Morning. Gabe Hajde here, the Senior Packaging Analyst at Wells Fargo, joined by my colleagues in the room, Richard Carlson, Bailey Gordon, and representing O-I Glass, apologies, is the President, CEO, Gordon Hardie, and John Haudrich, SVP and CFO. Also in attendance is a longtime friend and colleague, Mr. Manuel, VP of Investor Relations. Thank you all for attending. I say this every time, it is intended to be interactive to the extent you all have questions in the audience, please don't hesitate. With that introduction, you all put out a slide deck last night. I think you have some prepared remarks that you'd like to go through. If there's time, we have Q&A. Yeah. Great. We're a scale player to many of the largest food and beverage brands in the world, with over 6,000 customers across Europe and the Americas. Most of you are familiar with what we do. If we take a look at where we're at and move to the next slide. As I flagged up in our last earnings call, we really have a business of two hemispheres, where the Americas, which is further along in terms of our strategy execution based on Fit to Win, is performing strongly. We continue to see excellent execution around our Fit to Win program, our proximity to customer, and our businesses gaining share and improving their earnings. Between 2024 and 2026, operating profit in the Americas up about 60%. That's proof positive that the strategy we have and the execution of that is delivering. Europe is somewhere in the region of 6 to 10 months behind in terms of execution of our Fit to Win program, driven largely by the operating environment in Europe, where it can take anything up to a year to accomplish what you can accomplish in terms of change programs in the Americas. Soft start to the year in Europe, driven by our flagged energy reset of about $150 million. With the ensuing energy crisis, that drove incremental energy- driven inflation into the business. What we are seeing is an incremental improvement as we move through into the second quarter. While April and May were still soft volumes in Europe, we are starting to see an uptick in volumes in June and a very strong delivery of our Fit to Win cost- out program. Our balance sheet is strong. We have strong liquidity. Overall, I would say in all markets, demand is still soft. Consumers are still challenged from an inflationary point of view. With the additional energy costs, we see some of that continuing to play out. That notwithstanding, as we get fitter, we get more competitive. As I flagged up on the last earnings call, we've picked up at least 15 new pieces of significant business that start to play through in the second half of the year and into 2027. Our thesis of getting fitter and translating that into being more competitive and picking up incremental profitable volume is well and truly playing through. That set against the kind of macro background of lower overall demand. We maintain our kind of outlook for the full year guidance of somewhere between $1.125 and $1.2225. Softer start than expected, driven primarily by energy and softer demand, particularly in Europe, but an accelerating Fit to Win program. We set out at the start of the year about $250 million. We expect to beat that. That then sets us up for a fast start in 2027. Anything to add there, John? Yeah, just with a little bit of that transitional period on the volumes, we did tweak the second quarter outlook a little bit, and that's included in there. No change to the full year trajectory of the business, just a little bit of a later transitional period into positive growth that we're starting to see here in May, in June. The fundamental thesis is we transform the cost base well on track. By the end of this year, we'll have taken north of $500 million of cost out of the business. Typically, that's practically 80% of the initial $650 million target, there or thereabouts. We've upped that target to $750 million and probably see opportunities above that. Typically, these kind of programs, if you haven't got 30% out in the first 15 months, program probably isn't going to deliver what we've been able to demonstrate in the first 15 months, as we got north of 45% out and are well on track to either deliver or outperform the $700 million-$750 million. At I-Day, we laid out our thesis that our cost base was too high. We needed to face that reality, then we needed to work across the chain to not get cost just out of our own business, but across the incoming and outgoing chain. We're making tremendous progress working with suppliers and customers on stripping out waste and inefficiency across the total chain. We continue to sweep underperforming low EP or negative EP volume out of the business and focus on positive and higher EP volume. We see a significant shift in food, which is a very high EP category for us, and it's now our second-largest category of product. We're starting to see that shift in premiumizing the portfolio, as well as becoming more competitive in mainstream. We're very clear on where we play and how we win across each geography, and we have clear category and market strategies in place for that. The overriding metric for us is: Is it economically profitable? It's founded on the thesis that growth or value creation only occurs when you drive growth above your cost of capital. We have tremendous visibility on where we create and where we leak value in the business. Overall, our thesis is robust despite a softer start to the year. As we look forward into next year, while the path to $1.45 billion is steeper, we absolutely see a path there. Is there less margin for error? Absolutely. We still see a path to the $1.45. Yeah. Sure. With that. Yeah. That's really our strategy is get fit, turn that fitness into competitiveness, and then access the volume growth that's in the market. By 2028, that gives us the optionality to look at different forms of capital management and also how we expand into new geographies or new categories. It's pretty clear, widely and deeply understood across the organization, and is now one of the strengths of the business that top to bottom, you can walk into any office, any plant, and people can explain in a quite articulate way what the strategy is. I might stop there, Gabe, and hand over to you. All right. A couple of things. I guess you started off by saying that you're a scale player. Yeah. I think for all packaging companies, volume matters. Yes. It drives efficiencies, productivity, and, of course, you get the incremental contribution from the sales. In glass, it's even more pronounced. I don't have to tell you guys run this business, I just watch from afar. Volume is important. You mentioned winning 15 pieces of new business. Yeah. I don't want to put you on the spot and tell us exactly what that means. Yes Customer by customer. Markets being softer, and then you call out food as now being your second-largest category. I'm assuming that's behind beer. Correct. Wrongfully or rightfully. Maybe give us, if you can, by market, where you're seeing the weakness. It sounded like from the slide release that it was going to be more in Europe, and Americas is actually holding up pretty well. So maybe just North America proper, Central America. South America. Yeah. What's driving the weakness in Europe? I know you mentioned energy. I'll stop there. There's lots of questions in there. Sure. I thought we can revisit. Yeah. As I said, in the Americas, our businesses are performing strongly. Particularly, Brazil and Colombia continue to perform. If I take a look at Brazil, with new entrants coming into that business over the last five to six years, we've had a drop on market share, but our business is more profitable today than when we had 8 to 10 points higher in market share. Driven by absolutely outstanding execution by the team there of our Fit to Win program, working much more closely with customers to execute in the market. Colombia, Peru, still very strong markets for us. Mexico, a bit softer because of the export challenges into this market. We've been able to translate that competitiveness into volume growth in the domestic market. In North America, we've been able to really drive tremendous productivity that has made us more competitive. Actually, I think I pointed out our first quarter this year, despite a number of macro challenges, was probably the best quarter that business has had in 10 years. Capacities are reasonably tight. In the Americas, operating 96%-98%. Pricings are robust, and we continue to execute very well and are well advanced in embedding in how we're operating the business differently across the chain. Europe, we're probably, as I said, 6 to 10 months behind the execution of getting the costs out. We're now in the final stages, and over the summer, we will have executed everything that we announced. That notwithstanding, soft demand practically across every category in Europe. Primarily in the wine segment, where wine volumes have been dropping now for three to four years at somewhere between mid to high single digits, and resulting in overcapacity and downward price and margin pressure. Through our Fit to Win process, which the business there has executed well within the confines of the rules and regulations, has allowed us to be more competitive, we've been able to defend some of the volumes we had. There are other pockets, particularly in wine, where we said there is just no economic value to us being in those categories or with those customers, and we have shed those volumes. Food, operating well for us. Premium beer, operating well for us. With being more competitive and revitalizing our go-to-market system, we've seen a fair chunk of those 15 customers in Europe and picking up. We think we've hit the kind of trough in Europe and expect to see volumes kind of swing up from this month to the rest of the year. There's no doubt Europe has taken the brunt of the energy crisis at the consumer level. To give you an idea, I filled my car last weekend, hadn't done it for a while because I've been traveling a lot, to be stunned with almost $10 a gallon. That is impacting demand in Europe, and we saw some of that in May in certain categories. Europe will remain, from a demand point of view, to be challenged for the rest of the year, for sure. Our business, as we get fitter, we're able to defend and actually pick up some market share in certain categories. Okay. Yeah, Gabe, what I'd add is going into the quarter, we thought we were going to be flattish. Right? Sales volume plus or minus a little bit. Underneath that, we expected Europe to be up low single digits and the Americas to be down low single digits, primarily because of comps. The Americas is about what we expected. Europe, instead of being up a little bit, is kind of flattish. That's what we're seeing for the quarter at this point. Americas down low singles, Europe flattish. All things considered, not as maybe bad as I shouldn't say as bad, but the way you describe it is like $10 a gallon gas, like there's a big change. Yeah Marginal. Is that fair? In Europe? Yeah. The margins. No, marginal change in terms of what your expectations were. Yeah. I mean, we're just talking a few percentage points. Yeah. Right At the end of the day. Okay. Right? Instead of being flattish, we're going to be down a few points, most of that's that trajectory in Europe. I think the trajectory of volume between quarter one and quarter two in both regions actually has improved. From probably -7 in the Americas' first quarter to -3 in the second quarter, then moving into positive territory in quarter three and quarter four, the same dynamic happening in Europe. Okay. To the extent, the new 15 pieces of business are contributing an inflow positive at some point during the second half. That'll be a piece of it, then we're sort of subject to what the market is going to be doing. Yes. Okay. Food being, like I said, the number two category. Where was it? Can you frame that up for us? In this- It used to be about 15% of our overall demand. It's now closer to 20%, so it's moved five percentage points over the last few years. In fact, if you go back to a number of years, alcohol used to be something like 75% of our total portfolio related; now it's about 60%, where you see that 40% associated with both NAB and the food category. We are seeing a shift towards the non-alcoholic categories over time. Yeah. Food, driven by a couple of things. As people shift out of alcoholic beverages, it's not that they're consuming less liquid, but they're moving into non-alcoholic drinks. We're seeing water kind of, for us anyway, explode. Right? A very strong demand both in Europe and in the U.S. As the whole microplastics issue really starts to gain momentum in Europe, particularly, we're seeing a big shift in many of the iconic food brands in, from plastic into glass. We're also seeing within dairy, things like yogurts and drinks moving from plastic into glass. That now is a structural trend. We're starting to see that happen in North America, but not necessarily at the same pace. We would see that trend a bit behind in North America, but certainly gaining momentum. If you look throughout the rest of the Americas, there's always been a very solid base of glass and food, and we're seeing that growing as well. We see that trend continuing to grow as we get fitter and we reorganize our assets to take advantage of that. We see food as a growing part of that and a premium part of the portfolio. One last one on the quarterly update. I think the update was 20% of EPS. Now there's a decent size range, and I know there's some tax noise in there, but it would imply kind of, what is it? $0.20-$0.27. $0.20-$0.30. Somewhere in that range is kind of the. We're at $0.25-$0.375? $0.25 or something like that. Right. Yeah. A point of volume is $0.07. It's a sales volume. Are production volumes, inventories, sort of where we would've planned them to be? We're matching the production down. If the volumes are just a little bit soft, we're looking to take seven days of IDS out of the system this year. Okay. We want to make sure that we're bringing that down. Our production has been moving down with it. To the degree that you're losing the contribution and the production component of it, that's the only differential that you're seeing in the quarter. Okay. All right. Maybe I'll stick with sort of the numbers and medium-term outlook. You called out the 1.450. It's a longer putt on that one to use a lot of golf analogies. Can you talk about what has to go right? If we kind of stay in this, we're reading articles about more conflict with the Middle East. I'm assuming the longer that persists, it's going to make it tougher in Europe, from a volume standpoint, consumer affordability, all the things we read about. Anything else that you would add? Yeah. No question, the current environment and the incremental energy, because we'd more or less solved for the 1.50 energy reset. It's the incremental indirect energy piece that's hitting us. Does that make it a steeper climb to 1.45? Yes, it does. Is there less margin for error? Yes. That said, we still see a very clear path. It's down to controlling what we control within that, and we're confident we can do that. The rest is really the external, how the consumer kind of responds. If we were maybe 90% confident in the past, has that dropped a little? Yes, but it's still north of 50% in terms of being able to deliver on that. It is a steeper climb. Okay. Yeah. Just to anchor that and some of the numbers as we kind of go from, even if you just take the midpoint of kind of our guidance this year to the 1.450, you have to see more than a $250 million improvement, right? It's a bigger delta than we originally anticipated. We always earmark at least $150 million for Fit to Win next year. Ideally, we can continue to outperform in that regard to be able to help. That leaves you about $100 million. Looking at the commercials for the business, stable to a little bit of volume growth goes a good way to addressing part of that. Also on the net price environment, if in fact the energy markets moderate or stay flat, and against an environment where you got better capacity utilization, especially over in Europe, that may bode well for a net price positions. It's a little bit positive next year. Those are the kind of the three moving pieces that kind of support the 1.450 from kind of the midpoint of this year. Okay. Also, the PAFs. Keep in mind, on the pricing side, 55% of our business has price adjustment formulas. The elevated inflation we're picking up this year, we're going to be able to pass that on formulaically, leaving another component in the open market, primarily in Europe, against ideally an improving capacity utilization background. I think the Fit to Win piece will be a key part of it. We have 150 in. We've demonstrated an ability to take out roughly 300 a year. When you go through these programs, you build the productivity capability in the business. It tends not to just halve, right? The ability of the business to get after costs actually improves. While we've penciled in 150, we have a higher number in our thinking. Thanks. That should help. Some management teams might call that muscle memory. Yep. Keep working. Yeah. Keep working. In Europe, you mentioned wine being down mid to upper single digits. I'm assuming that's kind of isolated to certain, France, Italy. Is that capacity coming out of the market? We know what you all are doing. Yeah. At least I'm not asking you to speak for your competitors, what's out there in the public domain, such that it can't be repurposed, is kind of a question, and be disruptive? Overall, there's about 8%, I think, of European capacity, which is 1.7, 1.8 million tons have been flagged. We've been clear to the market where we are and what we've taken out. A lot of it is coming out completely, then volume shifting into remaining capacity. That's how we see it. We don't see a lot of repurposing into other categories. I think the challenge for wine is, I think, the industry probably sees it as structural. When you start lifting vines out that have been in the ground for 20, 30, 40, 50 years, then that origin capacity is gone. It's coming out. There's two challenges for wine that are structural, probably unrelated to price or inflation is you've got boomers who are either drinking less as they get older or passing away, so that demand evaporates and not replenishing that at a fast enough pace, particularly with the Gen Z-ers who came of legal drinking age at the start of COVID or during COVID. They just haven't come into wine at the same level. The industry is working through our response to that, but it's going to take a number of years for that to reset. There is the export challenge and the overhang from COVID on wine stocks being in the system, particularly in the U.S. Then you have Chinese demand, which has been cut right back, driven by some consumer challenges in China, but also an edict of no alcohol consumption at party events, at political party events. That has all impacted wine. Of all the categories, I would say the balance in wine is more structural than cyclical, whereas things around beer is probably weighted more toward, spirits certainly weighted more towards cyclical than structural, is how we'd see it. John, maybe one for you on the tariff side. You mentioned maybe some, I guess, USMCA shipping bottles from Mexico into the U.S. Does anything change? I think what is it now, Section 301, that they were trying to go to a more permanent structure on in terms of whether it's Europe or other countries? Yeah, to give you an idea, about 14% of the bottles that we make pass across the U.S. border in one format or another. Okay? 9% of that is primarily Mexico coming into the U.S., all under USMCA. I haven't heard anything that would structurally change that at all. Yeah. You're left with 4% coming in primarily from Europe. That's usually coming in as filled bottles. Okay? This is more about how our end-use categories with their customers fit. I haven't heard anything that's going to meaningfully change it's not a hugely material factor to the business overall. Okay. We get this question a lot. It seems like it's pretty dynamic with where aluminum is, but I'll ask it again. We use 2024 as a baseline for the aluminum content for a can. I know it's one category in which you guys kind of compete head-to-head with another substrate. Mark to market today, it's probably the aluminum content is up $0.06, so a can cost would be up 60% ish. Your guys' cost structure is also not standing still; we can't just. Those guys hedge, you all hedge. As you sit today's earning comment, conversations with customers, are they looking to lean any more or less into glass? I think there was a piece of business that you won here domestically that's been doing well for one of your customers in glass because it's differentiated. Just maybe cost component of it and then conversations with customers in that category. Yeah. I think when we started out on this journey, we mentioned at I-Day that the cost differential between glass and cans in North America was around 35%, which, no matter what the packaging does for the equity of the brand, a lot of consumers say, "I'm just not paying that premium. Sure. Recognizing that is, for us, an unsustainable position and one of the core objectives of Fit to Win was to get our cost base right so that we get within at least 15% of the cost of a can to a bottle differential. I think we're there. Partly driven by our own efforts and partly driven by the rising costs of aluminum. Not yet fully seen in because of the hedging, as we move forward and those hedges roll off, we actually are seeing the cost of glass and cans really tighten up. We're probably at parity in Europe or close to parity, and we're certainly around, probably around the 10% mark, and we are seeing demand for glass-for-beer increasing. We can sell all we can of it right now in North America and indeed Europe. Having said that, tariffs come and go. We've got to be able to get to that level of cost competitiveness on our own structural improvements over time. Does it help in the short term? Absolutely. But mid to longer term, we've got to get there without a tariff situation that could change at any time. I would add, we're actually bringing a furnace back online, that previously closed furnace in the Mexico area, to be able to support the demand growth in North America, given the backdrop of what we're just talking about here. It is translating into orders, and it's translating into different capacity management. On the topic of capacity, I'll call competitiveness, that kind of caught you guys by surprise in the market at the beginning of this year in Europe. Two-part question. Anything change there in terms of, I think things are all, I think, buttoned up on the contracting side. We did pick up an article. It looked like someone was adding a furnace here in North America, which, not our glass, so it's somewhere, I think Pennsylvania. How do you guys think about that? Yeah. I think in Europe we see capacity running at about 90%, 90, 91%. When you look at the announced capacity closures, we'll probably see that tightening up towards year-end, somewhere being 96%, 98%. With regard to pricing last year, the window was extended. There were contracts thought were closed, and then they come back and reopen. There was quite a bit of skirmishing with people looking to fill the capacity. We probably see that position kind of tightening up as that capacity comes out in Europe. Overall, in the Americas, capacity utilization running probably 97%, 98%. Yeah, we saw that furnace come on stream. It's a small addition to what is a very large market. It probably won't make a huge amount of difference to the overall level of capacity utilization in the market. Okay. Free cash flow conversion, we get a lot of questions on that for the packagers in general. This year, you guys have some restructuring costs flowing through. That's right. Can you help us bridge maybe where you're at this year, John, next year, what it looks like in terms of restructuring spend, what it could get to, and then your targets? Is that a 2028 event when we can maybe approach that 40% free cash flow conversion? Well, what we had said is a percent of sales. We view it in the terms of that. We're looking to get towards 5% of sales of cash flow. Where we are right now is clearly in the last year; in this year, we have taken sizable restructuring charges as we take out 14% of the capacity and rebalance our whole network ultimately. To get the high capacity utilization and the right fit of the assets for the demand. Last year we had about $140 million worth of restructuring charges. We think it's about $150 million this year. Next year, we think that's going to trail off into something which is typically normal for business. We're always doing something. Yeah. It's called $25 million-$50 million. There's going to be a meaningful delta in cash flow conversion next year. As we get outside of that. We've also been drawing our inventories down, which is helping out in that regard. We're going to continue to look through that to be able to be a source of cash for the business over time. We've also been taking some production penalties to get us there. A more normalizing demand environment against a better free cash flow conversion on restructuring charges, being really lean on CapEx in the 400s range, in the $400-$450 range. The CP, the tailing off of that restructuring charge should be able to support the target that we have. If we achieve the $1,450 next year, and with those elements that we're talking about and dropping it off, we get to our target. In 2027? That would be a 2027 target, assuming that you get into those. Yeah Get into the targets. Yeah. I think as well, what we outlined at I-Day is the way the business operated in the past, that the supply chain was probably broken across four distinct areas with four leaders and a lot of silo behavior, and a lot of cash leaking out between the silos. What we've done since I-Day is we've brought the whole supply chain together under one leader. Getting our own internal supply chain to work much more effectively cross-functionally and closing those areas of leakage in the business, sitting down with suppliers and doing exactly the same with them and closing out areas of cash leakage by better planning, just working in a better forecasting and working in a more effective way and trapping the cash as opposed to letting it flow. Likewise with customers. There's tremendous opportunity, and we saw tremendous opportunity to tighten up the whole cash cycle with customers as well. Taking a holistic cash position across the supply chain, and we're seeing that come through. We're seeing forecast accuracy improve both to suppliers and to customers, and we're seeing our IDAs come down, and we continue to expect to improve on that as we go forward. There's no reason why this business, given the business model, for want of a better word, can't achieve 5% of revenue as free cash flow. No reason at all why you can't do that. Thank you for that. We approach time. We're at time. Just one last one for you. If you had to pick two folks in the finals for the World Cup? Oh, gosh. Who's it going to be? Who's going to be most beneficial for the company? Well, it needs to be a country with a very large population. It can swing a lot. Unfortunately, Ireland isn't there because we're worse four out of four other countries in terms of that. My money's on England. I think England could go all the way this year, which would be the first time since 1966. There's a son of an Irishman captaining England as well, Harry Kane, who is one of the top goal scorers in Europe this year. Argentina could. Still a lot of fire left in Messi, so and he can change any game. Hopefully, it's going to be a fantastic World Cup, and really looking forward to it. It gets started tomorrow night. Yes. Yeah. We hope there's a lot of celebration in every country over the next couple of weeks. Agreed. Thank you for that. Yeah. Thank you.