Good day, and thank you for standing by. Welcome to the O-I Glass full year and fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After prepared remarks, there will be a question- and- answer session. To ask a question during the session, you will need to press star one on your telephone. Please limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Chris Manuel, Vice President of Investor Relations. Please go ahead. Thank you, Jerome, and welcome everyone to the O-I Glass full year and fourth quarter 2021 earnings call. Our discussion today will be led by Andres Lopez, our CEO, and John Haudrich, our CFO. Today, we will discuss key business developments and review our financial results. Following prepared remarks, we will host a Q&A session. Presentation materials for this earnings call are available on the company's website. Please review the Safe Harbor comments and our disclosure of the use of non-GAAP financial measures included in those materials. I'd now like to turn the call over to Andres, who will start on slide three. Good morning, everyone. I appreciate your interest in O-I Glass. Let me start by thanking the O-I team. I truly appreciate your high level of engagement, agility, and focus on execution over the past year, which helped us achieve our commitments and advance O-I's strategy. Last evening, we reported full-year 2021 adjusted earnings of $1.83 per share and free cash flow of $282 million. Both earnings and cash flow exceeded our original guidance and our most recent business outlook. Fourth quarter adjusted earnings were $0.36 per share, which also exceeded our business outlook as we close the year on an exceptionally strong note with sales volumes up more than 5% excluding divestitures. February 2021 results reflected a strong rebound from 2020, which was impacted by the onset of the pandemic. Sales volumes was up 5.3%, and production volume improved significantly. Importantly, our 2021 shipments exceeded pre-pandemic levels, reflecting a strong consumer preference for premium and sustainable glass packaging. Higher average selling prices offset around 80% of elevated cost inflation. This was quite a feat, given inflation was nearly double what we expected heading into a year. There was good momentum passing through incremental inflation. Earnings also benefited from our successful margin expansion initiatives, along with continued strong operating performance. As we will review shortly, we continue to take the bold structural actions to advance O-I's strategy. This includes all facets of the business, including structural actions to improve margin and investments to support organic growth. Likewise, we are developing our proprietary MAGMA solution, addressing legacy liabilities and optimizing our structure. On the right, we have shared a dozen key financial measures. As you can see, we are making solid progress across all dimensions of the business. This reflects a much more agile organization capable of effective execution, resulting in solid progress during 2021. There is great momentum at O-I, and we are optimistic for 2022. We expect improved adjusted earnings and strong adjusted free cash flow. Adjusted earnings should improve to between $1.85- $2 per share. We expect higher adjusted earnings despite an anticipated $0.18 impact from the combination of unfavorable FX, higher interest as we fund the Paddock trust, and dilution from divestitures as we optimize our portfolio. Excluding funding the Paddock trust, we expect free cash flow of at least $125 million. Likewise, a strong adjusted free cash flow should exceed $350 million, which excludes elevated expansion CapEx that is fully funded as we redeploy proceeds from divestitures. Reflecting good momentum, we expect first quarter earnings will improve from prior year results. John will expand on our financial performance and outlook a bit later. Let's move to page four as we review recent sales volume trends adjusted for divestitures. The chart illustrates our sales volumes over the past five years, which of course reflects the disruption from the pandemic. On a CAGR basis, our sales volumes have been stable over this period. Keep in mind, annual shipments have increased about 1.5% on average when including our JVs, which is more indicative of underlying glass demand. As I just noted, shipments were up 5.3% in 2021 as we recovered from the onset of COVID. Importantly, shipments improved 1.1% from pre-pandemic levels in 2019 as we saw solid growth across nearly all markets and end-use categories. Stronger glass demand reflects flexibility amid ongoing channel shifts, consumer preference for premium products, consumer preference for localization of supply, and the favorable sustainability attributes of glass. This was achieved despite ongoing supply chain challenges and reflects increased agility and improved commercial and operating capabilities. Strong demand continued through the fourth quarter as shipments were up more than 5% from the prior year. The Americas was down slightly, reflecting peak asset project activity combined with record low inventory levels. However, shipments were up a robust 13% in Europe. In particular, wine was very strong in Southern Europe as we exited the year. Strong demand continued into the new year, and January shipments were up more than 3% from the prior year period. Amid continued robust demand for glass containers, we expect O-I sales volume will grow up to 1% in 2022. This growth will be served by increased productivity and asset projects that will add the equivalent of a furnace across our enterprise. Additionally, we are building new capacity that should be online in early 2023 to serve premium categories in attractive growing markets. For the next three years, we anticipate organic growth will average 1%-2% per year across our consolidated network as the incremental capacity comes online. Let's turn to slide five. As we exceeded our financial commitments, we also made very good progress advancing O-I's strategy. In fact, we achieved all of our key objectives this past year. Our highly successful margin expansion initiatives boosted earnings $70 million, which exceeded our target of $50 million. With MAGMA, we aim to create new profitable business models that will revolutionize the glass market. We achieved critical milestones in 2021 as we validated our MAGMA Generation 1 line at Holzminden, and we are currently testing key Generation 2 technologies at our Streator pilot. As we rebalance the dialogue on glass, our glass advocacy digital marketing campaign generated 1.3 billion impressions, reaching more than 105 million people in the U.S. We are off to a greater start in the first year of this much-needed creative and effective program. Likewise, we advanced our ESG agenda, and our efforts are being recognized. I invite you to review the sustainability page in our appendix, which summarizes the meaningful ESG improvement at O-I, noted by the likes of Sustainalytics and EcoVadis, to name a few. We also made great progress as we optimized our structure by rebalancing our business portfolio and improving the balance sheet. Our portfolio optimization program is advancing swiftly. As discussed at Investor Day, we announced up to $680 million of future expansion initiatives, including up to 11 MAGMA lines, which will be substantially funded by our portfolio optimization program. We are also making greater strides resolving legacy liabilities. Back in April, we established an agreement in principle for Paddock's consensual plan of reorganization. A few weeks ago, the plan of reorganization was submitted to the court. Likewise, we have significantly reduced the unfunded position on our legacy pension plans. As a result of our efforts, we nearly doubled our free cash flow, and net debt is now at the lowest level since mid-2015. Finally, we advanced our efforts to establish a simple, agile organization as we completed the first two phases of our new strategic managed services partnership with Accenture. I firmly believe 2021 represents a step function improvement for O-I, and I'm confident we will continue to accelerate our transformation in 2022. On page six, we have laid out our key strategic objectives for 2022, aligned with the six key priorities we shared at our recent Investor Day. As we seek to expand margins, we intend to achieve higher selling prices that will offset last year's unfavorable spread and recover the impact of 2022 cost inflation. We will also continue our highly successful margin expansion initiatives, which should yield at least an incremental $50 million of benefits. Next, we intend to profitably grow our business in premium categories in key strategic markets. We will substantially complete the expansion initiatives in Colombia and Canada this year, which are currently underway leveraging legacy technology. Future expansion will increasingly utilize our MAGMA technology, including the next wave of projects in Peru and Brazil. Our expansion projects are substantially backed by long-term customer agreements. We will complete our current $1.5 billion portfolio optimization program in 2022. Remaining proceeds should be received prior to significant expansion reinvestment. We also intend to resolve Legacy Asbestos liabilities in the first half of 2022 and further de-risk our pension plans. We expect to complete our multi-generation MAGMA development plan over the next few years. In 2022, we will have Gen 1 fully optimized and plan to validate the Gen 2 pilot. Likewise, we will continue to advance our Gen 3 solution and the ultra-lightweighting initiative. We aim to further enhance glass' already attractive sustainability profile. We will reduce our greenhouse gas emissions by 5%-10% and source 30%-35% of our electricity from renewable energy sources. Along these lines, we will continue to expand our glass advocacy campaign with focus on multiple end use categories. Through continued disciplined execution, we aim to deliver on these commitments and many more critical milestones in 2022 that we believe will increase stakeholder value. Now over to John. Thanks, Andres, and good morning, everyone. I plan to cover a few topics today, including recent performance, progress on financial priorities, as well as our 2022 business outlook. I'll start with a review of our 2021 financial performance on page seven. As shown on the left, O-I reported full year 2021 adjusted earnings of $1.83 per share. This represented a 50% improvement from the prior year as the business recovered well from the onset of the pandemic. Segment operating profit was $827 million, up $157 million from the prior year, adjusted for FX and divestitures. Net spread was a headwind, reflecting elevated cost inflation. On the other hand, sales volume was up 5.3%, excluding divestitures, as shipments exceeded pre-pandemic levels. Likewise, production levels, excluding divestitures, increased 7.3%, which provided a significant earnings boost. Our results also reflect a continued strong operating performance as well as $70 million of benefits from our margin expansion initiatives. As you can see on the right, we reported fourth quarter 2021 adjusted earnings of $0.36 per share. Segment operating profit was $177 million, which was down $21 million from the prior year, adjusted for FX. As expected, net spread was a headwind due to elevated cost inflation and prior to sales price increases that began to take effect in January of this year. Sales volume was strong, up 5.3% from the prior year. Likewise, production increased 1.2%. However, higher production and the benefit of our margin expansion initiatives were more than offset by elevated logistics and higher maintenance expense in the fourth quarter as the fourth quarter is the peak of our project activity in 2021. Moving to page eight, we provide more information on our fourth quarter performance by segment. In the Americas, segment operating profit was $99 million, down $27 million from the prior year, adjusted for FX. Results benefited from favorable net price, reflecting timely pass-through of energy costs, primarily in North America. As Andres noted, same-structure shipments were down about 1.7%, reflecting low inventory levels in key growth markets and elevated asset maintenance activity, which was concentrated in the Americas. As anticipated, the impact of higher maintenance activity and elevated logistics costs more than offset the benefit of slightly higher production levels. In Europe, segment profit was $78 million, up $7 million, adjusted for FX. Net price was a headwind pending price increases starting in January. Shipments increased 13% from the prior year, mostly reflecting robust demand in the wine category across France, Spain, and Italy. Significantly lower operating costs reflected a 1% improvement in production levels, benefits from our margin expansion initiatives, and very good operating performance. Turning to page nine. We achieved all of our key financial priorities in 2021. Free cash flow was $282 million, which exceeded our original guidance and most recent business outlook. As illustrated on the top chart, cash flow has improved significantly from recent periods. Reflecting strong shipments, our IDS was down five days from the prior year as we achieved record low inventory levels. We aim to maintain low inventories, although rebalancing will be required across the network. Committed liquidity exceeded $2.3 billion, significantly above our guidelines. Net debt ended the year at $4.1 billion, well below our 2021 target of $4.4 billion. As you can see on the lower chart, we reduced net debt by around $500 million compared to last year and $900 million compared to 2019 levels. Our leverage ratio, as defined by our bank credit agreement, ended the year around 3.6x, which is favorable to our guidance of high threes. Our balance sheet improvement reflected improved free cash flow and proceeds on divestitures, which totaled $180 million in 2021. As Andres discussed, we have significantly advanced the Paddock Chapter 11 case. We also made very good progress reducing our unfunded pension liability, which declined nearly $325 million from year-end 2020. Actions included annuitizing liabilities and rebalancing the asset portfolio to reduce future volatility. Overall, we continue to improve our cash flow and balance sheet position. Let's shift to our 2022 business outlook. I'm now on page 10. We expect 2022 adjusted earnings will range from $1.85-$2 per share. As mentioned, earnings will be impacted around $0.18 per share by a number of factors, including a stronger US dollar, net dilution from divestitures, and incremental expenses we fund the Paddock trust. Currently, we have negotiated more than 90% of our open market sales agreements, and we are implementing annual price adjustment formulas on long-term contracts. As such, we are confident the benefit of price increases should recover last year's unfavorable spread and offset 2022 cost inflation. We expect sales volume growth of up to 1%. Earnings will also reflect more than $50 million of benefits from our ongoing margin expansion initiatives. These benefits will be partially offset by some one-time costs attributed to our expansion initiatives as we seek to debottleneck key markets. The chart includes other details. Overall, we expect earnings will improve between 12% and 20%, adjusted for the impact of FX divestitures in Paddock. Shifting to cash flows on the right. We expect 2022 free cash flow of at least $125 million and adjusted free cash flow should equal or exceed $350 million. As the chart illustrates, higher EBITDA and favorable working capital trends will boost cash flows. $600 million of CapEx compares to around $400 million in 2021, and the increase is due to investment in expansion projects, as previously communicated. Interest and taxes will be a headwind. Naturally, we will incur higher interest upon funding the Paddock trust, while elevated tax payments are attributed to higher earnings and resolution of tax matters. These factors should yield free cash flow of at least $125 million. Adjusted free cash flow is a new additional measure, which excludes the impact of strategic capital investment. Going forward, we are breaking out our expansion investments, which should approximate $225 million in 2022, and includes projects underway in Colombia and Canada. Keep in mind our expansion projects will be substantially funded by proceeds from our portfolio optimization program. Adjusted free cash flow of at least $350 million reflects the cash available to return value to shareholders through debt reduction, share repurchases, and the like. Please note that this cash flow outlook excludes the one-time $610 million impact of funding the Paddock trust. On page 11, we share our 2022 financial priorities. This year, we will focus on funding our expansion projects and further improving our balance sheet. As we just reviewed, we intend to optimize our adjusted free cash flow, which should be at least $350 million in 2022, reflecting an EBITDA conversion of between 25% and 30%. We intend to complete our $1.5 billion portfolio optimization program in 2022, well ahead of original 2024 target. To- date, we have completed or announced transactions totaling $1.1 billion, and other initiatives are in advanced stages. We have provided some additional details on timing of proceeds. Like Andres noted, we anticipate resolving Legacy A sbestos liabilities, and we'll further de-risk our pension plan in line with our goal of eliminating the unfunded liability by 2024. Finally, we will further reduce our leverage. As illustrated on the right, we are introducing a more expanded financial leverage measure, which includes net debt like the past, as well as our Legacy Asbestos and pension liabilities. As you can see, we have made significant progress reducing our financial leverage compared to recent years. We will further reduce our financial leverage in 2022. While we will incur new debt to fund the Paddock trust, the Paddock support liability will be eliminated. Total leverage should decline from over 4x last year to the high 3s by the end of 2022. This reflects strong adjusted free cash flow and proceeds on divestitures that will more than fund incremental investment and expansion initiatives this year. We remain on target to achieve our total leverage objective of around 3.5x by 2024. I'll wrap up with a few comments on our first quarter 2022 business outlook. I'm now on page 12. We anticipate favorable net price as price increases take effect, and we begin to offset the impact of prior year unfavorable spread and current year cost inflation. Reflecting continued strong demand, earnings should also benefit from higher sales volume, as we expect shipments will increase up to 2% from the prior year. Finally, we anticipate stable operating costs. We do expect higher production levels, especially since last year was impacted by severe winter weather. Likewise, earnings should benefit from our margin expansion initiatives. Yet we anticipate this will be offset by additional expense related to elevated project activity. Overall, we expect higher first-quarter earnings compared to the prior year. Now I'll turn it back to Andres. Thanks, John. Let me wrap up with a few comments on slide 13. Overall, we are pleased with our performance in 2021 as strong earnings and cash flows exceeded our original earnings guidance and most recent business update. Likewise, we made great progress advancing our strategy this past year. We have great momentum entering 2022 as all key levers are pointing up, supported by a strong fourth quarter sales volume that has continued into the new year. We have a clear plan and set of ambitious targets for 2022, which are well aligned with what we articulated at Investor Day. Importantly, we are focused on a set of near-term catalysts to create value. We have implemented most of our price increases effective early 2022 and expect stable to improving sales volumes. After decades of litigation, we intend to establish a fair and final resolution of our Legacy Asbestos liabilities by mid-year, which have consumed over 40% of our cash flows in the last decade alone. Likewise, our portfolio optimization program is moving swiftly, and we expect to complete that program this year, which will support our expected expansion projects over the next three years. O-I is a much more agile and capable organization, as we have demonstrated over this past year through sound execution and consistently meeting or exceeding our commitments. As such, we are optimistic about 2022, and we expect higher adjusted earnings, strong adjusted cash flow, and further balance sheet improvement. I'm confident these efforts will improve shareholder value. Thank you for your interest in O-I Glass, and we welcome your questions. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press the pound key. Please limit yourself to one question and one follow-up. Your first question comes from the line of Ghansham Panjabi with Baird. Your line's open. Thank you. Good morning, everybody. Good morning. I guess maybe for my first question, can you give us more color on that build up to the 1% volume growth that you're referencing for guidance for 2022? You know, just in context of your customers, a lot of your big customers talking about glass shortages, inventory seemingly pretty light. You're adding more CapEx, and yet we're at 1%, and your first quarter is at, you know, estimated at 2% or so. Just give us more color in terms of the evolution and what would be the offsets relative to what I just went through. I can make a couple of comments and then John can comment. The growth of 1% is primarily driven by the Americas. The reason for that is last year we had the Texas winter storm, which we expect not to repeat this year. We have incremental productivity, but we also took some actions to put in place line extensions to be able to have incremental production volume, given the good performance that we're seeing in the demand for glass containers. Now, with regards to the glass shortages, we've been actively working with customers to serve them the best we can. The fundamental reason for these issues is demand for glass is very strong, and in many cases shows up in peaks that are very difficult to follow. I think the strong relationships we have created over the last few years are helping us to really work together, plan together, and improve those situations fairly quickly despite of the challenging situations we sometimes face. Yeah, no, I would add on that is the reference to the Winter Storm Uri last year, that probably impacted volumes last year by about 0.5% the production level. We'll get that back. You know, we are adding some incremental lines to the system so that we can get some additional capacity out, obviously creep capacity out of the production system. But keep in mind, we're at record low inventory levels, and the big capacity adds that we've been investing in this next year here really don't go into effect until early 2023. You'll be able to see a step change increase in the production levels next year, which will let us get back to more of that 1%-2% volume in 2023. As we continue to add more production, that should allow us to get maybe to 2%-3% in the out period from there. Okay, that's very helpful. In terms of your comments on you know price cost recovery, I think you know on an EPS basis it was about a $0.21 impact in 2021. You know what are you assuming for 2022? How have you sort of navigated these extreme weather conditions and you know shortages in Europe in terms of natural gas and the impact in the U.S. also from the spike in natural gas recently and also just energy prices more broadly? Thanks. Yeah. As we said, late last year, we were squarely focused on executing on price increases. We got very well organized internally, and we've been able to implement more than 90% of those price increases already. We know what the price increases will be for 2022 for the most part. We've been tracking inflation very closely. We believe that with the information we have today in front of us, we will be able to fully recover inflation. Yeah, I could add on that, you know, in 2021, what we incurred was about $230 million of net inflation, and we recovered about $180 million in price, and that kind of gives you the negative spread that we had in 2021. We are actually thinking that 2022 inflation will exceed what we saw in 2021, but we'll get the prices above that, you know, to recover that, to cover that, plus the negative spread in 2021. What we saw with inflation was last year in 2021, it was really driven by energy and logistics costs, and that inflation bubble is moving through the value chain, and it's gonna be more on the raw material and labor side in 2022. We continue to have very good procurement practices, contracts, coverage on through other tools. We have a pretty good bead, I believe, on where we stand on the cost inflation side. As we mentioned in the prepared comments, we're over 90% implemented on the local contract basis. We believe we have a good view on what's happening next year at this point in time. With regards to extreme weather, it is difficult to know what weather is going to do in the next couple of months. Nevertheless, if we look at the largest markets in which we operate in Europe, if we look at the supplier base we have for those markets and the contracts we have in place, we're very comfortable we will be able to go through a winter with good supply. Now, if any new circumstance emerge, we'll analyze that one, and we'll take action in line with what is presenting itself at that time. At this point, we feel comfortable we're gonna be able to operate well. The highest pressures coming from natural gas supply are in markets where we are either small or we are not present. Your next question comes from the line of George Staphos with Bank of America. Your line's open. Hi, everyone. Good morning. Thanks for the details, and congratulations on concluding the year, guys. Two questions from me, one on growth and the other on operations. As far as growth goes, you know, what gives you comfort, why should we be comfortable that the growth that you saw in Europe in particular wasn't just pre-buying ahead of the price increases that are going into place in 2022, which obviously, if it was more pre-buy, would risk your volume and your volume forecast in 2022 and beyond? Relatedly to that, what benefit, if any at all, and if you could quantify, are you getting from ready-to-drink cocktails, and what, you know, demand that's driving in glass? My second question is on operations. John, Andres, can you talk to us about how you expect that project activity headwind in operations to step down in 1Q, 2Q, and so on? That $30 million, recognizing it was not just the project activity, it was a big nut and you know certainly is a headwind for you to get over. Thank you. Thank you, George. Let's talk about Europe first. We've been tracking closely our demand, and we didn't see any major reasons for indicating pre-buy in the previous quarter. Now, that demand that we saw in that quarter continued, and our price increases have been implemented. We, at this point, believe that the pre-buy activity, if it is there, it is quite low. Now, what gives us comfort with regards to our demand in general, at this point, I'm gonna talk about all markets, is the favorable trends we're seeing across markets, some of them driven by consumer preferences. Consumers are trading up. They're highly focused on premium. They're focused on sustainable products and health and wellness, for which glass is a very good fit. When we look at customers, they're focused on branding. Glass is a very good fit for branding too. We're seeing an increased preference by customers for local supply. The reason for that is all the challenges they have experienced over the last two years with supply chains, global supply chains. They're concerned about security of supply, costs and sustainability, and as a result of that, they're localizing things. We're seeing localizing production of their brands. We're seeing more and more localization of global brands, for example, which is impacting positively our volume. Third dimension of these trends is glass has been performing really well in on-premise and off-premise both. This can be confirmed by looking at the Nielsen statistics for off-premise and CGA for on-premise. Now, all of this that I just mentioned has resulted in high NPD activity across markets. Now, because demand is solid for us, we're taking the opportunity to work on mix improvement to improve margins and improve returns. The other dimension of that, which is very helpful to us, is it helps us define which businesses and assets we will focus on. Now, with regards to RTD cocktails, we've been able to develop some products already and are starting to put them in the market. We believe that over time, given the sea of sameness that is out there in these categories, customers will look for glass to be able to strengthen their brands or to launch new products. That's starting to happen, so that will be a help. With regards to project activity, obviously, it's a large level of project activity. What we've done is getting organized with the support of a third party for what we call capital excellence. That is all about analyzing risk and taking effective action to derisk the execution of projects. That's been ongoing. We started that early fourth quarter. Significant progress has been made, and we are pretty focused on taking decisions and action pretty agilely to derisk the execution. I'll build up on some of the other parts of your question there, George. First on the growth side, I would say that we have a very strong commercial pipeline. In fact, we're oversold in multiple markets. So if we can make it, we can sell it in that regard. And then when it comes to the project activity, our maintenance activity in 2022 will probably, you know, be high in the first quarter and then start to normalize and drop off after that. Now, the expansion activity will be a little bit more back-end loaded for the year, just to give you kind of a sense of that. Now what's playing through all this is a sense, you know, what's going on in the supply chain. I mean, as you know, obviously, project activity has been impacted by the ability to get equipment and also contract labor services. Overall, we've seen a little bit of delay and we've had to resequence things out some across our system, but we're confident we can get the project done. Just to complement our expansions in 2022, which will generate incremental volume in first quarter 2023, are all based on legacy technology. We know the technology well. All the practices are very clear, operating practices are very clear for us, so that facilitates the implementation. The execution involving MAGMA technology and the commissioning of that technology comes in the second half of 2023. We have enough time to get organized to be able to get there. I think your question is a very relevant one, and we identified that as a important area of focus for the organization, and that's why we're taking all the actions that I described before. Thank you. Now, one angle, George, one final point. One of the largest pressures we have had in demand over the last few years has come from domestic beer in the United States. The declining trend of that domestic beer is slowing down, but there is accelerated growth of global and international brands for beer, which is fully offsetting that decline of domestic beer. One of the largest pressures we've had over the last three to four years, it is fading away. That's very positive for our total volumes. Thank you. Your next question comes from the line of Anthony Pettinari with Citi. Your line's open. Hi, this is actually Bryan Burgmeier sitting in for Anthony. You know, looking at 1Q guidance, you have $40 million in non-repeated storm costs, positive price costs, positive shipment growth. What are some of the headwinds that I might be missing as to why 1Q couldn't be even stronger? Is there anything you would flag on, you know, R&D costs, equity earnings, or supply chain headwinds? Yeah, thanks. On the spread side, we'll have double-digit positive spread, you know, probably have single digit benefits from the volume that we talked about. As you alluded to, you know, part of the spread is there because of the impact of a prior year on the Winter Storm Uri and some of the energy surcharges. Our production will be up. I think the key thing, there's two elements that are out there. We did flag higher project activity, whether it you know maintenance and starting to ramp up on some of the expansion projects. Then there was a one-time $4 million insurance recovery last year that just is a thing to identify out there. Other than that, I think you kind of get, you know, where you need to be. Got it. Thanks. You know, just on the CapEx guide for 2022, apologies if I missed this. You know, you lowered it by $50 million-$100 million from the guidance you gave at our conference in December. You know, what changed over the last two months, and is the revised guide indicative of any supplier constraints or labor constraints that you may be seeing? Yeah. I would say that, you know, the planning numbers that we provided a few months ago were early in the project planning components as we pulled it together and fine-tuning, you know, the actual project plan, so that's part of the differential. Yes, we have seen, you know, a three-plus month delay in some of the project activity because of supply chain complications, in particular the contract labor side. It's just hard to get people with all the level of construction that's going on out there in the world and whatnot. It's all of those things coming together. Now, what's the implications on this to our longer term outlook? I think it's minimal... In one angle, we may see a little bit more normalization over the three-year period of time of the project activity, rather than it being more front-end loaded in that regard. By the same token, what we're seeing is that the dilution from divestitures is more favorable, you know, at the end of the day than what we were thinking. While we were originally guiding maybe $0.25-$0.30 of headwinds for all of those items, I think it's gonna be probably closer to $0.20 or so. At the end of the day, I think it all normalizes out and the guidance that we have for you know that 2024 periods that still makes a lot of sense. Your next question comes from the line of Salvator Tiano with Seaport Research. Your line's open. Yes. Hi. Good morning. Morning. Firstly, I want to ask a little bit about the earnings dilution from the portfolio divestitures and the incremental debt from Paddock. You mentioned it's going to be $0.10 this year, but clearly that's not happening the first day of the year. How should we think about the additional EPS headwind for 2023? What's kind of remaining? Yeah. The simple answer to that, and the easy answer is that if we have $0.10 this year, there'll be an incremental $0.10 going into 2023. The cumulative effect is that $0.20 I just referred you on the previous question. Again, a little bit lower than what we were, a little bit more favorable lower than what we were originally expecting. This assumes Paddock middle of the year, as we kind of indicated, and then kind of a sliding scale for some of the portfolio optimization activities. Okay. Great. Before you mentioned $4 million insurance proceeds, if you can remind us, was this received in Q4? Also, the weather headwind was around $40 million in Q1 last year. Do you expect, do you budget any additional settlements with utilities or insurance providers that will help your earnings this year? Yeah. On that last piece, you know, obviously we're working vigorously on the insurance side of a potential recovery there. You know, that process is very backlogged given the amount of disruption, the number of companies involved in that. That's still underway. You know, I think it's too preliminary to hang your hat on it, but we're working on it, and that would represent an upside. As far as the insurance proceeds, that was just a $4 million insurance proceeds that we recovered in the first quarter of 2021. It just won't repeat in the first quarter of 2022. What was your other question? Okay. Well, I think we lost him. We're ready for the next one. Thank you. Your next question comes from the line of Mike Leithead with Barclays. Your line's open. Great. Thanks. Good morning, guys. Good morning. First question, I wanted to circle back to Ghansham's first question and just make sure I understood it. It sounds like the shipments guidance this year is pretty much a function of your capacity running full out. Even if your customers wanted to grow, say, 4% or 5% this year as an example, it sounds like 1%'s kind of the upper limit in what you're going to be able to serve until the new investments come on in 2023. Is that a correct way to think about it? Then, how are your customers handling that conversation? Because my guess is they wouldn't want to leave growth on the table for a year or so. Okay. The shipments obviously are a function of these trends that we mentioned before and the capacity available. I think the good thing is we took some proactive action last year to implement some line extensions, and also we have been emphasizing all our work on productivity significantly to be able to get more out of existing assets. Those together plus the events that won't repeat will give us some capacity to be able to serve this growth. Now, in Europe in particular, we've been doing so too. Remember we added Durancore, and we haven't seen a normal year of operation with Durancore in place. 2022 will be the first one with that. But we also had a number of line extensions that we did in Europe over the last two years. That's part of what is helping our supply right now for Europe and supports the higher numbers we are seeing. Every one of the expansions that we presented to you are supported by long-term agreements, and those are the major drivers of our growth. From that perspective, the timelines of that are well aligned with the customer needs. It shouldn't be a problem. Now, there is more potential. Yes, there is. I think we gotta be very prudent with regards to the pace at which we go with these investments, and we continue to analyze the pipeline. That pipeline is strong, that with the investment we already brought forward, our focus right now is on defining out opportunities for the following business plan period. I would just add, the 1% growth is a function of the capacity of the elements that Andres has. It reflects the recovery from the Winter Storm Uri and some of those additional line extensions. Of course, the team is working hard to continue to increase productivity, and we'll see whether that provides an opportunity on the upside, but I think it's too early to make that call. Great. Thank you for that. For a follow-up, just maybe two quick ones for John on interest. One, what are you assuming today for incremental interest due to the Paddock funding? And then two, can you just remind us of your fixed versus floating mix of debt as we just think about rates potentially rising this year? On the Paddock side, we're looking at about $14 million. You know, that's $600 million at our average borrowing rate starting kind of midyear is a place to sit. You know, overall, where we're looking at right now is about 70/30 split between fixed and floating, 30% floating, maybe a little bit less than that. But the important part is we don't have a lot of exposure to U.S. floating. I think it's a half of $500 million or so. You know, right now, our assumptions include the forward curve as of a couple days ago. Now, if it ends up being more rate hikes from there, it might be $2 million, but it's. We're not terribly sensitive to the changes in the Fed policy over the shorter term here. Your next question comes from the line of Mark Wilde with Bank of Montreal. Your line's open. Thanks. Good morning, Andres. Good morning, John. Good morning, Mark. How are you? Good. John, just, and Andres, you've answered a little bit of this already, but can you give us some sense of any fallout you saw from Omicron in both quarter and as we go into the first quarter here? The sound was breaking a little bit, but I think you were asking about Omicron and potential impacts on the first quarter. Yes. Mm-hmm. Mm-hmm. Well, we've been very active in implementing guidelines and all the procedures that are designed and are recommended to protect the employees from this perspective. As we know, Omicron transmits a lot faster, easier. However, it has significantly less impact than the previous variants. It's been putting more pressure on the employee base, if you will, for our factories. Nevertheless, we've been able to operate pretty much normal across the global footprint. That's an ongoing effort. I think at this point, the incidence is starting to drop, so that should move in directionally in properly for us. Yeah, we've been able to weather the storm and our factories are running at this point 100% around the world. Just maybe to comment on the broader impact, you know, supply chain impact of the ongoing pandemic. One thing to keep in mind compared to other industries, our business is quite local. You know, 90% of what we ship is shipped within 500 mi-600 mi, you know. Then over 85% of our supply base is very local to our facilities. As such, you know, while you might hear broader supply chain challenges, our business in effect in and of itself is fairly localized. We've seen more with our customers impact on things, but we've seen some smoothing out of that overall over the last several months. Okay. John, for my follow-up, I wondered if you can just help us understand sort of your exposure to these high European gas prices. I know you've got hedges in place that protect you from some of that, but I'm just curious, you know, as those hedges roll off, how will that kind of interplay with kind of pricing? What I would say is we have a very, you know, mature process to manage energy across the business. The team does a fantastic job and have been doing for a period of time. It's not a new thing. We look out for the long term and continue to manage the long term of our contracts and also the financial tools that we use. We're quite confident about where we stand on the contracted and net cost of energy. Your next question comes from the line of Kyle White with Deutsche Bank. Your line's open. Hey, good morning. Thanks for taking the question. Obviously a lot of inflation with numerous price increases being pushed to consumers. Can you just talk broadly about your price elasticity with some of your end markets? Any concern here in terms of some of the higher value markets such as spirits and champagne? Maybe any way to characterize what percentage of your end markets are more sensitive to higher prices? Well, what I would say is over time, and I don't know if I have the numbers right on top of my head, but most of our business is moving more and more, I mean, to the more premium categories. They tend to do pretty well. It's some of the lower end value categories. We saw that, you know, 10 years ago during the last, you know, the Great Recession, where there was a trade down to value on some of the mid-tiers. But a lot of that, in particular in the U.S., has been cycled out of the system. You know, we're in a pretty good state, you know. Especially in this world of, you know, COVID, affordable luxuries have remained really important. You know, people are stuck at home, and so to have a good bottle of wine or a nice scotch or whatever is something you can continue to do amid everything else, understanding you're probably not traveling much and things like that, even in the world of inflation. Got it. You mentioned record low inventory levels, particularly in the Americas, which is having an impact in terms of your ability to maybe serve some of your customers. Where are your inventory levels now here in February, and will you have the ability to get them to maybe more manageable or more efficient levels? Yeah. The reason why we're seeing lower inventory levels is because we've been working extensively on demand planning, supply planning, sophisticating those processes, having those practices shared around the world. We mentioned before in previous calls that we implemented integrated business planning or IBP in the company that has a significant influence on our ability to plan the business. All of that is coming together to help us perform well, very well with lower inventories. Our expectation will be that we'll be able to continue reducing the inventories further, and we'll be able to maintain them at those lower levels over time. I mean, the team has done a great job. I mean, our IDS is down 25% over the last 2 years. As Andres mentioned, we're gonna be putting in new systems and tools to be able to continue to sustain that and continue to do better. We can do better. It will take a little bit of time to creep that down, but there's still opportunity. Your next question comes from the line of Adam Josephson with KeyBanc. Your line's open. Thanks. Good morning, everyone. Hope you're well. Hi. Morning. Hi. Morning, Andres. John, one question on your operating cash flow guidance of $725+. Can you just help me with working capital? Do you expect it to be a source or a use, and how much? With respect to some of the other items, the lower pension and equity dividends, I'm just trying to understand relative to, I guess, a normalized level of operating cash flow, how we should think about that $725+, given some of the moving parts I mentioned, and anything else that I neglected to ask about. Yeah, sure. Let me just give you a little bit of color there. You know, in 2021 here, you know, we ended up, you know, AR was a big use of cash, right? I mean, we were building up receivables and the business was recovering, and even the net effect of that and AP was a use of cash. Now, that was offset because of the inventories going down very well, right? But then going into 2022, we'll be collecting on those receivables because the volumes won't be growing, you know, nearly as much as the big recovery year. That gives us an opportunity to have a source of cash, even amid a situation where inventories stay relatively flat or maybe we can make a little bit of progress on the inventory side. You know, we show in there, you know, that the interest for the business will be up a little bit, primarily because of Paddock. Taxes will be a little higher, mostly because of settling out some prior year matters. Then the pensions is a good story here because 2021 really was the last year of the big pension payments that we foresee. So we had about $80 million of pension payments in 2021, and that probably will drop to between $20 million and $30 million in 2022. At that point in time, we really don't foresee a you know, a big spike up in pension payments at this point in time. All the other things are pretty much pretty comparable on a year-over-year basis. Terrific. Thanks, John. Andres, just on the volume issue, I mean, you went into the fourth quarter expecting flat shipments. They turned out to be up 5.4%. What—I mean, why would you say your visibility on volume seems as limited as it does? You know, 'cause I'm just thinking about your 2022. January was up 3%. It seems like you have a pretty easy comp in February and March given Winter Storm Uri, but you're nonetheless expecting a deceleration as the quarter progresses and then further deceleration later in the year. Just want to understand how much visibility you really actually have into demand and why it was so much different than what you were expecting in the fourth quarter. Yeah. I think the key driver of the incremental shipments that we saw is the continuously improved demand for champagne and Bordeaux wine in France and Prosecco and Italian wines. Those categories were extremely strong and a lot more than we expected. The interesting part of it is it continued coming into the first quarter. Remember that two years ago, those categories slowed down, and they were soft. What we are seeing at this point is the full recovery of those categories. Over time, as that sustains, we will be able to incorporate it in our projections better. The other factor that is driving significant incremental demand is the very strong performance of beer in Europe, or in the countries where we have our largest presence, which is primarily in Southern Europe. Beer is growing ahead of alternative packaging and is having a very strong performance. When you combine the two, we see the level of shipments that we're seeing in Europe. The other markets have very strong demand. They're just limited by capacity. We gotta deal with that, and depending on how mix moves, we have the capacity available or not, we have the inventory available or not. That influences our planning. For the most part, demand is very healthy and as we go into the year, we will be able to fine-tune those projections. Yeah. I mean, to build off that, I would say, as Andres said, that the demand profile has been strong, and we think it's going to remain strong. You know, the challenge has been looking at the supply chain and how that has been, you know, put a cap on things, not necessarily in our system, as mentioned before, but on our customer side. You know, the third quarter, we were down and it was all because of supply chain related items, and it's kind of hard to read that. Going forward, I think that the wild card is our ability to do more in the production side, creep it out and, you know, get more capacity out there to serve that strong demand. It's really those variables, not on the demand side, that we're trying to read through, and there's a couple of wild cards there. Your next question comes from the line of Michael Roxland with Truist Securities. Your line's open. Thanks very much. Congrats, Andres, John, Chris, on the year and the continued progress. Thank you. Just a quick question on. Maybe, John, to you on the inflation. You know, you expect you mentioned with respect to your, the contracts that you expect to recover not only 2021, but you expect a 2022 inflation as well. If 2022 inflation runs higher than you expect, are the contracts structured such that you can capture any incremental inflation above and beyond what you were expecting going into 2022? Yeah. What I would say is, you know, we know our contracts and we know what they stipulate, and as well as our financial positions that we use. The line of sight on 2022 cost inflation is pretty good for the last few months. I think if you've heard from us, you know, over the last couple public appearances is that we believed consistently that we're going to be able to recapture unfavorable spread in 2021 and offset 2022 cost inflation. We're in a good position there. You know, could spread be better than we anticipate? I think it'll be if you know, our view on inflation proves to be conservative. I think that is where it's at. Of course, we still continue to do some marginal level of pricing out in the marketplace, and so we'll see how those two dynamics play out. If inflation goes higher than we currently have it projected, in our conversations with customers, we make clear that if that happens, we'll be back because we won't be able to absorb the pressure ourselves. At this point, with all the information we have, we believe our projections are pretty sound. Yeah. I think that builds on the last comment, builds off on what we had said in the prepared comments. You know, heading into 2021, inflation ended up being double what we thought it was gonna be at that time, but we offset 80% of it. That just shows more commercial flexibility over the course of the year than maybe you would historically seen out of the business. We got a good capability there, and that's how we're working through these dynamics. Got it. Appreciate the comment. Just one quick question on inventories. You mentioned, you know, shipments growing 1% this year. You have this high demand. You have limited capacity, at least for the time being, but you wanna keep inventories lean. Given the current supply chain logistics issues, and obviously, that could be transitory. It could, you know, it could come back at some future point. Why do you think it's prudent to maintain inventories at a very lean level, coming out of the other side of this, you know, whether it be the pandemic or the supply chain? Why not, you know, let's say, you know, look at inventories, evaluate, maybe you need inventories 5% higher, 10% higher. Like, what's the logic in saying, "Well, we're gonna continue to run lean," and risk maybe not being able to supply customers as you have been able to do recently? Well, this business can be run with lower inventories than we have today, if we have all the right processes and tools and practices in place. Now, the investments we're making are the ones that are going to be able to take us to serve incremental demand. We want the efficiencies of the supply chain, but we need larger capacity to be able to meet the growing demand for glass containers. That's how we look at it. We're moving forward with the expansions in the Andean and Canada, and then we are in the planning stages of the other projects that we presented to you as part of the business plan in our day. Your last question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line's open. Great. Thanks for taking my question. I just wanted to follow up on a couple comments you made earlier about the dollar impacts for 2022. It sounded like you were about $50 million behind on price cost, but you fully expect to recover that in 2022, and it sounded like your inflation for 2022 would be above the $230 million that you saw in 2021. Assuming it's around $250 million, that looks like you'll get about, you know, $300 million or so of pricing. I guess, A, is that right? Given your volume outlook of just, say, 1%, it sounds like your EBITDA or your EBIT would be up in that $30 million-$50 million range for the full year. Is that right? Is that the right way to think about it, maybe $30 million-$60 million? Is that right? On your point of the, you know, the pricing and the spread, the way you're thinking about it is right, but we're not specifically going to communicate what we're getting on the top line price for competitive purposes. You know, the way you're doing the math is logical. As far as the improvement on the EBIT side, I think it'll probably be on the high end of the range that you had indicated on the EBIT side. The EBITDA might be, you know, more like $30 million or something like that. I'm sorry. Let me correct that. Yeah, you're right. It might be in the kind of the mid part of the range that you're saying there, mid to low range. Okay. Okay. Thanks a lot. Thank you. That concludes the question- and- answer session. At this time, I'll hand the call back to Chris for any closing remarks. Thanks, everyone, for participating in our call. That will conclude our events today. Please note that our first quarter 2022 call is scheduled for April 26th. Remember to make it a memorable moment by choosing safe, sustainable glass. Thank you. Thank you. That concludes the O-I Glass full year and fourth quarter 2021 conference call. You may now disconnect.