Q4 2025 O-I Glass Inc Earnings Call

February 11, 2026

Speaker #1: Hello, everyone, and thank you for joining the O-I Glass full-year and fourth-quarter 2025 earnings conference call. My name is Lucy, and I'll be coordinating your call today.

Operator: Hello, everyone, and thank you for joining the O-I Glass Full Year and Fourth Quarter 2025 Earnings Conference Call. My name is Lucy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. It is now my pleasure to hand over to your host, Chris Manuel, Vice President of Investor Relations, to begin. Please go ahead.

Speaker #1: During the presentation, you can register a question by pressing star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2.

Speaker #1: It is now my pleasure to hand over to your host, Chris Manuel, Vice President of Investor Relations, to begin. Please go ahead.

Speaker #1: It is now my pleasure to hand over to your host, Chris Manuel, Vice President of Investor Relations, to begin. Please go ahead. Thank you,

Chris Manuel: Thank you, Lucy, and welcome everyone to the O-I Glass Q4 and year-end conference call. Our discussion today will be led by Gordon Hardie, our CEO, and John Haudrich, our CFO. Following prepared remarks, we will host a Q&A session. Presentation materials for this call are available on the company's website. Please review the safe harbor comments and disclosure of our use of non-GAAP financial measures included in those materials. I'd now like to turn the call over to Gordon, who will start on slide 3.

Speaker #2: Lucy, and welcome everyone to the O-I Glass fourth-quarter and year-end conference call. Our discussion today will be led by Gordon Hardie, our CEO, and John Haudrich, our CFO.

Speaker #2: Following prepared remarks, we will host a Q&A session. Presentation materials for this call are available in the company's website. Please review the Safe Harbor comments and disclosure of our use of non-GAAP financial measures, included in those materials.

Speaker #2: I'd now like to turn the call over to Gordon, who'll start on slide.

Speaker #2: 3. Good morning, everyone,

Gordon Hardie: Good morning, everyone, and thank you for your interest in O-I Glass. Today, we will review our full year and fourth quarter 2025 results, discuss recent business trends, and provide an update on our strategic initiatives. We'll also outline our 2026 outlook and progress towards our 2027 Investor Day targets. Before we begin, I want to recognize the dedication of the entire OI team. Your commitment and execution continue to strengthen our performance. Last night, we reported full-year adjusted earnings of $1.60 per share, supported by stable top line, adjusted earnings nearly doubled versus 2024, and free cash flow rebounded to $168 million. These results reflect meaningful progress against our strategic objectives and were in line with our most recent upgraded guidance.

Gordon Hardie: Good morning, everyone, and thank you for your interest in O-I Glass. Today, we will review our full year and Q4 2025 results, discuss recent business trends, and provide an update on our strategic initiatives. We'll also outline our 2026 outlook and progress towards our 2027 Investor Day targets. Before we begin, I want to recognize the dedication of the entire OI team. Your commitment and execution continue to strengthen our performance. Last night, we reported full-year adjusted earnings of $1.60 per share, supported by stable top line, adjusted earnings nearly doubled versus 2024, and free cash flow rebounded to $168 million. These results reflect meaningful progress against our strategic objectives and were in line with our most recent upgraded guidance.

Speaker #3: And thank you for your interest in O-I Glass. Today, we will review our full-year and fourth-quarter 2025 results, discuss recent business trends, and provide an update on our strategic initiatives.

Speaker #3: We'll also outline our 2026 outlook and 2027 Investor Day progress towards our targets. Before we begin, I want to recognize the dedication of the entire O-I team.

Speaker #3: Your commitment and execution continue to strengthen our performance. Last night, we reported full-year adjusted earnings of $1.60 per share. Supported by a stable top line adjusted earnings nearly doubled versus 2024, and free cash flow rebounded to $168 million.

Speaker #3: These results reflect meaningful progress against our strategic objectives and were in line with our most recent upgraded guidance. A key contributor was the continued outperformance of Fit to Win, which delivered 300 million dollars of benefits in 2025 and more than offset ongoing macroeconomic pressures.

Gordon Hardie: A key contributor was the continued outperformance of Fit to Win, which delivered $300 million of benefits in 2025 and more than offset ongoing macroeconomic pressures. We exited the year with positive momentum as Q4 adjusted earnings increased meaningfully versus the prior year period. Looking ahead, we expect continued progress in 2026, including another strong year of Fit to Win execution, even as market conditions remain challenging. We are reaffirming our 2027 Investor Day financial targets. Despite challenging end markets, we have increased our cumulative Fit to Win benefit target, reinforcing our confidence in achieving our 2027 Adjusted EBITDA goal. As a result, we expect to continue improving earnings, expanding Economic Profit, strengthening Free Cash Flow, and delivering sustainable long-term value for shareholders. John and I will provide more detail on recent performance and our outlook.

Speaker #3: We exited the year with positive momentum, as fourth-quarter adjusted earnings increased meaningfully versus the prior-year period. Looking ahead, we expect continued progress in 2026, including another strong year of Fit to Win execution, even as market conditions remain challenging.

Speaker #3: We are reaffirming our 2027 Investor Day financial targets. Despite challenging end markets, we have increased our cumulative Fit to Win benefit target, reinforcing our confidence in achieving our 2027 adjusted EBITDA goal.

Speaker #3: As a result, we expect to continue improving earnings, expanding economic profit, strengthening free cash flow, and delivering sustainable long-term value for shareholders. John and I will provide more detail on recent performance and our outlook.

Speaker #3: Let's now turn to page 4 to recap our strong full-year 2025 results. As you can see, our performance improved across our key financial metrics.

Gordon Hardie: Let's now turn to page 4 to recap our strong full year 2025 results. As you can see, our performance improved across our key financial metrics. We created intrinsic value with Economic Spread expanding by 200 basis points, driven by stronger earnings, more disciplined capital allocation, and continued network optimization. As intended, we maintained a stable top line. Average selling prices were steady, while favorable FX largely offset a decline in volumes. Our shipments and tons were down 2.5%, amid a 3% decline in consumer consumption. A few insights to add. On a unit basis, our shipments were down only 1.5%, reflecting our deliberate shift towards lighter weight and smaller format bottles with strong margins. A major project startup in Europe impacted shipments nearly 1%.

Speaker #3: We created intrinsic value with economic spread expanding by 200 basis points, driven by stronger earnings, more disciplined capital allocation, and continued network optimization. As intended, we maintained a stable top line.

Speaker #3: Average selling prices were steady, while favorable FX largely offset a decline in volumes. Our shipments and tons were down 2.5% amid a 3% decline in consumer consumption.

Speaker #3: A few insights to add: On a unit basis, our shipments were down only 1.5%, reflecting our deliberate shift towards lighter-weight and smaller-format bottles with strong margins.

Speaker #3: A major project startup in Europe impacted shipments nearly 1%, and finally, we capitalized on emerging opportunities in pockets of growth as higher-value categories such as premium spirits, food, NABs, and RTDs outperformed trends in mainstream beer and wine.

Gordon Hardie: And finally, we capitalized on emerging opportunities and pockets of growth as higher value categories, such as premium spirits, food, NABs, and RTDs, outperformed trends in mainstream beer and wine. So we shifted our mix about 1% towards a higher quality book of business. Overall, we believe OI maintained or modestly improved market share as we continue to upgrade our business portfolio. Adjusted EBITDA increased 11%, with margins expanding 220 basis points as Fit to Win benefits more than offset modest pressure from net price and volumes. Adjusted EPS nearly doubled, driven by stronger operating performance and a lower effective tax rate. Free cash flow improved by approximately $300 million, supported by higher adjusted earnings, favorable working capital management, and a 30% reduction in capital expenditures.

Speaker #3: So we shifted our mix about 1% towards a higher-quality book of business. Overall, we believe O-I maintained our modestly improved market share as we continue to upgrade our business portfolio.

Speaker #3: Adjusted EBITDA increased 11%, with margins expanding 220 basis points as Fit to Win benefits more than offset modest pressure from net price and volumes.

Speaker #3: Adjusted EPS nearly doubled, driven by stronger operating performance and a lower effective tax rate. Free cash flow improved by approximately 300 million dollars, supported by higher adjusted earnings, favorable working capital management, and a 30% reduction in capital expenditures.

Speaker #3: This improvement was achieved despite $128 million of restructuring payments, which are expected to taper after 2026. Finally, leverage improved by nearly half a turn to 3.5, and we remain on track to reach approximately 2.5 leverage by year-end 2027.

Gordon Hardie: This improvement was achieved despite $128 million of restructuring payments, which are expected to taper after 2026. Finally, leverage improved by nearly half a turn to 3.5, and we remain on track to reach approximately 2.5 leverage by year-end 2027. Stepping back, we continue to operate in a challenging environment as the value chain works through the long tail of post-COVID normalization. Against this backdrop, we're taking a highly disciplined approach, enhancing our portfolio, executing Fit to Win, and maintaining rigorous capital allocation, which positions us well as markets eventually recover. The common thread behind these results is execution, particularly Fit to Win, which we will now discuss on page 5. Fit to Win is a core value driver for our business. The effort continues to deliver significant cost reductions while optimizing our network and value chain.

Speaker #3: Stepping back, we continue to operate in a challenging environment as the value chain works through the long tail of post-COVID normalization. Against this backdrop, we're taking a highly disciplined approach and enhancing our portfolio, executing Fit to Win, and maintaining rigorous capital allocation, which positions us well as markets eventually recover.

Speaker #3: The common thread behind these results is execution, particularly Fit to Win, which we will now discuss on page 5. Fit to Win is a core value driver for our business.

Speaker #3: The effort continues to deliver significant cost reductions while optimizing our network and value chain. Cost discipline is not just defensive. Our cost mindset and discipline strengthens our competitive position, which is a critical engine to enable future profitable growth.

Gordon Hardie: Cost discipline is not just defensive. Our cost mindset and discipline strengthens our competitive position, which is a critical engine to enable future profitable growth. In 2025, Fit to Win delivered $300 million of savings, exceeding our original target of at least $250 million. Momentum remained strong in Q4, with benefits of approximately $80 million. For 2026, we expect at least $275 million of additional savings. Given this progress, we've increased our 3-year cumulative Fit to Win target to at least $750 million, up from $650 million. Let's discuss progress across the different phases of the initiative. Phase A, focused on SG&A streamlining and initial network org optimization, generated approximately $180 million of benefits in 2025.

Speaker #3: In 2025, Fit to Win delivered 300 million dollars of savings, exceeding our original target of at least 250 million. Momentum remains strong in the fourth quarter, with benefits of approximately 80 million dollars.

Speaker #3: For 2026, we expect at least 275 million of additional savings. Given this progress, we've increased our three-year cumulative Fit to Win target to at least 750 million up from 650 million.

Speaker #3: Let's discuss progress across the different phases of the initiative. Phase A focused on SG&A streamlining and initial network optimization. Generated approximately $180 million of benefits in 2025.

Speaker #3: We expect an additional 135 million dollars in 2026, as we advance later stage SG&A initiatives and finalize previously announced elimination of approximately 13% of excess capacity by mid-2026.

Gordon Hardie: We expect an additional $135 million in 2026, as we advance later-stage SG&A initiatives and finalize previously announced elimination of approximately 13% of excess capacity by mid-2026, with remaining actions primarily in Europe. Phase B, which targets the end-to-end value chain transformation, delivered approximately $120 million of benefits in 2025, ahead of expectations. We anticipate at least $140 million of savings in 2026 as we progress through the rollout of total organization effectiveness across the plant network, with full implementation expected by year-end. We're also accelerating procurement and energy initiatives to drive incremental savings. Importantly, the upside opportunities in Phase B drove our increased 2027 target.

Speaker #3: With remaining actions primarily in Europe. Phase B, which targets the end-to-end value chain transformation, delivered approximately 120 million dollars of benefits in 2025, ahead of expectations.

Speaker #3: We anticipate at least $140 million of savings in 2026, as we progress through the rollout of total organization effectiveness across the plant network, with full implementation expected by year-end.

Speaker #3: We're also accelerating procurement and energy initiatives to drive incremental savings. Importantly, the upside opportunities in Phase B drove our increased 2027 target. Overall, Fit to Win is delivering faster and stronger results than planned, notably in our Phase B projects.

Gordon Hardie: Overall, Fit to Win is delivering faster and stronger results than planned, notably in our Phase B projects, and we remain fully committed to achieving our 2026 and updated 2027 targets. With that, I'll turn it over to John to review Q4 performance and our 2026 outlook, starting on page 6.

Speaker #3: And we remain fully committed to achieving our 2026 and updated 2027 targets. With that, I'll turn it over to John to review fourth-quarter performance and our 2026 outlook, starting on page 6.

Speaker #2: Thank you, Gordon, and good morning, everyone. I'll start with a review of our fourth-quarter performance, as Gordon has already covered full-year 2025 results. O-I delivered a solid fourth quarter, with higher adjusted earnings supported by a stable top line.

John Haudrich: Thank you, Gordon, and good morning, everyone. I'll start with a review of our fourth quarter performance, as Gordon has already covered full year 2025 results. OI delivered a solid fourth quarter with higher adjusted earnings, supported by a stable top line. Net sales were approximately $1.5 billion, and average selling prices were essentially flat, while favorable FX largely offset a mid-single-digit decline in volumes. Adjusted earnings rebounded meaningfully, improving from a net loss in the prior year to $0.20 per share. This improvement was driven by strong Fit to Win benefits, higher production levels, and a lower effective tax rate, which more than offset modest net price pressure and softer volumes. Overall, we delivered another solid quarterly performance, reflecting disciplined execution, continued cost reduction, and sustained momentum from our strategic initiatives.

John Haudrich: Thank you, Gordon, and good morning, everyone. I'll start with a review of our Q4 performance, as Gordon has already covered full year 2025 results. OI delivered a solid Q4 with higher adjusted earnings, supported by a stable top line. Net sales were approximately $1.5 billion, and average selling prices were essentially flat, while favorable FX largely offset a mid-single-digit decline in volumes. Adjusted earnings rebounded meaningfully, improving from a net loss in the prior year to $0.20 per share. This improvement was driven by strong Fit to Win benefits, higher production levels, and a lower effective tax rate, which more than offset modest net price pressure and softer volumes. Overall, we delivered another solid quarterly performance, reflecting disciplined execution, continued cost reduction, and sustained momentum from our strategic initiatives.

Speaker #2: Net sales were approximately $1.5 billion, and average selling prices were essentially flat, while favorable FX largely offset a mid-single-digit decline in volumes. Adjusted earnings rebounded meaningfully, improving from a net loss in the prior year to $0.20 per share.

Speaker #2: This improvement was driven by strong Fit to Win benefits, higher production levels, and a lower effective tax rate, which more than offset modest net price pressure and softer volumes.

Speaker #2: Overall, we delivered another solid quarterly performance, reflecting disciplined execution, continued cost reduction, and sustained momentum from our strategic initiatives. Now let's turn to page 7 to review segment operating profit.

John Haudrich: Now, let's turn to page 7 to review segment operating profit. Momentum remained strong in Q4, with segment operating profit increasing 30% to $177 million, and margins expanding 280 basis points. In the Americas, segment operating profit rose 40%, driven by higher net price and continued Fit to Win benefits. Volumes declined 10%, which was concentrated in beer and spirits, while other categories like food and NAB were more stable. Based on market data, about half of this decline was due to lower consumption, given ongoing affordability challenges, change in consumer behavior affecting many markets, and weather-related disruption in Brazil. Evolving US trade and immigration policies also impacted consumption and drove inventory adjustments across the value chain in the US and Mexico, which also weighed on shipments.

Speaker #2: Momentum remains strong in the fourth quarter, with segment operating profit increasing 30% to 177 million dollars, and margins expanding 280 basis points. In the Americas, segment operating profit rose 40%, driven by higher net price and continued Fit to Win benefits.

Speaker #2: Volumes declined 10%, which was concentrated in beer and spirits, while other categories like food and NAB were more stable. Based on market data, about half of this decline was due to lower consumption given ongoing affordability challenges, changes in consumer behavior affecting many markets, and weather-related disruption in Brazil.

Speaker #2: Evolving U.S. trade and immigration policies also impacted consumption and drove inventory adjustments across the value chain in the U.S. and Mexico. Which also weighed on shipments.

Speaker #2: Additionally, results benefited from a one-time $6 million insurance settlement related to a prior-year event. In Europe, segment operating profit increased 8%, reflecting contributions from strategic initiatives and higher production following last year's inventory reductions.

John Haudrich: Additionally, results benefited from a one-time $6 million insurance settlement related to a prior year event. In Europe, segment operating profit increased 8%, reflecting contributions from strategic initiatives and higher production following last year's inventory reductions. Net price was a headwind, and volumes declined 3.5%. Based on market data, consumption was down low single digits, while shipments were also impacted by a shift in order patterns and other factors at a few customers. Shipments were stable or slightly higher in wine and food, while beer and spirits remained soft. Trends were weaker in the UK and Italy, but stronger across other markets. Importantly, all actions to eliminate excess capacity are expected to be completed in the first half of 2026, materially improving Europe's operating trajectory. Overall, segment operating profit increased solidly, demonstrating disciplined execution and the continued success of our initiatives.

Speaker #2: Net price was a headwind, and volumes declined 3.5%. Based on market data, consumption was down low single digits, while shipments were also impacted by a shift in order patterns and other factors at a few customers.

Speaker #2: Shipments were stable or slightly higher in wine and food, while beer and spirits remained soft. Trends were weaker in the U.K. and Italy, but stronger across other markets.

Speaker #2: Importantly, all actions to eliminate excess capacity are expected to be completed in the first half of 2026, materially improving Europe's operating trajectory. Overall, segment operating profit increased solidly, demonstrating disciplined execution and a continued success of our initiatives.

Speaker #2: Taken together, these trends inform our expectations for 2026, which we'll discuss on page 8. Looking ahead, we expect to build on our momentum and deliver improved results in 2026.

John Haudrich: Taken together, these trends inform our expectations for 2026, which I'll discuss on page 8. Looking ahead, we expect to build on our momentum and deliver improved results in 2026. The top line should be stable or modestly higher, supported by slightly better gross price and favorable FX, as sales volumes are expected to be flat or slightly down. As markets gradually stabilize, we will continue to optimize our portfolio, including exiting unprofitable business, to improve Economic Profit while maintaining or growing market share. We anticipate Adjusted EBITDA of $1.25 to 1.3 billion, representing up to 7% growth versus 2025. This includes an estimated $150 million energy cost step-up, as favorable European energy contracts expired at year-end.

Speaker #2: The top line should be stable, or modestly higher, supported by slightly better gross price and favorable FX, as sales volumes are expected to be flat or slightly down.

Speaker #2: As markets gradually stabilize, we will continue to optimize our portfolio including exiting unprofitable business to improve economic profit, while maintaining or growing market share.

Speaker #2: We anticipate adjusted EBITDA of $1.25 to $1.3 billion, representing up to 7% growth versus 2025. This includes an estimated $150 million energy cost step-up as favorable European energy contracts expire through year-end.

Speaker #2: Excluding this impact, adjusted EBITDA would increase by up to 22%, highlighting the strength of our underlying operating improvements. As Gordon noted, we expect to benefit from at least $275 million of incremental Fit to Win actions, which should support improved performance despite modestly lower net price and flat or slightly lower volumes.

John Haudrich: Excluding this impact, Adjusted EBITDA would increase by up to 22%, highlighting the strength of our underlying operating improvements. As Gordon noted, we expect to benefit from at least $275 million of incremental Fit to Win actions, which should support improved performance despite modestly lower net price and flat or slower, slightly lower volumes. We project adjusted EPS of $1.65 to 1.90, representing up to 19% growth, assuming a tax rate of 30 to 33%. Free Cash Flow is expected to approximate $200 million, reflecting higher earnings, partially offset by slightly higher CapEx, which should approximate $450 million, and about $150 million of restructuring cash costs, which should decline after 2026.

Speaker #2: We project adjusted EPS of $1.65 to $1.90, representing up to 19% growth, assuming a tax rate of 30% to 33%. Free cash flow is expected to approximate $200 million, reflecting higher earnings partially offset by slightly higher CAPEX, which should approximate $450 million, and about $150 million of restructuring cash costs, which should decline after 2026.

Speaker #2: The first quarter will be our most challenging year-over-year comparison due to tariff pre-buying, a one-time insurance recovery in the prior year, and a seasonally higher tax rate.

John Haudrich: Q1 will be our most challenging year-over-year comparison due to tariff pre-buying, a one-time insurance recovery in the prior year, and a seasonally higher tax rate. So volumes will likely be down mid to high single digits, given tough comps and sluggish demand. Over the balance of the year, results should improve as comparisons ease and Fit to Win benefits continue to ramp, particularly as European capacity actions and TO implementation progresses. Additional guidance details are included in the appendix. I'll now turn it back to Gordon to discuss progress towards the 2027 targets and concluding remarks starting on page 9.

Speaker #2: So volumes will likely be down mid to high single digits given tough comps and sluggish demand. Over the balance of the year, results should improve as comparisons ease and Fit to Win benefits continue to ramp, particularly as European capacity actions and TO implementation progresses.

Speaker #2: Additional guidance details are included in the appendix. I'll now turn it back to Gordon to discuss progress towards the 2027 targets and concluding remarks, starting on page...

Speaker #2: 9. Thanks,

Gordon Hardie: Thanks, John. Reflecting on our solid momentum, we are reaffirming our 2027 investor-related targets. As you can see, we are making solid progress across our key objectives. Adjusted EBITDA and margins are improving, Fit to Win is accelerating, free cash flow conversion is improving, our balance sheet continues to strengthen, and our economic spread has rebounded. Importantly, the business is moving in the right direction across all dimensions. Let's conclude on page 10. In summary, we are making solid progress in building a stronger foundation for the future. While conditions remain challenging, we are focused on improving competitiveness and preparing for volume recovery beyond 2026. Importantly, Fit to Win is a new disciplined management system that drives consistent performance improvement regardless of market headwinds. As a result, margins and adjusted earnings are rising, free cash flow is improving, and our balance sheet continues to strengthen.

Speaker #3: John. Reflecting on our solid momentum, we are reaffirming our 2027 investor-related targets. As you can see, we are making solid progress across our key objectives, adjusted EBITDA and margins are improving, Fit to Win is accelerating, free cash flow conversion is improving, our balance sheet continues to strengthen, and our economic spread has rebounded.

Speaker #3: Importantly, the business is moving in the right direction across all dimensions. Let's conclude on page 10. In summary, we are making solid progress in building a stronger foundation for the future, while conditions remain challenging, we are focused on improving competitiveness and preparing for volume recovery beyond 2026.

Speaker #3: Importantly, Fit to Win is a new discipline management system that drives consistent performance improvement regardless of market headwinds. As a result, margins and adjusted earnings are rising, free cash flow is improving, and our balance sheet continues to strengthen.

Speaker #3: Most importantly, execution is strong, and momentum is building. Thank you for your continued support. We are now happy to take any questions.

Gordon Hardie: Most importantly, execution is strong and momentum is building. Thank you for your continued support. We are now happy to take any questions.

Speaker #1: Thank you. Two last good questions, please press start followed by one on your telephone keypad now. If you change your mind, please press start followed by two.

Operator: Thank you. 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. When preparing to ask your question, please ensure your device is unmuted locally. We kindly ask participants to limit their questions to one question and one follow-up question, and re-queue for any further. The first question comes from Ghansham Panjabi of Baird. Your line is now open. Please go ahead.

Speaker #1: When preparing to ask your question, please ensure your device is unmuted locally. We kindly ask participants to limit their questions to one question and one follow-up question, and requeue for any further questions.

Speaker #1: The first question comes from Ganges in Punjabi of Baird. Your line is now open. Please go ahead.

Speaker #1: ahead. Yeah,

Ghansham Panjabi: Yeah, thanks, guys. Thanks, operator. Good morning, everybody. Hey, Gordon, you know-

Speaker #4: Thanks, guys. Thanks for operating. Good morning, everybody. Hey Gordon, just going back to the fourth quarter and the 10% volume decline in the Americas, how much of that do you attribute to just your own inventory adjustments?

Gordon Hardie: Good morning, Ghansham.

Ghansham Panjabi: Just going back to the Q4 and the 10% volume decline in the Americas, how much of that do you attribute towards, you know, just year-end inventory adjustments? Obviously, it was a very tough year for many of your end markets throughout 2025, and I assume there was a fair amount of cleanout going into 2026. So just curious as to your thoughts. And then how are volumes in the region performing thus far in 2026? I know you have a tough comp from what you mentioned in terms of the pre-buy, et cetera.

Speaker #4: Obviously, it was a very tough year for many of you in markets throughout 2025, and I assume there was a fair amount of clean-out going into 2026.

Speaker #4: So, just curious as to your thoughts, and then how are volumes in the region performing thus far in 2026? I know you have a tough comp from what you mentioned in terms of the pre-buy, etc.

Speaker #3: Yeah. Thanks, Gancham. We continue to see sort of inventory adjustment in North America, particularly in spirits. And in beer, particularly on beer originating from Mexico, given some of the changes in consumer behavior.

Gordon Hardie: Yeah. Thanks, Ghansham. You know, we continue to see sort of inventory adjustment in North America, particularly in spirits, and in beer, particularly on beer originating from Mexico, given some of the changes in consumer behavior. So, you know, we would say, you know, somewhere up to maybe half of that was an industry or inventory adjustment. So, they're the two main drivers of that. There was also a bit of destocking in wine, but I think we believe that's largely fear. So the big areas have been beer and spirits. We continue to see fairly high stocks in spirits.

Speaker #3: So, we would say somewhere up to maybe half of that was in industry or inventory adjustments. So, they’re the two main drivers of that.

Speaker #3: There was also a bit of destocking in wine, but I hear. So the big areas have—think we believe that's largely been beer and spirits.

Speaker #3: We continue to see fairly high stocks in spirits. I think the inventory to sales ratio is still running above the 1.7, 1.8, which is historically high versus the long-run average of above 1.3.

Gordon Hardie: You know, I think the inventory to sales ratio is still running above the 1.7, 1.8, which is historically high versus the long run average of above 1.3. So it continues to be a challenge. However, you know, as we laid out, our segment profit, you know, is continues to improve in the Americas as we drive Fit to Win, and that helps us overcome these kind of short-term inventory adjustments. We expect those to continue in the Q1, you know, given the high level of stock in North America.

Speaker #3: So it continues to be a challenge. However, as we laid out, our segment profit is continuing to improve in the Americas as we drive Fit to Win and that helps us overcome these kind of short-term inventory adjustments.

Speaker #3: We expect those to continue in the first quarter. Given the high level of stock in North America—but we continue, then, on the other hand, to drive Fit to Win and also eke out pockets of growth across food, across NAB, particularly waters, which is particularly strong for us in North America.

Gordon Hardie: But, you know, we continue then, on the other hand, to, you know, to drive Fit to Win and also eke out, you know, pockets of growth across food, across NAB, particularly waters, is particularly strong for us in North America. So, yeah, that's how we see the first quarter in North America, Ghansham.

Speaker #3: So yeah, that's how we see the first quarter in North America.

Speaker #3: Gancham. Got it.

Ghansham Panjabi: Got it. Thanks for that. And then, as it relates to the, you know, the expanded savings, you know, $750 versus $650+ before, is that just a function of just the volumes being lower than you thought, and so you're taking additional actions? And then just one final clarification on the energy headwind of $150 million for 2026. Is that just a one and done? You know, will it just be specific to 2026, or will there be any sort of lingering impact, 2027 onwards? Thanks so much.

Speaker #4: Thanks for that. And then, as it relates to the expanded savings—$750 million versus $650 million plus before—is that just a function of the volumes being lower than you thought, and so you're taking additional actions?

Speaker #4: And then just one final clarification on the energy headwind of $150 million for 2026. Is that just a one-and-done? Will it just be specific to '26, or will there be any sort of lingering impact in 2027 onwards?

Speaker #4: Thanks so

Speaker #4: much. Yeah.

Gordon Hardie: Yeah, I'll take the first part. So, would you take the energy question?

Speaker #3: I think the first part, so would you

Speaker #3: take the energy question? Yeah, I'll take the energy question.

John Haudrich: Yeah, I'll take the energy. Yeah, let me just start with that one. On the energy side, yes, the $150 million energy reset is pretty much a kind of a one and done. You know, the contracts that we had that were multiyear contracts that expired at the end of the year, were rates before the Ukraine war with Russia. Russia war with Ukraine, I should say. And then, and then, which were at low rates. Those expired at the end of 2025. We have since been basically layering in contracts and hedges over the course of the last year, so we're substantially contracted on our energy exposure in 2026 in Europe.

Speaker #5: Yeah, let me just start with that one. On the energy side, yes, the $150 million energy reset is pretty much a kind of a one-and-done.

Speaker #5: The contracts that we had that were multi-year contracts that expired at the end of the year were at rates before the Ukraine war with Russia.

Speaker #5: Russia war with Ukraine, I should say. And then, which were at low rates, those expired at the end of '25. We have since been basically layering in contracts and hedges over the course of the last year.

Speaker #5: So we're substantially contracted on our energy exposure in 2026 in Europe, so we're confident about the $150 million, which is substantially at prices below current PTF, but still a ramp-up from where we were in the—

John Haudrich: So we're confident about the $150 million, which is substantially at prices below current TTF, but still a ramp-up from where we were in the past.

Speaker #5: past. And Gancham, with regard

Gordon Hardie: Ghansham, with regard to, you know, the additional savings, it really is not because of the volume. I think we pointed out, you know, in earlier calls, and particularly on Investor Day, $650 was the original target, and obviously we had a bigger bucket to go after. As the savings came faster than planned, you know, almost 50% of the savings in the first 15 months, and the organization's ability to, you know, go after and execute those savings, then we were able to get after, you know, some of the stuff that we saw embedded but didn't have a clear line of sight to, say, a year ago. Now coming to fruition and being able to execute that.

Speaker #3: To the additional savings, it really is not because of the volume. I think we pointed out in earlier calls, and particularly on Investor Day, $650 million was the original target, and obviously we had a bigger bucket to go after.

Speaker #3: As the savings came faster than planned—almost 50% of the savings in the first 15 months—and the organization's ability to go after and execute those savings, then we're able to get after some of the stuff that we saw embedded but didn't have a clear line of sight to, say, a year ago.

Speaker #3: Now coming to fruition and being able to execute that. That obviously helps offset the volume, but it's not because of the volume, so to speak.

Gordon Hardie: That obviously helps offset the volume, but it's not because of the volume, so to speak. I think they're separate issues, but certainly it underpins our confidence in delivering our 2027 number.

Speaker #3: I think there are separate issues, but certainly it underpins our confidence in delivering our 2027 number.

Speaker #4: Okay, perfect. Thanks for that.

John Haudrich: Okay, perfect. Thanks for that.

Speaker #3: Thanks,

Gordon Hardie: Thanks, Ganchu.

Speaker #1: The next question is from George Safos of Bank of America. Your line is now open. Please go ahead.

Operator: The next question is from George Staphos of Bank of America. Your line is now open. Please go ahead.

Speaker #4: Hi, good morning. This is Kyle Benvenuto stepping in for George. Regarding the flat to slightly down volume outlook, does this include the impact of exiting unprofitable business, or is that excluded?

Kyle Benvenuto: Hi, good morning. This is Kyle Benvenuto, stepping in for George. Regarding the flat to slightly down volume outlook, does this include the impact of exiting unprofitable business, or is that excluded? And what is the volume impact associated with walking away from that business? Thank you.

Speaker #4: And what is the volume impact associated with walking away from that business? Thank

Speaker #4: you. Yeah, I would say,

John Haudrich: Yeah, I would say, Kyle, yeah, thanks for the question. The outlook for 2026, where we say flat to slightly down, does incorporate our mix management efforts, which also includes our efforts to improve our premium and mix of business, grow market share in this area, but also exiting unprofitable negative EP business. So for example, if you go back to our Investor Day over about a, about a year ago or so, we had said that there was about 4% of our total volume that was deeply negative EP, and we wanted to address that. We want to address it either by raising prices in those books of business or exiting them. And over this last year, we probably saw about a 1% movement in the, in that book, and we expect to continue to chip away at that.

Speaker #5: Kyle, yeah, thanks for the question. The outlook for 2026, where we say flat to slightly down, does incorporate our mix management efforts, which also includes our efforts to improve our premium and mix of business, grow market share in this area, but also exiting unprofitable, negative EP business.

Speaker #5: So for example, if you go back to our Investor Day, over about a year ago or so, we had said that there was about 4% of our total volume that was deeply negative EP and we wanted to address that.

Speaker #5: We want to address that either by raising prices in those books of business or exiting them. And over this last year, we probably saw about a 1% movement in that book, and we expect to continue to chip away at that.

Speaker #5: And so, yeah, that is included in that outlook for the next year. So maybe there’s another 1% or so type of movement as we continue to mix-manage that.

John Haudrich: And so, yeah, that is included in that outlook for the next year or so. So maybe there's another 1% or so type of movement as we continue to mix manage that.

Speaker #4: Thank you. And then, just to follow up, Fit to Win was designed to lower your cost position and open up doors to new volume opportunities.

Kyle Benvenuto: Thank you. And then just to follow up, for the Fit to Win was designed to lower your cost position and open up doors to new volume opportunities. Why wasn't that sufficient to retain this volume? And thank you. I'll pass it over after that.

Speaker #4: Why wasn't that sufficient to retain this volume? And thank you. I'll pass it over after that.

Speaker #3: Yeah, what I might do if you look at the volumes probably don't 2.8% and I might unpack some of that to give you maybe some insight as a once-off insight at your end.

Gordon Hardie: Yeah. Well, what I might do if you look at the, you know, the volumes probably down, you know, 2.8%, and I might unpack some of that to give you maybe some insight as a once-off insight at year-end. But if you look at our total volume, you know, off about 2.8%, within that, there was, you know, directionally about 1 to 1.5% sort of share gain that translated into, you know, 1.5% volume. We also had some, you know, restocking in certain regions that probably added about another 1 to 1.5%.

Speaker #3: But if you look at our total volume off about 2.8%, within that, there was directionally about 1 to 1 and a half percent sort of share gain that translated into 1 and a half percent volume.

Speaker #3: We also had some restocking in certain regions that probably added about another 1 to 1 and a half percent. And then on the minus side, we had some customer events where customers were managing their inventory taking some capacity down in the short term.

Gordon Hardie: And then on the minus side, you know, we had some customer events where customers were managing their inventory, you know, taking some capacity down in the short term. That was about a decline of about 1.5%. You know, we mentioned a start-up of a fairly large capital project we had in the region. That, and maybe some furnace repairs we had during the year, that was about 1%. So when you net that off, that nets to about 2.5%, but within that, we had, you know, we think somewhere in the region, about a 1.5% growth in volume. And that was high quality, high EP growth.

Speaker #3: That was about a decline of about 1.5 percent. We mentioned a startup of a fairly large capital project we had in the region.

Speaker #3: That and maybe some furnace repairs we had during the year. That was about 1%. So when you net that off, that nets to about 2 and a half percent, but within that, we had we think somewhere in the region about a 1 and a half percent growth in volume and that was high quality, high EP growth.

Gordon Hardie: So we are seeing growth start to come through, but it is being offset by other events in the market.

Speaker #3: So, we are seeing growth start to come through, but it has been offset by other events in the...

Gordon Hardie: So we are seeing growth start to come through, but it is being offset by other events in the market.

Speaker #3: market. Yeah, and to build on

John Haudrich: Yeah, and to build on that, what I would say is we really wanted to take a very disciplined approach in the marketplace. If you take a look at, given the challenges in the macro environment. You know, we held the top line steady, which was exactly what we wanted to achieve. And you look at that, hey, net price was basically kind of flat in the marketplace. Our volumes are down a couple percent. Given the context of the market, we think that is good discipline in execution. And really, the concept of growing, you know, notwithstanding the mix management and everything that's going on right now, is really kind of our horizon two effort that we're working on.

Speaker #5: that, what I would say is we really wanted to take a very disciplined approach in the marketplace. If you take a look at given the challenges in the macro environment, we held the top line steady, which was exactly what we wanted to achieve.

Speaker #5: And you look at that and, hey, net price was basically kind of flat in the marketplace. Volumes were down a couple percent. Given the context of the market, we think that that is good discipline in execution.

Speaker #5: And really the concept of growing notwithstanding the mixed management and everything that's going on right now is really kind of our horizon to effort that we're working on.

Speaker #5: We're building the system for that right now, and we're finding those pockets of growth, as Gordon alluded to in the commentary. We're starting to execute on them.

John Haudrich: We're building the system for that right now, and we're finding those pockets of growth, as Gordon alluded to in the commentary. We're starting to execute on them. Some of them take time to be able to translate into actually demonstrated volumes and things like that. But, you know, we're working on things like design and innovation, leveraging our record, you know, our industry high net promoter score with our customers to find those opportunities for growth. But we're just starting that journey to start to leverage Fit to Win as we go forward.

Speaker #5: Some of them take time to be able to translate into actually demonstrating volumes and things like that. But we're working on things like design and innovation, leveraging our record—or industry-high—net promoter score with our customers to find those opportunities for growth.

Speaker #5: But we're just starting that journey. To start to leverage Fit to Win as we go forward.

Speaker #4: Yeah, and just to build on that, Kyle, I think—

Gordon Hardie: Yeah. And just to build on that, Kyle, I think we mentioned in, in our Investor Day and in subsequent calls that we really had mapped all, all of the categories and segments across all the markets in which we compete. And we, we now have a very, very clear view on where the pockets of growth are, where we have a right to win. And we are now adjusting or, or revamping our go-to-market model across all of our sales force in, in all of the markets. And that's just starting to, to, to hit and be rolled out. We, we are- and we're, we're having some wins on that.

Speaker #3: We mentioned in our Investor Day, and then subsequent calls, that we really had mapped all of the categories and segments across all the markets in which we compete.

Speaker #3: And we know how very, very clear a view we have on where the pockets of growth are, where we have a right to win. And we are now adjusting or revamping our go-to-market model.

Speaker #3: Across all of our sales force in all of the markets—and that's just starting to hit and be rolled out. We're having some wins on that, to give you an example.

Gordon Hardie: To give you an example, you know, with a regional beer customer, where our expected growth would be, you know, somewhere in the high to mid or mid to high single digits this year. We're seeing, you know, other spirits customers in certain regions where we would expect, again, high to mid single digit growth this year. So it's starting to come through, but really it will be, you know, towards the back half of the year and probably the last quarter of the year before we see that gain real momentum, and then into 2027. You know, as we look ahead for the year, we have the World Cup coming up, where we would start to see inventories building kind of late April into May.

Speaker #3: We had a regional beer customer where our expected growth would be somewhere in the high to mid or mid to high single digits this year.

Speaker #3: We're seeing other spirits customers in certain regions where we would expect, again, high to mid-single-digit growth this year. So it's starting to come through, but really it will be towards the back half of the year and probably the last quarter of the year before we see that gain real momentum.

Speaker #3: And then into 2027. As we look ahead for the year, we have the World Cup coming up, where we would start to see inventories building kind of late April into May.

Gordon Hardie: We've got the 250-year celebration here in the US. We think that's going to have a kind of a positive impact. So we see it starting to build. We spent the first kind of 15, 18 months on the back end of the business and getting TOE right. And now there's a huge focus on getting the go-to-market piece of the business right, so we can execute on where we see these pockets of growth.

Speaker #3: We've got the 250-year celebration here in the US. We think that's going to have a kind of a positive impact. So we see it starting to build.

Speaker #3: We spent the first kind of 15, 18 months on the back end of the business and getting TOE right. And now there's a huge focus on getting the go-to-market piece of the business right so we can execute on where we see these pockets of

Speaker #3: growth. Thank

Paco Ruiz: Thank you.

Kyle Benvenuto: Thank you.

Speaker #1: Thank you.

Operator: Thank you.

Speaker #3: Thanks, you.

Gordon Hardie: Thanks, Kyle.

Operator: The next question comes from Josh Spector of UBS. Your line is now open. Please go ahead.

Speaker #1: The next question, Kyle, comes from Josh Spector of UBS. Your line is now open. Please go ahead.

Anojja Shah: Hi, good morning. It's Anojja Shah, sitting in for Josh. I wanted to ask about 750, the new cost savings target. Not to take away from how impressive the performance has been, but you basically raised the cost savings target by $100 million, but kept the 2027 EBITDA the same. I assume that means that maybe your, you know, volumes are gonna continue to offset, but is there anything else in there, or what explains that? Can you reconcile that for us?

Speaker #6: Hi. Good morning. It's Anoja Shah, sitting in for Josh. I wanted to ask about the $750 million, the new cost savings target. Not to take away from how impressive this performance has been, but you've basically raised the cost savings target by $100 million, but kept the 2027 EBITDA the same.

Speaker #6: I assume that means that maybe you're volumes are going to continue to offset. But is there anything else in there or what explains that?

Speaker #6: Can you reconcile that for us?

Speaker #5: Yeah, yeah. This is John. I can touch base on that. Yes, the target of at least 1,450 remains in place, right? So we're not limiting ourselves to 1,450—at least 1,450.

John Haudrich: Yeah, yeah. This is John. I can touch base on that. You know, yes, the end target of at least 1,450 remains in place, right? So we're not limiting ourselves to 1,450, at least 1,450. So we have increased Fit to Win by $100 million. That does help mitigate the uncertainty around the commercial environment. Of course, we are working to drive an improved commercial outlook for the business. As just back to the last discussion, we are building this system to be able to grow. As we always said, it's gonna be a little bit more of a horizon two, you know, a target to drive the top-line growth. But we are making some room, given the uncertainty and the continued prolonged affordability challenges out there in the marketplace.

Speaker #5: So, we have increased Fit to Win by $100 million. That does help mitigate the uncertainty around the commercial environment. Of course, we are working to drive and improve the commercial outlook for the business.

Speaker #5: It's just back to the last discussion. We are building this system to be able to grow as we always said. It's going to be a little bit more of a horizon too.

Speaker #5: A target to drive the top line growth. But we are making some room given the uncertainty and the continued prolonged affordability challenges out there in the marketplace.

Speaker #5: A target to drive the top line growth. But we are making some room given the uncertainty and the continued prolonged affordability challenges out there in the

Anojja Shah: Okay, thank you for that. And then in the past, you talked about working with customers and I guess the whole supply chain to get better as an industry at forecasting demand. I think you had said that you were only about at a 50% success rate a while ago. Can you give us an update on that and maybe where you are now and any financial benefits you're seeing from that?

Speaker #6: Okay, thank you for that. And then, in the past, you talked about working with customers—and, I guess, the whole supply chain—to get better as an industry at forecasting demand.

Speaker #6: I think you had said that you were only about at a 50% success rate. A while ago. Can you give us an update on that?

Speaker #6: And maybe where you are now and any financial benefits you're seeing from that?

Speaker #3: Sure. So, when we kind of began the journey, it was running at about 50%. I am glad to report that as we move through 2025, that's jumped to about 68, 69%.

Gordon Hardie: Sure. You know, so when we kind of began the journey, it was running at about 50%. You know, I am glad to report that as we move through 2025, that's jumped to about 68-69%. And with many of our customers, you know, at the most senior level, we've had discussions about the need to, you know, improve the supply chain efficiency. You know, if I compare it to other industries, I think there's a big opportunity for ourselves working with customers and suppliers to strip out waste and inefficiency in the value chain. And that's what we're focused on. I think when we last spoke, our new chief supply officer hadn't started.

Speaker #3: And with many of our customers at the most senior level, we've had discussions about the need to improve the supply chain efficiency. If I compare it to other industries, I think there's a big opportunity for ourselves, working with customers and suppliers, to strip out waste and inefficiency in the value chain.

Speaker #3: And that's what we're focused on. I think when we last spoke, our new Chief Supply Officer hadn't started. He has not begun.

Gordon Hardie: He has now begun, and you know, that's a key focus for him and his team: How do we strip cost and waste out of the supply chain and then share that with customers and suppliers, with a view to growing volumes in the different categories? So we've made good progress. Still a lot of work to go and still a lot of opportunity to take out over the next 18, 24 months, Anojja.

Speaker #3: And that's a key focus for him and his team—is how do we strip custom waste out of the supply chain, and then share that with customers and suppliers, with a view to growing volumes in the different categories.

Speaker #3: So we've made good progress. Still a lot of work to go, and still a lot of opportunity to take out over the next 18 to 24 months.

Speaker #3: Anuja. Great.

Anojja Shah: ... Great. Thank you. I'll turn it over.

Speaker #6: Thank you. I'll turn it over.

Speaker #1: Thank you. The next question is from Mike Roxland of Joist. Your line is now open. Please go

Operator: Thank you. The next question is from Michael Roxland of Truist. Your line is now open. Please go ahead.

Speaker #1: ahead. Yeah.

Michael Roxland: Yeah, thank you, Gordon, John, Chris, and team, for taking my questions. Congrats, on all the progress.

Speaker #7: Thank you, Gordon. John, Chris, and T for taking my questions. Congrats on all the progress. Gordon, I wanted to follow up with you.

Speaker #5: Thanks.

Gordon Hardie: Thanks.

Michael Roxland: Um-

Gordon Hardie: Thanks.

Michael Roxland: Gordon, I wanted to follow up with you. Absolutely, yeah. Just wanted to follow up with you, Gordon, on, you know, some really interesting color in terms of mentioning, you know, where the pockets of growth are, where you have a right to win. And then you mentioned revamping the go-to-market model. So what are you doing differently, and what are you trying to encourage the sales force to do differently to drive better volumes? And as you think about your portfolio, I know you mentioned, you know, you had some beer win; it sounds like you had a beer win and maybe some spirits wins as well, that are going to hit later this year.

Speaker #7: Absolutely, yeah. Just wanted to follow up with you, Gordon, on some really interesting color. In terms of mentioning where the pockets of growth are—where you have a right to win.

Speaker #7: And then you mentioned revamping the go-to-market model. So, what are you doing differently? And what are you trying to encourage Salesforce to do differently to drive better volumes?

Speaker #7: And as you think about your portfolio, I know you mentioned you had some beer—it sounds like you had a beer win and maybe some spirits wins as well that are going to hit later this year.

Speaker #7: But as you think about your portfolio, are you looking to reorient maybe toward more growth markets like food and maybe these RTEs, maybe minimize beer, maybe minimize spirits, particularly given the elevated inventories that that category has?

Michael Roxland: But as you think about your portfolio, are you looking to reorient maybe toward more growth markets like food and maybe RTDs, and maybe minimize beer, maybe minimize spirits, particularly given the elevated inventories that category has experienced?

Speaker #7: experienced? Yeah.

Gordon Hardie: Yeah, I'll take the second piece first, Mike. So, yes, is the short answer in terms of reorienting the portfolio to, you know, higher growth and higher margin segments such as, non-alcoholic beverages, you know, premium non-alcoholic beer, waters, juices. We're seeing, you know, significant growth opportunities, particularly in the Americas on that. Food is growing, particularly in the southern half of Europe, and in markets like Brazil and Mexico, and indeed here in North America. So that's very much part of a focus strategy, and we're starting to see results come through.

Speaker #3: I'll take the second piece first, Mike. So yes, is the short answer in terms of reorienting the portfolio to higher growth and higher margin segments such as non-alcoholic beverages, premium non-alcoholic beer, waters, juices, we're seeing significant growth opportunities, particularly in the Americas on that.

Speaker #3: Food is growing particularly in the southern half of Europe. And in markets like Brazil and Mexico, and indeed here in North America. So that's very much part of a focus strategy.

Speaker #3: And we're starting to see results come through. With regard to the go-to-market model, I probably would have viewed the organization of the Salesforces in the different markets to be somewhat traditional.

Gordon Hardie: With regard to, you know, the go-to-market model, you know, I probably would have viewed the organization of the sales forces in the different markets to be somewhat traditional, you know, and probably hadn't changed over a period of 10 to 15 years. And we're bringing in much better sort of insights, sharing those insights with the sales force and bringing kind of modern methods of sales management into the business. And equipping then our sales force with insights and, you know, opportunities by customer on how the customer can either, you know, improve their growth or improve their cost, or both.

Speaker #3: And probably hadn't changed over a period of 10 to 15 years. And where we're being bringing in much better sort of insights sharing those insights with the Salesforce and bringing kind of modern methods of sales management into the business.

Speaker #3: And equipping then our Salesforce with insights and opportunities by customer on how the customer can either improve their growth or improve their cost or both.

Gordon Hardie: And then a much more rigorous system of review and accountability, building from daily sales to weekly sales to monthly against targets, and a much tighter account management. Now, in many industries, this is old hat, but this will be a big step forward for us in how we drive focus on performance. And, yeah, we have some fantastic insights and data in the business. It's now how do we turn those into opportunities for our customers? And we're already starting to see, you know, green shoots coming through in that system. It's early days in embedding it.

Speaker #3: And then a much more rigorous system of review and accountability building from daily sales to weekly sales to monthly against targets and a much tighter account management.

Speaker #3: Now, in many industries, this is old hat. But this is a this would be a big step forward for us in how we drive focus on performance.

Speaker #3: And yeah, we have some fantastic insights and data in the business. It's now how do we turn those into opportunities for our customers? And we're already starting to see green shoots coming through in that system.

Speaker #3: It's early days in embedding it. We should be well underway by the end of the second quarter. And that system should be in place across all the markets.

Gordon Hardie: We should be well underway by end of the second quarter, and that system should be in place across all the markets, and functioning accordingly. We're also upgrading some of the, you know, some of the commercial leadership in different markets, and bringing kind of better and best practices into the business. So that's a bit of flavor on that, Mike. Happy to elaborate on any of that.

Gordon Hardie: We should be well underway by end of the Q2, and that system should be in place across all the markets, and functioning accordingly. We're also upgrading some of the, you know, some of the commercial leadership in different markets, and bringing kind of better and best practices into the business. So that's a bit of flavor on that, Mike. Happy to elaborate on any of that.

Speaker #3: And functioning accordingly. We're also upgrading some of the some of the commercial leadership in different markets. And bringing kind of better and best practices into the business.

Speaker #3: So that's a bit of flavor on that, Mike. Happy to elaborate on any of that.

Michael Roxland: No, that's very helpful, but would it be fair to say that the changes that you're pursuing are going to lead you to that volume growth that you're targeting for 2028 and beyond, the 1% that you outlined at I Day? But it sounds like you're getting an earlier jump-

Speaker #7: No, this is very helpful. But it would be fair to say that we changed the year—pursuing our going to lead you to that volume growth that you're targeting for 2028 and beyond, the 1% that you outlined at I-Day, right?

Speaker #7: It sounds like you're getting an earlier jump on doing these things, particularly given that you've brought up there's been a pull-forward of your Fit to Win benefits, such that you're starting to move forward at a faster pace on commercialization, trying to streamline the organization and bring in business wins.

Gordon Hardie: Yeah.

Michael Roxland: on doing these things, particularly given that you're bringing-

Gordon Hardie: Mm-hmm.

Michael Roxland: You've brought the... There's been a pull forward of the Fit to Win benefits, such that you're starting to get to move forward at a faster pace on commercialization and trying to streamline the organization and bring in business wins. Is that a fair assessment?

Speaker #7: Is that a fair assessment?

Speaker #3: Correct. Yeah. That's a fair assumption. And just to add a bit of color to that, so the first area of focus really was on the supply chain and strengthening the supply chain and getting the cost down.

Gordon Hardie: Correct. Yeah, that's a fair assumption, and just to add a bit of color to that. So, you know, the first area of focus really was on the, you know, the supply chain and strengthening the supply chain and getting the costs down. And that's what really we've been focused on, you know, over the last 18 months. And as we've made sort of faster progress than expected, that allows us to, you know, orient more focus to the front end of the business. It's very difficult to make moves on the back end and the front end at the same time, that risks all sorts of supply chain snafus and customer issues. And we were very deliberate in staging how we would do this.

Speaker #3: And that's what really we've been focused on over the last 18 months. And as we've made sort of faster progress than expected, that allows us to orient more focus to the front end of the business.

Speaker #3: It's very difficult to make moves on the back end and the front end at the same time. That risks all sorts of supply chain snafus and customer issues.

Speaker #3: And we were very deliberate in staging how we would do this. So we got the back end in order. And much better order. There's still a lot of opportunity there for us.

Gordon Hardie: So we got the back end in order, or in much better order. There's still a lot of opportunity there for us, and we did that faster than planned, and that allowed us then to switch the focus to the front end of the business, you know, probably maybe 6 to 9 months ahead of what we might have thought in the early days. So really it is a sequencing thing that allowed us to go faster as we made faster progress on the back end.

Speaker #3: We did that faster than planned, and that allowed us then to switch the focus to the front end of the business—probably maybe six to nine months ahead of what we might have thought in the early days.

Speaker #3: So really, it is a sequencing thing. That allowed us to go faster as we made faster progress on the back.

Speaker #1: end Back .

Michael Roxland: Got it. Very helpful. Thanks very much, and good luck in 2026.

Speaker #2: Thanks, very helpful. Got it—very much, and good luck in ’26.

Speaker #1: All right . Thanks , Mike .

Gordon Hardie: All right. Thanks, Mike.

Operator: ... The next question comes from Arun Viswanathan of RBC. Your line is now open. Please go ahead.

Speaker #3: Next question comes from Christopher Manuel.

Speaker #2: 26 .

Speaker #1: Thanks. All right, Mike.

Speaker #3: The next question comes from Arun Viswanathan of RBC. Your line is now open. Please go ahead.

Arun Viswanathan: Great, thanks for taking my question. Hope you guys are well. I guess first off, I just wanted to understand how the volume trajectory would progress through 2026. So I think last year in the first half, you were up, you know, 2 to 4% and then now you do face those tougher comps. And then, you know, the back half of 2025, you were down. So, should we expect kind of reversal of those trends in 2026? And, if so, given that you would be exiting maybe at a positive rate, do you expect that positive volume growth to continue in 2027? Thanks.

Speaker #4: Great . Thanks for taking my question . Hope you guys are well . I guess first off , I just wanted to understand how the volume trajectory would would progress through 26 .

Speaker #4: So I think last year in the first half you were up , you know , 2 to 4% . And and then now you do face those tougher comps and down .

Speaker #4: you were 25 , back you know , the So kind of expect reversal of should we trends those in 26 . And if so , given would be that you exiting , maybe at a as a at a positive rate , do you expect that positive volume growth to continue in 27 ?

John Haudrich: Yeah, Arun, thanks for the question. John here. Yeah, you're basically spot on. The first quarter, as we had indicated, is gonna be their toughest comp period. You know, our volumes are up between 4% and 5%. Last year, we believe that was substantially due to tariff pre-buying. So you kind of work off of that tougher comp. So that's where we said we're gonna be down mid, maybe even high single digits, depending on the consumer. We transition in the second quarter to something that's closer to flat, and in the back half of the year, you're looking at low to mid single digit type of growth numbers against obviously easier comps that we had over the next year. And yes, I think that this develops into a bit of commercial momentum.

Speaker #4: Thanks .

Speaker #5: Yeah . Thanks for the question John . Here . Yeah . You're basically spot on . The first quarter as we had indicated , is going to be our toughest comp period .

Speaker #5: You know , our volumes are between 4 and 5% last year . We believe up that was substantially due to tariff pre-buying . So so kind of you work off of tougher comp .

Speaker #5: So that's where we that said we're going to be down maybe even high mid single digits depending on the on on consumer . We transition in the second quarter to something is closer to flat .

Speaker #5: And then in the back half of the year you're looking at low to mid single digit type of growth numbers against obviously easier comps that we had over the next year .

John Haudrich: And so, you know, we're looking to continue to try to improve the top line. Obviously, you know, a little bit of help from the consumer will be good, and you know, there's macros that need to be addressed on the affordability side. But as we work through that on a macro basis, you know, that could result in a tailwind down the road as markets recover, and we get this engine that Gordon was talking about also, you know, fine-tuned.

Speaker #5: And yes , I think that this develops into a bit of commercial momentum . And so , you know , we're looking to continue to try to to improve the the top line .

Speaker #5: Obviously, you know, a little bit of help from the consumer will be good. And, you know, there’s macros that need to be addressed on the affordability side.

Speaker #5: But as we work through that on a macro basis , you know , that could result in a tailwind down the road as markets recover and we get this engine that Gordon was talking about .

Arun Viswanathan: Great. Thanks for that, John. And then, the free cash flow, you know, I think the guidance is somewhat in line with our expectations. Any opportunities there for upside? You know, I guess maybe it could come from, maybe net price not being as negative. I don't know if that's one opportunity, but, or working capital kind of harvesting a little bit more. Any opportunities there, where you could see upside to that free cash flow, maybe, or, you know, how do you feel about that, the level of guidance for 2026? Thanks.

Speaker #5: Also , you know , fine tuned .

Speaker #4: Great . Thanks for that , John . And then the free cash flow , you know I think the guidance is somewhat in line with our expectations .

Speaker #4: Any opportunities there for upside . You know I guess maybe it could come from maybe net price not being as as negative . I don't know if that's one opportunity , but or working capital kind of harvesting a little bit more .

Speaker #4: Any opportunities there where you could see upside to that free cash flow? Maybe? Or how do you feel about that?

John Haudrich: Yeah. Yeah. So, so clearly the biggest lever is gonna be on the EBITDA side. If we can perform on the top end of the range and, you know, get some of that higher end of improved cost performance. So obviously, we have $275 million. We're always aiming for more, right? As we've delivered in the past, we're always aiming for more, so there's continued opportunities to work there. I would also profile, as you mentioned, working capital. We do have efforts to continue to reduce inventory this next year.

Speaker #4: That level of guidance for 26 ? Thanks .

Speaker #5: Yeah , yeah . So so clearly the the biggest lever is going to be on the EBITDA side . If we can perform on the top end of the range and , and , you know , get some of that higher end improved cost performance .

Speaker #5: Obviously we have $275 million . We're always aiming for more . Right . As we've delivered in the past , we're always aiming for more .

Speaker #5: So there's there's continued opportunities to work there . I would also profile , as you mentioned , working capital . We do have efforts to continue to reduce inventory this next year .

John Haudrich: We have made a provision for additional receivables towards the end of the year as we're talking about the growth, but we're also working on, for example, non-finished goods inventories, other things below the line that could generate additional cash. And so I think those are your biggest variables, and we continue to work on the, you know, the balance sheet, and we'll probably have another year of refinancing going on. So we'll look for opportunities to improve, you know, P&L and cash management there.

Speaker #5: We have made a provision for additional receivables towards the end of the year . As we're talking about the growth . But but we're also working on , for example , Non-finnish inventories , good other things line below the that , that that could could generate additional cash .

Speaker #5: And so I think those are your biggest variables . And we continue to work on the , the balance sheet . And we'll probably have another year of of refinancing going on .

Speaker #5: So we'll look for opportunities to improve improve , you know , PNL and cash management there .

Arun Viswanathan: Thanks a lot.

John Haudrich: You know, yeah, you know, one other thing. You talked, you asked about net price. I do think, you know, you know, price is probably less the moving piece on the gross price, but inflation, you know, if inflation continues to trend off, that might be an upside, but I think it's a little early to determine.

Speaker #6: Thanks a lot .

Speaker #5: Yeah . You know you know one other thing . You talked , you asked about net price . I do think , you know you know price is probably less the moving piece on the gross price .

Speaker #5: But inflation , you know , if inflation continues to trend off , that might be an upside . But I think it's a little early to determine .

Arun Viswanathan: Thanks.

Operator: Thank you. The next question comes from Anthony Pettinari of Citi. Your line is now open. Please go ahead.

Speaker #6: Thanks .

Speaker #3: Thank you . The next question comes from Anthony Pettinari of Citi . Your line is now open . Please go ahead .

Bryan Burgmeier: Good morning. This is Bryan Burgmeier on for Anthony Pettinari. Thanks for taking the question. Maybe just kind of following up on Arun's question. Just considering the Q1 outlook, you know, do you anticipate any curtailments kind of continuing into Q1 or, or Q2? Or, you know, do you think those curtailments, if, if they are gonna be there, would kind of taper off throughout the year, considering your footprint actions are gonna be, I think, wrapped up by midyear this year? Yeah, any detail on kind of the curtailment or operating rate would be helpful.

Speaker #7: Good morning . This is Brian Burgmeier on for Anthony . Thanks for taking the question . Maybe just kind of following up on Aaron's question .

Speaker #7: Just considering the one . Q outlook , do you anticipate any curtailments of continuing into one Q or Q ? Q or do you think those curtailments , if they are going to be there , would kind of taper off throughout the year , considering your footprint actions are going to be , I think , wrapped up by mid-year this year .

John Haudrich: Yeah, let me step back and talk about capacity management. As you recall, back in 2024, we had about 13% of underutilized capacity, and that's what drove our program, you know, to eliminate the capacity which we've been working on. You know, that 13% in 2024 dropped to about 6% in 2025, primarily as we made progress on the Americas. It took us a little bit longer in Europe, given complying with labor regulations. So we expect that 6% to drop in 2026 as we complete that activity over in Europe. So that 6% maybe goes down to about 3% or so. We also have efforts to kind of reduce some inventories, as I mentioned.

Speaker #7: Any detail on kind of the curtailment or operating rate would be helpful ?

Speaker #5: Yeah . Let me step back and talk about capacity management . As you recall , back in 2024 , we had about 13% of underutilized capacity .

Speaker #5: And that's what drove our program , you know , to to eliminate the capacity which we've been working on . You know , that 13% in 2024 dropped to about 6% in 2025 , primarily as we made progress on on the Americas .

Speaker #5: It took us a little bit longer in Europe , giving , you know , complying with labor regulations . So we expect that 6% to drop in 2026 as we complete that activity over Europe .

Speaker #5: It took us a little bit longer in Europe , giving , you know , complying with labor regulations . So we expect that 6% to drop in 2026 as we complete that activity over in So that 6% maybe goes down to about 3% or so , where we also have efforts to kind of reduce some inventories .

John Haudrich: And that also, that extra, you know, downtime actually provides some swing capacity for us, which is pretty important. So as markets recover, that you have the opportunity to take advantage on the upside. So we might be carrying a little bit of downtime, but we're getting into the short strokes there.

Speaker #5: As I mentioned , and that that , that also that extra , you know , you know , downtime actually provides some swing capacity for us , which is pretty important .

Speaker #5: So as markets recover that you have the opportunity to take advantage on the upside . So we might be carrying a little bit of downtime .

Bryan Burgmeier: Got it. No, thanks for that detail. That makes a lot of sense. And then last question for me. You know, you mentioned the pre-buy impact from tariffs. Maybe just as we start to get closer to kind of lapping Liberation Day, are you seeing kind of stability or maybe even potentially a modest recovery in some of those impacted markets? I guess there's-

Speaker #5: But we're getting into the into the short strokes . There .

Speaker #7: that detail . Got it . Thanks for That makes a lot of sense . And then last question for me . You mentioned the pre-buy impact from from tariffs .

Speaker #7: Maybe just as we start to get closer to kind of lapping Liberation Day , are you seeing kind of stability or maybe even potentially a modest recovery in some of those impacted markets ?

John Haudrich: ... maybe still not the full clarity some customers are looking for, but I'm not sure if it's been stabilizing throughout the year. Thanks. I'll turn it over.

Speaker #7: I guess there's maybe still not the full clarity some customers are looking for, but I'm not sure if it's been stabilizing throughout the year.

Gordon Hardie: Yeah, I think we are seeing some stabilization, and certainly it's-- there's more certainty here than a year ago. And then we're seeing other sort of geopolitical moves, you know, with, you know, the UK, which is an important source market, obviously for Scotch, you know, opening up agreements with India and with China. And depending on how quickly they come to action, then that creates sort of opportunities for the Scotch industry to export more to India and China. And that obviously, you know, then has an impact on us. Same thing with French spirits, you know, into China, particularly cognac, and the higher-end wines and things like champagne. So those things help for sure.

Speaker #7: I'll turn Thanks . it over .

Speaker #1: Yeah , I think we are seeing some stabilization and certainly it's it's there's more certainty here than than a year ago . And then we're we're seeing other sort of geopolitical moves , you know , with we'll say , you know , the U.K.

Speaker #1: , which is an important source market , obviously , for Scotch , you know , opening up , you know , agreements with India and with China .

Speaker #1: And depending on how quickly they come to come to action , then that that that creates sort of opportunities for , for the Scotch industry to export more to India and China .

Speaker #1: And that obviously , you know , then has an impact on , on us . Same thing with French spirits , you know , into China , particularly cognac .

Gordon Hardie: They weren't on the radar this time last year. They are now. At least we, you know, we're working with, you know, the certainty of the system that's there at the moment. So I would say the big challenge in the US market is to increase, you know, consumer offtake and to drive down the inventories that are in the system. We are seeing, you know, customers make moves to, you know, changing in marketing strategies and increasing their spend behind that, increasing promotions, you know, to drive that. So, you know, I would say the outlook is certainly more stable and I would say probably more positive than it was this year, but last year, with all the uncertainty.

Speaker #1: The higher end wines and things like champagne . So , so those , those , those things help for sure . They weren't on the now this radar They are last year .

Speaker #1: , and at least we , you know , we're working with , you know , the certainty of the system that's there at the moment .

Speaker #1: So I think the big challenge in in the US market is , is to increase , you know , consumer offtake and to drive down the inventories that are , that are in the .

Speaker #1: We are seeing , you know , customers make moves to , you know , change in in marketing strategies and increasing their spend behind that , increasing promotions , you know , to , to drive that .

Speaker #1: So , you know , I would say the outlook is , is certainly more stable . And I would say probably more positive than was this year .

Speaker #1: Last year , with all the uncertainty .

Operator: Thank you. The next question comes from Paco Ruiz of BNP Paribas. Your line is now open. Please go ahead.

Speaker #3: Thank you . The next question comes from Paco Ruiz of BNP Paribas . Your line is now open . Please go ahead .

Paco Ruiz: Hi, good morning. Most of the questions have been answered-

Gordon Hardie: Good morning.

Paco Ruiz: but I have, I have two. First one is if you could give a little more detail on the European market, supply and demand dynamics. I mean, you, you commented that mainly so far the cut in supply will be in, in Europe. How you expect the volume to perform there?

Speaker #8: Hello . Hi . Good morning . Most of the questions have been answered , but I have . I have two . First one is if you could give a little more detail on the European market supply and demand dynamics .

Speaker #8: I mean, you commented that mainly supply would be Europe. How do you expect the volume to perform there?

Gordon Hardie: Yeah. So, happy to do that, Ruiz. So what we're seeing in Europe is... Well, let me stand back. So in the Americas, we see capacity, probably tighter, and more aligned with demand and, you know, less sort of price pressure, I would say, in general, across the markets. There are some pockets where that doesn't hold. But in general, I think capacity and demand is pretty tightly matched in the Americas. With regard to Europe, there certainly is more spare capacity. We've obviously, you know, taken down what we feel is surplus to us.

Speaker #1: Yeah . So happy . Happy to do that . So what we're seeing in Europe is , well , let me step back .

Speaker #1: So in the Americas we we see capacity probably tighter and more aligned with with demand . And , you know , less sort of price pressure .

Speaker #1: I would say in general across the markets , there are some pockets where that that doesn't hold . But in general , I think capacity and and demand is is pretty tightly matched in the Americas with regard to certainly is Europe , there more spare capacity .

Gordon Hardie: There has been some other capacity taken out across the markets, but if you look at categories like wine in France and Spain, there's still a significant overcapacity, and there is price pressure in those categories, in those markets. Also, you know, in sort of mainstream, lower equity kind of beer, we're seeing some capacity come on. But it certainly has tightened up significantly year-over-year. Okay? And I would say, you know, pricing has firmed up. Whereas last year, you're probably looking at a situation of more overcapacity and therefore more pressure on pricing. So, again, I would say the situation has improved year-over-year.

Speaker #1: We've obviously , you know , taken down what we feel is surplus to us . There has been some other capacity taken out across the markets , but if you look at .

Speaker #1: Categories like wine in France and Spain , they're still significant overcapacity . And and there is price pressure in those categories and those markets also , you know , in in sort of mainstream lower , lower equity kind of beer where we're seeing some some capacity , come on .

Speaker #1: But it's certainly has tightened up significantly year on year . Okay . And I would say , you know pricing has has firmed up last .

Speaker #1: year Whereas you've probably looking at a situation of more overcapacity and therefore more pressure on pricing . So again I would see the situation has has , has improved year on year .

Gordon Hardie: Obviously, you know, our focus is on what we control, and, you know, we're taking the actions we've outlined, which should all be completed at the latest by the half year. And that would make our network, you know, pretty tight.

Speaker #1: Obviously , you know , our focus is on what we control . And , you know , we're taking , you know , the actions we've outlined which should all be completed at the latest by by the half year .

John Haudrich: Yeah. I would add, you know, if you take a look at the trajectory of kind of net price performance, 2024 was a kind of a reset year. 2025 was significantly better, and then we expect 2026 to be better than 2025, even though we're seeing a little bit of still net price pressure. So it's gradually getting better and normalizing. So.

Speaker #1: And that would make our network , you know , you know , pretty , pretty , pretty tight .

Speaker #5: add , you I would know , if you take a look at the trajectory of kind of net price performance , 2024 was , was was a kind of a reset year , 2025 was significantly better .

Speaker #5: And then we expect 2026 to be better than than than than 2025 . Even though we're seeing a little bit of still net price pressure .

Gordon Hardie: Yeah. And, you know, you see the significant uplift in Americas in 2025 and not so much in the EU, and that really is just a factor of timing. You know, you can get to take actions in the Americas at a much swifter rate than in Europe, as you well know. But we've worked through that process, you know, diligently and in a disciplined manner, and we're well down the path to executing, you know, on the kind of actions that drove the uplifts in Americas. Or the Americas. We see those coming through now in Europe in 2026.

Speaker #5: So it's gradually getting better . And normalizing .

Speaker #1: Yeah . And you know , you see the significant uplift in in Americas in 2025 . And not so much in , in in the EU .

Speaker #1: And really is just a factor of timing . You know you can you can get to take actions in the Americas at a a , at much swifter rate than , than in Europe , as you well know .

Speaker #1: But we've worked through that process . You know , diligently and in a disciplined manner . And we're we're well down the path to executing , you know , on the kind of actions that that that drove the America uplift in .

Paco Ruiz: Okay. Thank you very much. My second question is one of the drivers that you commented on your capital market day, which is the move from can to glass. Which mainly you highlighted this on a better improvement of your profitability.

Speaker #1: We or the Americas , we see those coming through now in Europe , in 2026 .

Speaker #9: Okay , okay .

Speaker #8: Thank you very much . My question second is from one of the drivers that you commented on your capital market day , which is the move from from can to , to glass , which mainly you highlighted this on a on a better improvement of your profitability .

Chris Manuel: ... And now, given the high cost of the raw material of the aluminum, it's making this way alone. I mean, there are more opportunities for big companies to move that way. Are you seeing this driver already this year, or is this something that is still pending to be seen?

Paco Ruiz: ... And now, given the high cost of the raw material of the aluminum, it's making this way alone. I mean, there are more opportunities for big companies to move that way. Are you seeing this driver already this year, or is this something that is still pending to be seen?

Speaker #8: the given cost of the And now of the raw high material of the aluminum , it's it's making this way alone . I mean , I mean , they are they are more opportunities for big companies to , to move that way .

Speaker #8: Are you seeing this this driver already this year or is it something that is still pending to to be seen ?

Gordon Hardie: Yeah. Look, we certainly in the categories in which we operate, we've seen a very big slowdown, particularly in North America, of that switch. And, you know, if I take a look at the price gap, which I think we outlined at about 35%, at I Day, that is certainly, you know, with the movement in aluminum on paper anyway, to, you know, 10, 12% mark. And, historically, you know, when it's been around that level, you see a shift over time, from cans to glass, right? However, we're still focused on driving our own internal opportunities to reduce costs, and we're not going to stop there. But, yes, yes, absolutely it helps.

Speaker #1: Yeah . we certainly in the categories in which we operate , we've seen a very big slowdown , particularly in North America of switch that .

Speaker #1: And you know , if I take a look at the price cap , which I think we outlined at about 35% at , ID , that that is certainly , you know , with the movement in aluminium on paper , anyway , to , you know , you know , ten , 12% mark and , and historically , you know , when it's been around that level , you see a shift over time from cans to , to , to glass , right .

Speaker #1: However , we're still focused driving on our own internal opportunities through , you know , to reduce costs . And we're not going to stop there .

Gordon Hardie: You know, where there is can growth in Europe, but it tends to be in the categories where, you know, where glass isn't either not highly represented or it's not fit for purpose for a specific channel, right? And there's growth in kind of CSDs and particularly energy drinks, which is nearly exclusively can. And a lot of those consumption moments are in areas where you can't use glass, like concerts, beaches, and stuff like that. But you know, we're in terms of cost gap to cans in Europe, you know, we're in a very good position as well. So yeah. So let's see what plays out this year in terms of glass to cans.

Speaker #1: But but yes , yes , absolutely . It helps , you know , we're there is can growth in Europe . But it tends to be in the categories where , you know , where glass isn't either not highly represented or it's not fit for purpose for a specific channel .

Speaker #1: Right . And there's growth in in kind of csds and particularly energy drinks , which is , which is nearly exclusively can and a lot of those consumption moments are in areas where you can't use glass like concerts and beaches and , and stuff like that .

Speaker #1: But , you know , we're in terms of , of cost cap to , to cans in Europe , you know , we're we're we're in a very good position as well .

Gordon Hardie: But again, certainly in a much better position than we were this time last year in that regard.

Speaker #1: So , so so yeah . So let's see what plays out year in this terms of draft accounts . But again certainly in a much better position than we were this time last year in that regard .

Chris Manuel: Okay. Thank you very much.

Paco Ruiz: Okay. Thank you very much.

Gordon Hardie: Thank you.

Operator: Thank you. The next question comes from Richard Carlson of Wells Fargo. Your line is now open. Please go ahead.

Speaker #8: Okay. Thank you very much.

Speaker #1: Thank you .

Speaker #3: Thank you. The next question comes from Richard Carlson of Wells Fargo. Your line is now open. Please go ahead.

Richard Carlson: Hey, good morning, guys. I'm standing in for Gabe Hajde today. Most of my questions have been answered-

John Haudrich: Hey, good morning.

Richard Carlson: But I did want to ask... Hey, good morning. So, inventory was up, looks like $20 million quarter-over-quarter. We normally would have expected it to be about down by about that much. So call it about a $40 to 50 million delta there. Were you actually tracking ahead of your free cash flow guidance earlier in the quarter? It seems like maybe the surprise with some of the volume in Americas might have been to blame there. And then I guess if so, does this set you up a little better to start 2026, since maybe some of the inventory build into Q1 is already done?

Speaker #10: Hey , good morning guys . I'm standing in for Gabe Haiti today . Most of my questions have been did want to answered , but I ask .

Speaker #10: Hey . Good morning . So inventory was up . Looks like 20 million quarter over quarter . We normally would have expected it to be down by about that much .

Speaker #10: So call it about a 4050 million delta . There . Were you actually tracking ahead of your free cash flow guidance earlier in the quarter ?

Speaker #10: It seems like maybe the surprise was some of the volume in Americas might have been to blame . There . And then I guess if so , does this set you up a little better to start 2026 , since maybe some of the inventory build into Q1 is already done ?

John Haudrich: Yeah, one thing I would say is, when you take a look at those balance sheet numbers, there's a hell of a lot of FX flushing through there, okay? So on an FX neutral basis, we were able to reduce inventory some last year. Now, keep in mind, we did not achieve the IDS targets we were hoping to at the end of the year. You know, we ended in 2024 at 57 IDS. We were hoping to get that down to 50. We did not get there because of the softness in the back half of the year. But to your point, that does set us up for continued progress to be made this next year in 2026.

Speaker #5: Yeah , one thing I would would take a when you say is look at those balance sheet numbers , there's a hell of a lot of FX flushing through there .

Speaker #5: Okay , so so on an FX neutral basis , we were able to reduce inventory some last year . Now , keep in mind we not did achieve the the IDs targets .

Speaker #5: We were hoping to at the end of the year . We you know , we ended in 2024 at 57 IDs . We were hoping to get that down to 50 .

Speaker #5: We did not get there because of the softness in the back half of the year. But to your point, that does set us up for continued progress to be made this next year.

John Haudrich: So yes, we are anticipating and included in our guidance right now is us getting that 50 days of IDS, plus additional progress on non-finished goods inventories, things like raw materials and machine parts and spare parts and things like that, that also can contribute some upside opportunities to cash as we go forward.

Speaker #5: In 2026 . So yes , we are anticipating and included in our guidance right now is us getting that 50 days of IDs plus additional progress on on non finished good inventories , things like raw materials and machine parts and spare parts and things like that , that also can contribute some upside opportunities to cash as we go forward .

Richard Carlson: Understood. That's helpful. Then, John, also, your quarterly cadence guidance is reflecting pretty well-balanced H1 versus H2. I think based on some of the volume comments you've made, I would have been surprised, and then also based on some of your peer commentary about, you know, most are expecting a stronger back half. So maybe can you help us reconcile some of that? And then also, where is the World Cup contemplated in this, or is that just representing potential upside?

Speaker #10: Understood . That's helpful . And then John also your your quarterly cadence guidance reflecting is pretty well balanced H1 versus H2 . I based on think some of the comments you made , I would been have surprised .

Speaker #10: And also based on some of your your peer commentary about most . Most are expecting a stronger back half . So maybe can you help us reconcile some of that ?

John Haudrich: I think it's more of a potential upside. I mean, there's a lot of variables out there. You know, obviously, if we're talking about flat to slightly down volumes, you know, there's not a lot of those event-specific things considered into the guidance right now. As we take a look at you know, the reconciliations and things like that, you know, obviously, some of this has to do with prior year comps and where we were, you know, earnings-wise in the prior year. We also are looking at the cadence of Fit to Win. Obviously, we got a lot of activities here in the first half of the year, especially with Europe, you know, that will start to track into the second quarter.

Speaker #10: And then also where is is the World Cup contemplated in this , or is that just representing potential upside ?

Speaker #5: I think it's more of a potential upside . I mean , there's a lot of variables out there . You know , obviously if we're talking about flat to slightly down volumes , you know , there's not a lot of those events , specific things considered .

Speaker #5: And into the into the guidance right now , as we take a look at the the , you know , the reconciliations and things like that , you know , obviously some of this has to do with with prior year comps and where we were , you know , earnings wise in the prior year .

Speaker #5: We also are looking at the cadence of fit to win . Obviously , lot of we got a activities here in the first half of the year , especially with You Europe .

John Haudrich: But again, you know, if there is upsides in the markets and they recover, then that probably, as I mentioned, is not comprehended in the outlook that we have right now. So we're trying to be practical on our outlooks right now. And that includes the sales volumes at flat to down.

Speaker #5: know , that will start to track into the second quarter . But again , you know , if there is upsides in the markets and they recover , then then that probably is a mentioned is not comprehended in the outlook that we have right now .

Speaker #5: So we're trying to be practical on our on our outlook right now . And , and , and that that includes the sales volumes at flat to down .

Richard Carlson: Got it. Thanks, guys. Best of luck in Q1.

John Haudrich: Thank you.

Gordon Hardie: Thank you.

Operator: We have no further questions at this time, so I'd like to hand back to Chris for closing remarks.

Speaker #10: Got it . Thanks guys . And best of luck in Q1 .

Speaker #1: Thank you . Thank .

Chris Manuel: Thanks, Lucy. That concludes our earnings call. Please note that our Q1 call is currently scheduled for Wednesday, 29 April. Remember, make it a memorable moment by choosing safe, sustainable glass. Thank you.

Speaker #3: We have no further questions at this time . So I'd like to hand back to Chris for closing remarks .

Speaker #11: Thanks , Lucy . That concludes our earnings call . Please note that our first quarter call is currently scheduled for Wednesday , April 29th .

Speaker #11: And remember , make it a memorable moment by choosing safe , sustainable glass . Thank you .

Operator: This concludes today's call. Thank you all for joining. You may now disconnect your line.

Q4 2025 O-I Glass Inc Earnings Call

Request a DemoDemo

O-I Glass

Earnings