FOR IMMEDIATE
RELEASE
O-I REPORTS THIRD
QUARTER 2013 RESULTS
Strong operating performance and volume growth
drive higher earnings
PERRYSBURG, Ohio (Oct. 30,
2013) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the third quarter ending September 30,
2013.
Highlights
-
Third quarter 2013 earnings
from continuing operations attributable to the Company were $0.79
per share (diluted), compared with $0.55 per share in the same
period of 2012. Excluding certain items management considers not
representative of ongoing operations, adjusted earnings[1] were $0.79
per share compared with $0.69 per share in the prior year.
-
Global volumes, up 2%, were
higher year-on-year for the first time in seven
quarters.
-
Operating profit margin expanded
more than 180 basis points in Europe and North America driven
by sales volume gains, cost savings and, for Europe, higher
production.
-
South America's profit
contracted due to lower demand, principally in the Andean
countries, and due to the impact of currency headwinds.
-
The Company reaffirms its full
year 2013 free cash flow outlook of at least $300
million.
Commenting on the Company's third quarter results,
Chairman and Chief Executive Officer Al Stroucken said, "Overall,
our operations delivered strong results for the quarter, and we
again benefited from our broad geographic footprint. Growth in
sales volume in Europe, North America and Asia Pacific outweighed
the decline in South America. We are on track with our global
structural cost reduction and European asset optimization programs,
both of which continue to deliver benefits. And we continued with
our disciplined approach to capital allocation, as evidenced by our
share repurchases and debt pay-down in the quarter."
Operational
highlights
Net sales in the third quarter of 2013 were $1.78 billion, up 2
percent over the prior year third quarter. Price increased modestly
for the Company. Currency was a headwind as the weakened Brazilian
real and Australian dollar more than offset a stronger Euro.
Volume, in terms of tonnes shipped, increased 2
percent year-over-year. Europe volume increased 7 percent on growth
in wine, food and beer. The Company's efforts to win back wine
customers continued to show traction across Southern Europe. A
delayed harvest in Europe shifted volumes into the third quarter,
allowing food volumes to record double-digit gains.
Following adverse weather in the second quarter, beer volumes in
the third quarter increased year-on-year in both Europe and North
America. Volume growth in North America was also driven by
non-alcoholic beverages. In South America, a broad macroeconomic
slowdown and a general strike in Colombia dampened demand.
Segment operating profit was $259 million, up
nearly 6 percent over prior year third quarter. The Company
achieved improved profitability from increased sales and production
volumes, particularly in Europe, as well as reduced structural
costs.
Financial
highlights
Net interest expense was $5 million lower than the prior year,
primarily due to lower interest rates and to the Company's ongoing
efforts to reduce debt.
The Company's leverage ratio (net debt to EBITDA)
was 2.9 times at the end of the third quarter of 2013. The Company
expects to improve its leverage ratio to approximately 2.5 times by
the end of the year.
During the quarter, the Company continued to
execute on its capital allocation priorities by repurchasing
approximately $10 million of outstanding stock and repaying $168
million in debt.
Outlook
Commenting on the Company's outlook for the fourth quarter,
Stroucken said, "We expect market demand in North America and
Europe to be sluggish, but stable. As we have limited visibility
into the uncertain macroeconomic conditions in South America, our
plans anticipate no growth there in the fourth quarter.
Irrespective of external challenges, we are focusing on the levers
within our control: managing production volatility, reducing
structural costs and optimizing our assets. We are confident,
therefore, that we will deliver higher full year earnings and free
cash flow."
The Company continues to expect an adjusted EPS
range in 2013 of $2.65 to $2.85 per share and free cash flow of at
least $300 million for the year.
Note 1
The table below describes the items that management considers not
representative of ongoing operations.
$ Millions, except per-share amounts |
|
Three months ended September 30 |
|
|
2013 |
|
2012 |
|
Earnings |
EPS |
|
Earnings |
EPS |
Earnings from Continuing Operations
Attributable to the Company |
|
$132 |
$0.79 |
|
$92 |
$0.55 |
Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit |
|
|
|
|
|
|
Restructuring, asset impairment and related charges |
|
- |
- |
|
23 |
0.14 |
Charges for note repurchase premiums and write-off of
finance fees |
|
- |
- |
|
- |
- |
Adjusted Net Earnings |
|
$132 |
$0.79 |
|
$115 |
$0.69 |
$ Millions, except per-share amounts |
|
Nine months ended September 30 |
|
|
2013 |
|
2012 |
|
Earnings |
EPS |
|
Earnings |
EPS |
Earnings from Continuing Operations
Attributable to the Company |
|
$346 |
$2.08 |
|
$348 |
$2.10 |
Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit |
|
|
|
|
|
|
Restructuring, asset impairment and related charges |
|
9 |
0.05 |
|
23 |
0.14 |
Charges for note repurchase premiums and write-off of
finance fees |
|
11 |
0.07 |
|
- |
- |
Adjusted Net Earnings |
|
$366 |
$2.20 |
|
$371 |
$2.24 |
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. With revenues of $7.0
billion in 2012, the Company is headquartered in Perrysburg, Ohio,
USA, and employs approximately 22,500 people at 79 plants in 21
countries. O-I delivers safe, sustainable, pure, iconic,
brand-building glass packaging to a growing global marketplace.
O-I's Glass Is Life(TM) movement promotes the widespread benefits
of glass packaging in key markets around the globe. For more
information, visit www.o-i.com or www.glassislife.com.
Regulation G
The information presented above regarding adjusted net earnings
relates to net earnings attributable to the Company exclusive of
items management considers not representative of ongoing operations
and does not conform to U.S. generally accepted accounting
principles (GAAP). It should not be construed as an alternative to
the reported results determined in accordance with GAAP. Management
has included this non-GAAP information to assist in understanding
the comparability of results of ongoing operations. Management uses
this non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating compensation payments.
Further, the information presented above regarding free cash flow
does not conform to GAAP. Management defines free cash flow as cash
provided by continuing operating activities less capital spending
(both as determined in accordance with GAAP) and has included this
non-GAAP information to assist in understanding the comparability
of cash flows. Management uses this non-GAAP information
principally for internal reporting, forecasting and budgeting.
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 relationship to
core operating results and the business outlook.
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 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) foreign
currency fluctuations relative to the U.S. dollar, specifically the
Euro, Brazilian real and Australian dollar, (2) changes in capital
availability or cost, including interest rate fluctuations and the
ability of the Company to refinance debt at favorable terms, (3)
the general political, economic and competitive conditions in
markets and countries where the Company has operations, including
uncertainties related to the economic conditions in Australia,
Europe and South America disruptions in capital markets,
disruptions in the supply chain, competitive pricing pressures,
inflation or deflation, and changes in tax rates and laws, (4)
consumer preferences for alternative forms of packaging, (5) cost
and availability of raw materials, labor, energy and
transportation, (6) the Company's ability to manage its cost
structure, including its success in implementing restructuring
plans and achieving cost savings, (7) consolidation among
competitors and customers, (8) the ability of the Company to
acquire businesses and expand plants, integrate operations of
acquired businesses and achieve expected synergies, (9)
unanticipated expenditures with respect to environmental, safety
and health laws, (10) the Company's ability to further develop its
sales, marketing and product development capabilities, and (11) 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, and the other risk factors discussed in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2012 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.
Conference call scheduled for
October 31, 2013
O-I CEO Al Stroucken and CFO Steve Bramlage will conduct a
conference call to discuss the Company's latest results on
Thursday, October 31, 2013, at 8:00 a.m., Eastern Time. 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
Presentations & Webcast section.
The conference call also may be accessed by
dialing 888-733-1701 (U.S. and Canada) or 706-634-4943
(international) by 7:50 a.m., Eastern Time, on October 31. Ask for
the O-I conference call. A replay of the call will be available on
the O-I website, www.o-i.com/investors, for 90 days following the
call.
Contact: Erin
Crandall, 567-336-2355 - O-I Investor Relations
Lisa Babington, 567-336-1445 - O-I Corporate Communications
O-I news releases are available on the O-I website
at www.o-i.com.
O-I's fourth quarter 2013 earnings conference call
is currently scheduled for Wednesday, January 29, 2014, at 8:00
a.m., Eastern Time.
[1] Adjusted earnings refers to earnings from
continuing operations attributable to the Company, excluding items
management does not consider representative of ongoing operations,
as cited in Note 1 in this release.
3Q13 Earnings Release
3Q13 Earnings Presentation
This
announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the
information contained therein.
Source: Owens-Illinois, Inc. via Thomson Reuters ONE
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