PERRYSBURG, Ohio, Feb. 06, 2024 (GLOBE NEWSWIRE) -- FOR IMMEDIATE RELEASE
O-I Glass, Inc. ("O-I") (NYSE: OI) today reported financial results for the full year and fourth quarter ended December 31, 2023.
Full Year 2023 Results
Net Earnings (Loss) Attributable to To the Company Earnings Per Share (Diluted) | Earnings Before Income Taxes $M | Cash Provided by Operating Activities $M | |||||||||||
| FY23 | FY22 | FY23 | FY22 | FY23 | FY22 | ||||||||
| Reported | ($0.67) | $3.67 | $67 | $805 | $818 | $154 | |||||||
| Adjusted Earnings Earnings Per Share (Diluted) | Segment Operating Profit $M | Free Cash Flow $M | |||||||||||
| FY23 | FY22 | FY23 | FY22 | FY23 | FY22 | ||||||||
| Non - GAAP | $3.09 (Guidance: ~ $3.00) | $2.30 | $1,193 | $960 | $130 (Guidance: $100-$150) | $236 | |||||||
"I'm pleased to report strong 2023 performance as we successfully navigated softer macro conditions that developed over the course of the year including significant inventory de-stocking across the value chain. O-I continued to execute well through the fourth quarter and business performance moderately exceeded our expectations. As we concluded the year, strong net price and the benefit from our margin expansion initiatives helped mitigate the impact of softer demand and elevated production curtailment to balance supply with lower shipments," said Andres Lopez, O-I Glass CEO.
"In addition to operating well in 2023, we continued to advance our long-term strategy. The benefit from margin expansion initiatives significantly exceeded our target with the strongest results in that program's seven-year history. We made solid progress on our capital expansion program completing the first round of new capacity additions in Canada and Colombia, on time and on budget. Importantly, development efforts for MAGMA and ULTRA continued and our first MAGMA Greenfield project in Bowling Green, KY is on track to be commissioned in mid-2024. Our freshly updated ESG roadmap has been fully integrated into our strategy and long-term capital allocation plan as we advance glass as the most sustainable packaging solution. Finally, our balance sheet is in its best position in nearly a decade."
"Building off our strong operating performance last year, O-I is well positioned to manage through current soft macro conditions that should improve as the year progresses. I believe the most challenging market conditions are behind us and we anticipate stronger future earnings as both sales and production volumes recover to pre-pandemic levels over time," concluded Lopez.
Net sales were $7.1 billion in 2023, up approximately 4 percent compared to $6.9 billion in the prior year primarily due to higher average selling prices as well as favorable foreign currency translation. As anticipated, sales volume (in tons) was down 12 percent from the prior year mainly attributed to elevated inventory destocking across the value chain amid modestly softer consumer consumption.
Earnings before income taxes were $67 million in 2023, down from $805 million in the prior year mostly due to items management does not consider representative of ongoing operations which included a $445 million charge for impairment of goodwill in the company's North America reporting unit in 2023 as well as a $334 million one-time gain on sales-leaseback transactions in 2022 that did not repeat. The goodwill impairment primarily reflected changes in macro conditions resulting in lower sales volumes and a smaller asset base following recent restructuring activities intended to improve long-term performance as well as the impact of a higher weighted average cost of capital on valuation given elevated interest rates. Earnings also reflected higher segment operating profit which was partially offset by elevated interest expense.
Segment operating profit was $1,193 million in 2023 compared to $960 million in the prior year.
- Americas: Segment operating profit in the Americas was $511 million compared to $472 million in 2022 and primarily benefited from favorable net price and margin expansion initiatives which were partially offset by the impact of lower sales volume and elevated operating costs mostly attributed to temporary production curtailments to balance supply with lower demand. Segment operating profit also benefited $12 million from favorable foreign currency translation.
- Europe: Segment operating profit in Europe was $682 million compared to $488 million in 2022 and primarily benefited from favorable net price and margin expansion initiatives. These benefits were partially offset by lower sales volume as well as higher operating costs due to temporary production curtailments to balance supply with lower demand. Segment operating profit also benefited $17 million from favorable foreign currency translation.
Retained corporate and other costs were $224 million, down from $232 million in 2022.
O-I reported a loss attributable to the company of $0.67 per share (diluted) in 2023, compared to earnings of $3.67 per share (diluted) in 2022.
Adjusted earnings were $3.09 per share (diluted) in 2023, exceeding management's most recent guidance of approximately $3.00 per share (diluted) and compared to $2.30 per share (diluted) in 2022.
Cash provided by operating activities was $818 million in 2023 compared to $154 million in 2022 which included a $621 million one-time payment to fund the Paddock Trust and related expenses.
Free cash flow was $130 million in 2023, within management's most recent outlook of $100 million to $150 million and compared to $236 million in the prior year. Free cash flow included elevated capital expenditures of $688 million in 2023 compared to most recent guidance of approximately $700 million and $539 million in 2022.
Total debt was $4.9 billion on December 31, 2023, compared to $4.7 billion at prior year end. Net debt was $4.0 billion compared to $3.9 billion in 2022.
Fourth Quarter 2023 Results
Net Earnings (Loss) Attributable to the Company Earnings Per Share (Diluted) | Earnings (Loss) Before Income Taxes $M | |||||||||
| 4Q23 | 4Q22 | 4Q23 | 4Q22 | |||||||
| Reported | ($3.05) | $0.08 | ($439) | $29 | ||||||
| Adjusted Earnings Earnings Per Share (Diluted) | Segment Operating Profit $M | |||||||||
| 4Q23 | 4Q22 | 4Q23 | 4Q22 | |||||||
| Non - GAAP | $0.12 (Guidance: ~ $0.03) | $0.38 | $168 | $206 | ||||||
Net sales were $1.6 billion in the fourth quarter of 2023 compared to $1.7 billion in the prior year period as the benefit from higher average selling prices and favorable foreign currency translation partially offset a 16 percent decline in sales volumes (in tons).
The company reported a $439 million loss before income taxes in the fourth quarter of 2023 compared to earnings before income tax of $29 million in the prior year quarter. This decrease was mostly due to items management does not consider representative of ongoing operations which included the aforementioned $445 million charge for impairment of goodwill in the company's North America reporting unit in 2023. Earnings before income tax also reflected lower segment operating profit and elevated interest expense.
Segment operating profit was $168 million in the fourth quarter of 2023 compared to $206 million in the prior year period.
- Americas: Segment operating profit in the Americas was $93 million compared to $83 million in the fourth quarter of 2022 as favorable net price and margin expansion initiatives more than offset lower sales volume and moderately higher operating costs. Segment operating profit also benefited $2 million from favorable foreign currency translation.
- Europe: Segment operating profit in Europe was $75 million compared to $123 million in the fourth quarter of 2022 as favorable net price partially offset lower shipment levels and significantly higher operating costs due to elevated temporary production curtailment to balance supply with softer demand. Segment operating profit also benefited $4 million from favorable foreign currency translation.
Retained corporate and other costs were $49 million, down from $66 million in 2022.
The company reported a loss attributable to the company of $3.05 per share (diluted) in the fourth quarter of 2023 compared to earnings of $0.08 per share (diluted) in the fourth quarter of 2022.
Adjusted earnings were $0.12 per share (diluted) in the fourth quarter of 2023, higher than management's most recent guidance of approximately $0.03 per share (diluted) and compared to $0.38 (diluted) per share in the prior year quarter.
2024 Outlook
| 2023 Actual | 2024 Guidance | ||
| Sales Volume Growth (in Tons) | ? 12% | ? LSD / MSD | |
| Adjusted Earnings Per Share | $3.09 | $2.25 - $2.65 | |
| Free Cash Flow ($M) | $130 | $150 - $200 | |
O-I expects 2024 adjusted earnings of $2.25 to $2.65 per share which should meet or exceed the company's 2024 earnings target of $2.20 to $2.40 per share set during the last Investor Day in 2021. Results will likely be down from 2023, which represented O-I's highest adjusted earnings in the past 15 years, as the company expects the benefit of low-to-mid single digit volume growth and the company's robust margin expansion initiatives will partially mitigate the impact of lower net price and higher interest expense. While net price will likely decline in 2024, the company expects to retain 75 percent of the favorable net price realized over the prior two years. Furthermore, the company will benefit from strong operating leverage as sales and production volumes more fully recover to pre-pandemic levels over time.
O-I anticipates 2024 free cash flow will approximate $150 million to $200 million, an improvement from 2023 levels as reduced capital expenditures more than offset lower operating results and elevated tax and interest payments.
Guidance primarily reflects the company's current view on sales and production volume, mix and working capital trends. O-I's adjusted earnings outlook assumes foreign currency rates as of January 31, 2024, and a full-year adjusted effective tax rate of approximately 25 to 27 percent. The earnings and cash flow guidance ranges may not fully reflect uncertainty in macroeconomic conditions, currency rates, energy and raw materials costs, supply chain disruptions and labor challenges, among other factors.
Conference Call Scheduled for February 7, 2023
O-I CEO Andres Lopez and CFO John Haudrich will conduct a conference call to discuss the company's latest results on Wednesday, February 7, 2023, 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 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 first quarter 2024 earnings conference call is currently scheduled for Wednesday, May 1, 2024, at 8:00 a.m. EST.
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 approximately 23,000 people across 68 plants in 19 countries, O-I achieved net sales of $7.1 billion in 2023. 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, segment operating profit, segment operating profit margin, net debt 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 net earnings (loss) 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 (loss) 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. Segment operating profit margin is calculated as segment operating profit divided by segment revenue. Adjusted effective tax rate relates to provision for income taxes, exclusive of items management considers not representative of ongoing operations and other adjustments divided by earnings (loss) before income taxes, exclusive of items management considers not representative of ongoing operations and other adjustments. Management uses adjusted earnings, adjusted earnings per share, segment operating profit, segment operating profit margin, and adjusted effective tax rate 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.
Net debt is defined as total debt less cash. Management uses net debt to analyze the liquidity of the company.
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. Management has historically used 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 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 Glass" 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 general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to economic and social conditions, trade disputes, 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, public health issues and weather, (2) cost and availability of raw materials, labor, energy and transportation (including impacts related to the current Ukraine-Russia and Israel-Hamas conflicts and disruptions in supply of raw materials caused by transportation delays), (3) competitive pressures, consumer preferences for alternative forms of packaging or consolidation among competitors and customers, (4) changes in consumer preferences or customer inventory management practices, (5) the continuing consolidation of the Company's customer base, (6) the Company's ability to improve its glass melting technology, known as the MAGMA program, and implement it within the timeframe expected, (7) unanticipated supply chain and operational disruptions, including higher capital spending, (8) seasonability of customer demand, (9) the failure of the Company's joint venture partners to meet their obligations or commit additional capital to the joint venture, (10) labor shortages, labor cost increases or strikes, (11) 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, (12) the Company's ability to generate sufficient future cash flows to ensure the Company's goodwill is not impaired, (13) any increases in the underfunded status of the Company's pension plans, (14) any failure or disruption of the Company's information technology, or those of third parties on which the Company relies, or any cybersecurity or data privacy incidents affecting the Company or its third-party service providers, (15) risks related to the Company's indebtedness or changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to generate cash to service indebtedness and refinance debt on favorable terms, (16) risks associated with operating in foreign countries, (17) foreign currency fluctuations relative to the U.S. dollar, (18) changes in tax laws or U.S. trade policies, (19) the Company's ability to comply with various environmental legal requirements, (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 increased ESG scrutiny and changing expectations from stakeholders 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 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.
