterating our CapEx guidance for EUR 60 million in 2022. From that amount, EUR 15 million relates to the glass segment, and most of this will be spent towards the buying of materials for a scheduled furnace rebuild next year. CapEx related to the commercial refrigeration business primarily includes funding for the construction of the building and the procurement of equipment for the new plant in Romania. Following the great uncertainty this year and beyond, we have engaged advisors to review financial and strategic options aiming to improve the group's capital structure and liquidity, as well as maximize stakeholder value. Before handing over to the operator, and consistent with the last earnings call, we will be restricting the Q&A session. We will not be taking questions on certain topics, mainly in relation to sanctions. Similar to last time, we would like to first address some of the questions we have received and anticipate that you may have. Starting with the first obvious question, if the operational situation is stabilizing, particularly with regards to production and logistics in Russia? Production is taking place in Russia and is planned to continue over the next few months. Logistics remain challenging to transport finished and semi-finished goods to Romania due to the availability of trucks following EU sanctions. Prices to ship goods are elevated and continue to rise. Our primary objective is to continue to service our customers and maintain those relationships, and the Russian plant is crucial in doing so. Another question is if we can quantify the impact of the conflict on the company's results? As we stated in our business outlook disclosure in the financial statements, we do expect lower revenue, supply chain disruptions, and increased materials and logistics costs in the commercial refrigeration segment, which will continue to affect our business and materially impact our profitability and liquidity throughout this year. We are, of course, taking all mitigating actions we can and contingency plans as necessary. We will not provide further specific disclosure or guidance at this stage. The final one, if the sanctions picture worsens, and how is that affecting us? We have explored the effect of sanctions extensively with legal counsel and continue to do so as the picture evolves. The group is in compliance with all our regulatory obligations and are continuously monitoring the situation, which is constantly evolving. We will not be taking any further questions on this topic. Now, we can take any further questions we may have. Operator? Thank you. Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. Please be informed that there might be a short silence while questions are being registered. Thank you. The first question comes from Wolfgang Felix from Sarria. Please go ahead. May I first of all ask, outside of Nigeria, what minimum cash level would you be comfortable with? I think that's asked you this question before, but I wonder if anything has changed. If so, the cash level outside Nigeria in order to ensure, let's say, smooth operation. Yeah. After Nigeria is around, close to EUR 15 million. EUR 15 million. Could you by now perhaps disclose to us more or less how extensive your operations now are in Romania? I believe last time we discussed that you had still some operations in Romania, but you had brought some further assembly from Russia into Romania. Have you brought any additional operations back into Romania, or how large is that now? What part of the value chain does it cover? Okay. Let me answer this question. Immediately after the fire incident, a year ago, part of the main contingency plan was to wrap up our Russian plan, but also, in three months’ time, and actually we started in early October last year. We rented the space, and we established an assembly line in Romania by maintaining also some critical part of our employees in Romania. How we were doing this, actually because we had no equipment. The equipment was destroyed during the fire. We simply established an assembly line, and we were actually producing the cabins in Russia. We were doing the metal cutting and the insulation of the cabins, and we were sending shipping, and we are still doing today, cabins ready. Simply in Romania, the team is doing the final assembly of the coolers. What we were planning to do, and now we have accelerated, and we will be ready early July, is that we rented an additional space next week in order to have more, let's say, capacity and also disengage with our attachment to Russia, given the risk we are facing, the delays also in shipping cabins from Russia to Romania. In this additional space we rented next to our assembly facility, we will install metal cutting machines and a foaming station, so we will have a full production of coolers in Romania. We are transforming the simple assembly facility to a small full production facility, which will actually have also some 20%-30% more capacity than the previous one we assembled. This is what we are doing actually in Romania. That sounds encouraging. Can you tell us roughly what volume we would be talking about from, say, July onwards? Based on what Nikos said, the new, let's say, this small, let's say line, will give us around 5,000 coolers per month. Plus, keep in mind that we will maintain also the previous light assembly line that we built in October. We are looking. Okay. With what Nikos mentioned, around 5,000 coolers per month. Okay. More of that. Can I ask finally, the advisor you've retained? Can you confirm again who that was and exactly what you're discussing with them? Is it going to involve bondholders? Can you please repeat? I'm just asking if you can confirm again who these advisors are, what precisely you're discussing with them, and if that would involve bondholders. I think I'm gonna disclose the advisors who we have engaged with financial and legal advisors. Their name is, the legal advisor is Milbank, and financial advisor is PwC, the regular. Okay. Thank you. Are you planning to involve bondholders? Uh- I imagine. At this point in time, we are reviewing all options. It is a little bit premature to disclose if we will engage any stakeholders. We are simply assessing options to improve our liquidity and capital structure. Okay, thank you. I understood. Thank you very much. Thank you. The next question comes from Osman Memisoglu from Ambrosia Capital. Please go ahead. Hello, many thanks. A couple of questions on my side. Could you give us some color on how ICM business revenues are trending for April and May, given all the issues that you've talked about, particularly logistics issue? Also regarding the logistics part, how much higher are the costs relative to March you've seen in April and May? The third one from me, on- Osman, let's one by one, let's check the first two, and you can continue. Thank you. Uh- The trend of ICM. The trend in ICM, I think I already discussed that April and May we faced again challenges. It's not only that we are facing the impact of some order cancellations from customers in the eastern part of Europe, mostly Russia. Of course, Ukraine it's out of discussion. But also we are facing some other order cancellations given the logistical constraints and the extended lead times that we are communicating to customers because of the logistics challenges we are facing. The overall trend is going down. The main driver, Osman, is as Nikos mentioned, the soft demand and the order cancellation in Russia plus the delay in transportation. As regards logistics, as you understand, we cannot disclose the exact number, but I will give you the hint that the cost of a truck from Russia to Romania before the crisis now is 3 times higher after the war. Understood. Just coming back to the previous response, is your European, Western European orders being canceled? That's what I'm supposed to understand, right? Is it possible to give us some color on how. Is it a 10%, 20% reduction, obviously for a very important quarter? How should we think about that? We cannot give you a specific percentage. As I said, out of having order cancellation in Russia because of the situation and because of the market dynamics, let's say, Coca-Cola or other big international players that they are our key customers, they stopped any activation in the market, so they are not doing any new placements of coolers. Second, in the western part of Europe, we also have some cancellation, not a very material, let's say, part of our Euro-West European demand. Simply because we communicated that instead of latest by June, that was our commitment to deliver coolers, we communicated to them delivery times taking them to August or September. As you can understand, this is very late for them. It's the peak season has already started, and they need the coolers. Understood. Just to clarify on the Russian demand, I'm assuming Russian demand is zero, if not, close to zero. You have some export business to the east of Russia. Is that still continuing, and can you give us any color? Yeah. East of Russia, we have exports. We are doing actually to Stan countries, Kazakhstan, Uzbekistan, and these countries. There are also some delays there because there are a lot of formalities and customs clearance and approvals that the drivers need to present to the borders. This is something that is going quite smoothly. Is that a material part of what used to be a Russian figure in terms of revenues? Uh- This part, Osman, is increasing because we are making, we are getting market share in these countries, and we supply these countries from Russia. The effect here will be our expectation is to be high. Yeah, the demand actually there in these countries is higher, because our key competitor in these countries is a Ukrainian company that simply they ceased operations. Understood. There's a flip side to everything, I guess, in life. Okay. Final thing on this round, at least on insurance, just to confirm, you are expecting 100% settlement for business disruption in Q2, and any color on what type of figure you would expect roughly? Our expectation, Osman, is to settle the business interruption in Q2. However, this is not only in our hands. We are working closely with the loss adjusters. That's why we cannot now disclose a number. We try to finalize in Q2, and as we have already communicated in the previous calls, our maximum amount for business interruption is EUR 30 million, but this is the limit. Right. I'm guessing you're talking about the latest transportation cost increases. Are they looking favorable to incorporating those? What do you mean? Incorporate this cost to the business interruption? The latest transportation cost increase post-war that you mentioned, the three times and all that. Even though it's not necessarily directly related to Romania, I guess there could be a case made to incorporate. Yes, keep in mind that the business interruption or period is finishing, end of May. Understood. Okay, I have a few more, but I'll let others ask for now. Thank you. Thank you. The next question comes from Juan Ibinarriaga from Bank of America. Please go ahead. Hello, good afternoon. Thank you very much for the call. I have a couple questions. One has already been partially addressed, but I would like to ask the question in a slightly different way. With regards, I'm referring to April and May, the latest trading performance in the coolers business. Could you maybe tell us if volumes and gross margin are similar to March or are they getting worse? Volumes and gross margins. We cannot disclose these details, Juan. Also, things are moving so fast, so any kind of disclosure that will be modeled in your models will be at very high risk given that the situation is changing day after day. Transportation costs, raw materials costs, and all these critical parts of our cost base is changing over time. Okay. At least on a overall growth, it's I mean, would you say the trading conditions are similar to March or are they really getting worse day week- after- week? If I have to guess, our margins will be negatively impacted, compared to first quarter in our ready-to-drink business. Okay. The other question is with regards to liquidity. You said that minimum liquidity outside excluding Nigeria, liquidity needs will be around EUR 15 million. Could you tell us of the EUR 59 million cash, remind us how much is outside Nigeria and also undrawn facilities, you know, availability. To show we have an idea how far you are from that limit, from the EUR 15 million limit. I will give you the updated April 2022 liquidity, which is more relevant. In April we closed with cash of EUR 67 million, of which EUR 26 million were outside Nigeria. In relation to the undrawn lines, we've had EUR 6 million undrawn lines as of April 2022. Okay. Thank you very much. Thank you. The next question comes from Carl Malmberg from Stena AM. Please go ahead. Yes. Hi. Thank you. I was wondering how much of the CapEx towards the Romania build-up have been spent already, if you can provide some color on that. How much more of insurance claims in regards to that are you expecting? Thank you. Let me start with the CapEx already spent as of March 2022. We spent EUR 2.3 million this year, and we have already spent another EUR 1 million last year. All in all, it's EUR 3.3 million as of March 2022. What was your second question? Nigeria. Nigeria. For Romania? Okay. The second question? Is Romania. The second question was. Yes. How much of the insurance claims with regards to Romania have been received at this point? We have received EUR 25 million as of March 2022, which is actually they are related to property damage claim. In April, we received EUR 5.5 million, which was an advanced payment for the business interruption. We received another EUR 2.8 million in May, again, for the property damage claim. This is the numbers that we have already received until now. Yes. Just last one then. How much capital in total are you expecting to direct towards the Romanian build-up? I know you have the number for this year in the release, but could we see some next year as well? Yeah. As Nikos mentioned, our guidance is for EUR 60 million for the whole company. Okay. For the Romania plant, we are around an estimate, a number close to EUR 40 million-EUR 42 million, in that range. Anything more than that for next year, or is that the total amount? It's the total amount, yes. Assuming that everything will be invoiced this year. Of course, some payments, if the invoice comes in the end of the year, will be next year. Okay, thank you. Thank you. The next question comes from Osman Minishau from Ambrosia Capital. Please go ahead. Hello. Just following up on Romania. Can you confirm that you have started? I think that's what I read in the press release, but would love to get some more color. You have started construction as of May. That's the first point. Just wondering if there are any levers you could play with to accelerate the process. It was Q1 in part of the press release, early 2023 in another part. Just if you could confirm when you expect it to be operational. That's the first one. Yeah, we have faced some delays with the licensing and the overall, because it is a very big project like this one, it requires a number of licenses. The last one, the environmental license, which actually is the last one, it is expected to be, let's say, issued next couple of weeks. However, because we have received all other permits, early next week we start the excavations and all the works related to the building. At the same time, actually, we have ordered all long lead time equipment. As we had prioritized this first, and now we are in the final stage of agreeing with suppliers for the remaining part of the equipment. By the end of May, I assume, we will have ordered everything. The lead times and the plan is again somewhere in Q1 next year to have the inauguration and the ramp up of the plant. Understood. Related to this then, the upgrade of Romania by early July, will that stop the reliance on Russia or for Q3 and Q4, for the slow season at least? Or will you still depend on Russian plant for the second half of the year? Romania will not depend anymore on Russia because they will produce their own cabins, and then they will make the assembly of these coolers, the number of coolers we discussed. The Russian plant, as you can imagine, even this full production in Romania will not be enough to cover the demand for the first, let's say, high season, first half of next year. Right. Depending on how Russian situation evolves, we will keep out of the Russian market production, which we don't anticipate any problem. We will plan, but it is a little bit early now. We will decide this somewhere early Q3, how much volume related to Western Europe we will allocate to Russian plant. This will be, we will need to take into account several parameters like the cost, the transportation cost, materials cost. We need to, let's say, solve this equation and make an informed decision. Understood. High season will definitely. Well, you have the Romania plant potentially upcoming as well in early next year, right? That will be available as well. More short term, for Q3 this year, for Western European demand, given the upgrade in Romania by early July, will you have any dependence on Russia for Q3? We will have limited dependence because actually the second half of the year, as you know, historically. Yes. is low, and we believe that we can cover most of the European demand in the second half from Romania. Okay, perfect. Just very quickly on the EUR 6 million undrawn lines, that's outside of Nigeria, right? No, EUR 4 million is outside Nigeria. EUR 4 million outside. EUR 2 million is in Nigeria. Perfect. The other question is working capital. With all these moving parts, usually we would expect an outflow for working capital in Q2, but with all these moving parts, how should we think about whether it's. Could it support liquidity in Q2? As you understand, the situation is changing every day. However, like, the working capital in Q2 will remain high level. This is our estimation. Of course, as you know, there will be a reduction probably, but of course everything is changing in the last two quarters of the year. Understood. When you say remain at high levels, incremental cash outflow will be needed? Yeah, I think it will be around 2.1. Okay. Not an incremental burden. As you understand the situation. Of course. Yes. A lot depends again on Russia, because a big part- Right. of the stock is in Russia. Right. If we can produce and ship, then we will not see an increase. If for whatever reason tomorrow, Russian borders, I'm exaggerating, are closed, then some stock will be stuck there. Perfect. Yes, understood. Final bit is on Nigeria. For two quarters now, you had on below normal levels of margin. If I understood correctly in your speech, you mentioned the first two months were impacted with this gas shortage. Should we assume a no return to normal margins in Q2? How should we think about this energy cost issue? We are talking about Nigeria, Osman, and this is something very, very difficult to predict. Let's say March and April and early May, things have stabilized and we were running the furnaces with gas. Last couple of days we see some back and forth of the gas pressure, so we are obliged to move again back to diesel. Hopefully things will be better. Definitely in the remainder of the year things will be much better than the first two months. Yes. You're gaining maybe a bit from the euro weakness in terms of translating. Yes. As Nikos mentioned, now the sales bridge or FX, if you see the numbers, there is around EUR 1.1 million benefit. Perfect. Last thing related to Nigeria. Will you, given the cash, for some people, quote-unquote, "stuck there," are you considering upstreaming, cash from Nigeria? We upstreamed some cash from Nigeria in April as well, depending on the needs that we have outside Nigeria and always to secure the smooth operation in Nigeria. Because as you know, in order to upstream dividend, you need to have currency. Got it. The figures you shared with us was post-dividend upstream? Yes. In April. Perfect. Thank you. Thank you very much. There are no further questions in today's conference call. Dear speakers, the floor is yours. Okay. If there are no further questions, I would like t o thank you as usual. We are doing everything we can do to adopt both production and supply chain to address our customers' demand and of course making sure that all our people are safe and sound and that we operate within a rapidly evolving situation. With this, I'd like to thank you and don't hesitate to contact us if you have any further questions. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect your lines.