And then, yes, I mean, $75 million to $150 million of growth CapEx is required to keep up with, say, like a 2% kind of backdrop growth in the business. It could be kind of lumpy that’s why there’s a range there. Ultimately over time, we do believe that with MAGMA that brings that range down because the capital intensity of that solution is better than the legacy systems. But one thing I’d also want to point, as we think about just general CapEx, I mean just general cash flow is I believe that there’s trapped free cash flow in the business right now. Probably close to $200 million of trapped cash flow in the sense that our volumes are still well below pre-pandemic levels and returning our system back to that level probably adds $125 plus million of cash flow net of the working capital requirements.
As we also indicated in the prepared remarks, we are looking at some unusually high level of tax and interest payments right now that maybe half of that $50 million, $60 million ultimately comes back. And we are also looking at probably a heavier restructuring year in 2024. So, maybe $25 million comes back. So think of the terms of more normalizing of that, but also some of this ebbs and flows of the CapEx is a broader picture.
Andres Lopez : With regards to the peer investment 6hat announcement came out, some flexibility characteristics are highlighted. Those characteristics or capabilities are commercially available. We have them in some locations in Europe and Latin America. Now as you know, our focus in North America has been optimizing our asset network. So we’re doing that so we can improve returns in this business. We’re focus on the margin expansion initiatives with very good opportunities in North America. We are improving the commercial conditions and we’re focused on deploying MAGMA. As you know MAGMA has a number of characteristics that will create a competitive advantage that are not available today in the market. For example, it can be co-located or near located.
It can be re-locatable, lower capital intensive, lower total cost of one of capabilities, which is good to deal with seasonality or economic downturns will fit in a commercial warehouse off the shelf short time to market as a result of that. So that’s our focus and our first move in that direction is the Kentucky line that we are planning to startup in the middle of the year.
Gabe Hadji : Two quick follow-ups, hopefully one is on the open market business that you all referenced. I think historically speaking those are one year in nature. I’m just curious, if you can comment on the duration of that.
John Haudrich: Those are one year agreements primarily small customers mostly concentrated in Europe.
Gabe Hadji : And then John, I apologize that I missed it. You mentioned seeing a path to getting back above $3 of EPS. I don’t think you put a timeframe on it. I suspect that was intentional, but just any more color around that comment.
John Haudrich: What I would say is, and we are intentional, just to be clear on the timeline is a little bit uncertain because it’s a function of getting the volumes back to pre-pandemic levels. So if you take a look at our volumes, our volumes are down 12% in 2023, a 10% recovery off of that base would get us back to pre-pandemic basis, okay? We’re not — what I’m referring to here getting over $3 doesn’t mean that we need to get back to the volumes of 2022. Just the volumes of 2019 for example. And if you take a look at the volume that we’re getting back in 2024 call it low to mid-single digits that would still suggest that there’s mid-single digits plus of volumes still to be recovered above what we’re assuming in our current outlook for the business and the contribution margin that we get on the additional sales.
But more importantly, bringing back the curtailment and curtail capacity and the operating leverage of that, that’s at least $0.75 worth of additional earnings, potentially more when you look at the combination of those two getting back into a more normalized level. So if you take a look at the guidance that we have right now, and you look at that type of sensitivity, that’s what gets you comfortable with over $3 per share.
Operator: Our next question comes from Mike Roxland with Truist Securities.
Michael Roxland : Just one quick question on pricing. Obviously, 1% net decline in selling prices. So obviously you’ve given back a little, just trying to understand the context of why or what’s really driving the weakness in selling prices is more? Because John, you mentioned, labor is going up, inflation is still growing 3%. I guess it’s growing at a slower rate relative to last year than the year before, but it’s still going up. So is the price that you’ve given back more function of supply demand, because certainly some of your inputs still remain elevated and some are even are still going — still increasing.
John Haudrich: Yes, I mean, I’ll take a step at that one. First let’s understand the context. Gross price have been up a strong double-digit over the last few years. And so, you’re really looking at a great run on price. Now, when you take a look at the texture of that 1% decline that we’re talking about, keep in mind there’s two books of business, right? There is the long term contract business and then there’s the open market business. So the long term contracted business is going up low-single digit that’s passing through PAS and things like that, that’s structural in place. So — but we are seeing a low to mid-single digit decline in open market agreements and that’s primarily over in Europe. And I think the biggest challenge is that we were negotiating those prices over the last few months in the backdrop of a pretty soft macro condition.
And as we saw, just even in the fourth quarter in Europe volumes were down 22%. So I think what you’re seeing right now is a fairly acute short term softness that will correct itself because it’s substantially supply chain driven, but it also occurred at the same time that we’re out in the marketplace negotiating prices. And that’s why we’re confident as we go and volumes more normalized over the course of the year and into the future that the competitive backdrop will improve and allow us to be able to price through inflation going forward.
Michael Roxland : Got it. Very, very helpful. Appreciate the color. And then just one quick follow-up on your European energy position, obviously, very good timing with the contract that you had in terms of you being — in terms of those contract being able to shield you from the energy swings the last few years. You mentioned the forward curve for NatGas in 2026 and 2027 being similar to what you have currently. Why wouldn’t you and maybe you have, well, but it doesn’t sound like it, but why wouldn’t you have extended on the contracts that you have if the pricing is similar to what you currently have? Like why wouldn’t you want to you further enter into more contracts just to hedge yourself against increase in volatility in European energy?
John Haudrich: I would say that our view and we’ve — it’s explained further in our 10-K for details if you want to refer. We always take a five year view of energy going forward, okay? And so we will be opportunistic when we see periods when energy prices drop and things like that. We’ve got a great energy team, just a great energy team, and they’re very sophisticated in this regard. So Mike, I would expect us to continue to layer in contracts and things over time. But we certainly, we want to be opportunistic and the good thing is the position that we have allows us to be very opportunistic because we don’t really have any gun to our head because we’re good for the next couple of years.
Michael Roxland : Got it. One other question if you don’t mind, just any update on the Italian Antitrust Authority, what’s happening there and is there any sense of timing on when it may be complete in terms their review?
John Haudrich: We are aware of the investigation by the Italian Competition Authority. We don’t really comment on ongoing legal matters. I would say that O-I is committed to compliance with the laws of each jurisdiction in which we operate. Obviously, it’s all part of our global code of ethics and et cetera. It’s all clearly out there on our website. So we always intend to behave in accordance with our policies.
Operator: Our final question today comes from Arun Viswanathan with RBC Capital. Please go ahead.
