FOR IMMEDIATE RELEASE
O-I Glass, Inc. (“O-I”) (NYSE: OI) today
reported financial results for the third quarter ended September
30, 2022.
|
Earnings from Continuing
OperationsEarnings Per Share
(Diluted) |
Earnings from Continuing Operations Before
Income Taxes$M |
3Q22 |
3Q21 |
3Q22 |
3Q21 |
Reported |
$1.45 |
$0.48 |
$278 |
$127 |
|
Adjusted EarningsEarnings Per Share
(Diluted) |
Segment Operating Profit$M |
3Q22 |
3Q21 |
3Q22 |
3Q21 |
Non – GAAP1 |
$0.63(Guidance:
$0.55 - $0.60) |
$0.58 |
$266 |
$243 |
“O-I reported strong third quarter performance
which exceeded guidance driven by solid net price realization as we
began implementation of our third price increase this year in
Europe. Our glass shipments increased slightly compared to the
prior year period, as expected. Elevated asset project activity
contributed to higher operating costs, as we commission much needed
new capacity to support future growth. Higher costs were partially
offset by solid operating performance and the benefits from O-I’s
ongoing Margin Expansion initiatives,” said Andres Lopez, O-I Glass
CEO.
“As previously announced, the company continues
to deliver on key transformation initiatives. Following Paddock’s
fair and final resolution of its legacy asbestos liabilities and
emergence from Chapter 11 protection in July, O-I completed its
$1.5 billion portfolio optimization program in August with proceeds
used to reduce debt and pre-fund upcoming expansion initiatives.
Reflecting a healthier balance sheet, both Moody’s and S&P
upgraded the company’s credit rating during the third quarter.”
“O-I is performing well, advancing its strategy
and is a much more resilient and agile company as we continue to
navigate elevated market volatility. Reflecting strong year-to-date
earnings and business momentum, we now expect 2022 full-year
adjusted earnings will be at the high-end of our recently increased
guidance range and we anticipate further improvement in 2023,”
concluded Lopez.
Net sales were $1.7 billion in the third quarter
of 2022, up from $1.6 billion in the prior year quarter. Higher
average selling prices boosted sales by $221 million. Shipments (in
tons) improved nearly one percent but a slightly less favorable mix
resulted in a $4 million decrease to net sales. Other sales
declined $3 million driven by lower machine part sales. Unfavorable
foreign currency translation and divestitures reduced sales by $110
million and $20 million, respectively.
Segment operating profit was $266 million in the
third quarter of 2022 compared to $243 million in the prior year
quarter.
- Americas: Segment
operating profit in the Americas was $130 million compared to $133
million in the third quarter of 2021. Results were negatively
impacted $8 million due to divestitures while earnings benefited $5
million from foreign currency translation. Results reflected
favorable net price as higher selling prices more than offset cost
inflation. Shipments were down 1.8 percent (in tons) primarily due
to elevated asset project activity and unplanned production
downtime. As a result, the region incurred higher maintenance
costs, which were partially offset by the benefit from ongoing
Margin Expansion initiatives.
- Europe: Segment operating profit in
Europe was $136 million compared to $110 million in the third
quarter of 2021. Results were negatively impacted $16 million due
to unfavorable foreign currency translation. Earnings benefited
from favorable net price as higher selling prices more than offset
cost inflation and volume growth as shipments increased 3.6 percent
(in tons). Modestly lower operating costs reflected the net benefit
of a subsidy received in Italy to help mitigate the impact of
elevated energy costs and an insurance recovery in the prior year
period that did not repeat this year.
Retained corporate and other costs were $63
million compared to $49 million in the prior year quarter primarily
due to higher management incentive expense and elevated cost
inflation.
For the third quarter 2022, earnings from
continuing operations attributable to the company were $1.45 per
share (diluted) compared to $0.48 per share (diluted) in the third
quarter of 2021. Third quarter 2022 earnings from continuing
operations before income taxes were $278 million, compared to $127
million in the prior year quarter. Both periods included items
management considers not representative of ongoing operations and
other adjustments.
In both the third 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 third quarter of 2022, this included a
$153 million gain on a sale leaseback transaction entered into by
the company for its land and buildings related to its plant in
Vernon, California, $10 million for restructuring, asset impairment
and other charges and $5 million in pension settlement charges. In
the third quarter of 2021, these items included $12 million for
restructuring, asset impairment and other charges and $5 million in
pension settlement charges.
Excluding certain items management considers not
representative of ongoing operations and other adjustments,
adjusted earnings were $0.63 per share in the third quarter of
2022, compared to $0.58 per share in the third quarter of 2021 and
guidance of $0.55 to $0.60 per share.
2022
Outlook
O-I expects fourth quarter 2022 adjusted
earnings will range between $0.28 and $0.33 per share, an increase
from prior guidance of between $0.20 and $0.30 per share. Results
are expected to lag prior year adjusted earnings of $0.36 per share
primarily due to an estimated $0.12 per share headwind from
unfavorable foreign currency translation, impacts of divestitures
and incremental interest expense for debt incurred to settle the
Paddock 524 (g) trust. Results should reflect a higher net price,
which will benefit from the recently implemented third price
increase in Europe. Likewise, the company expects slightly lower
sales volumes (in tons) given the strong 5.4 percent growth in the
prior year period as well as current record low inventory levels
and capacity constraints in key markets. Operating costs will be
higher given incremental expense for expansion project activity
which should be partially offset by benefits from the company’s
ongoing Margin Expansion initiatives.
The company is again improving its full year
2022 guidance compared to its most recent outlook shared during an
investor conference in September. Management now expects adjusted
earnings will range between $2.20 and $2.25 per share which is at
the high end of prior guidance of between $2.10 and $2.25 per
share. The updated range reflects favorable year-to-date results
and solid momentum heading into the fourth quarter. Management has
affirmed its cash flow outlook and expects adjusted free cash flow
of at least $400 million and free cash flow of at least $200
million in 2022.
O-I’s earnings outlook assumes foreign currency
rates as of October 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 $618
million related to the funding of the Paddock 524(g) trust and
related expenses which occurred in the third quarter of 2022.
Conference Call Scheduled for
November 2,
2022
O-I CEO Andres Lopez and CFO John Haudrich will
conduct a conference call to discuss the company’s latest results
on Wednesday, November 2, 2022, at 8:00 a.m. ET. 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 year-end and fourth quarter 2022 earnings
conference call is currently scheduled for Wednesday, February 1,
2023, at 8:00 a.m. ET.
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,
healthy 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 approximately 24,000 people across
70 plants in 19 countries, O-I achieved net sales of $6.4
billion in 2021. Recognizing the tremendous benefits of glass, the
United Nations has designated 2022 as the International Year of
Glass to celebrate the past, present, and future of this
transformative material. Learn more about us:
o-i.com / Facebook / Twitter / Instagram / LinkedIn
The company routinely posts important
information on its website – www.o-i.com/investors.
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, segment
operating profit and adjusted effective tax rate, 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 earnings from
continuing operations 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. Adjusted effective tax rate relates to the
provision for income taxes, excluding tax items management
considers not representative of ongoing operations and other
adjustments, divided by earnings from continuing operations before
income taxes, exclusive of items management considers not
representative of ongoing operations and other adjustments
Management uses the above non-GAAP financial measures 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 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 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” 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 and disruptions in
supply of raw materials caused by transportation delays), (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.
- 3Q 2022 O-I Glass Earnings Presentation
- 3Q 2022 O-I Glass Earnings Release
For more information, contact:
Chris Manuel
Vice President of Investor Relations
567-336-2600
Chris.Manuel@o-i.com
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