Andres Lopez: Yeah, so, we see opportunities in multiple markets in MAGMA, given its flexibility, the scalability, time to market, and many other things, lower capital intensity, lower total cost of ownership, the ability to co-locate or near locate has many opportunities for MAGMA. So, for example, what we’re doing right now in Kentucky, is to put capacity right where the demand is for this craft distilleries are making capacity available for them to be able to guarantee our supply. Like that, you will be able to map similar situations across the United States and in other markets. And there is enough – there are enough opportunities already identified to support a larger-scale deployment starting once Gen 3 is concluded. So, we mentioned here that, MAGMA is very good for fragmented premium market, which is high value. And that’s where we are focusing our efforts and our plants at this point.
John Haudrich : And Mike, to your question, on what’s driving the additional benefits we’re looking for in the margin expansion initiatives going from $150 million to $175 million? Keep in mind, $75 million of that is related to restructuring of various facilities or SG&A reductions that we decide – made decisions on in the fourth quarter of last year. All that work is substantially done. And so, we are at the runrate of that benefit already. And so, that certainly helped us in the first quarter and it gives us the confidence. So we really are looking at another $100 million above that and if you look at historically how the company has performed on these initiatives, that’s in our wheelhouse. One thing I would add and a big shot out to the operations team, we’re seeing the best performance in the operations in seven years and that is providing us a backdrop of being able to drive more benefits in that regard.
And we are shifting some of our capital spend a little bit less on growth right now, because of the softness in the market and a little bit more towards cost-related projects, automation, and things like that. That’s sustaining additional benefits this year, but also really built the pipeline for continued benefits and continued margin expansions into the future.
Operator: The next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.
Arun Viswanathan: Great. Thanks for taking my question. I guess, yeah, again, I just wanted to go back to the volume front. So, do you think it’s possible that we revert to, say a flattish or a zero or a 1% growth the trajectory may be in the back half of this year, especially facing easy comps in Q3, Q4? And maybe some capacity additions and your MAGMA build out? And is that kind of where you place long-term glass demand? Or do you think there’s been some structural weakness now that we should revert to maybe a lower growth rate?
Andres Lopez: So, our expectation is that, we will go back to pre-pandemic levels and the same is the perspective of our customers. So, every customer we talk to is planning to go back to pre-pandemic or slightly higher depending on the industry in which they are. So, now as destocking finalizes, which is being the largest driver of our sales drop and consumer comes back up, we should be able to start seeing that level of performance. Knowing exactly where that is going to fall is difficult, but our expectation is that we’re going to later in the year and actually in the year will be a much different pace when compared to today.
John Haudrich : Yeah. To build off of that, Arun, I would say that, right now, we’re in a mode where we are recovering to as Andres said that that pre-pandemic basis as the consumer gradually starts to improve as we mentioned. So, I think it’s a little early to be able to call long-term trends, because we have to see a little bit more there. But as we look at what’s driving the softness, right now, whether it’s destocking or whether it’s just kind of the macros and things like that, it’s too early to make a statement. I’ll call if there’s any change in the drivers for our business over the long-term. So we haven’t really changed that perspective yet. Now, to your question about the back half of the year or two, so it’s included in our materials on Page 4.
We do expect things in the back half of the year to be up mid-single-digits or high-single-digits. Again, to your kind of what you’re alluding to, there are easier comps. We’re down mid-teens last year. So we will be comping those to be able to give us stronger growth overall to recovering in time to pre-pandemic levels. And then we’ll see the longer term trends unfold.
Andres Lopez: And everything we are describing…
Arun Viswanathan: Okay. Thank you.
Andres Lopez: Answering your question doesn’t include any deployment of MAGMA.
John Haudrich : Yes, correct.
Arun Viswanathan: Oh, great. And then, just to go up quickly on price cost. So I think, you may have addressed this, but you wanted to hold on to, say, two-thirds of your pricing that was put in place over the last couple of years. Do you still feel comfortable with that cadence, especially, given that we’ve potentially seen some further deflation on the raw side? Or how would you kind of characterize your outlook for price cost after this report? Thanks.
John Haudrich : Yeah, well, I first say that, price cost this year were as we said it’s stable with our original outlook of some pressure of, call it little over $200 million or so of price cost pressure. We have not changed that. What we’ve seen is a little bit of softening in cost inflation, right? And most of that’s on the energy side, a little bit I raw materials and price has been adjusted a little bit primarily because, for example, the energy adjustments coming in North America get passed to our customers pretty quickly. As we look to the overall backdrop of cost inflation, we’re looking again, low-single-digit cost inflation coming off a little bit of what we were thinking. And keep in mind, more than half of our business is under long-term agreements with price adjustment formulas.
So, as we go into next year, there should be a natural continued recovery component of that. I think it’s a little early to talk about the overall price, marketplace going forward. But I believe that if you take a look at the history of this company, over – with the exception of, with the last year or so here, we have historically been a business that’s been either neutral or a little bit a positive on net price in a more balanced environment with this demand comes back into it a little bit more of normalized environment. So we believe that that’s still the fundamental backdrop for our business. Of course, we just got to work through a little bit of the transition here is we are referring to on the call.
