Hello everyone and welcome to the O-I Glass Third Quarter 2022 Results Conference Call. My name is Sam and I'll be coordinating your call today. If you'd like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I will now hand you over to your host, Chris Manuel, Vice President of Investor Relations. Again, Chris please go ahead. Thank you Sam and welcome everyone to the O-I Glass third quarter earnings conference call. Today, our discussion will be led by Andres Lopez, our CEO, and by John Haudrich, our CFO. Today, we will discuss key business developments and review our 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 our disclosure and use of non-GAAP financial measures included in those materials. Now I'd like to turn the call over to Andres. Good morning everyone. I appreciate your interest in O-I Glass. Last night, O-I announced a strong third quarter adjusted earnings of $0.63 per share, which exceeded prior year results as well as guidance. As illustrated on the left, all key measures improved. Segment operating profit and adjusted EPS increased nearly 10%. Margins improved 60 basis points, and working capital was down more than a full turn. Earnings benefited from higher selling prices, which more than offset cost inflation. As expected, sales volume was up slightly amid record low inventories and capacity constraints in key markets. As we work to commission much-needed new capacity, we did incur some additional costs, which were mostly offset by solid operating performance and benefits from our margin expansion initiatives. In addition to a strong performance, we delivered on a number of key transformation initiatives during the third quarter. First, Paddock achieved a fair and final resolution of its legacy asbestos liabilities, and the trust was funded in July. O-I has reached an inflection point, and for the first time in decades, we are focusing all of our strong cash flow on efforts to increase shareholder value. Second, we also completed our $1.5 billion portfolio optimization program in August, which helped reduce debt and prefund our expansion investments. Finally, our leverage rate is now in line with our 2024 investor day target well ahead of schedule and net debt was the lowest level since the O-I Mexico acquisition. Recognizing our significant progress, both Moody's and S&P upgraded our credit rating during the quarter. We have updated our business outlook reflecting a strong year-to-date performance and good momentum heading into the fourth quarter. As you may recall, we did raise our full year earnings and cash flow outlook during an investor conference in September. We now expect full year earnings will be at the high end of that guidance range and cash flow should be in line with our updated outlook. Despite elevated macro uncertainty, we are encouraged by our performance and expect continued progress in 2023 and beyond. A bit later, John will discuss our business outlook as well as key themes for 2023. Let's move to page four as we review recent sales volume trends. Our shipments increased nearly 1% in the third quarter. Volume was up around 4% in Europe and down almost 2% in the Americas. In Europe, demand was strongest in the Southwest and North Central markets across multiple end-use categories. In the Americas, shipments were down mostly due to elevated asset maintenance and repair activity in Brazil and North America. With that said, the non-alcs were up double digits, and the spirits and NABs were the strongest categories across the Americas. Global shipments were up nearly 2.5% year to date, about 4% in Europe and 1% in the Americas. On the right, we have provided the latest Euromonitor consumption projections for the 2023 to 2025 period. As you can see, Glass is expected to grow nearly 2%-4% across the markets that we serve and should be in line or exceed the overall packaging growth rate in those markets. The strong growth projections further support the several mega trends we have discussed on the last several calls, leading to the strongest glass fundamentals we have seen in decades. As I've mentioned earlier, we are capacity constrained across several key markets. Our expansion investment program will add much-needed new capacity over the next few years. In fact, the first phase of our Canada expansion project is now in production, and more capacity will be enabled in Canada and Colombia in the first half of next year. Let's turn to page five. On top of strong recent performance, we continue to advance our transformation. Segment margins are up 100 basis points year to date, reflecting a strong net price realization and very good progress on our margin expansion initiatives. As noted, our expansion projects are progressing well as we capitalize on the strongest glass fundamentals in 20 years. All MAGMA development efforts are advancing well and we have made very good progress on key MAGMA innovations, such as the modular batch system, which is critical for greenfield expansion. The team is excited and preparing for our first MAGMA greenfield in Kentucky, which remains on track for mid-2024. Likewise, we are preparing our new ULTRA lightweighting solution for full-scale market trials starting in the fourth quarter of this year. Our ESG and glass advocacy efforts are also progressing well. As discussed, we wrapped up our portfolio optimization program and Paddock resolved its legacy asbestos liability. Overall, we're making excellent progress on our key strategic objectives. I encourage all of you to take a look at our updated sustainability report which can be found on the company's website. You can see a few highlights on page six. We are already more than halfway to our 2030 emissions reduction target and are implementing technologies such as gas oxy furnaces with heat recovery to further reuse CO2. Renewable energy now represents more than 27% of our energy source, a 14 percentage point increase from 2020 and we are well on our way to our 2030 goal. Likewise, we are expanding recycling collection sites, and our recent Green Bonds helped fund numerous projects to expand cullet uses. MAGMA and ULTRA will also provide significant sustainability benefits in the future. Overall, we're making solid progress, Glass is already the most sustainable packaging solution, and I believe you will be hard-pressed to find many industrial companies with so many levers to improve their sustainability position. Now, I'll turn it over to John to review financial matters starting on page seven. Thanks Andres and good morning everyone. O-I reported third-quarter adjusted earnings of $0.63 per share. Results exceeded guidance and increased nearly 10% from the prior year, despite headwinds from FX, divestitures, and interest on funding the Paddock Trust. Segment operating profit was $266 million, up from $243 million last year, as margins increased 60 basis points to around 16%. Favorable net price increased segment operating profit by $48 million as higher selling prices more than offset elevated cost inflation. Shipments increased 0.5%, while the net effect of higher sales volume and a change in mix was a slight benefit. Finally, operating costs were up modestly. The Americas reported $130 million of segment operating profit which was about flat with the prior year on an adjusted basis. Earnings benefited from favorable net price. The combined impact of 1.8% lower sales volume and favorable mix was about flat. Higher costs reflected elevated asset project activity and unplanned downtime, which were partially offset by our margin expansion initiatives. While performance was solid across the segment, we have been focused on addressing future customer agreements to restore margins in North America. As previously discussed, we are taking proactive measures to rebalance our network, improve mix, and enhance earnings. In Europe, segment operating profit was $136 million, up $44 million from the prior year on an adjusted basis, as margins reached 20%. Higher earnings primarily reflected very favorable net price. Results also benefited slightly from the combination of 3.6% higher sales volume and a change in mix. Finally, operating costs were down about $5 million, mostly reflecting the benefit of a subsidy received in Italy to help mitigate the impact of elevated energy costs, net of an insurance recovery in the prior year period that did not repeat this year. The chart provides additional details on non-operating items. As noted, our effective tax rate was at the high end of our guidance range due to regional earnings mix and discrete tax items in the quarter. Yet again, the company delivered strong earnings and margin improvement despite a highly volatile macro environment. Let's turn to page eight. We continue to make very good progress on our financial priorities, which are well aligned with O-I's strategic objectives that Andres discussed. Our cash flow outlook has improved over the course of the year and cash conversion is set to exceed our original expectations. We have taken action to optimize our structure, improve the balance sheet, and reduce our risk profile. As shown in the bottom chart, our total financial leverage approximated 3.6x at the end of the third quarter, which is in line with our 2024 Investor Day target, well ahead of schedule. Given an increasing interest rate environment, we intend to further reduce leverage to below 3x over the next few years and we will continue to review our capital allocation priorities. In summary, our balance sheet is in the best position in years and we are committed to further improvement. Let's discuss our business outlook. I'm now on page nine. Overall, our outlook has consistently improved over the course of the year, including our increased guidance provided in September. Year-to-date results have exceeded our original expectations, and we have good momentum heading into the final stretch of the year. We now expect fourth quarter adjusted earnings will range between $0.28 and $0.33 per share. Results will likely be down some from last year, mostly due to headwinds from FX, divestitures, and additional interest on funding the asbestos trust. However, earnings should be up on an adjusted basis. Our fourth quarter outlook has improved from prior guidance, given the third price increase we implemented in Europe. As previously communicated, sales volumes will be down a little, given a challenging prior year comparable. Keep in mind, inventories are at record low levels and we are constrained in several key markets until new capacity is commissioned. We now expect our full year 2022 earnings will approximate $2.20-$2.25 per share, which is at the high end of our recently increased guidance range. Furthermore, we continue to expect 2022 free cash flow will approximate or exceed $200 million, which is in line with our improved outlook shared in September. As we round out 2022, we are sharing some preliminary themes on 2023. I'm now on page 10. Despite elevated macro uncertainty, we remain optimistic and expect continued progress in 2023. Starting in January, strong net price will benefit from ongoing price increases amid continued cost inflation and annual adjustment formulas that pass on a lot of the inflation we incurred in 2022. Sales volume will likely be flat or up low single digits as we begin to commission new capacity. While it's unclear if we will face a recession, our modeling indicates the potential volume impact is pretty modest overall, especially given our oversold position in key markets. Like in 2022, we will have higher costs due to elevated project activity that will be partially offset by continued benefits from our margin expansion initiatives. Naturally, results will be impacted by higher interest rates given rising interest rates as well as FX headwinds. Overall, we expect 2023 earnings will be in line or likely up from 2022, which represents a strong double-digit improvement from adjusted levels when considering FX and Paddock interest. Next year's free cash flow should be modestly below or potentially comparable with current year levels as CapEx investment in our current expansion plan will likely peak in 2023. Finally, we anticipate continued progress on the balance sheet and financial leverage should be in the low threes by fiscal year in 2023. This preliminary outlook reflects our best view of macro conditions and the many levers we have to help manage through elevated market uncertainty like we have done since the inception of the pandemic. Let's turn to page 11. Of course, we face many macro uncertainties, including a challenging energy situation in Europe or a potential recession, yet we remain confident. O-I is a much more agile and resilient company as we continue to navigate elevated market volatility. We have the strongest balance sheet in years and cash flow conversion is up significantly following the resolution of legacy asbestos-related liabilities. O-I serves the global food and beverage market, which is more recession-resistant than many businesses. Likewise, our business mix has improved over the years as we shift to more attractive end-use segments, and U.S. mega beer now represents only 3% of global volumes. Importantly, we are significantly oversold in key markets across Latin America and Europe, which provides a buffer from potential recession volatility. O-I is well positioned to manage Russian natural gas curtailments as we enable energy switching capabilities across half of our EU network by around year-end. While Russia has curtailed NG, EU storage levels are around 94% across the continent and ahead of schedule, reflecting very good efforts to reduce gas consumption. Finally, we have consistently demonstrated improved agility amid significant market disruptions since 2020. Now back to Andres. Thanks John. In summary, we are pleased with our third quarter results and continued progress executing our transformation. The company is performing well and our business outlook continues to improve. In fact, the company has either met or exceeded the street expectations for 11 consecutive quarters. Importantly, O-I is a much more capable, agile, and resilient company, and we expect continued progress in 2023 and beyond. Finally, I believe O-I represents an attractive investment opportunity as we reduce our risk profile, execute our transformation program, enable profitable growth, advance breakthrough innovations like MAGMA and ULTRA, and further leverage our sustainability position to win in the new green economy. We are confident this strategy will create value for all the stakeholders. Thank you and we're ready to address your questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. Please note that participants are limited to one question and one follow-up question only. Please then rekey for any further questions. When preparing to ask your question, please ensure your line is unmuted locally. Our first question comes from Ghansham Panjabi from Baird. Gansham your line is now open. Please go ahead. Thank you operator. Good morning everybody. I guess first off. Morning Ghansham. You know, on the backlogs in Europe and Latin America that you called out, you know, as obviously being strong as you head into 2023, can you just give us a bit more color in that in terms of sizing of that backlog and, you know, the visibility you have associated with it? Yeah. When we look at the markets in Europe, Italy and France specifically are importing a significant amount of ware from various places within Europe and other places. That provides a buffer if you will, as we move forward in case of some changes in demand. That situation, Ghansham is also present across other markets. When we look at the North America market, it is importing 1.4-1.6 million tons every year. When we look at Brazil or the Andean countries, it's the same. Those two markets are important t hat situation of what you call the backlog is present in multiple markets that are very important for us. When we add up all those imports that's more than 2.5 million tons. We mentioned in a previous call that there is a dislocation of supply happening as a result of the conflict between Russia and Ukraine, and that's more than 1 million tons, more than 5% of the capacity in Europe and that's also adding to that. It looks to us that we have a pretty good buffer coming out of all those factors as we go forward and into 2023. As a result, we're pretty confident that our pricing position will be very constructive as we go into the following year. Yeah. I would just add that, you know, Andres mentioned we got about at least a 5% oversold position in Europe. We're probably looking at double-digit oversold positions across Latin America also. Mm-hmm. Okay, perfect. Thank you for that. Then in terms of the margin expansion initiatives, you know, the +$50 million that you're anticipating for 2023, are the drivers any different than what you've seen in the last couple of years? You've been pretty consistent with that sort of level. I'm just curious if there's anything different for next year. They're the same. Some of the initiatives are going to or are addressing or improving the top line. Some of them are pursuing year-on-year productivity. At this point, we are more mature in terms of our capability to drive those. We are more and more confident we can achieve what we've been achieving in the previous years. It's a pretty systematic approach across the organization that is delivering those results. Perfect, t hanks so much. Thank you. Our next question comes from George Staphos of Bank of America. George your line is now open. Please proceed. Thanks. Hi everyone. Good morning, t hanks for the details. I mentioned this, I think a couple of quarters ago. Again, we really appreciate the clarity on the material guys and the guidance, the early guidance on slide 10. On operations, that's where I wanted to spend my time first. Can you talk about the unplanned downtime that you saw in the Americas? What caused that? What the effect of that was? And then relatedly, you know, we're seeing the capital spending bump up into 2023. What are the key categories and buckets in terms of what's driving that? Okay, t here are about several drivers of unplanned downtime. One of them is unexpected issues that need repair, so we address them right away. The other part comes from the challenges offered by the supply chain. As you know, it's difficult to get materials and equipment, t hey get delayed. Every time we get enough equipment to be able to deal with a given repair, we are very proactive moving forward on repairing, even if that repair wasn't in the forecast. That's what's make it unplanned, i t's the right thing to. As we go forward, we are counting on a gradual improvement of that supply chain situation. As that happen, then we expect a higher number of repairs in 2023 as things normalize. That obviously drives the CapEx, but also inflation that we saw in capital equipment along the year that is considered to continue into the following year, driving up the CapEx number. Yeah, let me just quantify a couple of those elements. On the costs in the Americas, we did have probably about $15 million of higher operating costs, associated with the combination of planned maintenance activity. Primarily in Brazil, we had a big furnace rebuild, plus some of the other, you know, new capacity additions that we're working on, as well as that, you know, unplanned downtime components that Andres was discussing there. That $50 million was partially offset by about $5 million of margin expansion initiatives and there you see the change in the operating costs in the Americas. If you take a look at the capital spending for next year, we're looking at about $725 million-$750 million. We provide in there that, you know, $275 million-$300 million of that is associated with our expansion initiatives. A lot of the upfront on that is gonna be working on Canada and Colombia, which are the two big projects. We also will be, you know, working on some of the bigger projects going into 2024, which are included in a chart that we had in our previous conference. So we're gonna be just continuing rolling out. You know, we've got 11 different projects over the next couple of years, so that's gonna span those activities. The remaining component is about $450 million of maintenance spending. You know, we did about $375 this year and maybe that's kinda a historic average, but I think we're looking at a little bit of an increase right now because of two things. One is, you know, we are catching up on some of the maintenance activities that Andres referred to because of the delays in supply chain, but we also are seeing some cost inflation in the CapEx side. Okay, t hanks for that, John. I just wanted to sort of look under the hood on that point. That's what I was getting at. Is there anything troubling in the unplanned outages that you're seeing? I.e., you've been, you know, stressing the furnaces, you've been pulling at a pretty great rate and you're starting to see, you know, unplanned outages crop up more frequently, or is it, you know, there's nothing really that we should be worried about there from your vantage point? Then related, just can you give us a bit more color on how the MAGMA milestones are going? You said everything's, you know, on track but what's the next thing we should be sort of asking you about and holding you to in 2023? Thank you. Those issues that I mentioned are the first category driving the unplanned repairs happen every year, i t's not unusual. When they appear, then we just address them and keep going. We're very proactive at this point. Every time we have an opportunity to get an asset in a better condition, we will show. There is nothing really concerning other than the regular activities we gotta do to continue keeping assets in very good place. Maybe one thing to add on that is since, you know, the big projects have been harder to do incrementally because of supply chains, we've been doing more small projects. That's to give the, you know, to keep the assets in good conditions, you know. We do them more episodically, and that shows up in unplanned downtime because you do those activities. They buy you a couple of years. All of those go through expense rather than capital. I think somewhat a little bit of a reallocation of where you're seeing some of the money coming through. With regards to MAGMA, we're doing well. We continue to make very good progress developing the technology for Generation 2 and 3. At this point, we have three pilot centers in which we are piloting components of that technology. One is the Innovation Center, the other one is Streator, Illinois, and the other one is Holzminden, in Germany. We're making very good progress, and in line with meeting the timelines for our first line in Kentucky. All right guys, I'll turn it over. Thank you. Thank you. That's yours. Our next question is from Michael Roxland of Truist Securities. Mike, your line is now open. Please go ahead. Thanks Andres, John, Chris. Congrats on another strong quarter. Thanks. Following up on George's questions, outside of some of the unplanned downtime, are there other issues, John that you mentioned about causing the margin weakness in the Americas? And maybe can you expound upon some of the initiatives that you're pursuing to restore margins in that region? And then just quickly, though, in Europe you know, how sustainable are those 20% margins? Yeah. In the Americas, keep in mind, you know, if you take a look at our book of business, we have about 55% of our business is long-term contracts. It's more like 30% in Europe, but it's more like 75% in the Americas. As you know, a lot of those contracts have price or all of them have price adjustment formulas. While we can pass through energy costs quickly in North America, most of the other basket of goods get picked up through the annual price adjustment formula. In this case, it should go in more or less in January of this next year. The Americas does have a little bit more of a lag effect than what you see in Europe and its ability to recover all the significant cost inflation this year. That's gonna be a natural element, Mike that will help out the margins and the overall performance in the Americas next year, for example. In Europe, as far as the strong margins, and I think we've mentioned it before, you know, we take a very long-term position, you know, structural position on our energy contracts and we believe we have the best in class, you know, procurement positions on a long-term basis on energy. As it pertains to margins in the future in Europe, especially in a world where we have this elevated environment of energy risk and costs, we're well positioned on a long-term basis. For competitive purposes, we aren't extending beyond that. I think it's important to highlight that the work on the margins in Europe has been going on for several years. What we see today is the product of all that work. The margin expansion initiatives are contributing, the mix improvement is contributing, and also what we've done over the last year on the current inflation, the very high inflation that we're facing is we have very strong capabilities in procurement. We have very strong capabilities in commercial, and we are planning well ahead of time. That gave us the confidence last year that we were going to fully record inflation, protect the margins, and even have a positive net price. It is the same position what we have today. We are very confident we are going to perform well in 2023 for the same reasons. Got you, t hat's very clear. Just one quick follow-up on MAGMA capacity. Of the new capacity you're bringing online in Kentucky, can you talk about how much of that capacity is already committed to customers and how much maybe you're leaving for spot volume? The reason I'm asking is that one of your peers is planning to increase capacity by about 400,000 tons by 2024. I'm just wondering if you've, you know, with Kentucky coming online or starting production in mid-2024, do you have 80% committed, 90% committed? Should we be concerned about any increased competition from one of your larger peers? Yeah. There is no concern about placing that capacity in the market. There are two big blocks of driving that demand. One is the, let's say, the fragmented market that is all supplied primarily through imports t hat's 1.6 million tons. Once we have capacity in the country to be able to supply that with MAGMA, which is a very good fit for that, it will be a natural fit, t here is no issue with that. We have a growth plan for in that market. It's a multi-year plan, and MAGMA is a part of it. Now, we will supply Spirit's customers out of that too, with which we have long-term agreements t hat will be secure. That capacity is gonna be right where the demand is. It's gonna be very close to demand, and it's gonna be in a unique position versus what capacities that might be available in the country. Gotcha. Thank you and good luck with the balance of the year. Thanks Mike. Thank you. Our next question come from Anthony Pettinari from Citi. Anthony your line is now open. Please go ahead. Good morning. I was wondering, is it possible to say what percentage of net capacity you're bringing online in 2023, you know, as a percentage of your current footprint? Just, you know, from a high level, all of the, you know, the beverage can makers are canceling projects and shutting down plants in some cases. You know, are you seeing any of this weakness, or do you think glass is just, you know, rapidly gaining back share? Just wondering if you could talk about what you're kinda seeing on a high level in the U.S., Brazil and Europe. Yeah, Anthony. I'll touch base on the first one. You know, over the next three years, part of our expansion program, we're adding capacity to support about 6% growth, okay? That's over the you know, three-year period of time. We believe on a run rate basis, we're installing capacity that equals about 1.5% additional new capacity in 2023, but it might be between 1% and 1.5% realized because we're implementing it and rolling it in. Now we go in 2024, we're gonna see more coming online. It's probably our peak of new capacity onboarding in that period of time with it starting to trail off a little bit in the subsequent period there. Andres did you wanna touch base on the second part? Yeah. As we shared before during the Investor Day and in some of the previous calls, aluminum cans and glass play in different lanes. Our growth is driven by premium products in spirits, in wine, in food, in NAB, and beer. Their growth is driven by carbonated soft drinks, energy drinks, sport drinks, bottled water, and hard seltzers. What's happening in the aluminum industry at this point is related to their position versus those segments, which are different from the segments that are driving our growth. For our purposes, those two things are separate things t hat's why we are growing the way we're growing and you see our performance the way it is. Okay, that's helpful. I'll turn it over. Thank you. Thanks Anthony. Our next question comes from Mark Wilde of Bank of Montreal. Mark your line is now open. Please go ahead. Thanks. Good morning Andres. Good morning John. Good morning. Any way to help us size the cumulative impact on container prices over in Europe once this third price increase is in? Just order of magnitude, what would it do to the cost of a wine bottle if we stacked all of these increases on top of each other? You know what I can indicate for you know, we aren't providing, you know, forward guidance per se on the current price increase that we have in the marketplace. If you look at our European numbers in the third quarter, they were up about 18% on a year-over-year basis. That's the cumulative effect of the price increases that we have year-to-date. Obviously, the third price increase would be additive to that, to give you a sense of the direction that we have going on here. Okay, that's helpful. Andres just for my follow on, I'm kind of curious, you mentioned the ULTRA lightweighting initiative. Is there any way to quantify the savings from both a cost standpoint, but also just what it does to the weight of the container? Yeah. I can share with you what the target is. It's reduction of weight up to 30%. It's very significant. When we are already seeing some of those bottles that are coming out of the innovation center. It is really impressive how light those are. They're gonna have not only a cost impact, but a sustainability impact, which is very significant. The CO2 emissions by container is gonna go down. We're gonna start the first commercial trial of that at the end of this quarter and then we'll work along with the customer over the first quarter next year to get ready for commercialization in the second of the very first container under those conditions. I cannot share cost reduction targets at this point, but obviously 30% reduction in weight is quite impactful. One thing I would add to it is that another real benefit Mark, of it is that as you lightweight and you have furnace pull, right, you can actually get a creep capacity out of this so that you'll have more capacity out of any individual furnace because you're using less product in each bottle. So that's another way for us to be able to support the really good growth on a pretty low capital intensity basis going forward. Okay, that's helpful. Thanks John. Thanks Andres. Thank you. Our next question comes from Kyle White of Deutsche Bank. Kyle your line is now open. Please proceed. Hey, good morning. Thanks for taking the question. On volumes, was there any noticeable difference in how demand or volumes trended throughout the quarter? You know, we've seen some other packaging peers talk about a slowdown later in the quarter, but it doesn't seem like you're seeing anything of that nature. The cadence was positive along the quarter. July was softer, if you will. August and September were stronger. As we look at October, we're seeing that in line with our expectations. Obviously, as you know the current quarter when compared to prior year that was a out of pattern year will be lower but it's higher than pre-pandemic levels. It's about 2% higher than pre-pandemic levels. Our volumes are just fine. Got it. On Europe, how much of your energy needs there is already secured for next year? Where are you at regarding the strategy of switching, you know, 50% of your capacity to oil versus nat gas? Longer term, do you think there could be any potential opportunity for share gains from maybe some smaller players that aren't as protected from the higher energy costs going forward? We are doing very well preparing the capacity to take various fuels. We are planning to be ready with 50% of the capacity by year-end, that's progressing well. The situation of natural gas in Europe has improved quite a bit since our last call. The consumption reduction measures have been quite effective, t hat's one thing. The weather has been milder at this point in time, so that's helping or contributing to balance the storage. The liquid natural gas handling capacity is up, so that's helping the supply. As a result, the storage levels are pretty high. They're all in excess of 90% and even in high 90s across countries. The situation at this point looks a lot better than before. Nevertheless, we are prepared with capacity ready to switch if required. On the energy contract, you know, question, I would say as I mentioned earlier, we take a long-term approach on our energy contracts that we're well established for 2023 before the run up in the environment that we have right now. We were in pretty good position there. You know, for competitive purposes, we don't quantify that. But I would say, you know, despite that very good position, there's a lot of inflation in the environment through indirect costs and things like that. We do need good net price realization to cover that. Not to mention other inflationary situations like wages, interest, inflation, you know, CapEx, as I mentioned before. We really manage our net price for the company on a cash basis to make sure that we maintain the strong cash flow needed to continue to support the investments in the company. Yeah. There is something that we don't mention very often, which is how is our position with customers evolving. When we look at our position from a quality service perspective and our overall performance with our customers measured through Net Promoter Score, it has been improving significantly over time. We are in some places, in some markets, at very high levels at this point. There has been a very solid evolution in our relationship and service with customers, which put us in a good position going forward. Sounds good. I'll turn it over. Thank you. Our next question comes from Gabe Hajde from Wells Fargo. Gabe your line is now open. Please go ahead. Andres, John, Chris, good morning. Good morning. Good morning. I was hoping maybe you could help us understand, I guess or maybe compare or contrast sort of what might be a recession, because I feel like some of the fact pattern is consistent with 2008, 2009, and some of it is different. Obviously, the price at which or the inflation that's hitting the consumer is occurring for different reasons versus a strategy that was employed by O-I 14 years ago or so. So maybe why you think the negative impact might be limited to 1%-3%. Again, I appreciate, I think the market was down around that magnitude during the global financial crisis. Again, just if we're kind of sitting here with maybe a little bit of a critical eye, the consumer getting hit with a lot of inflation, why we may not see the similar drawdown in volumes that we did in 2008, 2009 versus, you know, what you guys are proposing here today? Okay. Just to comment on 2008, 2009 and the difference with this time. There are multiple reasons why this is different. Let me start with the pricing, which is what you suggest. At this point in time, we're pricing, w e've priced within market. At that point in time, we weren't, and those two positions are very different. Now, there are multiple reasons why to expect better performance. The short answer to that is glass demand fundamentals are very solid in all markets and they're very different when compared to the time that you referred to, in which glass was considered to be in secular decline. That's not the case anymore. That's been solved. The demand drivers today in several markets are not that GDP sensitive. Let me give you one example, localization of global brands, which is happening across markets t hat's not sensitive to GDP. Like that, there are other examples. The capacity's location in Europe of more than 1 million tons creates a condition in which securing supply is important for everyone. I mentioned before that in several key O-I markets, those markets are importing a significant amount of ware that adds up to more than 2.5 million tons and is all in key markets for O-I, Italy, France, North America, Andean and Brazil. The other thing is glass today and as a consequence of what we lived through the last three years, has demonstrated that it's very resilient to channel shift, on premise and off premise. What is expected if we go into recession is that at-home consumption is gonna go up. If that happens, Glass performs very well in those conditions. The last point is, the new business opportunities pipeline that we have today adds up to 1.7 million tons, t hat wasn't present at that point in time. None of these conditions, and many others, but, obviously, we would take a long time to describe all that, are very different than what we lived through back in 2009, 2008 and 2009. I would just add two things to that. One is, over the last decade, we've seen a more mix increase, improvement in our mix to more premium categories. In fact, those are considered affordable luxuries. Even if things are a little tough out there, you still go buy that bottle of bourbon or whatever, you know, and that's been proven out over time. In fact, over in 2008, 2009, we saw those same categories grow when other more mainstream commodities actually declined. In fact, we've mentioned before in the prepared remarks, mainstream beer is only 3% of our global volume and import. That was the category that took the biggest hit during the global recession in 2008 and 2009. We're a bit less exposed in that regard. Mm-hmm. All right. No, I appreciate the thorough answer. We tend to agree with you. I just wanted to tease some of that out. All right. Can you quantify for us a give an inch, you take a mile type thing on the 2023 view, just where corporate expense you expect that to land this year and sort of if there's something, I guess, maybe non-recurring in nature there? why it would be down next year? The— I guess, rebuild activity, if you can quantify that for us just to help us build a bridge. Corporate expenses this year are elevated. We expect them to be around $220 million this year t hat is a $50 million increase year-over-year. There are two main drivers for that. One is it's been a good year, so management incentives are up about $30 million in that regard. The other $20 million is just cost inflation kicking in, higher level cost inflation kicking in than we've seen in the past, in particular in insurance costs. One thing to keep in mind is we do have about $60 million of elevated R&D costs embedded in that number for higher MAGMA, ULTRA costs. Those will be with us for a few years, but you know, once Gen 3 and ULTRA are commercialized, then those start to rebase some. Just understand the pattern of corporate expense. As far as next year, you know, rebasing management incentives alone is $25 million-$30 million, let's say, of a reduction. We'll give more clarity in the year-end call about the total position on corporate expenses. As far as rebuild activity, as we mentioned before, you know, we are probably getting back into a more normalized level. The typical environment is about 12-14 furnaces a year t hat's what we would be returning to. Thank you. Good luck. Our next question comes from Arun Viswanathan from RBC Capital Markets. Arun your line is now open. Great, t hanks for taking my question. I guess I just wanted to ask first on the earnings bridge. You know, you've called out about $0.25 of headwinds and then you've also discussed you know, price mix, price, and then volume mix and so on, as potential tailwinds. How would we kind of parse that out? I guess is it mostly you know, volume mix is the variable factor? What would you say is kind of the biggest uncertainty if you look forward into 2023? I would say as we look to 2023 and you're looking on, I guess, page 10 and the directional arrows we have, the biggest lever that we have will continue to be net price in this environment. Volume and mix will be, as we say, kind of up to maybe flattish. It's gonna be more muted in that regard. Of the two levers, it's the net price is the biggest. Now if we look at, you know, things that are more variable out there, obviously, what is the pace of cost inflation? You know, that is always one that's a little bit, you know, harder to pin down. We are expecting in this, under this set of assumptions, remaining elevated cost inflation. Maybe not 2022 levels, but still quite a significant amount of cost inflation, in particular as the higher costs that we've all been seeing flush their way through the value chain, still higher raw material costs and labor costs, and in particular being up. That's probably the biggest unknown. Of course, you know, when it comes to volume, it's you know, we give a sensitivity there, maybe a 1%-3% span there of any recessionary pressures. Of course, we don't see that right now, but we just wanted to give you a sense of that sensitivity as we see things right now. Just to clarify. Do you believe that 1%-3% or some kind in the low single digit range is the you know more long-term growth rate that we should expect in glass containers? Is there anything that would maybe push that up as far as substrate conversion or anything else? The other question I had was, when do you expect that $700 million plus of CapEx to kind of come down? If so, what level do you think that is, you know, really sustainable over long-term spend? Yeah. As far as, you know, long-term growth, and don't equate the 1%-3% t hat's our sensitivity to any type of recessionary pressures. If you go to page four of the materials, we give the projected long-term growth, which is anywhere from, say, 2%-4% of sales volume growth in applicable markets that we operate in, okay? That we believe is the long-term growth rates. In fact, you know, we've been growing at about 0.5% this last quarter, but the feeling behind it is still this low, you know, single-digit type of demand environment out there. It's just obviously we're capacity constrained in that regard. As far as, you know, the CapEx, obviously, you know, the 2023 will be the most elevated, you know, environment for the expansion capital t hat's the biggest driver there. But we aren't giving, you know, views on CapEx levels, for example, in 2024 yet. Thanks. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Adam Josephson from KeyBanc. Adam your line is now open. Please go ahead. Andres and John, good morning. Thanks very much for taking my questions. You know, Anthony was asking earlier about can versus glass demand, and I think you mentioned that cans are used for soda, sparkling water, hard seltzer, energy, and consumption of those products is being affected by price increases and falling disposable incomes, et c.. I guess I'm still kind of confused by why demand for premium products would be holding up better than demand for soda and sparkling water if we're going to a recession. I would think demand for premium products, if anything, would be getting hit harder than for things like soda. Can you help me understand that dynamic and what gives you confidence that demand for premium products will hold up perhaps better than that for soda? Yeah. The consumers of premium products can afford those products, and they tend to stay in those categories during recession. It's been demonstrated across several recessions already. This is something that we've seen in the past and we expect to happen today. You've seen that there has been a lot of focus on identifying or trying to identify if there is trade-down taking place, and so far it's not that clear that there is trading down. Now, what you mentioned happens at a lower tier. There is the pure commodity type of products and the ones that go to just about that. Those will trade down because that consumer is more sensitive to those issues. Now, let me just make a comment with regards to how our markets have changed. Mainstream beer has been really a point of pressure for us in demands over the years, as you know. When you look at our growth numbers or our performance in every year, it has been highly influenced by mainstream. We shared with you before that we have been focused for several years now on diversifying into growing categories, which are premium products in nature, like food, NAB, premium, and spirits. As a consequence of that, mainstream that used to be around 40% in North America is down to 13%. Globally, mainstream is only 3%. When we look at our performance going forward, we gotta take into consideration that the most vulnerable category is becoming really small. That's important. The other part is in the United States as an example, there are imports that go up to even 1.6 million tons per year. You might recall that we acquired a distribution channel, and distribution organization with Vitro, which is called IPS. We've been developing that organization quite substantially, and we're growing quite well with that, which give us access to all that volume, which we didn't have before. That's in favor of our performance as we navigate challenging times. Thanks, Andres. John, just on the Italian subsidy. That's the first I've heard of a subsidy in Italy. Can you talk about what that, you know, why you received that? Were you expecting that? Do you expect more such subsidies? Any details around that, I'd appreciate. Yeah, sure. We were aware of a potential subsidy heading into the third quarter, yet it wasn't fully quantified or confirmed until later in the quarter, in September. The subsidy was about $13 million, which was probably about $6 million higher than we originally estimated. We did incur at least $10 million of more cost inflation than originally forecasted in Europe, so the net effect is rather muted compared to our original guidance. Historically, Italy has issued a lot of credits over the year. They manage things through that. We've had things called White Certificates in the past. It's how they manage a lot of these different things. It's one way that they also incent development and expansion within industries and things like that through this process. This is not particularly a surprise. It's actually a legislative item in Italy. In fact, I think in the last quarter call, we had indicated that even with the energy situation building up, that we had some pretty firm positions through some of the governments like Italy and official positions in France that would be supportive of the industry. Not a huge supply surprise, a little bit bigger than we expected, but so was cost inflation. Thanks John. Our next question comes from Jay Myers from Goldman Sachs. Jay your line is now open. Please go ahead. Good morning everybody, t hank you for getting me in here. I was wondering if you could just kind of decompose the -2% shipment number in the Americas. How much of that was these kind of unexpected downtime impacts versus, you know, outright just demand in, you know, Latin America/Brazil and North America? I mean, you do note that you have maintained a sold-out position in Latin America, you know, no comment on North America. Is there anything kind of fundamentally you're seeing from a demand perspective in North America? Yeah. I would say there's two primary drivers for the 2% down. It was down in Brazil, where we had, as I mentioned earlier, a large furnace rebuild. That was the driver for that, the sole driver for that. In fact, if it wasn't for that, there's strong double-digit demand backed up in that marketplace. Whatever we can produce, we can sell in that market. Then the other reason was in North America. I think it was a combination of two factors. One is we did have some, you know, incremental unplanned downtime. Same situation, inventories are relatively low. If there's a little bit of lower production than anticipated, that impacted sales. The only area where we saw a little bit of weakness across our global network in the quarter was in beer in North America, and that was probably fundamentally from a demand standpoint, a couple percent down from what we anticipated. It wasn't a major driver of the overall performance for the company. Just to complement that, looking at Brazil and the Andean, that market is characterized by customers focused on growing premium. That category was very, very small. They have a significant opportunity ahead of them, so they've been focused on premium, and this is across categories. They're also localizing global brands in those markets. There is a conversion taking place from returnable containers into one-way glass containers. That's related to the convenience for some consumption occasions. That's moving quite well, as well as the use of returnable containers for affordability and for sustainability reasons. All end users are growing there. We're limited by capacity today. Obviously, our inventories don't contribute to adding capacity. We're building t hat's why we're building incremental capacity in those markets. That's helpful, t hank you. John, just a quick follow-up. You know, on some of the leverage comments you made, you know, targeting kinda low threes by the end of next year. It did sound like you were talking about longer term, getting below that, you know, three number. Can you talk a little bit about just kind of how you're thinking about long-term leverage on the business? Like, what is the right number and why is it that number? Yeah, I think on the. You know, we believe in this business being a strong BB corporation, you know, is a good place to be. Obviously, in a world where interest rates are rising, you know, our view of the target leverage is dropping some, right? It puts kind of mid to low threes would be kind of a good place to be. With the higher interest rates, we believe being below 3x leverage is the right answer for the company. I think there's a good balance between you know, being able to allocate our capital for creating value as well as a good healthy balance sheet, and being very mindful of the interest rate environment that we're into. We also have a position that has a, you know, an appropriate spread, you know, in the interest rate funding position for the company. Thank you very much. Thank you. There are no further questions. I'd like to hand the call back to Chris for any closing remarks. Okay. This concludes our earnings call. Please note that our year-end call is currently scheduled for February 1, 2023. Remember, make it a memorable moment by choosing safe, sustainable glass. Thank you. This concludes today's call. Thank you for joining. You may now disconnect.