O-I Glass, Inc. (OI) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the O-I 2025 Investor Day. Welcome to everyone here in person, and I know we've got quite a crowd online as well. This is an event we've named, The Power of Glass. So I hope that you enjoy the journey. We're going to take you on here for the next couple of hours. My name is Chris Manuel. I've been with O-I for 6 years now heading the IR practice. So many faces I recognize out there. First, a safety note, in the event of emergency, leave everything here and exit out the same path that you came in. Second, please don't be that guy. Please mute your cell phones, electronic devices. And next to keep our low crowd happy, I need to make a couple of notes for you here. We will be making a number of forward-looking statements today. There will be some GAAP to non-GAAP disclosures that are available in the back of the slide deck. Those are posted at the company website at o-i.com under the Investors section. This is the O-I team that's here today. You'll see the note of a few that are going to be presenting to you. But all of us will be here to take your questions after the event and at lunch. One more note. For those listening online, you can send questions in, and we will ask those when we get to that period. The e-mail address is [email protected]. Over the next 2 hours, we want to bring you on board the O-I journey. We're going to start with Gordon Hardie, our CEO, he's going to give you an overview on how we're reframing the business opportunity. Next up, Eduardo Restrepo will talk about Fit to Win and the tremendous amount of costs that we're bringing out of the company. Next up, Emmanuelle Guérin will talk about also Fit to Win, but how we are reorganizing the fleet into a fit-for-purpose network. We'll take a short break to allow you to get some refreshments. And next up will be Arnaud Aujouannet to talk about how he will take that new fit-for-purpose footprint and translate it into profitable growth across mainstream and premium categories that you see here. After that, Randy Burns will talk about sustainability and strategic optionality that we'll have within the enterprise. After that, John Haudrich will draw together from a financial perspective, the opportunity in front of us. And then finally, Gordon will come back to talk about how we're going to execute this. So without further ado, let me introduce you to Gordon Hardie.

Thanks, Chris. Good morning, everybody, and welcome to the O-I Investor Day in this iconic venue. And thank you for everybody that's listening online as well. Good to see so many familiar faces here. Before I get started into the main body of our discussion today, I thought it might be worthwhile maybe telling you a bit of the story how I got here. I spent the first 15 years of my career working in the spirits industry in the alcohol beverage industry actually across the world, in spirits, in beer, and in wine. I worked in Europe right throughout the Americas, in Africa, the Middle East, across the Asia Pacific, and spend time in global travel retail. And so I walked in the shoes of our customers. I understand the opportunities they have, and I also understand the pain points they have. I then spent the last 20 years in my career working in businesses in the food and food ingredients industry. And all of those businesses had one thing in common. They had great strengths, but they also had trapped value, just like O-I. And so I then joined the Board of O-I and got to know the O-I business really well, understood the opportunities that were there and also the pain points we have in the business. And the one thing I'm acutely aware of is the fact that we have not delivered consistently for shareholders. And as we go forward, that's my #1 objective and the #1 objective of the team. So I understand our customers and feel have a very good appreciation of the world they live in. And I now understand our own business much, much better after 10 months. And I see a clear path to how by fixing our pain points, we can help our customers be more efficient, we can help them grow, we can help them be different, and increasingly, we can help them be more sustainable. So I'm in 10 months at this stage. And I've spent a very significant amount of that time on what I call the front line of the business, where the value is created with the customers, and with our own people in the plants and with our own commercial people out looking at our products in action. I have met about 4,000 of O-I employees, about 20% -- 25% of my colleagues. I've traveled to and spend hours in 34 of our 68 plants. And I've met over 70 of our customers and major suppliers across the world. And I've spent many hours with you, our investors and shareholders. And so from those many and varied conversations where everybody had a view or a piece of insight or a piece of history with the business, that has all informed our strategy going forward. So people ask me, so Gordon, what's different this time? And for me, it's pretty simple. The 3 areas of difference. O-I has done some great things in the past, has strengthened its balance sheet, has gotten rid of the asbestos board anchor on the business that have been there for 40 years, and did a lot to modernize the business over the last 7 years. But the one thing we had to come to grips with was to face the reality that despite the strengths we have, they have been blunted by an uncompetitive cost base. So the first thing we've done in the last 10 months was really face into that hard reality that we need to get more competitive and our costs have bloated to a position over the years that made us uncompetitive in certain categories and certain segments. The second thing that is different is we are reviewing not just the business but the whole value chain because there's a lot of trapped value and a lot of inefficiency in the value chain between ourselves and our suppliers, and also between ourselves and our customers. And so by working differently with suppliers, and working differently with customers, we can unleash or unlock some of that waste and inefficiency, and that can fund margin expansion, it can fund investment in the business. And in the conversations I've had with suppliers and with customers, they're all open to having different conversations. And the third thing that is different, is what I call bringing the outside in. I think there's a big opportunity for us to work much more closely with our customers and to deliver on the pain points and help them with the pain points they have and help them access the opportunities they have and also with our suppliers. We've got some outstanding suppliers with tremendous technology that can help lift the productivity in our own business. So there are the 3 things that are different, facing up to reality, end-to-end value chain, efficiency, and bringing outside in. The other thing we're doing as part of that phasing reality is challenging many or all of the conventions that are in the industry. Every industry has its conventions. It has its way of running factories and dealing with supply chain and so on. And so we are asking questions all the time, why are we doing it that way? What's the value of that process? Why are we spending things that way? So challenging how we operate the plants, challenging how we operate the supply chain, being disruptive, if you will, but it's being disruptive in a focused, data-driven fashion. It's not chaos. And we call that disruption with discipline. So as we move forward, what I'd like to do this morning is take you on a walking tour of O-I of the future over the next 3 to 5 years. And we pass through the turnaround strategy. We'll then move on to the shape and the pace of the execution plan. And then we lay out the financial commitments to 2027 and our preliminary targets to 2029. So we're asking our people to undertake a lot of change. And so the first thing you've got to do is you've got to create the case for change, and you've got to get to the why we're changing. And as well as that, you've got to give people a view of where you're going to be once you get through the big changes. And so over the last period of probably 8 or 9 months. We've gone out to our business, and we've asked people their views on where we could take the business. We've asked the same thing of customers, and we've asked the same thing of suppliers. And so what we've done is we've refreshed, reenergize our ambition for the business and our purpose, and I want to share that with you all now today. We call it The Power of Glass. And so The Power of Glass is basically the fundamentals of our investment thesis. And we feel there's 5 elements to the investment thesis, and we feel it's robust. The first one is transforming the cost base to be hypercompetitive in the categories and segments in which we compete. The second is optimizing the value chain with suppliers and customers. The third element is shifting the portfolio to higher margin, higher value, more premium products. And the third (sic) [ fourth ] is having a very clear map of where we are going to grow, what segments, what categories and in what geographies. And all of that rooted in a fundamental mindset shift our own economic profit. The only time we create value is when we deliver returns and growth above our cost of capital. And that is a big mind shift for the business. One of the first projects that came to my attention in the business was a project to spend about $50 million. And all of the analysis is around the gross margin and volume improvement. There was very little reference to capital other than the amount. As you can imagine, that was swiftly rejected. That project came to me about 10 weeks later again, after people had been through the training on the economic profit approach. And now that project came through with not just the P&L side of that project, but also the balance sheet and the cash generation of that project, right, over a 4- or 5-year period, all mapped out, and that project got signed off because it delivered returns above our cost of capital, well above our cost of capital. So this economic profit mindset is central to how we do business. We generate very strong free cash flow from operations and we must get better in extracting more of that out of the business to pay down debt, give ourselves more strategic flexibility, and returning capital to shareholders. We're reconfirming our EBITDA of $1.45 billion in 2027, and we're also announcing today our preliminary targets for 2029 of $1.65 billion. And through the journey, that would be an 8% CAGR. So where does that place us? Well, by any measure, we are a global systemic player in the glass packaging business. We're systemic to many of our customers, and we are now focused on transforming our competitiveness, increasing economic profit, and growing the value of the business. We have 21,000 associates across 74 countries. We've got 70 nationalities and we have 30 working languages in the business. So we have global reach, but we also have a deep, deep local connection to the markets and the customers with whom we operate. And we believe, therefore, by getting more competitive, we can take advantage of the strength of the business, which, to be frank, have been blunted because we haven't been cost competitive enough in the past. So I spoke a bit about the purpose and that really is the North Star and it's showing our people that this is not about cutting our way to prosperity. We are taking what we call bad cost sold of the business, getting more competitive, and the reason for that is that we can access growth. And so our purpose: together, we put the power of glass within the reach of everyone every day is about growth. The together piece is about tearing down the silos in the business because it's in the silos and between the silos where the cost ide and thrive, and moving to a much more cross-functional, open, transparent way of working and leveraging all of the talent we have in the business, and we have some tremendous talent in this business. Nobody makes glass like we make glass. We have generations of people in our business that know the art of glass making. It's also -- together is also both the customer bringing them closer and bringing our suppliers closer. The power of glass is rooted in the consumer love for glass. Consumers love glass. They love the feel of it, they love the touch of it, they love the clinking sound of it. They're associated with moments of enjoyment in their lives throughout the day. And there's a real part of that when you sit and listen to consumers talk about glass in a way no other substrate does, yes. And then within reach of everyone is speaking to an ambition to grow the business beyond the markets we're in, right? And the fabulous thing about the glass business, it's a daily purchase. People interact with it daily. And in businesses like that, all you have to do is to get a little increase on people's daily interaction with it and the numbers are ginormous. So that is our purpose. Coupled with that, one of the most important things is you drive change is speed, because if you don't move with alacrity, people get tired because they don't see the results coming through. And so what we've done is we've taken a lot of the bureaucracy out of the business and the layers of sign off, right? Because what I want is our people, particularly where they're close to the action at the front line of the business to be able to move with speed, make decisions, not be looking over their shoulder, right? And to do that, you have to give them a framework. And so we've developed a set of operating principles, yes, and those principles are rooted in safety, they're rooted in transparency, productivity, they're rooted in shared value with the customer. It's about taking ownership and finding a way to lead every day in the business. And of course, it's wrapped up in economic profit. And what we're saying to our people as long as you operate within those guidelines, go for your life. And that has released tremendous energy in the business. People come up to me and say, "Hey, Gordon, I've been in this business 25 years, and I've never seen us move this fast." And you know what, the world didn't fall in because we didn't take every box. So speed is really important to the change we're driving. So we have our purpose now, which is a stretching ambition for growth once we get competitive. We have a framework, which allows people to move at speed and make decisions close to the customer and close to where the action is. And decluttering the business and stripping the superstructure of bureaucracy of the business, and allowing people to really get back in the game and feel they have a sense of ownership of the results. And so we also have our value creation road map. And many of you have seen this, we laid this out last July. So what is it? It's essentially a map of how we're going to go about this turnaround. It's the arc of the turnaround. And it's broken into 3 stages or 3 horizons as we say. The first one is what we're calling Fit to Win. The second one is Profitable Growth. And the third is what we call Strategic Optionality, because we couldn't find a better name for the third one. So Fit to Win is exactly as it says on the bottle. It's about getting fit in order that we win more business in the market. It's about getting fit to grow. We're not doing it to pump the short-term earnings of the business. We're doing it so that we access growth. One of the most insightful and telling conversations I had early on in the piece is I met the CEO of a very large business that we've been partnering with for years. And I said to him have you any advice for me. And he said, you guys need to get more competitive. We love dealing with you, but you need to get more competitive. And I said, can you help me understand that? And he said, yes, he said, "Our guys love working with you." But we've had 8 growth projects in the last 5 years, or that could have been the other way around 5 growth projects in the last 8 years, and we've done none with O-I. So I went back to the business, and I looked at those projects. And to be honest, the pricing was fine, but we couldn't make the numbers work because our costs were too high. And I'd looked at what that growth would have brought. You're talking probably 10% growth over those 8 projects. I was with a customer in Latin America a couple of weeks ago, and they told me their demand for glass over the next 3 years is going to grow by 25%. And he said, "I need your head to get there." And the way we help them get there is by being more competitive. So we are doing Fit to Win to access the growth that's in the market. Everywhere I go, when I talk to the customers and I say, how do you see the outlook for the next 5 to 7 years. All of them are focused on growth. And I know we're going through some turbulent times here at the moment, right, in the industry we've come off the back of COVID, there's a packaging recession, there's uncertainty around tariffs, but one thing I'm crystal clear of, we will be selling more beverage products across the world in 2030 than we are in 2025. The same way is that we were selling more in 2025 than the industry did in 2015 and 2005. There's a tremendous resilience to the beverage alcohol market across the world. So we believe the growth is there. We believe we have tremendous strengths and we need to sharpen those strengths by being super competitive. That second horizon is really about then accessing that growth and generating more cash from the business as we get much more focused on capital. Capital is precious. And that's one of the lessons I'm driving into the business. It is super precious, and we have to treat it as such. We are getting much more disciplined in our approach to capital and John will touch on that in his section. And then the third piece, is really about when we've earned the right to expand and we've earned the right to do bigger things and make bigger plays. We're only in 43% of the top markets in the world, right? We only have a 9% share of the glass market. So we have -- if we get things right and sharpen our competitiveness with all the other strengths we have, which I'll lay out, we have tremendous opportunities to grow. But with every strategy, there's a long shadow between the strategy and execution, and I want to talk about that as we move forward now. So what is our right to win then? So we believe there are 5 elements in our right to win: the first one is rooted in the consumer, which is the most important thing, consumers love glass. There's just no question. It's undeniable. We have privileged relationships with customers. Some of these relationships go back 20, 30, 40, even 60 years. We've got a privileged footprint. It would take billions to replicate the footprint we have. And we have that global reach on the one hand where we can service all the very large global and international customers. But we have that deep local touch. You walk into any of our businesses, it's like any other local business. Led by people from the local culture who understand that culture, who understand consumers in that the connections with customers. And increasingly now, this focus on competitiveness. And I would say those strengths have been in the first 4 have been in O-I for many years, but they've been blunted by the fact that we haven't been more competitive, and we're addressing that now and we're addressing that with speed. So let's spend a few moments on each of these. Anywhere you go, any survey you run, glass comes out on top, okay, whether it's for sustainability, whether it's for taste, I mean we have customers in certain markets that advertise that their own product tastes better in glass. Imagine that. And people trust the quality of glass. And you can see that in the most iconic brands in any category in the world. And if you take a look at some of these brands here, glass is at the core of the brand's equity. And if for a few seconds, you close your eyes and you picked any one of these brands and you imagined what is the iconic package of the brand, 8 times out of 10, it's going to be glass. So key to that position is leveraging our customer relationships, and they're deep seated, O-I is deeply trusted. People like doing business because what -- O-I has the reputation of in the market is, yes, they drive a hard bargain, but once they commit, they are all in. And we're really seen as a trusted partner and you can see the work that Arnaud and the team have done in building that confidence over the last 8 to 10 years with a Net Promoter Score that's in the top quartile. Reinforcing those relationships are a set of irreplaceable assets. And then if you look at the market overall, the market is growing. We are in a growth market, the market for food and beverage is growing, and if you take a look at any of those segments there, you can see they're all growing. Glass is growing at less than what the total food and beverage packaging market is growing. And my hypothesis is that because glass has allowed itself to be gone on competitive over the years. And we're going to address that. So how does this all fit together to increase the value of O-I. Well, this is our virtual circle or our value wheel. So we are on a path to transform the competitiveness of the business. We are going to challenge every cost in this business. And if it doesn't make sense and if it doesn't add value, it's coming out. Through that, we will put ourselves in a position to access the growth that's there at an economic profit and really leverage and optimize the network we have around the world. That will deliver higher earnings, and importantly, boost cash and economic profit. That will allow us to strengthen our balance sheet and take it down from where we are to sit somewhere between 2 and 2.5x. And that will give us the opportunity to invest in targeted growth opportunities, of which there are somewhere in the region of 30 to 50 growth opportunities for us across the world in different categories, in different segments. And then put us in a position to be able to return capital to shareholders. So that is our focus, and that is how we are intent on driving value. Before I finish, and I hand over to Eduardo, a few words about economic profit. This has been a focus for me for the last 25 years and all the businesses we're on. Because the fundamental truth is if you do not deliver a return above your cost of capital, you're just digging a hole. And so what we did right from the very start is we mapped out where there was profit creation and where there was profit leakage in the business. And John and his team and Santiago Castrillon is here in the business. Santiago led the effort across the business to map out what are economic profit is at the enterprise level, but also right down through the business at a plant level, at a country level, at a customer level and at a SKU level. And now we have a complete picture across the business of where the creation is and where the leakage is. We've trained 300 of our people in the business on what it is, how it works, how you implement it. And all of the capital projects that we look at now and all of the investments we look at, are through the eyes of economic profit. And if it doesn't reach our target of WACC plus 2%, that capital doesn't get spent. And we've already caught about $70 million of capital that probably would have gone through in the past because there was a strategic reason for it. That didn't go through anymore, because it was never going to hit the target. And so driving that kind of capital discipline into the market is absolutely key for us. So with that in mind, what the success look like over the next 5 years. So as I mentioned upfront, we are reaffirming our 2027 commitment of $1.45 billion EBITDA, free cash flow of 5% of revenue, and a 2% economic spread. And we're also setting out today what we're calling preliminary targets for 2029. We see a clear path to lifting EBITDA to $1.65 billion delivering free cash flow of 7% of revenue and expanding our economic spread to at least 4%. So that's a quick walk through. I'll come back at the end to answer questions, and I'll now hand over to my colleague, Eduardo Restrepo. Thank you.

All right. Thank you, Gordon, and good morning to everyone. As Gordon mentioned before, my name is Eduardo Restrepo. I've been with the company for 21 years. I've had a chance to live in 4 different countries, 5 different cities, and multiple assignments, most recently, I was the Managing Director of our business in Americas Central. And today, I have the responsibility of all of our businesses across the Americas. Now for the session today, I got the privilege of sharing with all of you our Fit to Win program and how it is going to unleash The Power of Glass. So let's talk about our Fit to Win, what is Fit to Win? It is our enterprise-wide productivity improvement program that is going to elevate economic profit and deliver transformational savings into our financials. It is focused on 2 phases: running parallel, Phase A, our short-term quick actions that were taken in place. Phase B, require more transformation, more ramp-up activity. So it will require more time to get some traction into the savings generation for the productivity program. Both of them are already started. They're running parallel and are kicking off our transformation program. These 2 programs will enable the third element of Fit to Win, which is becoming best at both, which Emmanuelle will share later in the presentation today. So we are acting fast. We're putting initiatives into place, and we're building this momentum into the organization. Let's share -- let's review briefly what acting fast means. Today, for 2024, we were able to deliver $25 million into our savings plan. For 2025, we will deliver $250 million and as Gordon mentioned before, the momentum that we are seeing and the opportunities in front of us, gave us the confidence to elevate our savings target to $650 million by 2027. So what is different than Gordon mentioned before. What is different is this mindset change to elevate economic profit. So let's talk about this for a few minutes. Here introducing to you the 5 big macro elements that drives economic profit into our business. The first one, SG&A and network optimization, quick and effective actions taking place, as well as rightsizing the footprint, balancing capacity with demand. The second one, cost transformation working closer with our suppliers as well as generated a disciplined disruption for consumption reduction across our factories. The third one, total organization effectiveness or TOE. This program, outside in, a new way on how we elevate productivity across our footprint. The fourth one, best at both models that we serve, mainstream and premium categories. And the fifth one, as we advance through this system, we get the possibility to monetize some assets as well as the capital discipline mindset of WACC plus 2% delivery for every dollar that we spend in the business. So this systemic approach will allow us to elevate economic profit in our business. So let's go in the next couple of minutes briefly on each of the 5 elements. The first one, SG&A. Last year, we sat down as a leadership team, and we drafted a lean, fit for purpose organization allowing us to streamline the organization, release some cost, and create the possibilities to run our business efficiently and effectively. What this is doing for us is a savings plan of $200 million by 2027, half of which will be delivered into 2025. Now the second element of Phase A is network optimization. So last year, in the same review in the second half of the year, we -- and after going through the packaging recession, we saw that we have around 13% of excess capacity across our fleet, across our system. This excess capacity it was generating closely to $250 million of unabsorbed fixed cost. So we took action. We curtailed some assets in the organization. We balanced capacity with demand, and we were able to reduce $100 million of these unabsorbed fixed cost. For 2025, we will further seek reductions by $50 million that will be delivered into our savings plan as we take additional curtailments into the system as well as we work towards reducing our inventory day sales or ideas below the 50 days level that we have. Now we do expect that as we mature through our TOE implementation, it will further allow us to generate reductions into the system and part of our savings trajectory into 2027. So let's now spend some time talking about Phase B. As I mentioned before, Phase B runs in parallel to Phase A. It requires more ramp-up activity, but it's going to be transformational in nature. Two elements to highlight in this space, is first, working with suppliers closely, which I will share in just a few minutes. And the second one, as Gordon mentioned before, is generating this disciplined disruption across our facilities, changing the way we run our operations, defining new standards for us to reduce consumption, and as such, improve the profitability of our operations. Now going back to suppliers, what are we doing with suppliers. As you saw, we have an aggressive $150 million target. And as such, we need suppliers to work with us, and there's 3 focus areas on how we are segmenting this work with suppliers. There are suppliers that are strategic, there are suppliers that are partners, and we expect to continue building on partnership opportunities such as joint ventures and others that are more transactional in nature, but we need all of them working closely with us to deliver these savings into our financial targets. There's been good progress, we already had 2 supplier days done in our business. One in Europe and one in the Americas and action plans are well in its way. So let's talk now about TOE, what is TOE and what is it going to do for our business? It is a transformational program for us. It is a systemic approach on how we run our operations. It generates this disruption in the way we run our factories. It is going to allow us to elevate productivity in our factories as well as release trap capacity that we can then either reduce unabsorbed fixed cost or fill with profitable capacity and as a consequence, elevate economic profit into our business. This journey for O-I, started at the end of last year with a pilot that I'm going to introduce in a few minutes and will be fully deployed by the end of and actually starting in the second quarter of this year. So let's talk about the pilot and what are we seeing today. We selected the Toano, Virginia facility as a good representation of our fleet, and this project started in December of last year. It goes through a 20-week implementation period. We are 3 quarters in at this moment in time and the results are just simply impressive. The results especially for someone like me having lived in the glass industry for the last 20 years, I've never seen results delivered this way in such a sustainable manner, how quick and effective without capital investment and without any supply chain disruptions. So what are we seeing? We're seeing productivity improvement roughly by 10%. We also have a bold transformation program to reduce cost, and the inventories have dropped and part to the best performance across our fleet. It's simply impressive what we're seeing, and we're encouraged and refreshed by the results of this program. Now let me share with you then how we transition this transformation on how we run our businesses today. In Americas Central, a business that I know very well, once we went through the training program that was shared by Gordon earlier in the presentation, in the middle of last year, we went back with our leadership team and we understood all the different levers that drive economic profit. We drafted initiatives connected to these 5 levers that is allowing us to generate a transformation path for this business. And I'll give you some examples of what we're seeing today. SG&A and network optimization. We reduced by 25%, the SG&A of this business and we're generating -- and we're being able to run this business smoothly without any interruptions. We also took action on network optimization, balancing capacity to demand, and therefore, releasing unabsorbed fixed costs on our financials. For cost transformation, we have a double-digit cost reduction plan into 2027. And we're also going to be working closer with suppliers, bringing the supplier day for this business unit in the second quarter. TOE, we are leveraging the lessons learned from the pilot that we are seeing in the Virginia facility, and once this program reaches our factories, it's just going to simply elevate or ignite further the transformation path for the business. What is this doing? It is allowing us to become best at both the models that we serve in this marketplace. Good examples are being best for mainstream like beer category or being best in premium for the growing tequila business in this business unit. And then as we do this, we get the opportunity to further monetize assets as well as ensuring that every investment that we make is going to yield WACC plus 2% into the financials. At the end, what this business will do -- what the system will do for us is that we are going to be able to transition the economic spread of this unit by roughly 6% to 8% into 2027. So the results are encouraging or the transformation path is encouraging, and the leadership team is excited to deliver on the targets. At the end of the day, what this will do for our business and all the other businesses around the world is that it's going to allow us to become fit, so that we create the conditions to compete and win in the marketplace. And this is what becoming best that both is all about, which I'll let Emmanuelle introduce next. Thank you.

Thank you, Eduardo. Good morning. My name is Emmanuelle Guérin. I joined O-I last October as Senior Vice President for Business Operations Europe. Prior to joining O-I, I've worked nearly 20 years in the polymers industry for DuPont Deutsch Elastomers and DuPont Engineering Plastics before moving to PPG, leading the Industrial Coatings business and then later on the Global Auto Parts and Commercial business. The reasons I chose to join O-I are twofold: first, for the opportunity to work on the transformation that Gordon outlined; and secondly, because I truly believe in The Power of Glass, it's sustainability and the opportunity for growth it offers. And I'm excited to be standing here today to talk to you about the Best at Both model. So what is Best at Both model? It's a strategy that focuses on simplification, productivity and competitiveness, and we're achieving this by differentiating our approach to mainstream and premium, with a unique set of service models. We, today, ambition to grow our premium portfolio from 27% to 40%, knowing that premium markets returned 30% above average margin. This is a way for us to create value. The way we're driving that differentiation is leveraging the Fit to Win, the cost savings Eduardo outlined previously and making and turning this into a systematic way to realign our network, our capital, and our resources to be the lowest cost for premium for -- sorry, the lowest costs for mainstream and the best cost for premium. Now how do we do that? Well, it does take a complete reset of our ways of working: operationally and commercially. On the operations side, we're driving network specialization, we're driving end-to-end supply chain optimization, and we're driving capabilities realignment because it doesn't take the same skill set to address a mainstream market as it does a premium market. On the commercial side, we're adapting our service levels to our segmentation and we're leveraging our valuable relationships and Arnaud will deep dive on the commercial transformation in the profitable growth section. Now if I take a closer look at our operations transformation, it's really about driving a fit-for-purpose network by realigning our furnaces, realigning our lines to mainstream and to premium. If you think about mainstream, it's about running long campaigns, it's about fewer SKUs, whereas on the premium side, it's shorter campaigns, higher complexity, more job changes. The skills and the efficiency to drive those 2 model is different. So we're specializing our furnaces. We're specializing our lines. Because we're growing our portfolio of premium from 27% to 40%, we're also redirecting the number of furnaces that are dedicated to premium and we're redirecting the capacity that we're releasing from our TOE exercise. So we have trapped capacity. We're redirecting this capacity to serve the premium market. By doing that, we can support the volume growth with limited capital investment. And then thirdly, we're specializing our supply chain, and we're specializing our teams, again, the skill sets to drive growth in mainstream and premium are different. So what does it take to win in mainstream? Well, today, we are #1 in mainstream. So we -- it's all about being the lowest cost, and we're achieving that lowest cost competitiveness, leveraging our scale, leveraging our Fit to Win cost competitiveness that we achieved through disciplined disruption, and importantly, we're reframing competition. So we're reframing competition because today, 38% of O-I's portfolio actually competes with cans. It competes with cans in beer, but it competes with can also in food, in non-alcoholic beverages and ready-to-drinks and especially those latter categories of fast-growing categories. So we believe that by being cost competitive to cans, we actually increase our opportunity for growth. And what the illustration on the right-hand side shows, is the -- how sensitive to cost the glass share is. So if you look at the yellow line, the far left, the 100% is the unit cost index in the North America region, which is the highest, the share of glass is the lowest. In other parts of the world, where unit cost is lower, the share of glass is higher. So we're convinced that by driving cost competitiveness and narrowing the gap to cans, we're going to grow. And our goal is to reduce that unit cost by -- in mainstream markets, relevant markets and categories by 20%. Again, focusing on Fit to Win, making Fit to Win not a onetime project, but really a mindset and a way of thinking, embedding waste elimination in the way we do everything. We partner with the value chain to eliminate secondary costs and then we lightweight because by lightweighting, we're also reducing transportation costs and we're improving our sustainability performance. On the right-hand side on the 2 graphs, so the first one, North America, 100% being the index for North America glass unit cost, you can see that cans are 20% to 30% less expensive than glass. And the share has been declining. On the right-hand side, you see European glass unit costs being much closer to cans and the share has been maintaining itself broadly over the last 6 years. So again, we're convinced by adopting that Best at Both model for mainstream, we're the lowest cost provider we will unlock growth. And we have examples of success today where we are winning in mainstream beer. The first one is in our Colombia plant in Zipaquira, where that scale with 4 furnaces, high operational efficiency, and the co-location of the sand mine has actually enabled the glass share to grow nearly 7% in the market where glass already has a leading position. The other example is in IVC in Mexico. IVC is our joint venture with Constellation Brands. It's the largest glass production in the world, sitting next to the largest brewery in the world, massive scale, 5 furnaces, again, high operational efficiency, best-in-class technology, and there -- this has enabled our customer to actually grow their brands by 20% over the past 5 years. So being the lowest cost in mainstream to win and being competitive to cans delivers growth. Now I'm going to switch to the premium model and what it takes to win in premium. Premium, as I shared earlier, is about usually shorter campaigns, more flexibility, higher job changes, more intricate design. So it's all about innovation, design and services to our customers. And here, our commitment is to offer that service at the best cost. Again, we're leveraging our scale. We're also leveraging the Fit to Win cost competitiveness that we're establishing to provide the best service to our customers that flexibility at the best cost. And the example I want to share is of the repositioning of a plant is the Alloa site in Scotland. And by the way, this plant has been running for 275 years, it's oldest plant in the world still making glass. And this plant is today best -- the best total cost serving premium in spirits. It's located right at the heart of the scotch whiskey market, so increased customer touch. It's designed to deliver high flexibility, the highest quality level. And with the recent investments that we've made in the site, it actually has leading sustainability as well. So in summary, Best at Both model is about being the lowest cost in mainstream, competing with cans, while in the premium side, it's providing the best service at the best cost to our customers. Closing on Fit to Win. So we've seen Fit to Win Phase A, Phase B and all the cost competitiveness programs and TOE that Eduardo covered. I've just covered Best at Both model and really, this is about radically reducing total enterprise cost, optimizing our network and our value chain. We're delivering $650 million in savings by 2027. We're increasing our share of premium from 27% to 40% by '29. And we're reducing our unit cost to cans, our unit costs by 20% to compete with cans. And we're doing all this with 1 purpose, which is to drive growth. And Arnaud will cover profitable growth in the session after the break. Thank you.

Okay, guys. We've got about 10 minutes here scheduled for a break. So if we could come back at 9:35. For those of you on the Internet, please go enjoy a beverage or a product on a glass during the break. Thank you. [Break]

All right, guys, I think we're about ready to kick off the next session here. If you could make your way back in. Thank you. Next up, Arnaud is going to talk to us about how we will transform or how we will translate this new more profitable fleet into Profitable Growth.

Thank you. So welcome back, everyone. My name is Arnaud Aujouannet. I'm the Chief Sales & Marketing Officer at O-I. I actually joined O-I 9 years ago, coming from the fast-moving consumer goods industry, because I spent 22 years in Gillette and Procter & Gamble. And sometimes people ask me, why did I join O-I? I say it for 3 core reasons: number one, because I think that packaging build brands; number two, I think about the unique power of glass to elevate moments in our daily lives; and number three, because I think about the role we have to play in making glass more relevant for our customers and our consumers. So as you understand, I'm pretty excited to talk about this part, which is talking about growth, profitable growth. So what we want to do is leverage our increased competitive advantage, cost advantage; two, accelerate our growth with our winning customers. So we will do that through 3 core initiatives: number one, putting glass in more hands; number two, leverage the Best at Both models like presented by Emmanuelle before; and number three, leverage our privileged customer relationships. So to give you a little bit of more color on that, what does it mean? So first, we truly believe that glass is very well positioned as a growth substrate supported by the consumer trends happening. Consumer trends are friends today because sustainability, premiumization, health and wellness are helping glass. Number two, we think that glass is absolutely fit for mainstream and premium markets. NOI has a right to win in both of them. We will win because we will specialize even more our network of plants and differentiate our value proposition with customers, but we will do it in a selective way because we will apply a very or strategic process to focus on growth battles or what we call offense battles and defense battles. We will leverage our customer relationships, and Gordon was talking about it. We have breadth and depth of customer relationships, but capitalizing on our strengths and our increased competitiveness, we think we can create superior value for our customers. So what is our ambition? And I can -- you can see at the bottom of the slide, up until 2027, we expect stability in volume. Why? Because we will grow in the growing category, while we probably do mix management in the less attractive categories. From '27 and onwards, we will accelerate growth, and we plan to grow 1.5% on average and continue to increase our NPS score. So as we talk about growth, let's spend a few minutes to think about our trajectory and growth Okay. So if you look at our growth evolution until 2022, we have been actually growing on average 1.5%. It hasn't been completely consistent, but we have been growing. If we include our strategic joint ventures, and Emmanuelle was referring to our IVC joint venture, for example, in Mexico, we have been growing 2.6%. So we have been growing. It's true that now we are decreasing and we are in the packaging recession environment, which is driven by usually 2 factors: which is consumer price increase, big inflation; and number two, big effect on inventory correction after pretty bullish, I would say, market after the post-pandemia. But what is our perspective on the future on the market? So our expectation is that we see the market -- the glass market growing on average 1.5%. But as you can see on this slide, we see 2 trends. We see the premium markets growing faster than the mainstream market. Premium market, we expect them to grow on average 4% again, and mainstream market between 0% to 1%. So why do we expect premium market to grow faster? There is a fundamental point that during -- even during tough times, recessions, consumers continue to indulge themselves. They usually prefer to save money on the basic spending, why they want to spend good times with their family enjoying moments. You can see, for example, people traveling again. The air travel is at the same level as before the pandemia. The spending in travel retail is never time high. So people continue to indulge themselves. Glass is a great fit for that. To spirits category, especially is growing at more leverage trends. As you can see, a lot of our spirits on -- a lot of spirits customers are developing strategy to continue to grow leveraging those trends. Think about the growth of the sprit market, the tequila market, the scotch whiskey, but also growth in geographies like India, for example. Number two, what I would highlight also is the growth of the nonalcoholic beverage segment. So you can see this category growing fast, whatever it is premium or mainstream. Why? Because consumers are moving to a healthier beverages and the non-alcoholic beverage companies are developing strategies to create more occasions for consumers to doing non-alcoholic beverage. So what is supporting those trends? There are 3 fundamental consumer trends that are supporting that: number one, I was talking about it, premiumization and affordable luxury; number two, sustainability; and number three, health and wellness. As you can see on the right, this is driving some subcategory trends that are acceleration versus the average. Think about, for example, premium alcohol is growing faster. We talked about it, spirit-based RTD, or Prosecco, sparkling wine, food, low or no alcohol beverages or even sparkling water. Okay. So let me zoom a little bit on 2 of them. So affordable luxury. So I talked about the fact that consumers continue to indulge themselves, but also what we see is the growth of the middle class population in especially developed markets. Glass is a perfect fit and spirits market and premium markets are perfect fit for indulgence. Okay? So leveraging those trends this can create space for growth, okay health and wellness. Health and wellness has been accelerating since the pandemia. Let me remember you that glass is only packaging, which is considered virtually inert by the FDA. So this trend is true, is generating alcohol moderation, especially in the existing or developed markets. But at the same time, as I was saying, we see growth in premium and all the spirits brands are developing strategies to continue to grow in different geographies or niches. But at the same time, we know that consumers don't stop drinking or eating they're also shifting a part of their consumption to healthier beverages. So they are drinking, for example, low to no alcohol beverages, and you see the growth of low to no alcohol beer or spirits brand developing no alcohol spirits business. You see the growth of sparkling water, which is booming in many countries. So what we want to do is to continue to accelerate this growth and play our role there. What we want to do is to make glass more relevant in more occasions, but also increase the glass share of locations. So I encourage you to look at the those images and think about your life. How many times in your day do you or can you interact with glass? Think about your breakfast. You might have jars, you might have honey, you might drink a juice in glass. In the morning, you are in the office, you can drink sparkling water or coke. When you're in the restaurant, we can drink sparkling water again or a glass of wine. In the evening, you can go to friends in the bars -- in a bar and drink a nice bottle of beer. And I could go on and on. As you can see probably here, there are multiple occasions in the day where consumers can interact with glass. On average, how many times do you think consumers interact with glass. I won't ask you to answer, but the answer is, on average, 2x. So it gives you the magnitude of the potential of growing glass penetration within categories on both occasions. How are you going to do that? We want to do that by combining 3 things: leveraging those trends and capitalizing on the growing trends. Number 2 is leveraging our Fit-to-Win initiative that Eduardo presented by making glass more competitive, to be more relevant for more occasions for our brand partners, but also capitalizing on our strengths. Our strengths are very often innovation, design and customer partnership. We generated more than 300 innovations over the last 2 years. And we are recognized as for this capability to help the brand design nice products. You have probably have seen a lot of pictures in the entrance. This is core to make glass more relevant for consumers and enhance their occasions. But obviously, we won't do that everywhere for every category. So we will have a very selective approach. We want to win in premium and mainstream, like Emmanuelle described before, but we have selected our battles. So we divided our categories, countries, tiers combinations under two big groups, one of them we call the offense categories and the other ones are the defense categories. The offense, we divided both of them under 2 subgroups, one of them that are currently attractive and the one if we want to increase attractiveness. Let me zoom a little bit on the offense battles. The offense battles are usually fast-growing categories where glass is highly relevant and glass is brand builder, where O-I has the right to win. And as you can see in this graph, there might be premium or mainstream product. Premium product can be, for example, spirits and wine that are a lot of them in this category on premium side, but also on the mainstream side, you might have food and NAB there. We will win by applying our best cost model for the mainstream categories as described by Emmanuelle. So fitting our network of plants, very cost-effective plants with the right service model to especially remove inefficiencies. And we're winning premium with our best cost model with a specially specialized network of brands for premium, but also delivering the right level of services for the premium markets. So what I propose is we listen to one of our critical customer Pernod Ricard to talk about how they feel about the growth of premium and what do they expect from O-I. So I hand over to [ Maria Piadicaro, ] who is the Chief Supply Chain Officer at Pernod Ricard. Can show the video. [Presentation]

So I hope it helps you better understand what we talk about. So let's move to the second battle, which is a defense category. So the defense categories are usually long run business, okay, big sizable business where cost is more important, where O-I also has a right to win okay? And that are critical for us that's great cash contributor, especially as we increase our cost competitiveness. As you may understand, most of that is made of mainstream categories. okay, mainstream, mainstream beer, mainstream wine, but also mainstream NAB and food. So what we want to do here is especially apply our best cost model, our lowest cost model. So as part of this category, we might have segments mostly focused on economy segments where we will struggle to generate the right economic value for our customers and for us. In this case, we will probably exit those segments, okay? So what does it mean is that we will do mix management in the defense battles. Okay? We have a history of doing mix management. As you can see on the top right corner, we have been doing mix management already since 2019 to increase our share of premium. We moved the share of premium from 19% to 27%. Okay? Also, we did some very specific efforts in food in Europe. We have been moving away from non-branded products okay, where the container was not driving the brand equity to shift this capacity to support brands where the glass is driving the brand equity. As a result, as you can see, we might have a slight decline. We had a slight decline in volume, but a significant increase in margin. So what will be the effect of this strategy on our perspective. Okay? So first, as I was talking about before, we expect to be still flat until 2027 because we expect to exit some categories while we'll be investing growth in some segments. The two of them could be -- should be driving stability. After 2027, we will accelerate growth and the effect of investing in growth categories should help us to accelerate growth on average 1.5%. We still see opportunity to go faster than that. It might depend on the packaging recession recovery might go faster than what we see. It might be also that through our cost competitiveness, we'll gain faster share of the good glass market but also drive faster conversion from other substrates. And finally, we might go faster by accelerating our partnership with our strategic customers. I would highlight maybe that where are we at this stage in terms of growth this year, we are at plus 5% in quarter to date. Okay? This is mainly driven by growth in demand in Latin America, but also with two factors. We start to see inventory rebuilding and some share gains. So some great shoots in this market. Still, we want to be prudent with all the -- what's happening on tariffs going on right now and the uncertainty in the economy coming from that. So to do this strategy, to execute this strategy, we will leverage our strategic relationship with our customers. And Gordon was talking about it at the beginning of this presentation. We have a unique breadth and depth of relationship, and we have a unique perception from our customers. So we have more than 6,000 customers. We operate in -- we sell in more than 71 countries. We operate across all the food and NAV categories, food and beverage categories, sorry. We are playing with all type of customers, whatever they are global international customers to small and fragmented customers, which is also giving us an opportunity to do valuable mix management. So we have all the customer base that can give the right to grow, okay? At the same time, what you can see from this chart, whenever we interview customers in a qualitative way or quantitative way, we have great feedback from customers. Customers like us because we have a can-do attitude, because we have a global footprint, and we operate across multiple categories to help them evolve and drive their strategy. And number 3, because of our behavior. They trust us and we are trusted and respected. And this is our -- the values we want to drive in our relationship. We have been very actively driving that over the last years through measuring our Net Promoter Score that you probably understand what it is. So as you can see, driving this Net Promoter Score has been helping us to increase our customer satisfaction and driving, I would say, those great relationship. So we are now reaching a level where we are in top quartile in the industry. Are we perfect? No. We want to continue to improve that and reach above 60 level in NPS score. So what are we going to do with those valuable relationships. I think Gordon mentioned that before, our strategy is to help our customers be more efficient, grow, differentiate and be more sustainable. We will do that, number one, by capitalizing on our strengths, okay? And I was talking about innovation, design, sustainability and Randy will cover sustainability right after. But also, we will help them to be more cost competitive through our Fit-to-win initiative, and generate growth through our productivity program, not necessarily having to rely on huge capital investments because we will generate more tonnes from our network. So we will be able to do that -- sorry, excuse me, before we move to the end, let's listen to one of our critical customer, Heineken, to talk about how they feel about O-I and also what do we expect from O-I. And over to [indiscernible], Chief Procurement Officer of Heineken. [Presentation]

So what we will do also to enable that is evolve our commercial approach. We will have a very thorough segmentation approach. And number two, we will develop new capabilities, building on digitalization and artificial intelligence. Segmentation, we will classify all our customers between partner strategic and tactical partners will be the customers who will invest and grow or to co-investment with them, create joint ventures, deliver the best level of services. Strategic partners will be customers with whom we will do long-term partnership and support their growth. Tactical customers usually relying on short-term partnership will have the lowest level of services. As you may understand, we will adapt our segmentation to our level of service. Capabilities, we will leverage digitalization and artificial intelligence to help us improve our customer service better forecast, better sale, cross-selling, upselling analytics and serve customers differently by the deleveraging also digital selling platform. So to conclude, I will go back to the goals. And as you understand, stability until 2027, mix management, leveraging on growth categories, acceleration of growth after 2027, where we will leverage, I would say, the growth categories to accelerate and continue to increase our Net Promoter Score. I hand over to now to Randy Burns, who is going to cover sustainability goals, but also our Horizon 3. Thank you.

Well, hello, everybody. Good morning. My name is Randy Burns. I'm the company's Chief Administrative and Sustainability Officer. Today, I'm going to cover our Horizon 3 growth and value returning plans, which we call as Gordon mentioned, strategic optionality. But before I get there, I have some sustainability news I'd like to announce. So 5 years ago, O-I came forward with a set of 2030 sustainability goals that included a 25% greenhouse gas reduction by 2030, a 40% renewable energy target by 2030 and a 50% call it target by 2030. Well, it turns out that 2025 is going to be a milestone year for O-I sustainability program in our journey. Because if we haven't already, we're going to hit those goals by the end of the year. So I'm proud to announce today that O-I is going to elevate its sustainability ambitions and announced new 2030 goals, and you can see them here. We're going to elevate our greenhouse gas goal to 47%. And by doing that, we're going to bring the company in line with the 1.5-degree warming pathway. We're going to elevate our renewable energy target to 80%, and we're going to bump our cullet goal to 60%. Doing this not only shows that O-I has a commitment to being the global leader in sustainable glass manufacturing. More importantly, our progress is going to help our customers also hit their sustainability goals and keep on track. Now we have a solid road map to get here, and it's grounded in Fit-to-Win and the efficiency and productivity in there, but it will also involve the tools that you see before you on the screen. So now let's turn to strategic optionality. Our Horizon 3 growth and value returning plans fall into 3 general categories with which you're all familiar. The first would be geographic expansion. The second will be to use traditional corporate development tools to add on to our business and grow. And the third, of course, is traditional value-returning plans for shareholders. We intend -- and all this is predicated on us having a strong balance sheet and letting the Fit to Win benefits roll through the business in order that we are able to access this growth. So we're going to use target expansion opportunities to increase growth and look at returning shareholder value. So let's look next at the market opportunities we may have and then dig into a few details. So O-I is 1.7x bigger than our next largest competitor. We have amazing customers and relationships. And we have a strategic footprint that serves them well as you heard from [ Herve ], among others. But we only make 9% of the world's glass containers, 9%. And we're only in 43 of the addressable markets, which is a lot fewer markets than our customers are in. And even though we're projecting low single-digit growth in the glass market, we have plenty of other opportunities to grow our business based on our customer relationships and the footprint. And you'll notice down at the bottom, the markets that we're not in are growing faster than the markets that we are in. So our growth opportunities are considerable here, and we're excited about that. So you might be asking yourself, what are the tools that O-I is going to use to access this growth? And if you're thinking Fit to Win, well, you're on the right track because we're going to do this in 2 phases. Phase 1 make no mistake, is about strengthening the business and the balance sheet so that we can access the growth by using the stronger competitiveness that we have. And so what does the near term look like for expansion potentially based on this proposition. Well, as the benefits from Fit to Win hit the business as they run through, it might give us the opportunity to do some strategic bolt-ons. What would that look like? You say, well, we might be able to have a situation where we could enter into a joint venture with a customer like our successful one in Mexico with Constellation that Emmanuelle told you about that allows us to follow customer growth in a discrete way. And as Gordon mentioned, we believe there's value trapped in our supply chain. And I think there's probably some possibilities that something shows up that allows us to eliminate some waste and capture value in that way. We're going to save the longer-term geographic expansion, inorganic growth and other things for the longer-term piece here, right? Including maybe looking at container adjacencies. So our approach is really going to use our competitiveness gains to be opportunistic on growth and value returning options as the business gets stronger over time. Some of you may also be asking undoubtedly, I can see it on your face, does MAGMA fit into her someplace. So let's talk about that here quickly, too. So we can see MAGMA as a way to potentially follow the premium growth market. 2025 is going to be a learning year for O-I and MAGMA to see if the new Bowling Green plant can demonstrate economic profitability and production at scale. As Gordon mentioned, the litmus test for our assets is whether they can make and hit the WACC plus 2 hurdle. Magma is no different than any of our other assets in this regard. So 2025, also a milestone year from MAGMA, because we're putting the Bowling Green plant through its paces, as everybody well knows, and we'll be able to learn whether it's going to hit these critical financial KPIs and provide us an understanding of where MAGMA might best fit into our footprint. Now I know everybody is waiting to see -- hear from John to tie this up and to show us where all this is headed with the numbers, but let me hit this one last slide before I turn it over to him. Our targets when it comes to our Horizon 3 growth plans are pretty straightforward. In the near term, we're going to focus on getting fit in order that we can access growth and pursue some of these opportunities. And what does that mean? Fundamentally, it means a 2.5 turn leverage ratio. That's our near-term target. And from a longer-term perspective on the balance sheet, we would like to live in the 2x to 2.5x range. We think that's the one. John is going to have a lot more details on that in just a few minutes. And from a growth standpoint, what we're going to do is use the balanced capital allocation approach, as we determine where the expansion and therefore, investment in the business versus returning value to shareholders is the best way to unlock value for the company and its shareholders. So we're really excited about these ambitions and the road that we're on here with our transformation, and we're going to enjoy the journey, and I hope you will, to watching us perform and deliver these results. So without further ado, John, would you take us home on how all this looks from a financial standpoint.

Sounds good. Thanks, Randy, and good morning, everyone. As mentioned, I'm John Haudrich, I'm the CFO for the company. I've been in the packaging industry for over 30 years now. And I've been at O-I for about half of that in the CFO since around 2019. Over the 3 decades, I've had the pleasure of seeing some really good times and also some challenging times across the whole industry. One thing I learned though and central to our message today is the most competitive companies do really well regardless of the macro backdrop. And that's why I'm really excited about this plan. It's in our control. It's our self-help. It is us driving a competitive position that will allow us to be resilient and driver own future, which I believe will be more prosperous. So earlier on, you heard from Gordon, he shared the view of the strategy, the direction of the business. You heard from my peers about the different horizons we're using to drive value going forward. I want to talk now and bring it all together and talk about how we're going to leverage the power of glass to drive sustainable, consistent, better financial performance and greater shareholder value for you, our investors. First thing, we are reaffirming our 2025 guidance. We are also reaffirming as Gordon had mentioned, our 2027 financial targets and we are introducing our new 2029 objectives. So while the 2027 targets, as we heard are largely driven by Fit to Win, we're bringing in the 2029 objectives because we want to show and illustrate how the second and third horizons could potentially impact and bring more value to the organization. So we'll be talking about capital allocation, and we'll also be talking about our journey to create sustainable, improved economic profit. But before we do that, let's talk about a little bit of context, a little bit about the past. You see a number of different financial measures on this page. I want to focus first on the upper right-hand corner here, which is economic profit. The company had some really, really good years, really good improvement coming out of the pandemic and subsequent to that. And that culminated into historically strong performance in 2023. The company, like many others, benefited from strong at-home consumption during the pandemic, which was also supported then by a lot of on-premise consumption when the markets opened up. It was party time, right? So that buoyed the organization and resulted in a very strong performance. However, you see 2024 was a big reset year for the company. Like many others, we saw that the cumulative effect, the fact that cost inflation was building, and it was starting to overcome people's real wage growth and as a result, we saw a decline in consumer consumption activity. A lot of our customers had also thought, hey, this is going to be great times, and they had built up really strong expectations of future performance going well beyond 2023, and they had to pull their horns back in and reset their growth ambitions because of the price elasticity in the marketplace. And as Arnaud mentioned, that resulted in a significant inventory destocking, in fact, inventory destocking has probably impacted us more than actual consumer consumption declines, okay? So that was the driver of the reset in 2024. Now the good news is that in the back half of the year, we started to see stabilization in the sales volume. And as we heard from Arnaud, starting to see some green shoots in 2025 here. We expect 2025 to be a beginning of the recovery for the business. We expect the earnings could be up as much as 85% year-over-year. And the good news is we think that there is further improvement in the out periods, which we'll discuss here in a minute. So back to the 4 financial measures that Gordon went over earlier. We are looking to improve our EBITDA by 30% by 2027 and as much as 50% or more by the 2029 window. That will -- should result in improved EBITDA margins that we ultimately believe should be in the mid-20s over that 5-year window of time and a strong recovery in free cash flow. Free cash flow was a use of cash last year during the tough times. We expect it to go from a 5% to more than 7% as a percent of sales by 2029, and a corresponding improvement in economic spread. 4% economic spread or higher, that's pretty good performance, and that's what we're aiming for. We recognize that we are a company that needs to generate strong free cash flow, and as Randy alluded to, be able to return capital back to our investors, and that is part of the model that we're trying to build. Obviously, the first component here is Fit to Win. This is the same schedule that Emmanuelle showed earlier. I just want to make one point here that the front end of the value that we're creating here in the purple phase, what we call Phase A, is driving the performance that we're seeing improvement this year and going into next year. We are well into that okay? I feel very, very comfortable about our ability to execute on the front-end purple savings because we've already done a lot of the SG&A activities. We've already done a lot of initial network optimization. We've done a lot of the inventory correction activities, and we know exactly what else we need to do within the organization. It's just down to execution. But the same token, what you see is the Phase B starting to kick in this year, starting to see a little bit of the $50 million that we're signing this year. But really the driver of our improved performance in the out periods really is a Phase B kicking in. And what I'm really excited about is that Phase B has long legs to it, especially the TOE program, and that's going to carry beyond this 3-year window, and I believe has real upside to the performance of the business. So let's talk about the building blocks to how we are going to drive improved performance over the next few years. So this is the EBITDA bridge from where we were in 2024 to where we expected our target in '27 moving on to 2029. As you can see, we are taking an admittedly conservative view on the commercial outlook of the business, as Arnaud had mentioned. We're still in the midst of challenging. We're coming out of the worst of the packaging recession, but consumer confidence is still soft, and we obviously know the uncertainty in the world that we're living in right now. So we don't want to be over our skis there. What we have here is unfavorable net price of headwind there. That is made up of 3 different pieces, okay? First is we already had indicated in our guidance provided last month that we are looking at $125 million to $150 million of unfavorable net price in 2025 given the cumulative competitive situation in the marketplace. That's embedded in there. We are also making a provision for the energy resets, we have favorable energy contracts that the company had benefited for the last number of years. Those are set to expire at the end of 2025 and, and we are making a provision for that being reset next year. Of course, if there is a favorable resolution to the Ukraine Russia war, we believe that will result in a potential upside if markets become more constructive, but we are taking a conservative position there. And the third piece of that net price is that we assume after 2025, generally speaking, that we'll go back into a little bit of a more of a normal world where the company is able to offset cost inflation through annual price increases. Okay. Sales volume, as Arnaud had mentioned, we expect low single-digit growth in those core categories that we're trying to drive, especially in the premium area. But that leaves us some room to do some mix management in some of the business that is economically unprofitable business right now. So that gives us some wiggle room there to be able to make those important decisions for the company. We're also seeing, as we exit some of the inventory destocking activity that we've been doing within our own network once we get IDS down to below 50 days, and we think that's probably midyear, kind of later part of 2025 here, we should see an uplift in production normalization. And then what you're left with then is a significant Fit to Win benefits that we articulated. We will look for opportunities to continue to trim inventories down. If we can drive upside in the performance of the business, we're going to use that to continue to fine-tune our working capital. All around this economic profit mindset, you get that working capital down, it drives value to the shareholder. As we look into the out periods, we see the continuation of Fit to Win. And I believe that there's upside to this opportunity. But of course, it is extending out into the future for a period. So we're putting a initial position in there. But then you also see the profitable growth, and that's Arnaud talking about getting into that 1.5% plus growth especially as we start to mix manage ourselves towards the more premium categories. And that is the kind of the thought process and expectations we have as we drive to $1.65 billion over the next 5 years with upside opportunities. Okay. So what does that mean for free cash flow? So obviously, free cash flow, and this is shown and as a percent of sales was negative 2% of sales last year. Two big drivers here, pretty straightforward, increased earnings as well as improved capital discipline, okay? So we got a good EBITDA benefit there. We have CapEx going down. I'll cover that in the next page. And then we also have working capital improving, especially as we draw those inventories down. That gets us to our 2027 target of greater than 5% of sales on our way to over 7% in the out period. So let's talk a moment about CapEx. Over the last several years, the company has had elevated capital expenditures. That's a combination of maintenance spending to maintain our assets as well as productivity investments. The one you see in purple there, those are kind of labor and automation activities as well as in the gray bar investment and growth. We initiated a fairly sizable program back in 2021 to expand the business and to grow. That is coming to a close. Okay? So we're finishing that up. And we do not believe going forward that we need to invest in new capital for growth primarily because one, we have excess capacity right now, as Eduardo had mentioned earlier. But more importantly, with our total organization effectiveness program, we got trapped capacity in the system. And if we can release that, we don't need to have the expansion in the capital intensity associated with expansion capital. And we all know in a high fixed cost business like ours, that's the most profitable thing that you can do, get that operating leverage going and be able to extract the capacity out of the system. So as we look going forward in the next 3-year period should average about $450 million of CapEx, okay. So that's down 25% or so from the recent years. So a significant improvement in capital reduction and in capital intensity. You do see the maintenance mark actually going down some. As we go through network optimization and TOE activities, we do expect to have a smaller fleet of furnaces, but with greater capacity utilization within those furnaces. That's going to reduce our maintenance expense. And especially as we take an economic profit mindset to this, we are really, really laser-focused on making sure that we're spending money where we're going to get a return. Gordon, I think, alluded to it earlier, we canceled $70 million of projects that otherwise I think would have happened. Most of those were maintenance-related projects at facilities, but we really stress tested and we said, are we going to get the economic profit out of these facilities? Are they subject to network optimization? What's the path to 2% plus yes. And we canceled some. And in the past, I would have think we probably maybe would have gone forward with those types of projects. So everything is being subject to that type of discipline going forward, which could provide us greater level of capital efficiency. Let's talk about the balance sheet. A number of years ago, we were about 5.5x levered. I think we've made structural improvements in our balance sheet over the last number of years. that resulted in at 2023, a reduction in half of the leverage to about 2.8x. During that period of time, we had the benefit of the free cash flow of the business. but we also successfully executed a $1.5 billion divestiture program at very attractive valuation levels that were allowed us to reduce leverage. And we also significantly derisk the balance sheet through Paddock's fair and final resolution of legacy asbestos liabilities as well as reduction in our unfunded pension liability that went from over $500 million back of this earlier period to less than $100 million now. So we did have a tick up in 2024. That's the global packaging recession coming through, we believe, is temporary. And with the plans that you heard today and what you see for the rest of the discussion here, we're confident that we can get down to 2.5x leverage by the 2027 period. And ultimately, we believe between 2 and 2.5x is the appropriate position for our business. It balances the need for financial flexibility with the cost of capital, we believe in the appropriate way. So let's talk about capital allocation. O-I is a company that generates significant operating cash flow. In fact, over the next 3 years, we expect that will easily exceed $2 billion. So the question then is how are we going to use that significant cash to create value for our shareholders. Well, the first thing we need to do is properly maintain our operations and make sure that we have consistent and stable operations. We're going to invest in productivity behind the TOE program that Eduardo was talking about to make sure that we're really getting the most capital utilization and productivity in the business. We will be investing in restructuring. We believe that 2025 will probably be the peak year of restructuring, but we do expect some continued restructuring as we do fine-tuning of the network. But you can also see that we have significant capital being allocated to debt reduction as we believe is the best thing to be able to do is to get the leverage in the right place of the business. We will continue with our current share repurchase process for the next few years. On the chart, you'll also see a number of different examples of the different types of investments and use of cash that we might would have under our 3 different horizons, just to give you a flavor. So Randy alluded to it is as we look to getting to 2.5x levered or better, we're going to look at a more balanced capital allocation. okay? So -- and that's in a world where we would, in all likelihood, be doing more share repurchases and initiating a dividend at that point in time. So whenever we get to 2.5x our comfortable line of sight, that's when we'll evaluate that use of capital as well evaluating other things, as Randy had mentioned about potential expansion opportunities or great projects within the business. As I mentioned before, we understand that this is a company that should generate a lot of cash flow and should return capital to our shareholders ultimately. So that's our goal. So that brings us to economic profit. This schedule here shows the dollar value of economic profit generated each year as well as the economic spread in percentages. The good news is O-I is a company that can generate good economic profit. Our challenge has been consistently doing it. And that is what we are trying to get done here by being more competitive, we believe that we'll be less -- more of a -- less of a riding the wave of the macros, and we will be able to drive consistent level of performance and drive economic profit consistently up to between 2% to 4% ultimately in the out period. So that brings us back to reframing success. Again, we are confirming our 2027 number, which is about a 30% increase from the 2024 base. Our 2029 objective is a 50% increase from the baseline as well as a host of other longer-term objectives that you've heard the team discuss today. So thank you for your time. And at this point, I'll turn it over to Gordon for concluding remarks. Thank you.

Thanks, John. So thank you, everybody. And I hope you enjoyed that sort of walking to or through what the future 3 to 5 years looks like at O-I. So somebody said to me many years ago, there's a very long shadow between strategy and execution. And one of the things I've done in my career is really focus on execution. And I think it's a focus and a set of capabilities that I bring to O-I and the team are galvanized around. So from here on in, it's all about execution for us. We have a clear path to lifting our savings benefit from $300 million to $650 million. And we understand exactly the levers that we need to pull, but importantly, in what sequence. And we're challenging many of the conventions that either held the business back more put what I call bad costs into the business. And so we understand what that part is -- and we have a very clear set of management operating systems to now go and drive the execution of the business. And we are making fast progress. You've already seen from into the sort of '24 figure, most of that done in the fourth quarter. We're racing ahead in 2025, and you see where we intend to deliver $250 million of savings and then ramping from there. And I think there's a bit of a myth often that you get most of your productivity in the first year and then it tapers off. But people that can really, really good at this stuff actually drive their productivity rates further and further, the better they get it, the higher their productivity as the time goes on. What we're doing, as I said, is disrupting with discipline. So we're challenging the cost we have in the business, the way we do things. To give you an example, there was -- there's a process in our business that we call changeovers when we're changing from one product to the other. And in all the plants I go in and watch it change over. And I asked the question how long does that typically take and you can see you stand there for the time. And then I asked the question, how long did it take 10 years ago to do this? And you usually get the same number. I say how long does it take 20 years ago to do this? You kind of get the same number. When I was at the Dutch Grand Prix this summer, and I was right over the pits and one of the cars came in and they changed the 4 wheels in 2.6 seconds, I timed it. Now if you go back 5 years ago, it was probably 30 seconds and if you go back 10 years ago, it was probably a minute, right? That is the kind of mindset we're going to be driving into the business. We're breaking down these processes and stripping out the waste in the process to make things faster. And there's a hundred of things like that we're doing in the business. So it's all about execution, okay? So coming back to the investment thesis. We believe it's robust. It sounds, it's concrete. It's about transforming our cost base, and we have a clear line of sight, and we hope we've demonstrated that to you today. It's about reorganizing the value chain and working with the best suppliers that know how to get fit themselves and are innovative. And it's about challenging a lot of the in-built cost between us and the customer. To give you an example, it's not unheard of in this industry from customers to a supplier like O-I to have a 50% forecast accuracy. So as an O-I plant manager, you've got a 1 in 2 chance of either shipping it out the door the day it's made or putting it into inventory. Where I come from, that needs to be much closer to 85%, 90%. And that's a massive opportunity to take cost out on both sides. Because that's good for us, but it's also good for the customer and you drop the inventory and you dropped the working capital. We've spoken a lot about premium. All the markets in most consumer categories, the premium segment is growing, and there's tremendous margin in there, and there's higher EP. And as Arnaud pointed out, we've got a very clear view on where to grow and how to grow. And then with this economic profit mindset, we're going to be great Guardians of capital, because as I said, it's precious. It's other people's money, and we've got to be mindful of that. So my #1 objective, supported by the team you saw here today and people across the business at O-I is to grow the value of O-I for shareholders. We know we've done that in consistently in the past, but we are razor-focused on doing a much better job on that in the future and unlocking the trapped value that is in O-I. We do that by being a great supplier and a winning supplier for our customers and helping them with the opportunities and the pain points they have. We do that by working with the best, most productive, most innovative suppliers and having them grow with us. And we do that by attracting and retaining the best talent and giving people meaningful careers where they can grow and learn. And of course, we do that when shareholders see and touch and feel the value we're creating for them. And ultimately, it's about being more sustainable. And there's real value and sustainability, right? So when we wrap it all up, we feel we have a very strong approach, clear approach, rooted in reality, rooted in the customer and rooted in execution. So thank you for your time. I hope you enjoyed the walking tour through the business, and we look forward to taking your questions after a short break. So thank you very much, and thank you all for coming.

Thank Okay. As Gordon mentioned, give us a few minutes to get some chairs and bring everyone up on stage. And we're on our path to help you be above average, so you have another opportunity to interact with glass. We'll see you in 5. [Break]

Okay. Welcome back. We have some folks who want to ask some questions here in the audience. Catalina.

George Staphos BofA. First of all, thanks for the presentation. Really well done. One question. So it was great to hear about what you're seeing in terms of consumers' perceptions of glass, what your customers are saying about glass, Heineken and the like. Yet when we look at the data over time, glass has actually declined in the pack mix versus other materials. Domestically in beer is one in particular and broadly. And so if you agree with that premise, and maybe you don't, the question is, why? Is it you're not glass as a substrate to not resonating enough with the consumer or the issues more with your broadly, your customer set? And if so, how do you fix that? Where is the disconnect happening

Sure. Why don't I take that and then Arnaud can go a level deeper. So there's a range of advantages to glass, right? Like I mentioned, from a field, from a taste point of view, from a health quality point of view. But if the cost gets too far ahead, it blogs those advantages. And it is clear in mainstream categories and particularly in beer, probably the largest category, you know that the differential between glass and other substrate just got out of whack, right? And it got too high. And no matter how much people love it and people are prepared to pay a premium for it, like there comes a cutoff point, okay? And I don't think we as a business really kind of faced up to that reality or accepted and you think that your advantages of premiumness and taste and all of that will overwrite all cost advantages will just not reality. So the first thing is to get absolutely focused on getting as close on cost to the competitive set. And then you have a real fighting chance of making the case, as Arnaud said, for bringing glass into other day parts based on all of the advantages it has. Because you can have 4 advantages and one disadvantage that blunts the other 4. And so we feel that by getting much sharper on competitiveness, we will sharpen and leverage and multiply the other advantages we have. And I think there's an opportunity there. There is no doubt as well. There's some loss in terms of convenience and certain channels. But then on the other hand, glass has advantages in on-premise channels, for example. So I think the combination of having the right pack for the right consumer channel at the right price, okay? And that price may still be a premium, right? But it's a premium people are prepared to pay for because they see value. And I think what this comes down to is understanding what the value of glass is for the consumer here. So you can have a premium, but you can never get too far away that the customer walks away because they don't see value there. So we are ruthlessly focused now on getting ourselves into a position from a cost point of view that we now get back in the consideration set for value for consumers in the different product categories and in the different segments. And in the mainstream segment, that competitively -- that cost piece is very important. Consumers just have tighter elasticities there. In premium, because people place more value on the other attributes, they're prepared to pay a bit more for it. But again, you have to be conscious there. And we see that in our daily lives more premium products. We're prepared to up more for it because we see more value in the total experience. So -- but for us, not it all starts with getting competitive and getting cost competitive. And I'm absolutely convinced that when we get there, and we're all really seeing where we're getting competitive and we're picking up volume. That is the bedrock on which we'll will base the business going forward and leverage those other opportunities that have tremendous value, which have been planted -- blunted because our cost base has got out of whack.

Gordon, just if I could, just a quick follow-on on that. How important and how attackable are the filling and distribution current, recognizing you're going to improve on their current cost disadvantage for glass in terms of driving ultimately the pickup in volume. If you can touch on that?

Yes. Look, right I would say, and I've sat in plants actually that had both types of fitting lines, and there's no questions can go down the line faster. But there's things you can do on mainstream about how you design the bottle, right? to help it go faster. And we've done a lot of work over the last months. So looking at the total cost of ownership, right, because there's the pack, there's a supply chain. There is the filling, but there's also on the shelf. For example, pick a number, but my understanding of the industry is somewhere between 50% and 80% of cans are sold on discount. And it's the brand owner pays that discount, not the retailer. Whereas for glass, it's 25% to 30% on discount. And when you own a brand the more you sell on discount, the more it subtracts from that brand's equity. The more you sell at full price, which is what you do in glass, you sell more at full price and glass than you do in cans, the more it strengthens your equity. So when brand owners look at the long run equity, and that's the role of a brand owner and a brand manager to build a long-term equity, right, and balance that with the short-term volume. Glass is really a powerful tool. We've got to help our customers do more of it by getting fitter. And I've had many discussions now over the last couple of months, and I had one particular discussion with the CEO of one of our customers. And he said to me, I want more glass in the portfolio. I have too many cans in my portfolio. He said, "You got ahead of me right? " So that's our job now. We understand what we need to do.

I would add on to that, George, and it was one of the points that we made during the presentation is that we need to go back into the value chain, and that's why value chain optimization is so important. We're going to have to work with the closures and in the folding cartons and the labels too because it's all part of the same ecosystem, right? And if there's a cost disadvantage overall, well, it's affecting all players. And so we've started the process of working back in that value chain with the supplier group to make sure they're all kind of focused on the same solution.

My enemy's enemy is my friend.

[ Theo van der Meer ] from Robotti & Company. I was just wondering if you could drill down a little bit more on some of the efficiency goals and gains that you've already gotten maybe in the Toano place in particular. Is that a reduction in the number of SKUs or a consolidation of the type of SKUs or a change to the actual way the product lines are working there. Just some color to how you were to achieve those efficiencies.

Sure. Obviously, the operating system and how we're going about it is, I would say, commercial and confidence, right? But let me give you some things I can share. I think on the July call, I -- for those of you that were on the call, I mentioned we had run a short pilot study in one of our fittest plants in the fleet and doing a whole bunch of analysis with this operating system we're introducing into the business. And when I say operating system, that's not a piece of software, that kind of behavior or process improvement, all of that kind of stuff. And universally, this plant is seen as a really good plant. And within 4 weeks, we were able to demonstrate anywhere between 10% and 15% efficiency gains. That plant has now gone on to kind of drive those efficiencies. Right. And what you look -- you look at the end-to-end cost, you look at the end-to-end processes, I like to look at things at cost per minute, for example, because what you're paying is you're paying for time, right? And really understanding where all the losses are against what a standard might be and also raising those standards. Glass is a traditional industry, a lot of the manufacturing standards may not have changed for 5, 10, 15 years, 20 years. I come from daily fresh environment where you drop your inventory to 0 every night, 40,000 customers a day that expect 99-plus delivery in full on time. That's a different set of operating standards. And there's no reason why we at O-I can get a long way to the standards that, that business had. So I think it's -- as I said, it's a challenging convention and it's but it's doing it in a disciplined, data-driven way. And as I'd like to say, it really is disruption with discipline. So there's 2 types of costs for us just to close maybe build on that. There's good costs that help us build capability and advantage and there's bad cost. And it's binary, and the bad costs are coming on.

[ Josh Wesley ] Baird. Maybe if I'm a customer of O-I, say, in 2023, 2024, can you just give some color on what that interaction looks like with you guys as a supplier then and then how that might change through your 2027, 2029 targets?

Well, I'll take that and then I'll hand over to Arnaud. So in 2027, we are going to be a much fitter, leaner business. We're going to be a much more responsive business. And we're going to be a business which comes with solutions to customers on how to help them be more efficient, how to help them grow, how to help them be different and how to be sustainable. And we want to get ourselves into the position where we are the ones they come to first. Arnaud, you probably have views on that as well.

Yes. So as you probably understood from through our NPS journey. So NPS is asking a question, would you recommend or I am deep diving on why or not, okay? So through that, we have been learning over time. And the reason why our NPS score is improving because all those learnings, we apply that in how we serve customers. Okay. So number one, we have been growing and understanding that. But number two, I think with the segmentation we're going to apply we're going to make sure that the customers we have classified as partner and strategic will be served exactly as they want. So enabling growth, enabling efficiencies and so on. You have seen that. Probably, there will be some customers that will be less strategic that will have less services. And so with that, we will better serve those customers. We want to serve best and be choiceful and I look at our resources exactly.

Okay. I've got a whole pill of questions that have come in here from the Internet. So I'm just going to -- a number of them are around one topic. That's probably the big elephant. Talk to us about tariffs. We've heard about a wine in the champagne tariff. There's a number of others spinning around. How do tariffs impact you at O-I, how are you working with customers to solve them?

Okay. Before I answer that, has anything changed since half line this morning. Yes. Look, it's uncertain times, okay? And uncertainty is not good. And of course, we wish it would settle down, but it is what it is and in the spirit of facing reality. That's what we've got to do. What -- if it hurts our customers, ultimately, it would on mitigate it, it would hurt us. So we've -- you saw that $650 million number there. So obviously, as we work through the 10 months, we have that in mind, and we had -- we had a path, if you like, and we brought -- as we identified savings, and then we said, okay, what would it take to bring them forward to offset some of the volatility that may come in as tariffs have been flagged for some time. We're also working extremely closely with our customers and have been for some time. One of the first conversations I had with a customer in June was actually above what would happen with tariffs. So there's a lot of thinking going into that. Like anything else in life, there is -- where there's difficulty there's opportunity and there's puts and takes, and there's headwinds and tailwinds pick your image. But -- so the tailwinds, for example, there's over, what, close to 700,000 tons of glass imported from China at subsidized costs. Tariffs coming into the U.S. that helps us. And we have a fantastic footprint that services the wine industry in the U.S. About 2% of our bottles crosses the Canadian or the Mexican border on field. And then we've got a portion, probably what John, about 4 to 5...

4% to 5%.

4% to 5%, that crosses the border filled. And yes, so there's a bit of disruption there. But if that's not coming in, it's not as if the consumption is going away and we would expect to see a lift in domestic brands and domestic categories of product. And we've got the largest footprint and with TOE, where one unlocking trap capacity that we'll be able to service that. The third thing I would say is that all of the customers in anticipation of some disruption have for months now, been looking at other markets and particularly many of the big ones, they've got global access to markets and shifting marketing dollars and ramping up other markets. So right now, with the uncertainty, it's hard to give a pinpoint answer. We just need to keep cool heads. Keep control of what we're in control of and drive it fast and then see where it all settles. But we've got a privileged footprint across all the markets. We can help our customers relocate as they see fit and we're highly responsive. We have sprint capacity. So as I said, in every difficulty, there's opportunity somewhere. You just got to find it out and you got to keep driving as hard as you can, the things that you can control. We don't control tariffs and timing and all of that. But there's a lot of things we do control and that's what we're focused on. I don't know, John, if you have any thoughts on that?

if I may to complement from the business perspective, of course, in the Americas, tariffs, one of the elements that we are closely monitoring. Two areas that I wanted to expand, be staying close to the customers, understanding their contingency plans, their business continuity plans almost on a daily basis as thing shifts being there to support them, having the flexibility in order to adjust to any change in their shift on we're going to -- or they're going to develop supply for the future. As an example, we did see some customers shifting marketing dollars to other markets, other countries, therefore, being there for them, having the inventory and be able to supply. And then the second element is what you referenced to and we shared in our presentation today, control what we can control, which is Fit to Win. Fit to Win is our shield. And if we deliver the Fit to Win benefits, then we are -- we have the capability to navigate these difficult waters if they come to us and also take advantage of those positive tailwinds if they're here for us to grab as well. So from the perspective of the businesses.

The only thing I would add to this is the tariffs that are actually in place right now are actually probably tailwinds. I mean it's on aluminum and it's on the China where, certainly, there's talk about Mexico and Canada and then more recently over into Europe, back and forth within the last 24 hours. As Gordon said, only about 2% of our global capacity moves in between the U.S. and Mexico and Canada border on empty bottles. Maybe mid-single digits when you look at the filed products. And so you're looking at that kind of low to mid-single digits of global capacity as related to European wines and spirits that actually get imported over to the United States. So while these are still challenges if they ever emerge, they are a fraction of the business. And of course, we have the great footprint to be able to manage with a lot of flexibility.

And to give you an example, I was with a customer in Latin America recently, and they told me that they are accelerating the shift of their business from the U.S. into Latin America in anticipation of tariffs may arise. And a lot of companies are doing that -- and because they already have distribution and brand company set up and sales forces, they can redirect marketing dollars relatively quickly. So helping our customers get there and making sure they have the supply in those markets in which we operate, that's a Eduardo says that's a shield.

[ Marc Schneider from Twelve Lions ]. I'd like to ask questions about two of the leverage you spent a lot of time talking about both your competitiveness and the chip to premium products -- in terms of competitiveness, it's obviously, the first stage is taking out costs, but to be competitive, you need to share some of those cost savings with your customers. So how do you think about -- you showed $650 million of cost savings. How much of that or how do you think about how much you have to give back to customers to be competitive out of those cost savings? And then the question on the premium side, going from 27% to 40-plus percent. Is that going to be achieved by just taking a larger percentage of the growth in premium products? Or do you also have to gain market share from existing products to get there? And what are the risks associated with both those paths?

Yes. If you don't mind, Marc, I'll take the second one first. So premium is you've seen the figures and you've seen the trade lines. That is a growing pie, okay? So it's not a shrinking pie. So in a growth market, you're less focused on needing to take share. So that's the first point I'd make. The second point I make, we are already the largest premium producer. Right, in the markets in which we operate, okay, by -- probably by 2x? So we have all of the capabilities to win there. And being competitive -- being competitive is it's less of an issue for us in premium, but it will also help premium, okay? And a lot of it is your go-to-market how close you are to the customer, how close you are to the marketing groups, the capabilities you bring in design and innovation. And you might talk a bit about innovation here and driving that. But innovation drives premium. And in spirits and in beer, even overall beer is flat to declining. But if you look at the segments are growing, it's the premium segment and it's the premium brands are growing. If you look in spirits, all of the Spirit brand owners, all of their portfolios are driven by premium. And if you ask them, what will your portfolio look like in 10 years' time, they're all seeing a greater percentage of premium. And if you were in the scotch business, one of the things to ask is or even the whiskey overall is how much stock are you laying on? Are you laying more down more stock down going forward than you were in the past 10 years. And inevitably, you get the answer, we're laying down more stocks. Right? So that whole premium pace, and that's a long run trend. It's been around for 30, 40 years. It gets bumps every now and then. 9/11, the great financial crisis, COVID less so just post-COVID, it was a bit of a bump, but the underlying trend is a megatrend. It isn't going anywhere. And so you have a growth market, you get fitter, you sharpen those other capabilities by being fitter, there's tremendous opportunities for us to grow. On the first question, how much you have to give back. It's not as if we're just going to give back and get nothing for it, right? That's part of why we're dealing with customers that we consider partners and strategic, they will get the lion's share of our productivity in exchange for growth. People who deal with us tactically who spot buy and so on, they won't benefit from that. And we will be directing the lion's share of being our competitiveness, if you like, to those customers that are partners and strategics, and they tend to be the winning customers, right? So you can make -- help them be more efficient and you can access the growth in volume. And the way to think about it is, if I'm more efficient, I get access to volume. If I help them grow, I get access to more volume. If I have to be different, I get more margin because it's usually in premium. And if I have them be more sustainable, that's usually more sticky, right? So it's about building layers of advantage into how we go. And as Arnaud said, segmenting the customers, you might have a chat a bit about the innovation and what you guys have been doing?

So I think innovation is critical to drive growth in premium. And if you think about the changing environment. All our top customers are thinking about their strategy to be in the right place at the right moment. And so innovation is key for that. So fundamentally, what we do is to be close to them to help them doing that. So to restore the point, I think a few days from now, we will be in the innovation day with the CMO of one of the top spirits customers to work with all the brands to see strategy and how can we fit with that. And fundamentally, we have a pretty unique capability in this dimension. We have state-of-the-art designers. Designers that are designing whatever category for whatever category segments, so that who knows how to design bottles and create value for brands. We also do that with using neuroscience, understanding what consumer, what the brain perceive on the packaging and how to translate to brand equity into a winning packaging. So we're bringing that to our customers. We also have built capabilities in marketing, where in the organization, we have marketers coming from FMCG companies that know the language of our customers, to be able to develop the right product, the right ranges to help them win. Okay? So as a consequence, we want to continue to accelerate our NPD pipeline and help our customers truly have winning proposition on packaging to address all the pockets of growth they see in the marketplace.

I think the other thing is operationalizing that, you can design a bottle, but it also has to be very efficient going down the line with very low breakage levels and so on. So how then you operationalize that design and the quality must be perfect in premium. Because it's premium, super premium, ultra-premium luxury and the higher you go, the better you must be at manufacturing. And we have all of those manufacturing capabilities, yes.

Marc, I would add one thing. As you noted in our materials, we've taken a pretty conservative view on the commercial outlook over the next few years as we go through a lot of this change, we want to intentionally not put ourselves in a position of disrupting and so that we can actually harvest the most out of the savings that we're achieving.

Anthony Pettinari from Citi. Maybe just following up on that last point. As you look at your long-term targets, maybe out to 2029, what are your assumptions or your algorithm around net price outside of these kind of restructuring activities? And then maybe zooming in on Europe, does your outlook assume that maybe you give back some more price in Europe given you had a couple of very strong years there? And then you mentioned Russia, Ukraine. Conversely, if you saw European nat gas fall EUR 10 or something. Could you talk about maybe what the sensitivity could be or how quickly would prices adjust? Or any way to kind of frame the scenario?

Yes. So on that secondary point, right, on the nat gas and the exposure, if you take a look at TTF prices today, for example, I mean, they're still -- they're down 30% from where they were a week or 2 ago, given the dialogues that have been occurring. So it's obviously very volatile. But we've made a provision close to $150 million, for example, if you look at that chart for that reset. So to the degree that, that market becomes more constructive, that's a pretty significant favorable variance that could occur against what we laid out there, okay? So it could be a meaningful upside depending on how things play out on the global stage there. As far as the assumptions going forward, we still have the negative net price this year, and then we have the energy reset next year, but we are anticipating over the longer term that you look at about a net price neutrality from a commercial standpoint. Before the last few years, which obviously saw a big price increase and a little bit of a reset going on here. If you look at that previous 7 years, which were maybe a little bit more of a stable environment in our business, our net price was flat to up a little bit, 6 out of those 7 years. So this is a business that generally can price through the cost inflation. And we just need a little bit more normalcy, keeping our fingers crossed for normalcy. But assuming that, I think we should be fine on a stable net price outlook.

Just as a build on that as well, the more you shift your portfolio into premium is it is de facto a price increase, right, because you're expanding margin. The other thing on energy is that's one of our value streams that we looking in terms of usage. That is really kind of a sharpened area of focus in the business. So not focusing just on price, but also on usage. And we have a whole bunch of plans and a whole team looking at how we use energy as well here because the penny saved in usage is penny earned on the bottom line, right?

Yes, Gordon, you bring up a good point. I mean, in our outlook, we do have some earmarked savings for lower energy usage, but I think that there's probably potential upsides to that because we're just getting started in that area.

Mike Roxland, Truth Securities. Thank you for all the details, and congrats on the progress thus far. Two-part question. More short term, in terms of the guidance, you basically indicated that you're now going to hit Fit to Win benefits of $200 million this year. I think the range previously was $175 million to $200 million coming in on the high end, volumes are up 5% year-to-date, your guidance embeds for 25% flat volumes. Why -- is there -- is it fair to suffice to say there's conservatism built into the $120 million to $150 million on an EPS basis and the [indiscernible] to $1.2 billion in EBITDA, given the way things have trended thus far this year? That's question one. And then question two, you mentioned 1.5% volume growth, 2027 and beyond. How does that break out by geography? Because I recall that you were targeting or had been targeting volume growth of 2% to 3% globally. Like 0% to 1%, I think, in the U.S., low single digit in Europe and high single-digit in LatAm. If I'm right with that, like what's changed such that you're now expecting lower growth than you had been historically.

Do you want to take that?

Yes, I can take the guidance question. So certainly, we've come out of the gate well this year. I mean the volumes are up. The cost savings are coming through. We've adjusted that element of the $200 million going from $175 million to $200 million, we solidified the $200 million there. I mean that's mostly driven because of confidence around dealing with the network optimization activities that we have there. So yes, I think things are going well, but there's also a lot of uncertainty in today's marketplace, right, with the risk of tariffs, the risk of the turbulence that is associated with that. With the fact that consumer confidence is still is a little bit soft. So keep in mind, our full year guidance has earnings between $120 million and $150 million. I think I still think that we're within that range. Maybe we've moved up a little bit into that range. But I think that range is still appropriate for the outlook for the company for this year.

Yes. On the growth piece, I think one of the things that I countered when I came in was budgeting for volume growth and profit growing on the base of volume growth and not really tackling the core issue of the cost. So the direction of kind of get to the business is let's be conservative on the volume piece. We know there's growth there, but we need to be really competitive to get at it. So if you like, curtail your volume growth and you've got a target number, then you've got to really kind of understand what your costs are. And like the equation I live by is not revenue minus cost equals whatever is left over is the EBIT. In my word, it's revenue minus EBIT equals your cost base. And that's a different mindset and a different approach to running the business and a different board to financial planning as well. I lived in Australia for 12 years and there's an expression there called the [indiscernible] guy. And you're going to do something, you're going to do something, and we don't want to be seen as the [indiscernible] guys, right? We want to be seeing the people, we set commitments out there and we deliver on those commitments. And so that's the philosophy, and that's the kind of approach we've taken to shape in these numbers. If volumes come in better we're going to be in a position to take full advantage of those and we won't be for wanting in taking our fair share of it if the volume arises yes.

Maybe to complement on the where to grow. I think your question was about geographies. The way it is -- what I tried to explain before is we have broken down our business by country, by segment, by tier, okay? So we looked at the mapping of the world and we say, where do we have highest growth, where do we have the best match and where should we focus our attention. And so we have the battles that you have seen before are where we're going to accelerate the growth, okay? So we thought about it in a much more granular way than just a geography, okay? The categories where we want to go, premium, we talked about it. but we see growth in food and NAB, for example, but also pockets of growth in multiple categories. So that's a very granular approach. That's what we have been doing.

And one thing, Mike, I would add, if you want to bust down kind of like the 1.5% that you see as a longer term, like where is that emerging from a market standpoint. You probably have over the longer term Europe growing kind of in that low single digit, maybe kind of 1% or so. Latin America, probably plus 2% to 3%. And in North America, anywhere between minus 1% to 1%, depending on what category you're talking about and what's going on broader in the marketplace. So that's a little bit of the texture of the geographies from an overall growth standpoint. And then, of course, we have our strategies of how we're attacking that from an often defense perspective.

There's a final bit on that, Mike, part of that 1% is also mix management. So shedding a noneconomic profit volume here, right? So we will continue to build the momentum of the portfolio towards a 100% economically profitable portfolio as we move through the next 3 to 5 years.

Okay. Josh, I'll have you up here in one second. But before I do, I've got a whole pile of them in here from the Internet. So I'm going to combine 2 and make it a 2 part question for you. First, does Fit to Win, bring cost competitiveness low enough, only just to stop the market share losses in North America. Or will it perhaps enable you to gain some share? That's part A. Part B is can competitors have made it very clear about their intent to grow share in Europe, how confident are you that will not lose share in Europe?

Yes. So we've done a lot of work on this, understanding the cost dynamics between total cost of ownership of bottles and cans. And we're clear where we need to be, and we understand the breakpoints on stopping and picking up some volume. And the closer you get to parity, the more volume you pick up. Now it's clear that we've seen when we get within 15% of cans, we've seen a fairly dramatic shift back into glass. We help our customers within that range, they shift. Okay. The other thing is the TTV has repealed a law where glass couldn't access 12-ounce packaging in RTDs, ready to drink. And so that has been close to us for 20, 25 years. And that category is growing in the U.S. at about 18% to 20%. And that will allow us to be more competitive or well, will give us access to that growth and with our competitiveness approach, we expect to pick up share there as well. And we have examples as Emmanuelle shared with you in Mexico and in Colombia, we're really hyper competitive to cans. And you saw us growing at 6.7% and cans actually declining. So it can be done. You have to be surgical about it, and you have to know what cost level you need to hit. And remember, only about 38% of our portfolio needs to be at that competitiveness level. So we're very clear on that. The second part of the question again? What -- can you ask me the second part of the question again? Yes. Yes. Yes, can competitors. I'm a student of history. And so I've had a good look at what has happened in glass can dynamics. And I suppose when they say they're coming, kind of to be [ forewarn ] is to be forearmed. So that would be the first thing. -- and we'll be -- we're racing ahead on being competitive in Europe. -- again, Emmanuelle pointed out, we are already very cost competitive to cans overall. And you saw that, that differential is much, much tighter in Europe. -- than in North America. And now we're going to double down on competitiveness in Europe. So we'll see how that works out, maybe.

I can add, I would just say that we have the same Fit to Win program that is more covered, the same objectives driving competitiveness in Europe. So even though the gap to cans may be lower, we're still going ahead to be even more competitive.

And maybe to add on that, there are kind of fundamental differences between Europe and North America, especially on the beer market. So when -- in North America, a lot of the market is single one bottle long neck amber. In Europe, most of the brands have their own bottle iconic bottle, which is brand builder. Okay. So that's a big difference. So for the brands moving to cans is a big risk, okay? And they know that. It's not that -- sometimes they are not tempted to especially drive profitability, but they know that there is a big risk to lose consumers. On top of that, we know also that consumers prefer glass in Europe and probably more than in U.S. So we have a huge preference for glass. And up to the point that you didn't get countries on this chart, but the market share of glass in Europe is much higher than it is in U.S. Most of the countries for glass even for beer is in the range of 60% to 80% to 90%. Okay. So that's a different landscape. And so the more we are competitive to the point where customers are not tempted to shift to for profitability reasons, the more we can meet that and we'll be leading glass. We just had a case a few months ago with one of our beer customers in Europe that opening told us they need to shift and they want to shift some of the business to cans because their margin didn't allow to [ for-glass ] completely. So they wanted to push that. And so what we did? So let's do also a communication campaign together to talk about the benefit of glass and to see if you get uplift from that. And actually, we did a co-communication campaign talking about the benefits of glass and recyclability, et cetera, for example. The uplift on sales was plus 20% during the campaign with the remnant effect of plus 10% on the full business, even different brands, okay? which even surprised the marketing people, okay. So to the point I want to make is the market is slightly different. Consumers like glass. And the more we -- we put glass in their hands and make the benefits relevant and remove the competitiveness barrier and help them to be -- to make profit, the more we contain the risk of cans in Europe.

And just to kind of close out on that point, I think in our own business over the years, we allowed costs to increase beyond productivity in North America and over the long run, that has made glass really uncompetitive to cans. And as I said, we're facing that reality and taking action. We're not going to make that mistake in Europe. So we're a different beast to the one that allowed that to happen.

Josh Spector with UBS. I have 3 potentially quick ones here, more follow-ups. First is, John, can you be specific around the gas assumption for 2026 about what you're baking in, in terms of the number? Also, I guess, for John, about free cash flow conversion, 5%, 7% of sales. My math is that translates to something like a 25% to 35% EBITDA to free cash flow conversion. When I do the math and assume your EBITDA is higher and your CapEx steps up, I would say that there's the potential to do 40% conversion maybe higher. Is there something structural? Or is there something we should be building in to drive that and then last, on the mix shift. How important is that for the growth post 2027 versus needed to hit your cost targets? So is that baked into some assumption around price cost or you need that to avoid volume declines. So just wondering where that fits in more in the 2 periods.

I can address the -- for clarity on the energy reset, if you take a look at that bar that we had in the build, we set aside about $125 million -- closer to $150 million for energy reset. Again, it's a placeholder given where markets are right now. Again, we'll see whether the market will shift in our favor in that regard. And your question of free cash flow, so yes, the conversion elements getting into that 25% to 30%, I do think we could do better, right? And over the next few years, at least in the next few years, and I know you're referring to a little bit further out, will have some extra restructuring dollars and other things that are weighing on some of the free cash flow just because we have to make the conversions and the TOE, but I do believe that we should be able to do better than we were laying there, and that's why we have a greater -- at least a kind of a greater-than sign on those numbers that we provided. Yes. Yes, that's a good point. And Gordon, just kind of said inventory, that's another area. We have -- our aim this year is to get our IDS down to 50 days or lower, but we have operations running in the 30s or lower. And so there's a big opportunity across the whole fleet to become much more inventory and working capital efficient, and we're going to be looking at the opportunities to be able to trim that out over time. It's just waste. And as we get -- work with our customers more as we get these dedicated fleets, 20%, 30% of our fleets right now are hybrid and that an Emmanuelle showed that. And that creates a lot of volatility, right? And you're changing from one thing that you're running to the next thing that you're running. And so if you can get more fleet specialization, you're going to get a lot better working capital specialization too, and that's part of the journey forward.

We've got clear metrics now through the organization linked to incentives as well. So what we've done is we've taken the enterprise EP and we've built what we call an EP tree across 6 levels of the organization and then with KPIs and objectives for each level and each type of work that's going on there each function. And then that's linked to incentives. So you really tie economic profit growth to incentives right down to the factory floor. So you really start to shift the culture. Just coming back on the premium. I think cost and pricing should be kind of far distant cousins, right? And so our cost focus is about being competitive in any environment, in any category. And on the premium piece, that is -- that's a clear strategy to grow both volume and margin and economic profit. I don't know if that answers the question.

Nicholas from [indiscernible] from Bank Capital. I was wondering what the changes in the targets for Fit to Win impact the restructuring costs? And then what exactly is like the time line and costs associated with shifting the furnace orientation.

Yes. So the targets that we have for the $650 million, remember, we had laid out in a couple of quarters ago, the Phase A of $300 million, which is now $350 million. We always knew that there was a Phase B, and we always communicated that Phase B was coming. We didn't dimension what that is. And today, we're dimensioning what that is. So all been built into the way that we've been building the plan over the last several months, but that just came to the maturity point that we're able to communicate the dollar figure of it right now. And if I would allude back to the chart that we showed in my section on the capital allocation, we have about $250 million or thereabout set aside over the next 3 years for restructuring charges. We had mentioned something like $120 to $150 million of that will be this year. So they will probably be the peak period, but we will have some restructuring over the next few years, and it's all built into the views that we have. Hopefully, that answers your question.

Ryan Thorpe AllianceBernstein. Okay. This is a restructuring conversation now. And I find it helpful -- I find the anecdotes actually very helpful in understanding how the restructuring is working and how real it is. Two questions. One, you made a reference to you hope to have 100% of your portfolio economic profitable by, I believe, 2027, you didn't tell us what percent isn't now. I'd like to know that, and I'd like to know what you're doing with those customers, what the discussions feel like, what you're willing to see to walk from the business, how you're thinking about that. I'll give you question 2. Apologies for overloading. You made a comment about forecasting accuracy. Why should I believe you can go higher than 50%? In companies I've been in that's frequently pretty dependent on the competency of your customers. And it's hard to increase that. So anecdotes. What are you doing that makes that go up 85 to 90 is much higher?

Sure. So on the 100% economic profitability, I can't commit exactly to the 2027 number, but it will fall between -- somewhere between 2027 and 2029, right? And there is going to be a massive push on over the next 2 years to everything that isn't economically unprofitable or is economically on profit and there isn't a clear path there out of the business because we can pick up premium EP positive business there. So that's the first point. I'm not going to share exactly what that number is. It's a number worth going after, if I can put it that way. And by making it more economically profitable or getting it to our target or even getting that business to WACC actually, never mind say WACC plus and getting rid of the stuff that don't have a path, that is a measurable increase in EP in the business and we have a clear line of sight on that by SKU by customer. And then we're going to -- we've got to do everything on our side. Usually, there's about 10 levers you can pull to make something economically profitable. about 8 of those levers sit within our house or within the value chain before the customer. And so it's very important that we do everything we can to get all of those levers pulled, and we get our manufacturing variances to 0. Then you can go and have a conversation, say, with the customer, look, we've done everything we can. And we either need a price increase or some sort of mix shift. And if you don't get to an agreement on that, then that product comes out. It's -- we're not chasing profitless prosperity anymore, right? So that's kind of the view and the approach on that. And again, the second part of the question, Ryan. Yes, forecast accuracy Yes. I'm reminded of Henry Ford when he said, whether you believe you will or whether you believe you won't, you'll be right, okay? And I've gone into businesses in the past, where [indiscernible] forecast accuracy and everybody said that's the way it's always been and the customer won't change. Well, first of all, you can't accept that, and I don't accept 50%, right? And there's a cost of 50%. And going forward, we're going to assume our pricing includes a forecast accuracy of north of 70%, okay. And when you sit down with customers and you make this aware oftentimes customers are unaware that they're so out of whack. And so that goes to an inefficiency in their system and their processes, and there's opportunities for them to change and lower their working capital by having more just-in-time inventory and so on. And over the last 25 years, I've had many of those discussions, and I found winning customers, particularly go after the opportunity to be more efficient, okay? And so I don't see that as a huge barrier. You got to do some work. Also, we've run tests with where we do our own forecasting. We let the system do it, and then we let the system do it with AI and then with last human eye over it. And guess what, the AI is much more accurate. So we're investing in that kind of capability. So when you see Fit to Win, it's not about austerity it's about productivity and taking some of those savings and investing it into new differentiating capabilities for the business. But in that shadow space between 50% and 85%, there's a lot of money, and we intend to go after it.

Okay. We're going to take 1 last question. here from George, and then we're going to break for the event.

Thanks, Chris. Again, thanks, everybody, for the questions and the answers and the details. George Staphos BofA. So as we sit here today, stocks at $11.50, give or take, you put up, I think one of the most interesting parts of your presentation, you expect you presented a 4% spread over WACC over time. In the time that we've covered the sector, we have rarely seen companies hit that if for a year, let alone sustain that and a little on O-I. If you do that, chances are in a couple of years and we're having this presentation again, your stock won't be at $11.50. It will be something somewhat higher, a lot higher. Can you unpack why you can -- as you sit there, why you think 4% is sustainable? How much is that a margin? It looks like it's mostly margin. What else are you building in, in terms of cost of capital in terms of the variability and the volatility that's been in the business being removed, help us believe that 4% spread. Because if you do that, it will be an even better tenor the presentation in a few years.

Yes. I mean, George, clearly, the biggest component is getting back into stronger margins, right? I mean we talked about lower to mid-20 type of margins. But at the same token, we got a lot of invested capital in this business. And there's a lot of opportunity through the TOE program. We showed an example, 10% to 15% type of improvement. And capacity utilization. And that's just a huge, huge element in such a fixed cost business as we have right now. And so I think those 2 elements are the biggest component. I wouldn't dismiss the invested capital component of it. It's a big piece of the pie, especially as we use cash to reduce debt and get down the balance sheet into a healthier position also.

Just to build on that, we have some wonderful engineers in our business, but engineers tend to do things that require capital and are less often less interested in the process stuff, right? And I know that's a great overgeneralization, but just to give you an idea. And so what we're challenging people, why do we have to spend capital on something when maybe process low capital is a way forward. And in the Toano result, when I asked about the elements of efficiency, and I won't go into the details in the past, I got an answer back. It would take 2 years to do, and it will require $19 million of capital, we got there in 8 weeks and now $1 of capital, okay? And that's the kind of challenging of the conventional thinking of in the industry. The other piece is a 50% or a 50-day IDS in my world is just way out of WACC. These are local businesses that deliver things within 200, 300 miles of where they are made. And in a previous life, Ryan, you asked for examples, we -- when I went in, we started out at about 50 days and we got it down to 10 with a similar type of spread of businesses, large in local businesses, delivering 200, 300 miles from the plant. And there's a method to that, there's an intensity working capital. When you go to the plants and one of you do the walk through and everybody wants to show you the warehouse because they're usually pretty well organized and clean, and when I walk in, you see in our accounts over the last year, we've had a run-up in inventory. We're sitting on close to $1 billion and you walk in, you see all the bottles and people are pointing out how well the warehouse. Well, there's 3 types of warehouses in my world, are 2 really. One that are empty -- are one that don't belong to me and not on my system, for which I don't pay. Because when I went in and I see stacks and bottles, I say to our colleagues, hey, just imagine that, that are stacks of either euro notes or dollar bills, because that's what you're looking at. So we are going to have a relentless focus on getting inventory down, but doing it in a way that we have no supply chain misses. Right? I came from a daily fresh world where you drop your inventory to 0 every night, and we delivered to 40,000 customers every day with a DIFOT north of 99%. So when people say to me, it can't be done, we're going to challenge that standard in that convention as well. Will we get to 10%? Maybe not, but we're going to get a lot lower than 50 over the journey. And there's a ton of money in that.

Okay, guys, that's going to wrap up our event for today. Thank you for those of us online. This will conclude the event. For those of you here, please give me a few minutes to get my O-I teammates out there, but we do have 3 booths set up in the hall that you came in. One is centered on mainstream. One is centered on premium. One is discusses some of the ability we tie those together with sustainability. So our colleagues will be available to answer more of your questions out there. And then that's number one. Number two, we will have lunch and the whole team will still be available to ask questions during that period. And then before you leave, I would like you to know that there's -- on the way out, grab a bag, there's a nice bottle of Patron Cristalino that you'll see back there in the back corner in the window banner for each of you to take with you. So again, thank you for your time today, and we appreciate your interest.