FOR IMMEDIATE RELEASE
O-I Glass, Inc. (“O-I”) (NYSE: OI) today
reported financial results for the second quarter ended June 30,
2023.
|
Net Earnings Attributable to the
Company Per Share (Diluted) |
Earnings Before Income
Taxes$M |
2Q23 |
2Q22 |
2Q23 |
2Q22 |
Reported |
$0.69 |
$1.59 |
$154 |
$328 |
|
Adjusted EarningsEarnings Per Share
(Diluted) |
Segment Operating Profit$M |
2Q23 |
2Q22 |
2Q23 |
2Q22 |
Non - GAAP |
$0.88(Guidance:
$0.80
-$0.85) |
$0.73 |
$326 |
$257 |
“We are pleased to report strong second quarter
performance, which exceeded guidance, as O-I continued to execute
well amid more challenging macro conditions. Business performance
improved significantly from the prior year reflecting favorable net
price realization, solid operating results and benefits from our
ongoing margin expansion initiatives which more than offset the
impact of softer demand. We continue to expect 2023 adjusted
earnings will significantly exceed the prior year given strong
execution and operating performance,” said Andres Lopez, O-I Glass
CEO.
Net sales were $1.9 billion in the second
quarter of 2023, up compared to $1.8 billion in the prior year
period primarily due to higher average selling prices as well as
favorable foreign currency translation, partially offset by lower
shipment levels. Sales volume (in tons) was down 9 percent from the
prior year compared to O-I’s most recent guidance of a mid-to-high
single digit decline and was primarily attributed to softer
consumer consumption activity and inventory destocking across the
value chain.
Earnings before income taxes were $154 million
in the second quarter of 2023 compared to $328 million in the prior
year, down 53 percent. Results reflected higher segment operating
profit which was more than offset by items management considers not
representative of ongoing operations, including refinancing charges
this year and a one-time gain on a sale leaseback transaction in
the prior year period, as well as higher interest expense.
Segment operating profit was $326 million in the
second quarter of 2023, up 27 percent compared to $257 million in
the prior year period.
- Americas: Segment operating profit
in the Americas was $126 million compared to $130 million in the
second quarter of 2022. Results benefited from favorable net price
and O-I’s margin expansion initiatives. These benefits mitigated
the impact of 9 percent lower sales volume (in tons), temporary
production curtailment to balance supply with lower demand as well
as elevated planned asset project activity. Results were negatively
impacted $4 million due to additional lease expense associated with
the sale leaseback transactions completed in 2022 and benefited $3
million from foreign currency translation.
- Europe: Segment operating profit in
Europe was $200 million compared to $127 million in the second
quarter of 2022. Earnings benefited from favorable net price, solid
operating performance and O-I’s margin expansion initiatives which
more than offset 11 percent lower sales volume (in tons). Results
include $4 million from favorable foreign currency
translation.
Retained corporate and other costs were $54
million compared to $53 million in the second quarter of 2022.
Net earnings attributable to the company were
$0.69 per share (diluted) in the second quarter of 2023 compared to
$1.59 per share (diluted) in the prior year period. Earnings were
impacted by items that management considers not representative of
ongoing operations including a $0.19 charge related to refinancing
activities in the current year period and a net benefit of $0.86 in
the prior year related to the one-time gain on a sale leaseback
transaction, partially offset by restructuring charges.
Adjusted earnings were $0.88 per share (diluted)
in the second quarter of 2023, compared to $0.73 per share
(diluted) in the prior year period and the company’s original
guidance of $0.80 to $0.85 per share.
2023
Outlook
$ millions except per share data |
ACTUAL |
GUIDANCE |
YTD23 |
3Q23 |
4Q23 |
FY23 |
Sales Volume Growth (in Tons) |
▼ 9% |
▼ MSD/HSD |
▼ LSD/MSD |
▼ MSD/HSD |
Adjusted Earnings Per Share |
$2.17 |
$0.68 -
$0.73 |
$0.25
- $0.35 |
$3.10 -
$3.25 |
Free Cash Flow ($M) |
n/a |
n/a |
n/a |
~ $475
aFCF ~
$175
FCF |
Capital Expenditures ($M) |
n/a |
n/a |
n/a |
~ $700 - $725 |
O-I has tightened its full-year financial
guidance range and now expects adjusted earnings will approximate
$3.10 to $3.25 per share. Adjusted free cash flow should be about
$475 million and free cash flow should approximate $175
million.
Third quarter 2023 adjusted earnings should
approximate $0.68 to $0.73 per share compared to $0.63 in the prior
year quarter. Higher earnings are expected to reflect strong net
price and continued solid operating and cost performance while
shipment levels will likely be down compared to the prior year
primarily reflecting softer consumer demand in several markets and
categories. Results are also expected to reflect higher costs due
to temporary production curtailment to align supply with demand as
well as higher interest expense.
Guidance ranges primarily reflect potential
variability in sales volume, mix and working capital trends over
the second half of 2023. O-I’s adjusted earnings outlook assumes
foreign currency rates as of July 31, 2023, earnings dilution from
the company’s portfolio optimization program, and incremental
interest expense due to higher prevailing interest rates and debt
incurred to fund the Paddock 524(g) trust. The full-year adjusted
effective tax rate should approximate 24 to 26 percent. The
earnings and cash flow guidance ranges may not fully reflect
uncertainty in macroeconomic conditions, currency rates, and
further pandemic effects such as supply chain and labor challenges,
among other factors.
Conference Call Scheduled
for August 2,
2023
O-I CEO Andres Lopez and CFO John Haudrich will
conduct a conference call to discuss the company’s latest results
on Wednesday, August 2, 2023, at 8:00 a.m. EDT. A live webcast of
the conference call, including presentation materials, will be
available on the O-I website, www.o-i.com/investors, in the News
and Events section. A replay of the call will be available on the
website for a year following the event.
Contact: Sasha Sekpeh, 567-336-5128 – O-I
Investor Relations
O-I news releases are available on the O-I
website at www.o-i.com.
O-I’s third quarter 2023 earnings conference
call is currently scheduled for Wednesday, November 1, 2023, at
8:00 a.m. EDT.
About O-I Glass
At O-I Glass, Inc. (NYSE: OI), we love glass and
we’re proud to be one of the leading producers of glass bottles and
jars around the globe. Glass is not only beautiful, it’s also pure
and completely recyclable, making it the most sustainable rigid
packaging material. Headquartered in Perrysburg, Ohio (USA), O-I is
the preferred partner for many of the world’s leading food and
beverage brands. We innovate in line with customers’ needs to
create iconic packaging that builds brands around the world. Led by
our diverse team of more than 24,000 people across 69 plants
in 19 countries, O-I achieved net sales of $6.9 billion in
2022. Learn more about us: o-i.com / Facebook / Twitter /
Instagram / LinkedIn
Non-GAAP Financial Measures
The company uses certain non-GAAP financial
measures, which are measures of its historical or future financial
performance that are not calculated and presented in accordance
with GAAP, within the meaning of applicable SEC rules. Management
believes that its presentation and use of certain non-GAAP
financial measures, including adjusted earnings, adjusted earnings
per share, free cash flow, adjusted free cash flow, adjusted
effective tax rate and segment operating profit provide relevant
and useful supplemental financial information that is widely used
by analysts and investors, as well as by management in assessing
both consolidated and business unit performance. 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.
Adjusted earnings relates to net earnings
attributable to the company, exclusive of items management
considers not representative of ongoing operations and other
adjustments because such items are not reflective of the company’s
principal business activity, which is glass container production.
Adjusted earnings are divided by weighted average shares
outstanding (diluted) to derive adjusted earnings per share.
Segment operating profit relates to earnings before interest
expense, net, and before income taxes and is also exclusive of
items management considers not representative of ongoing operations
as well as certain retained corporate costs and other adjustments.
Management uses adjusted earnings, adjusted earnings per share and
segment operating profit, to evaluate its period-over-period
operating performance because it believes these provide useful
supplemental measures of the results of operations of its principal
business activity by excluding items that are not reflective of
such operations. The above non-GAAP financial measures may be
useful to investors in evaluating the underlying operating
performance of the company’s business as these measures eliminate
items that are not reflective of its principal business
activity.
Further, free cash flow relates to cash provided
by operating activities plus cash payments to fund the Paddock
524(g) trust and related expenses less cash payments for property,
plant, and equipment. Adjusted free cash flow relates to cash
provided by operating activities plus cash payments to fund the
Paddock 524(g) trust and related expenses less cash payments for
property, plant and equipment plus cash payments for property,
plant and equipment related to strategic or expansion projects.
Management has historically used free cash flow and adjusted free
cash flow to evaluate its period-over-period cash generation
performance because it believes these have provided useful
supplemental measures related to its principal business activity.
It should not be inferred that the entire free cash flow or
adjusted free cash flow amount is available for discretionary
expenditures, since the company has mandatory debt service
requirements and other non-discretionary expenditures that are not
deducted from these measures. Management uses non-GAAP information
principally for internal reporting, forecasting, budgeting and
calculating compensation payments.
The company routinely posts important
information on its website – www.o-i.com/investors.
Forward-Looking Statements
This press release contains “forward-looking”
statements related to O-I Glass, Inc. (“O-I Glass” or the
“company”) 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, as amended. 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 that 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
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 the supply chain, competitive pricing pressures,
inflation or deflation, changes in tax rates and laws, war, civil
disturbance or acts of terrorism, natural disasters, and weather,
(2) cost and availability of raw materials, labor, energy and
transportation (including impacts related to the current conflict
between Russia and Ukraine and disruptions in supply of raw
materials caused by transportation delays), (3) the impact of the
COVID-19 pandemic and the various governmental, industry and
consumer actions related thereto, (4) competitive pressures,
consumer preferences for alternative forms of packaging or
consolidation among competitors and customers, (5) the company’s
ability to improve its glass melting technology, known as the MAGMA
program, and implement it within the timeframe expected, (6)
unanticipated operational disruptions, including higher capital
spending, (7) the failure of the company’s joint venture partners
to meet their obligations or commit additional capital to the joint
venture, (8) the company’s ability to manage its cost structure,
including its success in implementing restructuring or other plans
aimed at improving the company’s operating efficiency and working
capital management, and achieving cost savings, (9) the company’s
ability to acquire or divest businesses, acquire and expand plants,
integrate operations of acquired businesses and achieve expected
benefits from acquisitions, divestitures or expansions, (10) the
company’s ability to generate sufficient future cash flows to
ensure the company’s goodwill is not impaired, (11) the company’s
ability to achieve its strategic plan, (12) unanticipated
expenditures with respect to data privacy, environmental, safety
and health laws, (13) the ability of the company and the third
parties on which it relies for information technology system
support to prevent and detect security breaches related to
cybersecurity and data privacy, (14) changes in capital
availability or cost, including interest rate fluctuations and the
ability of the company to refinance debt on favorable terms, (15)
foreign currency fluctuations relative to the U.S. dollar, (16)
changes in tax laws or U.S. trade policies, (17) risks related to
recycling and recycled content laws and regulations, (18) risks
related to climate-change and air emissions, including related laws
or regulations and increased environmental, social and governance
scrutiny and changing expectations from stakeholders and the other
risk factors discussed in the company's filings with the Securities
and Exchange Commission.
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 or operations and financial
condition, the company does not assume any obligation to update or
supplement any particular forward-looking statements contained in
this document.
- 2Q 2023 O-I Glass Earnings Release
- 2Q 2023 O-I Glass Earnings Presentation
For more information, contact:
Chris Manuel
Vice President of Investor Relations
567-336-2600
Chris.Manuel@o-i.com
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