FOR IMMEDIATE RELEASE
- Strong second quarter results
exceeded guidance
- Delivered on key transformation
commitments including resolution of legacy asbestos
liabilities
- Management increased full-year 2022
financial outlook
O-I Glass, Inc. (“O-I”) (NYSE: OI) today
reported financial results for the second quarter ended June 30,
2022.
|
Net Earnings (Loss) Attributable to the
CompanyEarnings Per Share (Diluted) |
Earnings (loss) Before Income
Taxes$M |
2Q22 |
2Q21 |
2Q22 |
2Q21 |
Reported |
$1.59 |
$0.73 |
$328 |
$198 |
|
Adjusted EarningsEarnings Per Share
(Diluted) |
Segment Operating Profit$M |
2Q22 |
2Q21 |
2Q22 |
2Q21 |
Non – GAAP1 |
$0.73(Guidance:
> $0.65) |
$0.54 |
$257 |
$232 |
“O-I reported strong second quarter net earnings
attributable to the company and adjusted earnings exceeded guidance
demonstrating exceptional agility amid elevated market volatility.
As expected, our glass shipments increased slightly compared to the
prior year period and the benefit of higher selling prices
continued to more than offset elevated cost inflation. Strong
earnings also reflected solid operating and cost performance
supported by O-I’s ongoing Margin Expansion initiatives.”
“Importantly, O-I delivered on key commitments
along our transformation journey. The balance sheet is now in its
best position since prior to the acquisition of O-I Mexico in 2015.
The company recently announced the first U.S. MAGMA greenfield
facility at Bowling Green, KY which should commence production
mid-2024. Additionally, Paddock has achieved a fair and final
resolution of its legacy asbestos liabilities and the 524(g) trust
was fully funded as of July 18th, 2022.”
“Overall, O-I is operating very well and is
delivering on its transformation commitments which will benefit all
stakeholders and continue to create value for our shareholders,”
said Andres Lopez, O-I Glass CEO.
Net sales were $1.8 billion in the second
quarter of 2022, up from $1.7 billion in the prior year quarter.
Unfavorable foreign currency translation impacted sales by $95
million and $11 million of lower sales was due to divestitures.
Higher average selling prices contributed $208 million to sales.
Shipments (in tons, excluding divestitures) improved approximately
one percent while sales declined $1 million due to the net effect
of higher sales volume and a slightly unfavorable change in mix.
Other sales improved $17 million driven by higher machine part
sales.
Segment operating profit was $257 million in the
second quarter of 2022 compared to $232 million in the prior year
quarter.
- Americas: Segment
operating profit in the Americas was $130 million compared to $124
million in the second quarter of 2021. Results included $4 million
of unfavorable foreign currency translation. Shipments increased
about one percent (in tons) and elevated cost inflation was mostly
offset by the benefit of higher selling prices. Operating costs
were lower than the prior year quarter reflecting the benefit of
ongoing Margin Expansion initiatives which were partially offset by
higher repair costs and unplanned production downtime.
- Europe: Segment operating profit in
Europe was $127 million compared to $108 million in the second
quarter of 2022. Results included $13 million of unfavorable
foreign currency translation. Shipments increased approximately one
percent (in tons) and the benefit of higher selling prices more
than offset elevated cost inflation. Operating costs were higher
than the prior year primarily due to higher engineering project
activity more than exceeding the benefits from Margin Expansion
initiatives and cost control measures.
Retained corporate and other costs were $53
million compared to $42 million in the prior year quarter
reflecting higher management incentive expense, elevated cost
inflation and additional research and development expenses related
to MAGMA.
For the second quarter 2022, net earnings
attributable to the company were $1.59 per share (diluted) compared
to $0.73 per share (diluted) in the second quarter of 2021. Second
quarter 2022 earnings before income taxes were $328 million,
compared to $198 million in the prior year quarter. Both periods
included items management considers not representative of ongoing
operations and other adjustments.
In both the second quarter of 2022 and 2021, the
company recorded several significant items impacting reported
results as presented in the table entitled Reconciliation for
Adjusted Earnings. Management considers these items not
representative of ongoing operations and they are excluded from
adjusted earnings. In the second quarter of 2022, this included a
$182 million gain on a sale leaseback transaction entered into by
the Company for its land and buildings related to its plant in
Brampton, Ontario, Canada, as well as $12 million for restructuring
and other charges. In the second quarter of 2021, these items
included a $69 million gain recorded on an indirect tax credit in
Brazil and $9 million for restructuring and other
charges.
Excluding certain items management considers not
representative of ongoing operations and other adjustments,
adjusted earningsP0F were $0.73 per share in the second quarter of
2022, compared with $0.54 per share in the second quarter of
2021.
2022
Outlook
“The company is increasing its full-year 2022
earnings and free cash flow outlook reflecting strong year-to-date
performance and expected favorable performance in the second half
of the year,” concluded Lopez.
O-I expects third quarter 2022 adjusted earnings
will approximate $0.55 to $0.60 per share which compares to $0.58
in the prior year. This outlook assumes higher selling prices will
more than offset cost inflation, flat or slight 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 raised its full-year 2022
earnings guidance. Management now expects adjusted earnings per
share of between $2.05 and $2.20 per share compared to the prior
guidance of between $1.85 and $2.10 per share. The updated range
reflects favorable first half results and solid momentum heading
into the second half of the year. Management has increased its cash
flow outlook and now expects adjusted free cash flow of at least
$400 million and free cash flow of at least $175 million up from at
least $350 million and at least $125 million, respectively.
O-I’s earnings outlook assumes foreign currency
rates as of July 31, 2022, earnings dilution from the company’s
Portfolio Optimization program, incremental interest expense for
debt incurred to settle the Paddock 524(g) trust and an effective
annual adjusted tax rate of approximately 25 to 28 percent. The
free cash flow and adjusted free cash flow outlook excludes $620
million related to the funding of the Paddock 524(g) trust and
related expenses which occurred on July 18, 2022.
Conference Call Scheduled for
August 3,
2022
O-I CEO Andres Lopez and CFO John Haudrich will
conduct a conference call to discuss the company’s latest results
on Wednesday, August 3, 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. 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 2022 earnings conference
call is currently scheduled for Wednesday, November 2, 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
impact of the COVID-19 pandemic and the various governmental,
industry and consumer actions related thereto, (2) the company’s
ability to obtain the benefits it anticipates from the Corporate
Modernization, (3) 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, (4) 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, (5) the company’s ability to achieve its strategic
plan, (6) the company’s ability to improve its glass melting
technology, known as the MAGMA program, and implement it within the
timeframe expected, (7) foreign currency fluctuations relative to
the U.S. dollar, (8) changes in capital availability or cost,
including interest rate fluctuations and the ability of the company
to refinance debt on favorable terms, (9) 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, (10) the company’s ability to
generate sufficient future cash flows to ensure the company’s
goodwill is not impaired, (11) consumer preferences for alternative
forms of packaging, (12) cost and availability of raw materials,
labor, energy and transportation (including impacts related to the
current conflict between Russia and Ukraine), (13) consolidation
among competitors and customers, (14) unanticipated expenditures
with respect to data privacy, environmental, safety and health
laws, (15) unanticipated operational disruptions, including higher
capital spending, (16) the company’s ability to further develop its
sales, marketing and product development capabilities, (17) the
failure of the company’s joint venture partners to meet their
obligations or commit additional capital to the joint venture, (18)
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, (19)
changes in U.S. trade policies, (20) risks related to recycling and
recycled content laws and regulations, (21) 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.
1 Adjusted earnings per share, free cash flow, adjusted free
cash flow and segment operating profit are each non-GAAP financial
measures. See tables included in this release for reconciliations
to the most directly comparable GAAP measures.
- 2Q 2022 O-I Glass Earnings Release
- 2Q 2022 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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