FOR IMMEDIATE RELEASE
O-I Glass, Inc. (“O-I”) (NYSE: OI) today
reported financial results for the first quarter ended March 31,
2022.
|
Net Earnings (Loss) Attributable to the
CompanyEarnings Per Share (Diluted) |
Earnings (loss) Before Income
Taxes$M |
1Q22 |
1Q21 |
1Q22 |
1Q21 |
Reported |
$0.55 |
($0.62) |
$170 |
($65) |
|
Adjusted EarningsEarnings Per Share
(Diluted) |
Segment Operating Profit$M |
1Q22 |
1Q21 |
1Q22 |
1Q21 |
Non - GAAP |
$0.56(Guidance:
$0.38-$0.43) |
$0.35 |
$231 |
$175 |
“O-I reported strong first quarter results that
significantly exceeded guidance and demonstrated our agility to
navigate elevated market uncertainty and volatility. Shipments
increased 6.4 percent compared to the prior year period and
strengthened over the course of the quarter. Operating and cost
performance surpassed our expectations as improved manufacturing
speed and efficiency increased production to support robust demand
amid record low inventory levels. Likewise, the benefit of higher
selling prices more than offset elevated cost inflation,” said
Andres Lopez, O-I Glass CEO.
-
Reported Earnings: For the first quarter 2022, net
earnings attributable to the Company were $0.55 per share (diluted)
compared to a loss of $0.62 per share in the first quarter of 2021.
First quarter 2022 earnings before income taxes were $170 million,
compared to a loss of $65 million in the prior year quarter. Both
periods included items management considers not representative of
ongoing operations and other adjustments.
-
Adjusted Earnings: Excluding certain items
management considers not representative of ongoing operations and
other adjustments, adjusted earningsP0F were $0.56 per share in the
first quarter of 2022, compared with $0.35 per share in the first
quarter of 2021. Adjusted earnings exceeded the company’s most
recent business outlook of $0.38 to $0.43 per share.
- Segment
Operating Profit: Segment operating profit was $231
million compared to $175 million in the prior year quarter. Segment
operating profit benefited from 6.4 percent higher sales volume and
3.7 percent higher production volume (in tons). Likewise, higher
segment operating profit also reflected favorable net price,
continued solid operating performance and benefits from O-I’s
ongoing Margin Expansion initiatives. These benefits were slightly
offset by higher logistics costs.
“We continue to advance O-I’s business
transformation. The company’s ongoing Margin Expansion initiatives
are off to a good start and on pace to achieve O-I’s target of $50
million in benefits this year. Our MAGMA development efforts and
expansion plans to enable profitable growth are evolving amid
ongoing supply chain challenges while our Colombia and Canada
projects remain on track to add much needed new capacity in early
2023. On the ESG front, more than 30 percent of our electricity use
is now supplied from renewable sources and our Glass Advocacy
campaign scored over 500 million digital impressions in the first
quarter alone. As part of our Portfolio Optimization program, we
have completed or entered into sales agreements totaling $1.3
billion including the recently completed Colombian tableware
business sale. Importantly, Paddock’s plan of reorganization has
been accepted by voting asbestos claimants in percentages and
amounts that exceed the requirements of the Bankruptcy Code. The
plan is currently pending approval by the Bankruptcy Court, and, as
a result, we remain optimistic that ultimate resolution of
Paddock’s legacy asbestos liabilities will occur by mid-year 2022.
On a related note, we recently refinanced our $2.8 billion Bank
Credit Agreement at attractive terms that includes a delay-draw
feature to fund the future Paddock trust created under section
524(g) of the Bankruptcy Code,” continued Lopez.
First Quarter 2022 Review
Net sales were $1.7 billion in the first quarter
of 2022 compared to $1.5 billion in the prior year quarter.
Divestitures reduced net sales by $4 million. Average selling
prices increased 8.6 percent and contributed $140 million to sales
while shipments (in tons) improved 6.4 percent boosting net sales
by $73 million. Unfavorable foreign currency translation decreased
net sales by $37 million while other sales improved $20 million
driven by higher machine part sales to third parties.
Segment operating profit was $231 million in the
first quarter of 2022 compared to $175 million in the prior
year.
- Americas: Segment
operating profit in the Americas was $129 million compared to $100
million in the first quarter of 2021. Results included $4 million
of favorable foreign currency translation. Shipments increased 3.1
percent (in tons) and the benefit of higher selling prices more
than offset cost inflation. Operating costs were lower than the
prior year period reflecting higher production levels and the
benefit of ongoing Margin Expansion initiatives. Furthermore, the
disruption from winter storm Uri during the first quarter of 2021
did not repeat this year.
- Europe: Segment operating profit in
Europe was $102 million compared to $75 million in the first
quarter 2021. Results included $3 million of unfavorable foreign
currency translation. Shipments increased 9.9 percent (in tons)
primarily due to strong growth in the wine and spirits categories.
The benefit of higher selling prices more than offset cost
inflation. Lower operating costs were driven by continued solid
operating performance, higher production volumes and benefits from
O-I’s Margin Expansion initiatives.
Retained corporate and other costs were $50 million compared to
$35 million in the prior year quarter reflecting additional
research and development expenses related to MAGMA and higher
management incentive expense.
In both the first quarter of 2022 and 2021, the
company recorded several significant items impacting reported
results as presented in the table entitled Reconciliation for
Adjusted Earnings. In the first quarter of 2022, this included a
$16 million net gain on a divested business (after taxes and
noncontrolling interests) and $18 million for charges related to
note repurchase premiums and the write-off of finance fees. In the
first quarter of 2021, this included a $154 million adjustment to
the company’s Paddock support agreement liability, primarily to
reflect the subsidiary’s agreement in principle for a consensual
plan of reorganization.
2022
Outlook
“We are increasingly optimistic on our full-year
business outlook as we continue to navigate challenging macro
conditions with agility. Demand for healthy, sustainable glass
containers remains strong, operating performance is solid and we
are effectively raising prices to offset cost inflation,” concluded
Lopez.
O-I expects second quarter 2022 adjusted
earnings will approximate $0.55 to $0.60 per share which compares
to $0.54 in the prior year. This outlook assumes higher selling
prices will more than offset cost inflation, low single-digit sales
volume growth (in tons) and benefits from the company’s ongoing
Margin Expansion initiatives. Operating costs will also reflect
incremental expense for expansion project activity.
The company has revised its full-year 2022
earnings guidance. Management now expects adjusted earnings per
share of between $1.85 and $2.10 compared to the original guidance
of between $1.85 and $2.00. The updated range reflects favorable
first quarter results and good momentum as the company navigates a
period of elevated macro uncertainty. Management has reaffirmed its
original outlook for adjusted free cash flow of at least $350
million and free cash flow of at least $125 million.
The earnings and cash flow guidance ranges may
not fully reflect uncertainty in macroeconomic conditions,
geopolitical tensions including the conflict in Ukraine, impacts
from foreign exchange rates, and additional pandemic effects such
as supply chain and labor challenges, among other factors. O-I’s
earnings outlook assumes foreign currency rates as of April 25,
2022, earnings dilution from the company’s Portfolio Optimization
program, incremental interest expense for the anticipated funding
of the Paddock 524(g) trust and an effective annual adjusted tax
rate of approximately 28 to 32 percent. The free cash flow and
adjusted free cash flow outlook excludes the one-time funding of
the $610 million Paddock 524(g) trust upon the effective date of a
plan of reorganization, which the Company expects to occur during
the second quarter of 2022.
Conference Call Scheduled for
April
26,
2022
O-I CEO Andres Lopez and CFO John Haudrich will
conduct a conference call to discuss the company’s latest results
on Tuesday, April 26, 2022, at 8:00 a.m. EST. 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
Webcasts and Presentations 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. EST, on April 26, 2022. 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 a year following the
call.
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 second quarter 2022 earnings conference
call is currently scheduled for Wednesday, August 3, 2022 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 70 plants
in 19 countries, O-I achieved net sales of $6.4 billion in
2021. 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 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 are
reconciled to the most directly comparable GAAP measures and 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. Adjusted earnings, adjusted earnings per share and
segment operating profit 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 less cash payments for property, plant, and
equipment. Adjusted free cash flow relates to cash provided by
operating activities less cash payments for property, plant and
equipment pertaining to base maintenance activity. 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” 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
risk that the proposed plan of reorganization (the “Plan”) of
Paddock Enterprises, LLC (“Paddock”) may not be approved by the
bankruptcy court or that other conditions necessary to implement
the agreement in principle may not be satisfied, (2) the actions
and decisions of participants in the bankruptcy proceeding, and the
actions and decisions of third parties, including regulators, that
may have an interest in the bankruptcy proceedings, (3) the terms
and conditions of any reorganization plan that may ultimately be
approved by the bankruptcy court, (4) delays in the confirmation or
consummation of a plan of reorganization, including the Plan, due
to factors beyond the company's and Paddock's control, (5) risks
with respect to the receipt of the consents necessary to effect the
reorganization, (6) risks inherent in, and potentially adverse
developments related to, the bankruptcy proceeding, that could
adversely affect the company and the company's liquidity or results
of operations, (7) the impact of the COVID-19 pandemic and the
various governmental, industry and consumer actions related
thereto, (8) the company's ability to obtain the benefits it
anticipates from the corporate modernization, (9) 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,
achieving cost savings, and remaining well-positioned to address
Paddock's legacy liabilities, (10) 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, (11) the company's
ability to achieve its strategic plan, (12) the company's ability
to improve its glass melting technology, known as the MAGMA program
and implement it within the timeframe expected, (13) foreign
currency fluctuations relative to the U.S. dollar, (14) changes in
capital availability or cost, including interest rate fluctuations
and the ability of the company to refinance debt on favorable
terms, (15) 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,
natural disasters, and weather, (16) the company's ability to
generate sufficient future cash flows to ensure the company's
goodwill is not impaired, (17) consumer preferences for alternative
forms of packaging, (18) cost and availability of raw materials,
labor, energy and transportation (including impacts related to the
current conflict between Russia and Ukraine), (19) consolidation
among competitors and customers, (20) unanticipated expenditures
with respect to data privacy, environmental, safety and health
laws, (21) unanticipated operational disruptions, including higher
capital spending, (22) the company's ability to further develop its
sales, marketing and product development capabilities, (23) the
failure of the company's joint venture partners to meet their
obligations or commit additional capital to the joint venture, (24)
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, (25)
changes in U.S. trade policies, (26) risks related to recycling and
recycled content laws and regulations, (27) risks related to
climate-change and air emissions, including related laws or
regulations 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.
- 1Q 2022 O-I Earnings Presentation
- 1Q 2022 O-I Earnings Release
For more information, contact:
Chris Manuel
Vice President of Investor Relations
567-336-2600
Chris.Manuel@o-i.com
OI Glass (NYSE:OI)
Historical Stock Chart
From Jun 2024 to Jul 2024
OI Glass (NYSE:OI)
Historical Stock Chart
From Jul 2023 to Jul 2024