FOR
IMMEDIATE RELEASE
O-I REPORTS
FULL YEAR AND FOURTH QUARTER 2013 RESULTS
Focused Execution Delivers Higher Earnings and
Double-Digit Growth in Free Cash Flow
PERRYSBURG, Ohio (Jan. 28,
2014) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the full year and fourth quarter ending
December 31, 2013.
Highlights
-
Full year 2013
earnings from continuing operations attributable to the
Company were $1.22 per share (diluted), compared with $1.12 per
share in 2012. Excluding certain items management considers not
representative of ongoing operations, adjusted earnings[1] were $2.72
per share compared with $2.64 per share in the prior year.
-
Fourth quarter 2013 adjusted
earnings were $0.51 per share, compared with $0.40 per
share in the same period of 2012. Earnings improvement was driven
by higher sales and production volume, as well as structural cost
savings.
-
O-I generated $339 million
of free cash flow (non-GAAP) for the full year 2013. Free
cash flow increased 17 percent due to higher segment operating
profit, improvement in working capital and lower pension
contributions.
-
The Company repaid nearly
$300 million of debt, in line with its disciplined capital
allocation program. O-I's leverage ratio[2] was 2.6 at
year end, an improvement over prior year.
-
Full year segment operating
profit increased by $12 million versus the prior year due
to a global focus on structural cost reductions. Global volumes for
2013 were flat with prior year. Broad-based weakness in beer was
largely offset by gains in wine, especially in Europe.
-
The Company expects to
generate approximately $350 million of free cash flow in
2014.
Commenting on the Company's 2013 results, Chairman
and Chief Executive Officer Al Stroucken said, "Our strong free
cash flow generation and earnings growth demonstrate our success in
executing on our strategic agenda. We remain focused on driving
structural cost reductions, optimizing our asset base and smoothing
production. The bottom line benefits of these efforts were
partially masked by ongoing economic weakness in Europe, and
volatility in South America. As committed, we are using most of our
free cash flow to enhance our financial flexibility, while also
repurchasing more than a million shares."
Full Year 2013
Full year net sales were flat with prior year, at $7.0 billion.
Price increased 2 percent, while currency was a 1 percent headwind,
primarily due to the Brazilian Real and the Australian Dollar.
Volume for the full year 2013 was essentially flat
with prior year. While beer volumes declined in all regions, wine
volumes increased, led by successful initiatives to recapture wine
business in Europe.
Segment operating profit was $947 million for
2013, up more than one percent over prior year. Structural cost
reductions and asset optimization programs improved margins in
North America and Asia Pacific. In South America, profitability was
diminished by persistent currency headwinds and a general strike in
Colombia. European operating profit was flat as the benefits of
asset optimization were offset by modestly lower volumes and sales
mix.
Full year 2013 earnings from continuing operations
attributable to the Company were $1.22 per share (diluted),
compared with $1.12 per share in full year 2012. Excluding certain
items management considers not representative of ongoing
operations, adjusted earnings were $2.72 per share compared with
$2.64 per share in the prior year.
In 2013, pension contributions were nearly $100
million, which significantly exceeded required plan contributions
because the Company continued to make discretionary payments in an
effort to reduce long-term pension liabilities and increase the
Company's future financial flexibility.
For the sixth consecutive year, cash payments for
asbestos-related liabilities declined. In 2013, payments were $158
million, down $7 million from 2012, and the number of new filings
decreased from prior year. In the fourth quarter of 2013, the
Company conducted its annual comprehensive review of asbestos
related liabilities. As a result of that review, O-I recorded a
charge of $145 million, as presented in Note 1.
The Company's focus on cash gained further
momentum in 2013. Cash from continuing operations reached $700
million, up 21 percent from prior year. The Company generated $339
million of free cash flow (non-GAAP) in 2013, a 17 percent increase
compared to prior year. Higher segment operating profit,
improvement in working capital and lower pension contributions were
the key drivers for the strong cash growth.
The Company's disciplined capital allocation
approach allowed debt repayment of nearly $300 million and the
repurchase of $33 million of the Company's outstanding shares in
2013.
The Company's leverage ratio improved to 2.6 at
year end 2013.
Fourth Quarter
2013
Net sales in the fourth quarter of 2013 were $1.76 billion, similar
to the prior year fourth quarter. The Company benefited from price
gains of 1 percent, and recorded a currency headwind of 2 percent.
For the second consecutive quarter, volume in terms of tonnes
shipped was up 2 percent compared with the same quarter in the
prior year. The increase was primarily driven by global wine gains,
as well as moderately higher beer volumes in North and South
America.
Fourth quarter 2013 segment operating profit was
$195 million, up 19 percent over fourth quarter 2012. The Company's
efforts to better manage production levels throughout the year
obviated the need to sharply curtail production in the fourth
quarter as was done in the previous year. The Company also
benefited from ongoing structural cost reductions.
Fourth quarter 2013 adjusted earnings were $0.51
per share, compared with $0.40 per share in the same period of
2012. The increase is primarily attributable to higher segment
operating profit, resulting from higher sales and production volume
as well as structural cost savings.
In the fourth quarter of 2013, the Company
recorded several significant non-cash charges to reported results
as presented in Note 1 below. Management considers these charges
not representative of ongoing operations.
Outlook
Commenting on the Company's outlook for 2014, Stroucken said, "We
are not expecting a dramatic improvement in global macroeconomic
conditions in 2014. We will stay the course by focusing on
structural cost reductions and European asset optimization
initiatives, all of which are on track to drive continued growth in
free cash flow and earnings. We are also investing for the long
term. Our innovation center, which also serves as a pilot plant,
will enable us to develop technologies to improve manufacturing
efficiencies and increase speed to market. In all, we envision that
our lean manufacturing footprint, market-focused organization and
strong balance sheet will deliver increasing shareholder
value."
O-I expects full year 2014 free cash flow to be
approximately $350 million and adjusted earnings to be in the range
of $2.80 to $3.20 per share. The Company plans no change to its
capital allocation priorities: approximately 90 percent of free
cash flow will be apportioned to debt repayment with the remainder
to be used for share repurchases.
Note 1
The table below describes the items that management considers not
representative of ongoing operations.
$ Millions, except per-share amounts |
|
Three months ended December
31 |
|
|
2013 |
|
2012 |
|
Earnings |
EPS |
|
Earnings |
EPS |
Earnings (Loss) from Continuing
Operations Attributable to the Company |
|
$(144) |
$(0.88) |
|
$(162) |
$(0.99) |
Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit |
|
|
|
|
|
|
Charge for asbestos-related costs |
|
145 |
0.87 |
|
155 |
0.94 |
Restructuring, asset impairment and related charges |
|
84 |
0.51 |
|
121 |
0.73 |
Gain on China land compensation |
|
- |
- |
|
(33) |
(0.20) |
Net benefit related to changes in unrecognized tax
positions |
|
|
|
|
(14) |
(0.09) |
Reconciling item for dilution effect(1) |
|
- |
0.01 |
|
- |
0.01 |
Adjusted Net Earnings |
|
$85 |
$0.51 |
|
$67 |
$0.40 |
$ Millions, except per-share amounts |
|
Twelve months ended December
31 |
|
|
2013 |
|
2012 |
|
Earnings |
EPS |
|
Earnings |
EPS |
Earnings from Continuing Operations
Attributable to the Company |
|
$202 |
$1.22 |
|
$186 |
$1.12 |
Items that management considers not
representative of ongoing operations consistent with Segment
Operating Profit |
|
|
|
|
|
|
Charge for asbestos-related costs |
|
145 |
0.87 |
|
155 |
0.94 |
Restructuring, asset impairment and related charges |
|
92 |
0.56 |
|
144 |
0.87 |
Gain on China land compensation |
|
|
|
|
(33) |
(0.20) |
Net benefit related to changes in unrecognized tax
positions |
|
|
|
|
(14) |
(0.09) |
Charges for note repurchase premiums and write-off of
finance fees |
|
11 |
0.07 |
|
- |
- |
Adjusted Net Earnings |
|
$450 |
$2.72 |
|
$438 |
$2.64 |
(1) This reconciling item is related to the
difference between the calculation of earnings per share for
reported earnings and adjusted earnings. For reported earnings, for
the three months ending December 31, 2013 and December 31, 2012,
diluted earnings per share of common stock were equal to basic
earnings per share due to the loss from continuing operations
recorded in each period. Diluted shares outstanding were used to
calculate adjusted earnings per share for the three months and full
years ending December 31, 2013 and December 31, 2012.
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 $7.0 billion in 2013 and employs approximately 22,500 people at
77 plants in 21 countries. With global headquarters in Perrysburg,
Ohio, USA, O-I delivers safe, sustainable, pure, iconic,
brand-building glass packaging to a growing global marketplace. For
more information, visit www.o-i.com.
O-I's Glass Is Life(TM) movement promotes the
widespread benefits of glass packaging in key markets around the
globe. Join us in the #betteringlass conversation at
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 and social 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 10K for the year ended December
31, 2012 and any subsequently filed Annual Report on Form 10K or
Quarterly Report on Form 10Q. 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 January 29, 2014
O-I CEO Al Stroucken and CFO Steve Bramlage will conduct a
conference call to discuss the Company's latest results on
Wednesday, January 29, 2014, 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 January 29. 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 first quarter 2014 earnings conference call
is currently scheduled for Wednesday, April 30, 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.
[2] The leverage ratio is calculated as total debt, less cash,
divided by adjusted EBITDA as presented in the appendix of the
accompanying presentation.
Fourth Quarter 2013 Earnings
Release
4Q13 Earnings Presentation
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX 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
HUG#1757581
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