FOR IMMEDIATE RELEASE
For more information,
contact:
Sasha Sekpeh
O-I Investor
Relations
(567)
336-5128
alexandra.sekpeh@o-i.com
O-I Continues to
Build Momentum on Its Transformational Journey
PERRYSBURG, Ohio (Dec. 20, 2016) - Owens-Illinois,
Inc. (NYSE: OI) today announced several significant developments in
the transformational journey that the Company outlined at investor
day earlier this year. The initial phase of the journey has been
focused on enhancing financial flexibility through proactive
liability management as well as stabilizing and improving top and
bottom line business performance.
The Company has substantially improved its debt
profile through the recent issuance of a 500 million euro,
eight-year, fixed-rate bond with a very favorable coupon of 3.125
percent. This transaction met all key objectives: increased
the composition of fixed-rate debt to nearly two-thirds, augmented
the natural hedge to foreign currency exposure, repaid higher-cost
floating-rate debt and extended the Company's debt maturity
profile.
Further, the Company continues to de-risk its
pension plans. The Company recently settled approximately $200
million in pension obligations of the Owens-Illinois Hourly
Retirement Plan ("Plan").[1] This
transaction occurred via the purchase of a group annuity contract
with The Prudential Insurance Company of America, a subsidiary of
Prudential Financial, Inc. (NYSE:PRU) using Plan assets that will
transfer payment responsibility for retirement benefits owed to
approximately 7,500 U.S. retirees and their beneficiaries. This
settlement will reduce the Plan's pension obligations by 10 to 15
percent.
The Company also continues to reduce its
asbestos-related liabilities. The Company reported a total
asbestos-related liability of $817 million on its balance sheet at
year end 2015. During 2016, asbestos payments of approximately $125
million will reduce this liability to less than $700 million. The
Company has preliminarily concluded that there will be no
adjustment to the asbestos-related liability in 2016. Next year,
expected payments of approximately $115 million will further
decrease the liability.
Separately, the Company's strategic initiatives,
particularly those related to manufacturing, remain a strong
contributor to year-on-year operating profit gains. The Company
continues to pivot towards the benefits of the supply chain and
commercial initiatives that will drive incremental improvements in
the next phase of the transformational journey. Regarding the top
line, the Company launched its key account management effort to
positively impact relationships with customers by adopting service
levels and integrating Company resources aligned to the needs of
key clients. These efforts are paying off. O-I has renewed global
agreements with several strategic customers, which fortifies
management's confidence in volume growth in 2017. Collaborative
innovation is also taking hold. In Latin America, O-I launched
commercial sales of red glass. In North America in the coming year,
O-I is expected to launch sales of the Helix screw cork bottle,
created in partnership with cork manufacturer Amorim.
Jan Bertsch, chief financial officer, said, "We
are very pleased with the progress we are making in achieving our
short and long-term financial goals. As we wrap up 2016, we expect
to be solidly within our guidance range for adjusted
earnings.[2] And,
excluding asbestos payments, which relate to a legacy liability and
not to the ongoing glass container operations, our adjusted free
cash flow2 for full year
2016 would be approximately $425 million. This provides a better
view of the cash generation potential of our business segments.
Looking into next year and even into 2018, we anticipate the
Company's financial performance will be entirely consistent with
the key investor day metrics: continued margin expansion, 10
percent CAGR in adjusted earnings, and solid cash flow
generation."
###
About O-I
Owens-Illinois, Inc. (NYSE: OI) is the world's largest glass
container manufacturer and preferred partner for many of the
world's leading food and beverage brands. The Company had revenues
of $6.2 billion in 2015 and employs 27,000 people at 80 plants in
23 countries. With global headquarters in Perrysburg, Ohio, O-I
delivers safe, sustainable, pure, iconic, brand-building glass
packaging to a growing global marketplace. For more information,
visit o-i.com.
Non-GAAP Financial
Measures
Management believes that its presentation and use
of certain non-GAAP financial measures, including adjusted EPS and
adjusted free cash flow, provide relevant and useful information,
which is widely used by analysts, investors and competitors in the
industry, as well as by management in assessing both consolidated
and business unit performance. The information presented regarding
adjusted EPS relates to net earnings from continuing operations
attributable to the Company, exclusive of items management
considers not representative of ongoing operations because such
items are not reflective of the normal earnings of the business,
divided by weighted average shares outstanding (diluted).
Management has included adjusted EPS to assist in understanding the
comparability of results of ongoing operations. Further, the
information presented regarding adjusted free cash flow relates to
cash provided by continuing operating activities less capital
spending plus asbestos-related payments and management has included
adjusted free cash flow to assist in understanding the
comparability of cash flows generated by the Company's principal
business activity, which is glass container production. It should
not be inferred that the entire adjusted free cash flow amount is
available for discretionary expenditures. Management uses non-GAAP
information principally for internal reporting, forecasting,
budgeting and calculating compensation payments. Management
believes that the non-GAAP presentation allows the board of
directors, management, investors and analysts to better understand
the Company's financial performance in relation to core operating
results and the business outlook. These non-GAAP measures should be
considered supplemental in nature and should not be considered in
isolation or be construed as being more important than comparable
GAAP measures.
The Company routinely posts important information
on its website - www.o-i.com/investors.
Forward-looking
Statements
This document contains "forward-looking"
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Section
27A of the Securities Act of 1933. Forward-looking statements
reflect the Company's current expectations and projections about
future events at the time, and thus involve uncertainty and risk.
The words "believe," "expect," "anticipate," "will," "could,"
"would," "should," "may," "plan," "estimate," "intend," "predict,"
"potential," "continue," and the negatives of these words and other
similar expressions generally identify forward-looking statements.
It is possible the Company's future financial performance may
differ from expectations due to a variety of factors including, but
not limited to the following: (1) the Company's ability to
integrate the Vitro Business in a timely and cost effective manner,
to maintain on existing terms the permits, licenses and other
approvals required for the Vitro Business to operate as currently
operated, and to realize the expected synergies from the Vitro
Acquisition, (2) risks related to the impact of integration of the
Vitro Acquisition on earnings and cash flow, (3) risks associated
with the significant transaction costs and additional indebtedness
that the Company incurred in financing the Vitro Acquisition, (4)
the Company's ability to realize expected growth opportunities and
cost savings from the Vitro Acquisition, (5) foreign currency
fluctuations relative to the U.S. dollar, specifically the Euro,
Brazilian real, Mexican peso, Colombian peso and Australian dollar,
(6) changes in capital availability or cost, including interest
rate fluctuations and the ability of the Company to refinance debt
at favorable terms, (7) the general political, economic and
competitive conditions in markets and countries where the Company
has operations, including uncertainties related to economic and
social conditions, disruptions in capital markets, disruptions in
the supply chain, competitive pricing pressures, inflation or
deflation, and changes in tax rates and laws, (8) impacts from the
United Kingdom's referendum of withdrawal from the European Union
on foreign currency exchange rates and the Company's business, (9)
consumer preferences for alternative forms of packaging, (10) cost
and availability of raw materials, labor, energy and
transportation, (11) the Company's ability to manage its cost
structure, including its success in implementing restructuring
plans and achieving cost savings, (12) consolidation among
competitors and customers, (13) the Company's ability to acquire
businesses and expand plants, integrate operations of acquired
businesses and achieve expected synergies, (14) unanticipated
expenditures with respect to environmental, safety and health laws,
(15) the Company's ability to further develop its sales, marketing
and product development capabilities, (16) the timing and
occurrence of events which are beyond the control of the Company,
including any expropriation of the Company's operations, floods and
other natural disasters, events related to asbestos-related claims,
(17) the Company's ability to accurately estimate its total
asbestos-related liability, and (18) the Company's ability to
successfully remediate the material weakness in its internal
control over financial reporting, and the other risk factors
discussed in the Company's Amendment No. 1 to the Annual Report on
Form 10-K/A for the year ended December 31, 2015 and any
subsequently filed Quarterly Report on Form 10-Q. It is not
possible to foresee or identify all such factors. Any
forward-looking statements in this document are based on certain
assumptions and analyses made by the Company in light of its
experience and perception of historical trends, current conditions,
expected future developments, and other factors it believes are
appropriate in the circumstances. Forward-looking statements are
not a guarantee of future performance and actual results or
developments may differ materially from expectations. While the
Company continually reviews trends and uncertainties affecting the
Company's results of operations and financial condition, the
Company does not assume any obligation to update or supplement any
particular forward-looking statements contained in this
document.
[1] The Company
expects to recognize a non-cash charge in the fourth quarter
related to pension settlement charges associated with the Plan.
This charge will not impact adjusted earnings nor will the
transaction affect the Company's cash flow generation.
[2] Adjusted
earnings per share and adjusted free cash flow are non-GAAP
financial measures. See tables included in this release for
reconciliations to the most directly comparable GAAP measures.
O-I Logo
O-I Continues to Build Momentum on Its Transformational
Journey
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Owens-Illinois, Inc. via Globenewswire
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