Good day, and thank you for standing by. Welcome to the O-I Glass First Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, 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. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Chris Manuel, Vice President of Investor Relations. Please go ahead. Thank you, Rain, and welcome everyone to the O-I Glass first quarter 2022 earnings conference call. Our discussion today will be led by Andres Lopez, our CEO, and John Haudrich, our CFO. Today, we'll discuss key business developments and review financial results. Following prepared remarks, we'll host a Q&A session. Presentation materials for this call are available on the company's website. Please review the safe harbor comments and the disclosure 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. We reported strong first quarter results last evening. Adjusted earnings of $0.56 per share significantly exceeded guidance, primarily due to better than expected shipments and production levels. As illustrated on the left, earnings improved across all key measures, with adjusted EPS up 60% from the prior year. Shipments increased nearly 6.5%, reflecting a strong demand for healthy, sustainable glass containers, and growth was most pronounced in Europe. The team did a great job increasing the speed and efficiency to boost production to meet demand amid historically low inventory levels. In the Americas, the business also rebounded from the impact of Winter Storm Uri last year. As expected, higher selling prices across all markets more than offset elevated cost inflation, and favorable performance reflected the benefits of our ongoing margin expansion initiatives. Our hearts go out to all those impacted by the tragic conflict in Ukraine. Keep in mind, we do not have operations in Ukraine or Russia, so we have not been directly impacted. However, these developments have complicated an already challenging situation, given elevated cost inflation and supply chain issues. As I will discuss later, O-I continues to demonstrate increased agility and execution discipline, delivering on its commitments despite elevated macro uncertainties. As we manage through a highly volatile environment, we continue to make very good progress on our transformation. Our multi-year margin expansion initiatives are off to a good start this year. We are investing in expansion, we are advancing MAGMA, ESG, and our glass advocacy campaign. Likewise, we are optimizing our portfolio and addressing legacy liabilities. As announced yesterday, Paddock recently achieved another key milestone as voting asbestos claimants overwhelmingly approved the proposed plan of reorganization. Paddock is now entering the final phase of the Chapter 11 process, and we remain optimistic that Paddock will resolve its legacy asbestos liabilities by mid-2022. Finally, we are increasingly optimistic for our business outlook, reflecting strong first quarter results and good momentum. We expect higher second quarter results, and we have raised the top end of our earnings guidance range. 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. As you can see on the chart, demand has been exceptionally strong as the momentum that began in the fourth quarter continued through the start of this year. Sales volumes accelerated each month of the first quarter, which increased 6.4% compared to the prior year. Shipments increased across all key geographies. The Americas was up more than 3%, and Europe grew almost 10%, even as both regions implemented sizable price increases to offset elevated cost inflation. We believe there are several key drivers for recent strong demand. First, glass is benefiting from consumption trends that emerged over the course of the pandemic, such as increased at-home dining, where people seek a more healthy and premium experience. As COVID recedes and markets reopen, in many geographies, product demand is up. On-premise is rebounding across the globe, and we are seeing a strong demand across all markets, including European wine and spirits, which are exported across the globe. At the same time, glass historically imported from Russia and Ukraine has been displaced due to the recent conflict, which is driving up demand for locally produced glass in Europe. Overall, food and beverage product inventories remain far below pre-pandemic levels, and many markets we serve continue to be well oversold, especially in Europe and Latin America. Finally, glass is increasingly more competitive compared to alternative substrates, reflecting relative input cost and availability. Keep in mind that 90% of our glass is shipped within around 500 miles of our plants, and more than 85% of our inputs are locally sourced. As a result, global supply chain issues have been less impactful on glass than other substrates, and glass is well-aligned with the emerging preference for local supply chains. Reflecting these ongoing trends, we expect shipments will grow low single digits in the second quarter, despite a difficult 18% growth comparison from last year. Given recent positive momentum, we now expect our full year sales volume will be at the high end or exceed our original guidance range of up to 1% growth in 2022. Of course, we continue to monitor macro trends which could affect this outlook. As I mentioned, we are facing capacity constraints in key markets as we manage record low inventory levels. Given this challenge, we have been leveraging the global capability to increase productivity that we developed over the past few years. As a result, we are enjoying the benefits of increasing manufacturing speeds and efficiencies to boost production to better meet the strong demand. We are mix managing our business to improve margins and support our strategic customers' growth ambitions. Keep in mind that we will be adding substantial new capacity over the next few years to support demand growth. Let's turn to slide five. On top of favorable near-term performance, we continue to advance our transformation. We are expanding our margins. During the first quarter, we successfully raised selling prices as we offset cumulative cost inflation. Faced with incremental inflation pressure, we have implemented a second price increase starting in the second quarter. Overall, we are confident OI will meet its full year net price objectives. Our margin expansion initiatives are off to a good start, and we are on pace to achieve our $50 million annual target. As we discussed, demand remains robust, and we are adding much needed capacity in key markets to support profitable growth. The first round of expansion projects in Colombia and Canada should be online in early 2023. However, market conditions have changed. We are seeing more cost inflation and much longer lead times on key capital items due to supply chain challenges. These issues are impacting our original capital investment and MAGMA development timelines. As a result, we are evolving our plans with agility. We expect a broader range of smaller scope capital projects rather than a few large-scale greenfield or brownfield initiatives. This will rebalance our expansion timeline as well as de-risk project execution. Likewise, we are accelerating development of our Generation III MAGMA solution, which is even more critical and valuable, given increasing macro volatility and uncertainty. While our evolving plan will likely be a bit different than what we laid out last year, I'm confident we will achieve our objectives all within our original investment commitments and return profiles. Our ESG and glass advocacy efforts are also progressing well. Nearly 1/3 of our electricity is now being supplied from renewable sources, a big step change increase towards our goal of 40% renewables by 2030. Please see the appendix which details OI's ambitious and comprehensive set of ESG goals. Our glass advocacy digital campaign is gaining momentum with over 500 million digital impressions in the first quarter alone. If you joined the call a bit early, you likely heard the new song, "Better in a Glass" by Chase McDaniel, a rising country music star. It's a great, fun song which represents another angle of our marketing efforts, and we include more details on this slide. As part of our portfolio optimization program, we have completed or entered into sales agreements totaling $1.3 billion, and I remain highly confident we will complete this program before year-end. Importantly, we remain optimistic that Paddock will resolve its asbestos legacy liabilities by mid-year. As mentioned earlier, the voting asbestos claimants have overwhelmingly approved Paddock's plan of reorganization. A hearing to consider confirmation of the plan by the bankruptcy court is currently scheduled for May sixteenth. Upon confirmation of the plan, Paddock and the other plan proponents will seek affirmation by the Delaware District Court. Once that occurs, the plan will go effective, O-I Glass and Paddock will fund the trust with $610 million, and asbestos personal injury claims will be channeled to the trust. Advancing to slide six. For the past five years, building capabilities has been a top priority. We now have the agility to navigate the tremendous volatility we have seen since the start of the pandemic. As a result, we have delivered on our commitments, supported by solid, consistent execution. Over the past two years, we have leveraged long-standing relationships with suppliers and customers to find ways to overcome severe inflation, shortages in materials, and logistics issues in order to meet demand, key stakeholder objectives. At the same time, our improved financial performance, inventory management, and portfolio optimization are freeing up capital to pay for much needed capacity expansion. We are again acting with agility to navigate an increasingly volatile and uncertain world this year. As illustrated on the page, we are taking a rigorous and systematic approach across all facets of the business. Despite a clear step change improvement in execution, this performance has not yet translated into better valuation for OI. Yet, I'm confident it will. More importantly, OI is now well-positioned to meet or exceed the commitments to all our stakeholders, including investors. Now I turn it 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 first quarter performance on page seven. OI reported very strong first quarter 2022 adjusted earnings of $0.56 per share, which significantly exceeded our guidance in prior year results of $0.35 per share. Higher earnings reflected favorable net price, strong sales volume, and solid operating performance, which also benefited from the rebound of Winter Storm Uri last year. Segment operating profit was $231 million, up from $175 million last year. Favorable net price increased segment operating profit by $15 million as higher selling prices more than offset elevated cost inflation. Volume and mix added $17 million as shipments increased 6.4%. Favorable operating performance helped reduce operating costs by $26 million. Increased speed and efficiency boosted production levels 3.7%, which supported strong demand amid record low inventory levels. Segment operating profit improved significantly in both the Americas and Europe. The Americas posted segment profit of $129 million, up from $100 million last year, reflecting favorable spread, more than 3% sales volume growth, and improved operating costs. Higher earnings also reflected the rebound from Winter Storm Uri last year and incremental benefits from our margin expansion initiatives. In Europe, segment operating profit was $102 million, compared to $75 million in the prior year. Earnings benefited from higher shipments, which increased nearly 10%. Very good operating performance as well as higher selling prices, which more than offset elevated cost inflation. The segment also benefited from our ongoing margin expansion program. The chart provides additional details of non-operating items. Overall, we are very pleased with our first quarter results, reflecting favorable performance across all key business levers. Let's turn to page eight. We continue to make solid progress on our 2022 financial priorities. While the first quarter is a seasonal use of cash for the business, recent free cash flow performance has been favorable compared to historic levels, as you can see on the upper chart. We continue to advance our portfolio optimization program and have entered into several asset sales totaling $1.3 billion to date. This includes completing the Colombia tableware sale in February and signing a sales leaseback transaction, which is set to close in the second quarter. Other projects are in advanced stages, and we remain confident that we will achieve our $1.5 billion goal this year, well ahead of our original schedule. We expect to resolve our legacy asbestos liabilities by mid-2022. We recently refinanced our $2.8 billion Bank Credit Agreement at attractive terms, which includes a $600 million delayed draw feature to fund the future Paddock 524(g) Trust. We continue to advance our pension de-risking activities and reduce O-I Glass's financial leverage, which declined significantly from this time last year, as shown in the lower chart. Let's discuss our business outlook. I'm now on page nine. We expect second quarter adjusted earnings will range between $0.55 and $0.60 per share, which is up from $0.54 last year. Keep in mind, this outlook is net of dilution from recent asset sales and incremental interest expense as we anticipate funding the Paddock Trust. From a revised base of around $0.50, we expect improved business performance will add $0.05-$0.10 of profit. We anticipate continued favorable net price. As Andres noted, we have implemented a second round of price increases this quarter amid persistent cost inflation pressure. Shipment activity will likely moderate to low single-digit growth given capacity constraints and historically low inventory levels. Finally, we anticipate continued strong operating and cost performance. However, we do expect incremental costs as expansion project activity ramps up. Shifting to the full year, we are increasingly optimistic about our 2022 business outlook. Demand for healthy, sustainable glass containers remains strong. Operating performance is solid, and we are effectively raising prices to recapture cost inflation. Of course, we continue to monitor macro developments, including demand trends and supply challenges, including cost and availability of key inputs such as natural gas in Europe. We have revised our full-year earnings outlook. We now expect adjusted earnings of between $1.85 and $2.10 per share as we increase the top end of our range. Improved guidance reflects favorable first quarter results and good momentum as the business navigates a period of elevated uncertainty. We have also reaffirmed our original cash flow guidance. Now back to Andres. Thanks, John. Let me wrap up with a few comments on this slide then. We are off to a strong start this year. First quarter earnings significantly exceeded our original guidance as the business performed well across all key business levers, supported by a strong demand for healthy, sustainable glass packaging. Importantly, we are focused on a set of near-term catalysts to create value. Efforts to recapture the impact of cost inflation and our margin expansion initiatives are going well. We are enabling a strong demand with increased production speed and efficiency. Following 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. OI is a much more agile and capable organization, as we have demonstrated over this past year through disciplined and effective execution and consistently meeting or exceeding our commitments. We remain optimistic about 2022 and expect higher earnings both in the second quarter and full year that reflect our confidence in our team and business performance. Thank you for your interest in O-I Glass, and we welcome your questions. Thank you. As a reminder, to ask a question, please press star one on your telephone keypad. To withdraw your question, press the pound key. We also ask to limit yourself to one question and one follow-up and re-enter the queue for additional questions. Thank you. Please stand by while we compile the queue roster. Your first question comes from Ghansham Panjabi from Baird. Your line's open. Thank you. Good morning, everybody, and congrats on a very strong start to the year. Good morning. Thank you. Good morning, Andres. I guess first off, just sort of, you know, thinking high level in terms of what's been happening in Europe, can you just give us a better sense as to why volumes have started off so strong in the year? Just in terms of the competitive backdrop with, you know, plants being located in Ukraine and Russia, et cetera, just give us a sense as to what the current capacity situation is in Europe. Thank you, Ghansham. The situation in Europe is quite positive. The demand has been driven by pretty much every segment in which we are involved. Now, mineral water, which decreased dramatically during the pandemic time, is fully back, and that is a substantial volume. As we said before, champagne, Bordeaux wine, Prosecco, Italian wine, they were also quite soft before the pandemic. As we entered the pandemic and in the last year or so, these categories are becoming stronger and stronger, and they're driven by local demand as well as by exports. Now, we are present in, and we have a very large presence in two markets in Western Europe, France and Italy, where beer is performing extremely well and is growing very fast and ahead of alternative packaging. The factor that related to your question that is also boosting demand for multiple suppliers, not just us, and you've seen it in other reports, is the fact that the capacity that used to go from Russia and Ukraine into Europe is not going anymore, and it won't go for any foreseeable future. That is substantial amount of capacity. Some capacity also shut down because of the macro conditions and most likely will take a while to return. Those are specific to Europe. There are factors that are common to all markets, including Europe. Consumers are focused on premium products. At home consumption remains. The performance of glass in off-premise and on-premise has been very strong, so channel shift is not really impacted. In fact, it's favorable to glass. Inventories in the supply chain are very low, and they will continue for a while because the market is totally oversold. The NPD activity is high, and glass is local, and that's very convenient for many customers. Okay. Thanks for that, Andres. In terms of the asbestos settlement, obviously you're very, very close to that at this point. Can you just take us through the tax consequences? Is the full amount fully tax-deductible? What year would that start to kick in? And just any other color you can share with us on the taxation of that. Yeah. Yeah, Ghansham, this is John. Just as in the past, this type of payment would also be a tax-deductible item. You know, obviously taxes are complex, and there's you know, net carryforward losses and things like that that need to be considered. This does extend out you know, that period of benefit for the organization, and there is a reasonable amount of tax shield associated with this. Of course, tax regimes matter, but it will probably be a couple years before you know, this comes into play, considering the net loss carryforward position that the company is in right now, but it does extend that window. Okay. Awesome. Thanks so much. Your next question comes from Michael Roxland from Truist Securities. Hi, Andres, John, Chris. Congrats on a strong start to the year. Thank you. Andres, just wanted to follow up on your comments on the MAGMA rollout. I think last quarter you referenced the three-month plus delay in projects activity, and that was due to the supply chain and contract labor. It sounds now that this is also impacting the rollout of MAGMA. Can you just give us any more color on how you can anticipate rolling out MAGMA? I think you were supposed to have 11 lines rolled out by 2024. How do you see that now playing out? Does that affect the EBITDA guidance or free cash flow guidance that you provided at your Investor Day in September? Okay. We are making very good progress developing MAGMA Gen One, Generation Two, Generation Three, developing Ultra, which goes along with that, which is lightweight containers, as well as designing for alternative fuels use in MAGMA. Now, as everything else in the project space, our development has been delayed. It's taking longer, as you mentioned. It depends on what equipment is involved, it is more standard or less. Now, other things have also been impacting the development of MAGMA. The COVID lockdowns have slowed down development, labor shortages, and the supply lead times that we already mentioned. We are increasing our focus and resources on developing MAGMA so we can recover timelines. Now projects in general are exposed to the same pressures of the supply chain, and it is very high inflation in capital equipment and equipment lead times. We engage in an effort that we call capital expansion with a third-party support to analyze our whole plan implementation and de-risk that plan. What we're doing is identifying projects, alternative projects that can be smaller or simpler or faster to implement or lower capital intensity and can be geographically distributed. They reduce risk, but allow us to meet the objectives we committed to. The objectives are intact. The composition of projects will change, and we're gonna be able to share more details on that in the near future. We are moving forward to meet the same objectives we laid out for you, including developing MAGMA and making sure Generation III is available for deployment in 2025. Mike, for clarity on your later question there, is all of our, you know, earnings related outlook that we laid out on Investor Day is very much intact. We're managing this, as Andres said, to be able to achieve that. That means sales volume growth should be in place, earnings should be in place, the balance sheet should be in place. On the cash flow side, it's gonna be a little bit lumpier just because of the supply chain elements there, but the cash flow generation over the three-year cycle remains intact. It's just gonna be a little bit more lumpy, and we'll lay that out in the future once we have the plan fully scoped out. Got it. Thank you. Just two quick follow-ups. Just on that, John, when do you think you will be providing an update on the revised plan and what you're looking to do to achieve the financial metrics you laid out on Investor Day? Just quickly, any comments you have on early trends you're seeing thus far in 2Q. Thanks very much, and good luck in the quarter. Yeah, as far as laying out the update here, probably the next quarter, we will be doing that, understanding the supply chain issues are the dominant factor here. We'll lay out the new plan and the revised plan and everything like that. We just need to understand that we'll also have to continue to be agile going forward as supply chain issues continue to persist or change. Yeah. With regards to April and the second quarter, we are shipping in line with our forecast. The forecast reflects one less day in shipments, but it also reflects large furnace repairs that are taking place at this point. The demand is quite strong across all markets, and it continues that way. The operational performance is very strong. We just mentioned that our teams globally are very well organized, leveraging the capabilities they developed to be able to increase the speeds and efficiency, which are allowing us to serve even incremental demand. We are very optimistic about the year. We're very confident in our execution, and this quarter continues to reflect that. Next question, Rain. Thank you. Our next question comes from George Staphos from Bank of America. Hi, everyone. Good morning. Thanks for the details. Congratulations on the quarter. Frankly, the clarity of the presentation, you know, continues to improve, guys. We thank you for that. I guess my question, you know, when we go through your guidance, look at 2Q, look at the first quarter, and just use midpoints, and recognizing that's simplistic analysis, it suggests that the second half of the year is perhaps down versus last year. I'm just trying to understand, gentlemen, to what degree you're just building in some cushion because of the obvious, you know, unpredictability in Europe and elsewhere that you've got to contend with, both, again, you know, in terms of what's happening with the Ukraine and Russia and inflation and the like. If we could extract that cushion, assuming there is that in there, what, you know, what would that amount look like, and what would your guidance be if not for the, for that? Then I guess the second question that I had, related to that is, was there any effect of pre-buy from what you could see in the results? Then just a quick follow-on to Mike's question. With MAGMA is itself a model where you are trying to have smaller, more modular capacity that's more geographically dispersed. So I'm not sure exactly what you're getting at in terms of the adjustment to the plant since MAGMA is in itself a plan of using smaller, more modular capacity that's dispersed. Thanks, guys, and good luck in the quarter. Thank you. Let me just start with the first question. We are very optimistic about the year, and we continue to see very favorable demand fundamentals. Operating performance is very strong. We are effectively pricing through cost inflation. We are in a good position. Now, as we all know, there is a significant macro uncertainty which impacts all industries. It's not just glass, and it's not just O-I. That is characterized, for example, by input cost volatility, supply chain risk, and potential recessionary pressures at some point. It's difficult to determine when that point will be. Our operations are solid, and we are optimistic for the year, but we also wanna be prudent. Yeah, maybe, to add on that, specifically to some of the number calculations you're doing, George, there, just give you our perspective on how we were thinking about it. We did increase the top end of the range by $0.10. As we look at it, the first quarter exceeded the top end of our original guidance by $0.13. But at the same time, we do have a few cents of added pressures, stronger dollar, higher interest expense and things like that. That kind of drove that net $0.10 number there. We have not made any further adjustments to our forward business outlook from what our original guidance was, just reflecting those dynamics on the top end. Obviously it's early in the year, and we will continue to update our outlook as we navigate the market volatility. One thing to keep in mind in the second half of the year is we do have probably about $0.13 of YoY headwinds associated with FX, you know, divestiture, dilution, and additional interest on Paddock. Keep in mind that those numbers are kind of just structural elements there, which really would indicate that operating performance we expect things to be good in the back half of the year from an operating performance standpoint. Thanks for that, John. Very fair. With regards to the pre-buy, strong shipments in Europe have been taking place for two quarters in a row. That take us to believe that this is not a pre-buy situation. When we take into consideration the various factors that are common to all regions as well as the individual factors impacting demand in Europe, we believe those are really the drivers. Pre-buy might be some. We believe is very little, if there is, and two quarters in a row wouldn't be a pre-buy situation. With regards to MAGMA, you're right. It allow us to implement the smaller capacity and all that. However, most of the projects we had in our plan are very large greenfields, through MAGMA, but very large greenfields. The issue with them, for example, is lead times and inflation impact those kind of projects more than very small projects that are primarily light extensions and things like that. One reason for that is the civil infrastructure that needs to be implemented, so buildings and steel and all that. That's going through a material inflation. What we are doing with lots of agility, which is one more example of the change at O-I, is reconfigure our plan that meet our objectives, which is really what are the drivers of value for shareholders. Maybe one thing to add on that MAGMA component, it the ultimate solution gen three is the one that really allows you to scale down and go into the light manufacturing warehouse and things like that. You know, where we are in the development cycle, the plans over the next couple of years here were really more like a generation 1.5 or 2, which still rely on a lot of the larger infrastructure items. Ultimately, that's why we wanna accelerate gen three, because it is a great solution for the situation that we're seeing right now. Thank you, guys. Thank you. Your next question comes from Mark Wilde from BMO Capital Markets. Your line's open. I'd like to add my congratulations. Very good quarter. Thank you. Andres, can you talk about how you are managing the European energy pricing in the first quarter and whether, you know, energy prices in Europe, which look like they're gonna be much higher going forward, is sourcing changes, whether that's causing any long-term changes in your planning for the European market? Okay. We started our work to deal with the situation that we're going through today a long time ago. Our capabilities in procurement, for example, allow us to manage inflation to a point. Our capabilities in the commercial space are also of big support to be able to deal with this. We have started to plan all our work for price increases to be able to fully offset inflation not later than the middle of last year. We've been executing according to that plan. We plan very early and we plan well, and we're executing in line with that. We believe we have the right mechanisms to work through this from a procurement standpoint, from a commercial standpoint, but also the culture of the company, because this is a company that works very well cross-functionally. To deal with this kind of situation, you need a lot of cross-functional work. You need the finance team in there, you need business intelligence, you need a lot of help from different functions to be able to do it. Is this having a long-term impact in the business? Can this change our perspective of the business? Not at this point. I think with what we know today, we believe we can navigate this well. If things change, if things deteriorate, we'll adjust accordingly. But so far, we feel very good about the way we've been handling this. I would add two points to that, Mark, real quick, is that, you know, we are investing in other energy switching capabilities so that we would have the flexibility between energy, you know, oils and other things like that from just increased flexibility. Then really over the long run with Magma, to be able to run off of biofuels and hydrogen down the road, granted that's a few years out, those markets need to develop, but it gives you even more flexibility on an energy standpoint over the long term. Okay. I wonder, just kind of following on that, Andres, can you give us some sense of what all of these cost changes have meant in terms of the relative cost of glass versus other substrates, and whether any of those changes are, you know, altering the behavior of your customers? Yeah. Going into this period of time, there was a gap between us and really one alternative packaging, if you will. That differential has decreased by 50%. For all purposes, it is favorable to glass. Now, it is important to keep in mind that in some cases, and in particular, when we compare with aluminum cans, we play in different lanes. They are driven by energy drinks, sport drinks, bottled water, hard seltzers, carbonated soft drinks, those products, which are growing and are driving their performance. In our case, we're driven by, or our demand is driven by premium products in spirits, in wine, in food, in NABs, in beer. We are in different lanes. We play in different segments. If you want to compare a container for a given segment between the two, that gap has closed. Okay, very good. I'll turn it over. Thank you. Thank you. Your next question comes from Gabe Hajde from Wells Fargo Securities. Andres and John, good morning. Good morning. Good morning. You guys, I think, Andres, you just confirmed, kind of historically speaking, it's been a wise practice to forward buy or hedge energy kind of beginning in the midyear or even before that. I think, as we kind of think about 2023 and rolling those forward, and I wanna say energy is around 20% of cost of goods depending on what you're making, would that then imply that you need another round of kind of high single-digit price increases in Europe? I appreciate things are fairly volatile at the moment, but just sort of if we were to freeze energy where it's at today. We've been executing as we promised. Last year, we got the question very often with regards to are you going to record inflation? Our answer was, yes, we will. We've done it. We had our first price increase, inflation continued to go up, we implemented the second. We will continue to monitor inflation, and if the situation present itself with incremental inflation, we're gonna take action. I would add, Gabe, that, you know, we take a very long-term structural approach to our procurement and financial management of the organization. We don't go. It's not a month-to-month or quarter-to-quarter type of practice with the organization, so we try to manage over the long term. Okay. And then I guess down in Brazil, have you seen any change, either, I guess, on the consumer side in terms of consumption patterns and/or at your customers? I think it's reasonable to assume they're a little bit more economically sensitive down there. Given the inflation that they've seen on the consumer side, maybe a little bit more replenishment of the returnable fleet or anything like that that you've seen versus one way. There is a large scale expansion of premium beer taking place in Brazil, and that is generating a very large volume, which is utilizing in full the capacity available for glass in the country. Those products tend to be less impacted by this inflationary situation in Brazil. At this point, we are sold out, all the capacity is being used, and this large scale expansion of premium beer continues. Now, returnable containers are being emphasized, and I encourage you to take a look at the latest presentations by large customers in that country, and you will see how the emphasis is not only in glass but in returnable glass. That's also going through the system. You know that when inflation goes up in those countries, in those economies, returnable containers are a very good way to protect margins by our customers. Thank you. Good luck. Your next question comes from Kyle White from Deutsche Bank. Your line's open. Hey, good morning. Thanks for taking the questions, and congrats on a very strong quarter. Just hoping to better understand the volume cadence through the quarter, you know, up 6% for the quarter, but I believe volumes are tracking up 4% through February. So why such acceleration in March? Was this just all related to taking share from Russia and Ukraine, or any other details you could provide? Well, I think it's the multiple factors that we describe are common to markets and the ones that are particular to Europe. Mineral water, for example, is accelerating in that period of time. When economies were still locked down or limited in activity and the on-premise channel was at partial capacity, then mineral water was lower. Now it's. We're fully up. The exports of champagne and Prosecco or still wine, Italian wine, are very strong, and that's driving that incremental demand, the beer performance in the countries that I described in Western Europe. Of course, the capacity in Ukraine and Russia that is not going into Europe is a buffer for the entire system. I think when we look at Europe, it is important to take into consideration that there is a significant buffer. That helps us to be confident about the demand in Europe. If I could just follow on, do you have a sense of how much volumes from Russia, Ukraine were a benefit for you too this quarter, and what you kind of expect for the balance of the year from that? Yeah. There are multiple dislocations taking place, but I would guess that if we highlight a gross number, it could be around 1 million tons. It's about a 20-million-ton system over in Europe, to give you an idea of context. Yeah. It's a very large buffer. That's not considering the drivers of incremental demand in the market. It's just these locations that create a gap of 1 million tons or so that needs to be absorbed by the local capacity. Got it. On my second question, can you just provide update on your inventory levels? You know, typically, I believe you guys use the first quarter to kind of build up inventories. Doesn't seem like that was necessarily the case given the strong demand this quarter. Will that impact maybe volumes or typical seasonality through the balance of the year, or how should we think about it? Our inventories have been reduced over the last two, three years. The reason why we can do it is because we changed the planning processes of the company. You might recall that we implemented IBP, Integrated Business Planning, which changes how this business can be run. As a result of that planning process, our supply and demand planning capabilities, which are very different than they used to be, and the flexibility in our manufacturing operations, when we combine all of that, this company is able to work with much lower inventories, and that's what we are seeing. Our inventories are lower. Now demand obviously is very strong, so at some point we're gonna be limited by inventories. I think it's important to highlight that we believe the levels we describe for this year, we believe are sustainable, and we might be able, in some places, to still go even further down because of what I described before. Yeah. Just to back that up with a couple data points. On a YoY basis, our IDS, Inventory Days Sales, was down about eight days. On a sequential basis between the fourth quarter and the first quarter, they were down about two days. You're right, usually you start to build some up there. We do believe, as Andres says, that we are continuing to manage to lower inventories through the new technology. This summer we're putting in more new technology, so we're regularly doing this to be able to support this going forward. Keep in mind, we are also, with this better speed and efficiency that we talked about before, building up creep capacity additions to the business to be able to support that. The combination of managing to continue to lower inventory efficiencies and creep capacity is supporting the strong demand growth that we're seeing. In some markets, we did some line extensions last year. We highlighted that in previous calls. That's something that is supporting us to serve incremental demand in those markets. Got it. Thank you. I'll turn it over. Thank you. Your next question comes from Adam Josephson from KeyBanc. Your line is open. Thanks, everyone. Good morning. Hope you're well. Good morning.[crosstalk] Yeah. Good morning, Andres. John, a couple cash flow questions for you, if you don't mind. You raised your net income guidance by a little bit. Free cash flow language is the same. I know inflation is getting more severe, and it seems like you've raised your volume expectations by something. Can you just help us with the extent to which your free cash flow expectations have changed at all? I know the language remains the same, but you know, at or above $125 could be a very big range for all we know. How are you thinking about free cash flow compared to three months ago? How wide is the range that you're really thinking about that it could be this year? Yeah. Thanks for the question. Keep in mind, you know, let's parallel this to our earnings outlook. You know, we have 185-210 as our EPS outlook. So 185, you think that is kind of the floor. Well, the $125 million of free cash flow is the equivalent floor to that earnings number. To the degree that earnings outperform and continue to be on the mid to higher end of our guidance range, it would lead you to believe that free cash flow also would continue to improve. To give you a kind of a sense, you can kind of look at that range and get a feel for the magnitude of the opportunity there. You know, one thing I would say is you take a look at the other levers of cash flow besides EBITDA. You know, our cash flow levers remain pretty stable overall. We expect working capital to continue to be a modest source of cash going forward this year compared to the prior year. Free cash flow, you know, CapEx is pretty stable overall. Obviously, we're changing our plans around a little bit, but the overall number is pretty stable. You look at the other levers that we outlined at year-end, they pretty much are intact. Hopefully that gives you a sense of the range possibility and how we're thinking about that guidance. I appreciate it. Just one follow-up. I mean, are you thinking that the number could be considerably higher than that $125? Are you thinking, "No, what we really think is it's $125 or something maybe a little bit higher, but not dramatically so? Well, I think you could look at the range based upon the earnings range and. Yeah. extend that by that fixer, and that gives you. Yeah. at least a sense of the EBITDA movement. You know, the other thing that could be choppy is capital investments could be choppy just with supply chain issues and things like that. Those are the Yeah. the variables we're mostly taking a look at. Whatever your conversion ends up being this year, John, are you thinking just based on your changed CapEx plans for this year and perhaps beyond that your conversion will be similar over the next two years as it will be this year? Or are you thinking the conversion could change in a pretty material fashion over the three-year period? Well, what I would say is, you know, that we primarily focus on conversion on adjusted free cash flow, taking out the strategic capital because that could be lumpy. You know, that guidance that we provided during our Investor Day, I think it was 30%-35%, something like that, of adjusted free cash flow conversion is what we expect to generate over that period of time. Now to the other question of, you know, supply chains and their affecting the capital timing and things like that, let us come back a little bit later in the year, mid-year, whatever, to give you a better sense of what that is. It really is, again, it's driven mostly by supply chain things. Overall, we're seeing a little bit of spreading out of you know, the capital expenditures. Just things are always you know, three to six months slower right now than you'd like. That kind of needs to be flushed through the overall sequencing compared to what we were originally expecting. I appreciate that. Just one last one, John, if I may. I think George was asking about cushion or potential cushion in your full year guidance, given the outperformance in 1Q and given your 2Q and your second quarter guidance. Just to be clear, are you thinking about it like that, or are you thinking, "No, look, we visibility is just, it's limited," and I mean, look at how much you beat your first quarter guidance by. Visibility is very limited, and this is really the best we can do, and we don't really think there's a whole lot of, quote, "cushion" in terms of the implied 2Q guidance. Can you just flesh that out a little bit more? Yeah. I mean, I go back to the original guidance for the year that we gave heading into the year had a $0.20 range, right, on a relative sense of performance or so. Now we have a little bit of a wider range because we picked up the top end. I'm sorry, had a 15-cent, now it's at a $0.25 range. As we think about it, what we've done is we've increased the top end of our guidance range based upon what we've achieved in the first quarter. We really haven't rebased anything else for the balance of the year. To the degree that the business has good momentum, we continue to see solid demand and the ability to get the creep capacity and to be able to generate more sales volume. Yeah, there's probably some upside to that. There's also all the uncertainties that we're talking about. There's just a stew of different variables in place, so it's hard to identify a particular cushion or not. All I'd say is that we're incrementally more positive on the operating performance of the things that we can control, but there's the uncertainties with the macros, and we're just gonna have to work that through the next several months. I think they'll be pretty telling on those elements, and we'll update guidance as we get closer to midyear. Thanks so much, John. Your next question comes from Jay Mayers from Goldman Sachs. Your line's open. Hey, good morning, everybody. Thank you for taking the time and squeezing me in here. Just one quick one for me here on the balance sheet. You know, congratulations, first of all, on you know, coming close to the Paddock settlement. With regards to the $600 million delayed draw term loan, just wondering if you can help me kind of think through that funding source. You know, first of all, it's you know, kind of an option for you right now. Even if it is drawn, you know, relatively short maturity. You know, curious if you can kind of help me think about how that becomes you know, a permanent part of the capital structure versus kind of some considerations around CapEx, asset sales, et cetera. Thank you. Yeah. Our intent would be to use the delayed draw when we complete Paddock and we fund it. To your point is, you know, within our BCA, that delayed draw it extends through the end of 2024. We have something over a year and a half to be able to address that on a long-term basis. Ultimately, you know, we would look to refinance that into longer-term debt. Of course, at the same token, you brought up the point, we continue to do our portfolio optimization. More cash is coming in. You know, we have a couple hundred million dollars more still to come. We'll be looking at the inflows of that and that, you know, the rebalancing of the delayed draw and the rest of things in totality here, not to mention the cash flows of the business. We would expect to be active in the capital markets sometime over the balance of the year in all likelihood, but let's see how those cash flows come through those other sources too. Very helpful. Thank you very much. Okay, Rain, I think we have time for one more question. Sure. Your last question comes from Anthony Pettinari from Citi. Your line's open. Hi, this is actually Bryan Burgmeier sitting in for Anthony. Thanks for the new volume growth guidance for 2022. Just given some of the supply constraints that you've spoken about, is there a cap on the level of volume growth that O-I could see this year? Based on the level of volume growth, you know, already seen in 1Q and your guidance for 2Q, it seems to be implying, you know, kind of flat or negative growth for the second half. I'm just wondering if you can explain that dynamic a little bit. Yeah. We have multiple sources of incremental capacity to support incremental demand this year. One is, we're not having a repeat of the Storm Uri impact in the first quarter. That's one. Line extensions that we implemented last year are now available for us to get incremental supply. Increased productivity, which is quite impactful and is going quite well. Inventories, depending on the market, we have more available in inventories, but we continue to work on that. Then just exiting the year, we will have two large projects already available, which is the project in India and the project in Canada. Yeah, I mean, I think I could add a couple more context there. If you look at our increased productivity or increased level of production in the first quarter, it was just 3.7%. It fell into three buckets of about equal size. One was the rebound from Winter Storm Uri that's come and gone. The other 1/3 is the capacity add that Andres talked about. The other 1/3 is that increased speed and efficiency that we've been achieving. The enduring element of that is probably your biggest incremental headwind to be able to, I mean, incremental benefit to be able to deliver more deliver on more sales out there, as well as how efficient we can be with inventories. Got it. Thanks for that detail. Last question for me. You know, a large beverage producer that hasn't really used glass historically is conducting a returnable glass pilot in the U.S. right now. Can you just remind us from O-I's perspective, how do the economics of returnable glass compare to the economics on one-way glass? Is it possible to say what% of your current portfolio comes from returnable glass rent? Returnable glass has very large presence in Latin America. It does not in the United States. Because it makes multiple trips to the market, this is the best option from affordability perspective early on in the market because it's better for consumers, it's better for our customers too. There are some pilots, and there is increased interest in returnability in the United States. We gotta watch them closely to see how they develop. At this point, as I mentioned before, we're seeing incremental emphasis on returnable glass in markets like Brazil because of the higher inflation in those markets. Now, from a sustainability standpoint, there is no better package than returnable glass. It beats everyone else by a very large margin. Yeah. Just to underscore the economics there, let's say that you just use a baseline of $0.10 for a bottle. Obviously, it could be all over, but depending on the bottle and the market that you're in. The equivalent returnable item per unit of consumption is well below $0.01. I mean, these bottles usually make like 20, 30 trips, even with collection and cleaning costs and stuff like that. They're well below anything out there that you can touch in the marketplace, whether it's glass, aluminum, plastic, whatever. Got it. Okay, guys. Thanks. That concludes our earnings call. Please note our second quarter call is scheduled for August 3rd. Remember, it tastes better in a glass, so make it a memorable moment by choosing safe, healthy, and sustainable glass. Thank you. This concludes today's conference call. Thank you all for joining. You may now disconnect.