Kyle Benvenuto

Kyle Benvenuto asked about the significance of engineered I-joist products, including SawTek, in regaining market share from open web truss systems, the evolving competitive dynamics, and how open web pricing compares to I-joist pricing given recent lumber price movements. He also requested a breakdown of the key factors that would drive Building Materials Distribution (BMD) results towards the high end versus the low end of its 1Q EBITDA guidance range.

Answer

Kelly Hibbs, CFO, clarified that SawTek systems and software design for efficient job site installation are not new, and builders typically don't switch back to engineered wood. He noted that lumber is a key input cost for open web manufacturers, potentially driving cost pressure for them. For BMD's 1Q EBITDA margins, Kelly Hibbs highlighted sales velocity, mix shift (more general line/EWP for higher end), and the proportion of product flow from warehouse versus direct sales as major drivers. Jeff Strom, Incoming CEO, added that operationalizing recent growth projects and continuous improvement would also contribute.

Kyle Benvenuto of Bank of America asked if the 2026 volume outlook, projected as flat to slightly down, accounts for the strategy of exiting unprofitable business and what the associated volume impact is. He also questioned why Fit to Win, designed to reduce costs and create new volume opportunities, wasn't sufficient to retain certain volumes.

Answer

CFO John Haudrich confirmed the 2026 volume outlook includes mixed management, estimating a 1% volume impact from exiting unprofitable business in 2025, with another 1% expected in 2026. CEO Gordon Hardie explained that while total volumes were down, O-I Glass achieved 1.5% growth in high-quality, high-economic profit volumes, offset by other market factors. He detailed the strategic sequencing of Fit to Win, focusing first on supply chain and cost reduction, which allowed an earlier shift to front-end commercial growth initiatives, with momentum expected to build in late 2026 and 2027.

Kyle Benvenuto asked if the flat to slightly down volume outlook for 2026 includes the impact of exiting unprofitable business and the associated volume impact. He also questioned why Fit to Win, designed to lower costs and open new volume opportunities, wasn't sufficient to retain this volume.

Answer

CFO John Haudrich confirmed the 2026 outlook incorporates mixed management efforts, including exiting unprofitable business, noting about 1% of deeply negative economic profit volume was addressed last year with another 1% expected. CEO Gordon Hardie and CFO John Haudrich explained that while total volume was down, there was 1.5% high-quality, high-economic profit growth offset by other market events. They emphasized a disciplined approach and that leveraging Fit to Win for growth is a 'horizon two' effort, with new go-to-market models being rolled out.