Exhibit 99.1
FOR IMMEDIATE RELEASE
For more information, contact:
Chris Manuel
Vice President of Investor Relations
567-336-2600
Chris.Manuel@o-i.com
O-I REPORTS THIRD QUARTER 2020 RESULTS
Strong Rebound After A Challenging Second
Quarter Due to the Pandemic
PERRYSBURG, Ohio (October 27, 2020)
– O-I Glass, Inc. (“O-I”) (NYSE: OI) today reported financial results for the third quarter ended September 30,
2020.
“After a very challenging second
quarter due to the pandemic, earnings rebounded strongly during the third quarter. Sales volumes recovered very well reflecting
consumers’ affinity for healthy and sustainable glass packaging. Likewise, continued strong operating performance substantially
offset the impact of lower production levels as capacity was gradually restarted following a disruptive second quarter. Despite
the ongoing pandemic, the company generated strong operating results and continued favorable cash flow,” said Andres Lopez,
O-I CEO.
“O-I continued to advance its strategy
to create long-term value. The turnaround initiatives gained momentum and contributed to the company’s strong operating performance
during the quarter. The company completed the sale of its Australia and New Zealand (“ANZ”) operations to optimize
its structure, and the net proceeds were used to reduce debt and improve O-I’s financial flexibility. Paddock’s Chapter
11 filing is proceeding as expected as Paddock seeks a final resolution of its asbestos-related liabilities. Additionally, the
company remains on track with the MAGMA Generation 1 installation in early 2021 that will pave the way for broader deployment starting
in 2022 as we seek to revolutionize the business model for glass,” added Lopez.
Summary Comments for Third Quarter 2020
| · | Reported Earnings: For the third
quarter 2020, earnings from continuing operations were $2.06 per share (diluted) compared with a loss of $3.69 per share in the
third quarter of 2019. Current year earnings from continuing operations before income taxes were $376 million, compared to a loss
of $536 million in the prior year. 2020 results included an approximately $280 million net gain on the sale of O-I’s ANZ
business unit. 2019 results included a $595 million non-cash impairment charge to reduce the carrying value of goodwill for the
company’s North America business unit. Cash provided by continuing operating activities in the third quarter 2020 was $262
million compared to $416 million in the prior year. Cash payments for property, plant and equipment were $57 million in the third
quarter of 2020 compared to $100 million last year. |
| · | Adjusted
Earnings: Excluding certain items management considers not representative of ongoing operations, adjusted earnings1
were $0.41 per share in the third quarter of 2020, compared with $0.54 per share in the third quarter of 2019. While
operating performance was consistent with the prior year, lower adjusted earnings per share primarily reflected the unfavorable
impact of an elevated tax rate, higher retained corporate and other costs as well as recent divestitures. |
| · | Stable Segment Operating Profit: Segment
operating profit1 was $204 million compared to $206 million in the prior year. Higher selling prices mostly offset cost
inflation. Adjusted for the sale of ANZ, third quarter 2020 shipments in tons increased 1.7 percent compared to 2019 as markets
stabilized following a double digit decline in the second quarter. As expected, production volume was down 9.7 percent in tons
from last year adjusted for the sale of ANZ due to capacity management earlier in the quarter and subsequent production ramp up
later in the quarter. All plants returned to normal operating levels prior to quarter end. Operating performance remained strong
and the company’s turnaround initiatives and cost control measures substantially offset the impact of lower production levels. |
| · | Favorable Cash Flows: O-I reported
$205 million of free cash flow1 in the third quarter of 2020 compared to $316 million in 2019. Adjusted for changes
in accounts receivable factoring levels, free cash flow1 was $96 million favorable compared to the prior year. |
| · | Lower Debt: Total debt was $5.4
billion at September 30, 2020 compared to $6.5 billion at June 30, 2020 and $5.9 billion at September 30, 2019.
Net debt1 was $4.8 billion at September 30, 2020 which was down from $5.4 billion at June 30, 2020 and $5.6
billion at September 30, 2019. Lower debt levels reflected favorable cash flow and use of proceeds from divestitures. |
| · | Strong Liquidity: As a result of
favorable cash flows, committed liquidity improved over the course of the quarter. At the end of the third quarter 2020, O-I maintained
in excess of $2 billion in total committed liquidity including cash-on-hand as well as undrawn availability on committed lines
of credit. |
| · | Business Outlook: O-I expects fourth
quarter 2020 adjusted earnings1 will approximate $0.30 to $0.35 per share. |
Third Quarter 2020 Results
Net sales in the third quarter of 2020
were $1.6 billion compared to $1.7 billion in the prior year as net sales declined $76 million attributed to the divestment of
ANZ. After adjusting for the sale of ANZ, average selling prices improved nearly 1 percent and increased revenue $12 million. Shipments
increased 1.7 percent in tons, or $24 million, while unfavorable foreign currency translation reduced net sales by $11 million.
Segment operating profit1 was
$204 million in the third quarter of 2020 compared to $206 million in the prior year. Higher shipments benefited segment operating
profit by $10 million. Cost inflation, which was elevated due to foreign currency pressures, more than offset the benefit of higher
selling prices by $4 million. Operating costs were $6 million higher than the prior year as improved operating performance and
cost control efforts substantially offset the impact of lower production levels. Current year profits were unfavorably impacted
by the net effect of favorable foreign currency translation and the sale of ANZ.
| 1 | Adjusted earnings per share, segment operating profit
of reportable segments (“segment operating profit”), free cash flow, adjusted free cash flow, adjusted net interest
expense, free cash flow adjusted for factoring, adjusted effective tax rate, EBITDA to free cash flow conversion and net debt
(total debt less cash) are non-GAAP financial measures. See tables included in this release for reconciliations to the most directly
comparable GAAP measures. |
| · | Americas: Segment operating profit
in the Americas was $113 million compared to $123 million in the third quarter of 2019. Shipments increased 2.0 percent in tons.
Cost inflation was elevated due to foreign currency pressure and was partially mitigated by the benefit of favorable selling prices.
Savings from the company’s turnaround initiatives and cost reduction efforts partially offset the impact of lower production
levels. Results were unfavorably impacted $1 million by foreign currency translation. |
| · | Europe: Segment operating profit
in Europe was $88 million compared to $79 million in the third quarter 2019. Segment operating profit benefited from 0.3 percent
higher sales volume in tons, favorable mix and higher selling prices, which more than compensated for incremental cost inflation.
Operating costs were elevated due to lower production levels and startup costs at the new brownfield plant at Gironcourt France.
Higher costs were partially offset by favorable operating performance driven by the company’s turnaround initiatives and
cost control measures. Results benefited $4 million from favorable foreign currency translation. |
| · | Asia Pacific: Segment operating
profit in Asia Pacific was $3 million compared to $4 million in the third quarter 2019 which included $5 million of dilution attributed
to the ANZ sale. Favorable operating performance reflected the company’s turnaround initiatives and cost control measures.
For the third quarter 2020, the results for the Asia Pacific segment reflect only one month of the results of the ANZ businesses.
For the third quarter of 2019, the results of the Asia Pacific segment have been recast to reflect only the results of its ANZ
businesses. The sales and operating results of the other businesses that historically comprised the Asia Pacific segment and were
retained by the Company, have been reclassified to Other sales and Retained corporate costs and other, respectively. |
Retained corporate and other costs were
$35 million compared to $21 million in the prior year. Higher costs reflect the sale of the company’s interest in a soda
ash joint venture during 2019 and higher operating expenses including additional costs for MAGMA, partially offset by efforts to
reduce costs.
Net interest expense was $61 million, down
from $83 million in the prior year. Net interest expense included $6 million and $24 million in the third quarter of 2020 and 2019,
respectively, for note repurchase premiums, third party fees and the write-off of deferred finance fees that were related to debt
that was repaid prior to its maturity. Exclusive of these items, adjusted net interest expense1 decreased $4 million
in the third quarter of 2020 compared to the prior year quarter due to debt reduction and refinancing activities.
The company’s effective tax rate
was approximately 11 percent compared to negative 6 percent last year. Excluding certain items management does not consider representative
of ongoing operations, the adjusted effective tax rate1 was approximately 37 percent compared to 28 percent in the prior
year period.
In both the third quarter of 2020 and 2019,
the company recorded several significant items impacting reported results as presented in the table entitled Reconciliation to
Adjusted Earnings. Management considers these items not representative of ongoing operations and they are excluded from adjusted
earnings. In the third quarter of 2020, these items include approximately $280 million for the gain on the sale of the ANZ businesses,
$9 million for restructuring, asset impairment and other costs, $6 million of debt refinancing expense and $3 million in strategic
transaction costs. In the third quarter of 2019, charges excluded from adjusted earnings reflected approximately $595 million of
goodwill impairment charge, $32 million for restructuring, asset impairment and other charges, $24 million of debt refinancing
expense and $11 million in pension settlement charges.
Business Outlook
O-I expects fourth quarter 2020 adjusted
earnings1 will be in the range of $0.30 to $0.35 per share which includes the dilution on recent divestitures. This
outlook assumes higher selling prices will mostly offset cost inflation. The company expects fourth quarter sales and production
volumes will be flat or slightly up compared to prior year levels but could vary depending on the course of the pandemic (full
year 2020 sales volume outlook has improved to a 3 to 5 percent decline from the prior year compared to the previous outlook of
a 4 to 7 percent decline). Furthermore, earnings should benefit from continued favorable operating performance and cost reduction
efforts. The adjusted effective tax rate in 2020 should approximate 30 to 35 percent.
The company expects its full year 2020
EBITDA to free cash flow conversion1 will exceed 10 percent in 2020 and should exceed 18 percent adjusted for the impact
of the ANZ divestiture.
The company is actively monitoring the
impact of the COVID-19 pandemic, which will negatively impact its business and results of operations in 2020 and potentially beyond.
The extent to which the company’s operations will be impacted by the pandemic may depend on future developments, which are
uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the pandemic
and actions by governmental authorities to contain the outbreak or treat its impact among other things.
Conference Call Scheduled for October 28, 2020
O-I CEO Andres Lopez and CFO John Haudrich
will conduct a conference call to discuss the Company’s latest results on Wednesday, October 28, 2020, at 8:00 a.m. EDT.
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. EDT, on October 28, 2020. 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 fourth quarter 2020 earnings conference call is
currently scheduled for Wednesday, February 10, 2021, 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 make more of it than any other glass bottle or jar producer in the world. We love that it’s
beautiful, pure and completely recyclable. With global headquarters in Perrysburg, Ohio, we are the preferred partner for many
of the world’s leading food and beverage brands. Working hand in hand with our customers, we give our passion and expertise
to make their bottles iconic and help build their brands around the world. With more than 25,500 people at 72 plants in 20 countries,
O-I has a global impact, achieving revenues of $6.7 billion in 2019. For more information, visit o-i.com.
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, segment operating profit, net debt, free cash flow, free cash
flow adjusted for factoring, EBITDA, EBITDA to free cash flow conversion and adjusted effective tax rate provide relevant and useful
supplemental financial information, which 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
from continuing operations attributable to the company, exclusive of items management considers not representative of ongoing
operations 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 from continuing operations 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. Net Debt is
defined as Total debt less cash. Management uses adjusted earnings, adjusted earnings per share, segment operating profit, and
net debt to evaluate its period-over-period operating performance because it believes these provide a 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, segment operating profit, and net debt 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 continuing operating activities less additions to property, plant and equipment. Management has historically used free
cash flow to evaluate its period-over-period cash generation performance because it believes this has provided a useful supplemental
measure related to its principal business activity. Free cash flow, free cash flow adjusted for factoring, and free cash flow to
EBITDA conversion may be useful to investors to assist in understanding the comparability of cash flows generated by the company’s
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 the
measure. 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. 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 company’s ability to obtain the benefits it anticipates from the Corporate Modernization, (2) risks inherent
in, and potentially adverse developments related to, the Chapter 11 bankruptcy proceeding involving the company’s wholly
owned subsidiary Paddock Enterprise, LLC (“Paddock”), that could adversely affect the company and the company’s
liquidity or results of operations, including the impact of deconsolidating Paddock from the company’s financials, risks
from asbestos-related claimant representatives asserting claims against the company and potential for litigation and payment demands
against the company by such representatives and other third parties, (3) the amount that will be necessary to fully and finally
resolve all of Paddock’s asbestos-related claims and the company’s obligations to make payments to resolve such claims
under the terms of its support agreement with Paddock, (4) 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 the company’s legacy liabilities, (5) 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, (6) the company’s ability to achieve its
strategic plan, (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 Brexit, 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, (10) the impact of COVID-19 and the various governmental,
industry and consumer actions related thereto, (11) the company’s ability to generate sufficient future cash flows to ensure
the company’s goodwill is not impaired, (12) consumer preferences for alternative forms of packaging, (13) cost and availability
of raw materials, labor, energy and transportation, (14) consolidation among competitors and customers, (15) unanticipated expenditures
with respect to data privacy, environmental, safety and health laws, (16) unanticipated operational disruptions, including higher
capital spending, (17) the company’s ability to further develop its sales, marketing and product development capabilities,
(18) the failure of the company’s joint venture partners to meet their obligations or commit additional capital to the joint
venture, (19) 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, (20) changes in U.S. trade policies, and the other
risk factors discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2019, Quarterly
Report on form 10-Q for the quarterly period ended September 30, 2020 and any subsequently filed Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q or the company’s other 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.
O-I GLASS, INC.
Condensed Consolidated Results of Operations
(Dollars in millions, except per share amounts)
| | |
Three months ended
September 30 | | |
Nine months ended
September 30 | |
| Unaudited | |
2020 | | |
2019 | | |
2020 | | |
2019 | |
| Net sales | |
$ | 1,616 | | |
$ | 1,670 | | |
$ | 4,595 | | |
$ | 5,063 | |
| Cost of goods sold | |
| (1,339 | ) | |
| (1,371 | ) | |
| (3,887 | ) | |
| (4,131 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Gross profit | |
| 277 | | |
| 299 | | |
| 708 | | |
| 932 | |
| | |
| | | |
| | | |
| | | |
| | |
| Selling and administrative expense | |
| (95 | ) | |
| (108 | ) | |
| (308 | ) | |
| (339 | ) |
| Research, development and engineering expense | |
| (16 | ) | |
| (16 | ) | |
| (45 | ) | |
| (50 | ) |
| Interest expense, net | |
| (61 | ) | |
| (83 | ) | |
| (212 | ) | |
| (215 | ) |
| Equity earnings | |
| 21 | | |
| 17 | | |
| 49 | | |
| 55 | |
| Other income (expense), net (including goodwill impairment - 2019) (a) | |
| 250 | | |
| (645 | ) | |
| 147 | | |
| (709 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) from continuing operations before income taxes | |
| 376 | | |
| (536 | ) | |
| 339 | | |
| (326 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Provision for income taxes | |
| (41 | ) | |
| (31 | ) | |
| (50 | ) | |
| (86 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) from continuing operations | |
| 335 | | |
| (567 | ) | |
| 289 | | |
| (412 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from discontinued operations | |
| | | |
| | | |
| | | |
| (1 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net earnings (loss) | |
| 335 | | |
| (567 | ) | |
| 289 | | |
| (413 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net earnings attributable to noncontrolling interests | |
| (7 | ) | |
| (8 | ) | |
| (11 | ) | |
| (17 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net earnings (loss) attributable to the Company | |
$ | 328 | | |
$ | (575 | ) | |
$ | 278 | | |
$ | (430 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Amounts attributable to the Company: | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) from continuing operations | |
$ | 328 | | |
$ | (575 | ) | |
$ | 278 | | |
$ | (429 | ) |
| Loss from discontinued operations | |
| | | |
| | | |
| | | |
| (1 | ) |
| Net earnings (loss) | |
$ | 328 | | |
$ | (575 | ) | |
$ | 278 | | |
$ | (430 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Basic earnings per share: | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) from continuing operations | |
$ | 2.09 | | |
$ | (3.69 | ) | |
$ | 1.77 | | |
$ | (2.77 | ) |
| Loss from discontinued operations | |
| | | |
| | | |
| | | |
| (0.01 | ) |
| Net earnings (loss) | |
$ | 2.09 | | |
$ | (3.69 | ) | |
$ | 1.77 | | |
$ | (2.78 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding (thousands) | |
| 157,073 | | |
| 155,536 | | |
| 156,650 | | |
| 155,083 | |
| | |
| | | |
| | | |
| | | |
| | |
| Diluted earnings per share: | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) from continuing operations | |
$ | 2.06 | | |
$ | (3.69 | ) | |
$ | 1.76 | | |
$ | (2.77 | ) |
| Loss from discontinued operations | |
| | | |
| | | |
| | | |
| (0.01 | ) |
| Net earnings (loss) | |
$ | 2.06 | | |
$ | (3.69 | ) | |
$ | 1.76 | | |
$ | (2.78 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Diluted average shares (thousands) | |
| 159,299 | | |
| 155,536 | | |
| 158,438 | | |
| 155,083 | |
(a) On July 31, 2020, the Company completed the sale of its Australia and New Zealand ("ANZ") businesses to Visy Industries Holdings Pty Ltd. The Company recorded a net gain of approximately $280 million in the third quarter of 2020 related to this sale.
O-I GLASS, INC.
Condensed Consolidated Balance Sheet
(Dollars in millions)
| | |
September 30, | | |
December 31, | | |
September 30, | |
| Unaudited | |
2020 | | |
2019 | | |
2019 | |
| Assets | |
| | | |
| | | |
| | |
| Current assets: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 606 | | |
$ | 551 | | |
$ | 273 | |
| Trade receivables, net | |
| 724 | | |
| 621 | | |
| 968 | |
| Inventories | |
| 782 | | |
| 1,045 | | |
| 1,015 | |
| Prepaid expenses and other current assets | |
| 272 | | |
| 271 | | |
| 278 | |
| Total current assets | |
| 2,384 | | |
| 2,488 | | |
| 2,534 | |
| | |
| | | |
| | | |
| | |
| Property, plant and equipment, net | |
| 2,675 | | |
| 3,273 | | |
| 3,104 | |
| Goodwill | |
| 1,847 | | |
| 1,934 | | |
| 1,893 | |
| Intangibles, net | |
| 311 | | |
| 371 | | |
| 404 | |
| Other assets | |
| 1,407 | | |
| 1,544 | | |
| 1,613 | |
| | |
| | | |
| | | |
| | |
| Total assets | |
$ | 8,624 | | |
$ | 9,610 | | |
$ | 9,548 | |
| | |
| | | |
| | | |
| | |
| Liabilities and Share Owners' Equity | |
| | | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| Accounts payable | |
$ | 910 | | |
$ | 1,276 | | |
$ | 1,064 | |
| Short-term loans and long-term debt due within one year | |
| 212 | | |
| 124 | | |
| 376 | |
| Current portion of asbestos-related liabilities | |
| | | |
| | | |
| 125 | |
| Other liabilities | |
| 575 | | |
| 595 | | |
| 630 | |
| Total current liabilities | |
| 1,697 | | |
| 1,995 | | |
| 2,195 | |
| | |
| | | |
| | | |
| | |
| Long-term debt | |
| 5,163 | | |
| 5,435 | | |
| 5,512 | |
| Asbestos-related liabilities | |
| | | |
| 486 | | |
| 342 | |
| Paddock support agreement liability | |
| 471 | | |
| | | |
| | |
| Other long-term liabilities | |
| 1,028 | | |
| 1,130 | | |
| 1,063 | |
| Share owners' equity | |
| 265 | | |
| 564 | | |
| 436 | |
| | |
| | | |
| | | |
| | |
| Total liabilities and share owners' equity | |
$ | 8,624 | | |
$ | 9,610 | | |
$ | 9,548 | |
O-I GLASS, INC.
Condensed Consolidated Cash Flow
(Dollars in millions)
| | |
Three months ended
September 30 | | |
Nine months ended
September 30 | |
| Unaudited |
| 2020 | |
| 2019 | |
| 2020 | |
| 2019 |
| Cash flows from operating activities: | |
| | | |
| | | |
| | | |
| | |
| Net earnings (loss) | |
$ | 335 | | |
$ | (567 | ) | |
$ | 289 | | |
$ | (413 | ) |
| Loss from discontinued operations | |
| - | | |
| 1 | | |
| - | | |
| 1 | |
| Non-cash charges | |
| | | |
| | | |
| | | |
| | |
| Depreciation and amortization | |
| 116 | | |
| 127 | | |
| 363 | | |
| 380 | |
| Pension expense | |
| 10 | | |
| 8 | | |
| 30 | | |
| 24 | |
| Restructuring, asset impairment and related charges | |
| 5 | | |
| 24 | | |
| 72 | | |
| 56 | |
| Pension settlement charges | |
| | | |
| 11 | | |
| 8 | | |
| 13 | |
| Goodwill impairment charge | |
| | | |
| 595 | | |
| | | |
| 595 | |
| Gain on sale of ANZ businesses | |
| (280 | ) | |
| | | |
| (280 | ) | |
| | |
| Cash payments | |
| | | |
| | | |
| | | |
| | |
| Pension contributions | |
| (11 | ) | |
| (10 | ) | |
| (32 | ) | |
| (29 | ) |
| Asbestos-related payments | |
| | | |
| (32 | ) | |
| | | |
| (135 | ) |
| Cash paid for restructuring activities | |
| (10 | ) | |
| (12 | ) | |
| (32 | ) | |
| (41 | ) |
| Change in components of working capital | |
| 13 | | |
| 278 | | |
| (402 | ) | |
| (661 | ) |
| Other, net (a) | |
| 84 | | |
| (7 | ) | |
| 112 | | |
| (36 | ) |
| Cash provided by (utilized in) continuing operating activities | |
| 262 | | |
| 416 | | |
| 128 | | |
| (246 | ) |
| Cash utilized in discontinued operating activities | |
| | | |
| | | |
| | | |
| (1 | ) |
| Total cash provided by (utilized in) operating activities | |
| 262 | | |
| 416 | | |
| 128 | | |
| (247 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | | |
| | | |
| | |
| Cash payments for property, plant and equipment | |
| (57 | ) | |
| (100 | ) | |
| (246 | ) | |
| (333 | ) |
| Acquisitions, net of cash acquired | |
| | | |
| | | |
| | | |
| (157 | ) |
| Contributions and advances to joint ventures | |
| | | |
| | | |
| | | |
| (22 | ) |
| Net cash proceeds on disposal of assets | |
| | | |
| 1 | | |
| 2 | | |
| 2 | |
| Net cash proceeds on sale of ANZ businesses, net of transaction costs | |
| 441 | | |
| | | |
| 441 | | |
| | |
| Deconsolidation of Paddock | |
| | | |
| | | |
| (47 | ) | |
| | |
| Other, net | |
| | | |
| 4 | | |
| 1 | | |
| 5 | |
| Cash provided by (utilized in) investing activities | |
| 384 | | |
| (95 | ) | |
| 151 | | |
| (505 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | | |
| | | |
| | |
| Changes in borrowings, net | |
| (1,222 | ) | |
| (377 | ) | |
| (300 | ) | |
| 593 | |
| Treasury shares repurchased | |
| | | |
| | | |
| | | |
| (38 | ) |
| Payment of finance fees | |
| (5 | ) | |
| (23 | ) | |
| (50 | ) | |
| (31 | ) |
| Dividend paid | |
| | | |
| (8 | ) | |
| (8 | ) | |
| (24 | ) |
| Net cash proceeds (payments) for hedging activity | |
| (50 | ) | |
| | | |
| (8 | ) | |
| 28 | |
| Distributions to noncontrolling interests | |
| (1 | ) | |
| | | |
| (5 | ) | |
| (7 | ) |
| Sale leaseback proceeds in conjunction with ANZ sale | |
| 155 | | |
| | | |
| 155 | | |
| | |
| Other, net | |
| | | |
| | | |
| (3 | ) | |
| (3 | ) |
| Cash provided by (utilized in) financing activities | |
| (1,123 | ) | |
| (408 | ) | |
| (219 | ) | |
| 518 | |
| Effect of exchange rate fluctuations on cash | |
| 16 | | |
| (11 | ) | |
| (5 | ) | |
| (5 | ) |
| Increase (decrease) in cash | |
| (461 | ) | |
| (98 | ) | |
| 55 | | |
| (239 | ) |
| Cash at beginning of period | |
| 1,067 | | |
| 371 | | |
| 551 | | |
| 512 | |
| Cash at end of period | |
$ | 606 | | |
$ | 273 | | |
$ | 606 | | |
$ | 273 | |
(a)
Other, net includes other non-cash charges plus other changes in non-current assets and liabilities.
O-I GLASS, INC.
Reportable Segment Information
(Dollars in millions)
| | |
Three months ended
September 30 | | |
Nine months ended
September 30 | |
| Unaudited | |
2020 | | |
2019 | | |
2020 | | |
2019 | |
| Net sales: | |
| | | |
| | | |
| | | |
| | |
| Americas | |
$ | 887 | | |
$ | 918 | | |
$ | 2,442 | | |
$ | 2,733 | |
| Europe | |
| 644 | | |
| 588 | | |
| 1,775 | | |
| 1,834 | |
| Asia Pacific | |
| 52 | | |
| 128 | | |
| 281 | | |
| 382 | |
| Reportable segment totals | |
| 1,583 | | |
| 1,634 | | |
| 4,498 | | |
| 4,949 | |
| Other | |
| 33 | | |
| 36 | | |
| 97 | | |
| 114 | |
| Net sales | |
$ | 1,616 | | |
$ | 1,670 | | |
$ | 4,595 | | |
$ | 5,063 | |
| | |
| | | |
| | | |
| | | |
| | |
| Segment operating profit (a): | |
| | | |
| | | |
| | | |
| | |
| Americas | |
$ | 113 | | |
$ | 123 | | |
$ | 268 | | |
$ | 380 | |
| Europe | |
| 88 | | |
| 79 | | |
| 191 | | |
| 248 | |
| Asia Pacific | |
| 3 | | |
| 4 | | |
| 19 | | |
| 25 | |
| Reportable segment totals | |
| 204 | | |
| 206 | | |
| 478 | | |
| 653 | |
| | |
| | | |
| | | |
| | | |
| | |
| Items excluded from segment operating profit: | |
| | | |
| | | |
| | | |
| | |
| Retained corporate costs and other | |
| (35 | ) | |
| (21 | ) | |
| (98 | ) | |
| (83 | ) |
| Items not considered representative
of ongoing operations (b) | |
| 268 | | |
| (638 | ) | |
| 171 | | |
| (681 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Interest expense, net | |
| (61 | ) | |
| (83 | ) | |
| (212 | ) | |
| (215 | ) |
| Earnings (loss) from continuing operations before income taxes | |
$ | 376 | | |
$ | (536 | ) | |
$ | 339 | | |
$ | (326 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Ratio of earnings (loss) from continuing operations before income taxes to net sales | |
| 23.3 | % | |
| -32.1 | % | |
| 7.4 | % | |
| -6.4 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Segment operating profit margin (c): | |
| | | |
| | | |
| | | |
| | |
| Americas | |
| 12.7 | % | |
| 13.4 | % | |
| 11.0 | % | |
| 13.9 | % |
| Europe | |
| 13.7 | % | |
| 13.4 | % | |
| 10.8 | % | |
| 13.5 | % |
| Asia Pacific | |
| 5.8 | % | |
| 3.1 | % | |
| 6.8 | % | |
| 6.5 | % |
| Reportable segment margin totals | |
| 12.9 | % | |
| 12.6 | % | |
| 10.6 | % | |
| 13.2 | % |
| (a) | Segment
operating profit consists of consolidated earnings before interest income, interest expense, and provision for income taxes and
excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain
retained corporate costs. |
| | The
Company presents information on segment operating profit because management believes that it provides investors with a measure
of operating performance separate from the level of indebtedness or other related costs of capital. The most directly
comparable GAAP financial measure to segment operating profit is earnings from continuing operations before income taxes. The
Company presents segment operating profit because management uses the measure, in combination with net sales and selected cash
flow information, to evaluate performance and to allocate resources. |
| (b) | Reference
Reconciliation to Adjusted Earnings. |
| (c) | Segment
operating profit margin is segment operating profit divided by segment net sales. |
O-I GLASS, INC.
Reconciliation to Adjusted Earnings
(Dollars in millions, except per share amounts)
The reconciliation below describes the items that management considers not representative of ongoing operations.
| | |
Three months ended
September 30 | | |
Nine months ended
September 30 | |
| Unaudited | |
2020 | | |
2019 | | |
2020 | | |
2019 | |
| Earnings (loss) from continuing operations attributable to the Company | |
$ | 328 | | |
$ | (575 | ) | |
$ | 278 | | |
$ | (429 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Items impacting cost of goods sold: | |
| | | |
| | | |
| | | |
| | |
| Acquisition-related fair value inventory adjustments | |
| | | |
| 1 | | |
| | | |
| 1 | |
| Items impacting other selling and administrative expense: | |
| | | |
| | | |
| | | |
| | |
| Restructuring, asset impairment and other charges | |
| | | |
| | | |
| | | |
| 2 | |
| Items impacting other expense, net: | |
| | | |
| | | |
| | | |
| | |
| Gain on sale of ANZ businesses | |
| (280 | ) | |
| | | |
| (280 | ) | |
| | |
| Charge for goodwill impairment | |
| | | |
| 595 | | |
| | | |
| 595 | |
| Restructuring, asset impairment and other charges | |
| 9 | | |
| 32 | | |
| 80 | | |
| 70 | |
| Strategic transaction costs | |
| 3 | | |
| | | |
| 7 | | |
| | |
| Charge for deconsolidation of Paddock | |
| | | |
| | | |
| 14 | | |
| | |
| Pension settlement charges | |
| | | |
| 11 | | |
| 8 | | |
| 13 | |
| Items impacting interest expense: | |
| | | |
| | | |
| | | |
| | |
| Charges for note repurchase premiums and write-off of finance fees | |
| 6 | | |
| 24 | | |
| 44 | | |
| 26 | |
| Items impacting income tax: | |
| | | |
| | | |
| | | |
| | |
| Net benefit for income tax on items above | |
| (1 | ) | |
| (4 | ) | |
| (20 | ) | |
| (6 | ) |
| Items impacting net earnings attributable to noncontrolling interests: | |
| | | |
| | | |
| | | |
| | |
| Net impact of noncontrolling interests on items above | |
| | | |
| | | |
| | | |
| | |
| Total adjusting items (non-GAAP) | |
$ | (263 | ) | |
$ | 659 | | |
$ | (147 | ) | |
$ | 701 | |
| | |
| | | |
| | | |
| | | |
| | |
| Adjusted earnings (non-GAAP) | |
$ | 65 | | |
$ | 84 | | |
$ | 131 | | |
$ | 272 | |
| | |
| | | |
| | | |
| | | |
| | |
| Diluted average shares (thousands) | |
| 159,299 | | |
| 155,536 | | |
| 158,438 | | |
| 155,083 | |
| | |
| | | |
| | | |
| | | |
| | |
| Earnings (loss) per share from continuing operations (diluted) | |
$ | 2.06 | | |
$ | (3.69 | ) | |
$ | 1.76 | | |
$ | (2.77 | ) |
| Adjusted earnings per share (non-GAAP) (a) | |
$ | 0.41 | | |
$ | 0.54 | | |
$ | 0.82 | | |
$ | 1.74 | |
| | |
| | | |
| | | |
| | | |
| | |
(a) For purposes of computing adjusted earnings per share, the diluted average shares (in thousands) are 156,531 and 156,550 for the three and nine months ended Sept. 30, 2019.
The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measure, adjusted earnings and adjusted earnings per share for the quarter ending December 31, 2020, to its most directly comparable GAAP financial measure, earnings from continuing operations attributable to the Company, because management cannot reliably predict all of the necessary components of this GAAP financial measure without unreasonable efforts. Earnings from continuing operations attributable to the Company includes several significant items, such as restructuring charges, asset impairment charges, charges for the write-off of finance fees, and the income tax effect on such items. The decisions and events that typically lead to the recognition of these and other similar items are complex and inherently unpredictable, and the amount recognized for each item can vary significantly. Accordingly, the Company is unable to provide a reconciliation of adjusted earnings and adjusted earnings per share to earnings from continuing operations attributable to the Company or address the probable significance of the unavailable information, which could be material to the Company's future financial results.
O-I GLASS, INC.
Changes in Net Sales and Segment Operating Profit for Reportable Segments
(Dollars in millions)
| | |
Three months ended September 30, | |
| Unaudited | |
Americas | | |
Europe | | |
Asia Pacific | | |
Total | |
| Net sales for reportable segments- 2019 | |
$ | 918 | | |
$ | 588 | | |
$ | 128 | | |
$ | 1,634 | |
| Effects of changing foreign currency rates (a) | |
| (51 | ) | |
| 40 | | |
| | | |
| (11 | ) |
| Price | |
| (1 | ) | |
| 13 | | |
| | | |
| 12 | |
| Sales volume & mix | |
| 21 | | |
| 3 | | |
| (76 | ) | |
| (52 | ) |
| Total reconciling items | |
| (31 | ) | |
| 56 | | |
| (76 | ) | |
| (51 | ) |
| Net sales for reportable segments- 2020 | |
$ | 887 | | |
$ | 644 | | |
$ | 52 | | |
$ | 1,583 | |
| | |
Three months ended September 30, | |
| | |
Americas | | |
Europe | | |
Asia Pacific | | |
Total | |
| Segment operating profit - 2019 | |
$ | 123 | | |
$ | 79 | | |
$ | 4 | | |
$ | 206 | |
| Effects of changing foreign currency rates (a) | |
| (1 | ) | |
| 4 | | |
| | | |
| 3 | |
| Net Price (net of cost inflation) | |
| (18 | ) | |
| 14 | | |
| | | |
| (4 | ) |
| Sales volume & mix | |
| 9 | | |
| 1 | | |
| | | |
| 10 | |
| Operating costs | |
| | | |
| (10 | ) | |
| 4 | | |
| (6 | ) |
| Divestiture (ANZ) | |
| | | |
| | | |
| (5 | ) | |
| (5 | ) |
| Total reconciling items | |
| (10 | ) | |
| 9 | | |
| (1 | ) | |
| (2 | ) |
| Segment operating profit - 2020 | |
$ | 113 | | |
$ | 88 | | |
$ | 3 | | |
$ | 204 | |
| | |
Nine months ended September 30, | |
| | |
Americas | | |
Europe | | |
Asia Pacific | | |
Total | |
| Net sales for reportable segments- 2019 | |
$ | 2,733 | | |
$ | 1,834 | | |
$ | 382 | | |
$ | 4,949 | |
| Effects of changing foreign currency rates (a) | |
| (158 | ) | |
| 5 | | |
| (18 | ) | |
| (171 | ) |
| Price | |
| 11 | | |
| 37 | | |
| | | |
| 48 | |
| Sales volume & mix | |
| (144 | ) | |
| (101 | ) | |
| (83 | ) | |
| (328 | ) |
| Total reconciling items | |
| (291 | ) | |
| (59 | ) | |
| (101 | ) | |
| (451 | ) |
| Net sales for reportable segments- 2020 | |
$ | 2,442 | | |
$ | 1,775 | | |
$ | 281 | | |
$ | 4,498 | |
| | |
Nine months ended September 30, | |
| | |
Americas | | |
Europe | | |
Asia Pacific | | |
Total | |
| Segment operating profit - 2019 | |
$ | 380 | | |
$ | 248 | | |
$ | 25 | | |
$ | 653 | |
| Effects of changing foreign currency rates (a) | |
| (11 | ) | |
| (3 | ) | |
| (1 | ) | |
| (15 | ) |
| Net Price (net of cost inflation) | |
| (29 | ) | |
| 36 | | |
| (10 | ) | |
| (3 | ) |
| Sales volume & mix | |
| (60 | ) | |
| (24 | ) | |
| (2 | ) | |
| (86 | ) |
| Operating costs | |
| (12 | ) | |
| (66 | ) | |
| 12 | | |
| (66 | ) |
| Divestiture | |
| | | |
| | | |
| (5 | ) | |
| (5 | ) |
| Total reconciling items | |
| (112 | ) | |
| (57 | ) | |
| (6 | ) | |
| (175 | ) |
| Segment operating profit - 2020 | |
$ | 268 | | |
$ | 191 | | |
$ | 19 | | |
$ | 478 | |
| (a) | Currency
effect on net sales and segment operating profit determined by using 2020 foreign currency exchange rates to translate 2019 local
currency results. |
Unaudited
O-I GLASS, INC.
Reconciliation to Free Cash Flow
| | |
Three Months Ended | | |
Three Months Ended | |
|
|
|
|
| | |
September 30, 2020 | | |
September 30, 2019 | |
|
|
|
|
| Cash provided by (utilized in) continuing operating activities | |
$ | 262 | | |
$ | 416 | |
|
|
|
|
| Cash payments for property, plant and equipment | |
| (57 | ) | |
| (100 | ) |
|
|
|
|
| Free cash flow (non-GAAP) | |
$ | 205 | | |
$ | 316 | |
|
|
|
|
Accounts Receivables Factored
| June 30, 2020 | | |
September
30,2020 | | |
| |
| | |
| |
|
|
|
|
| $ | 437 | | |
$ | 426 | | |
Difference | |
| (11 | ) | |
| | |
|
|
|
|
| | | | |
| | | |
| |
| | | |
| | |
|
|
|
|
| June 30, 2019 | | |
September 30,2019 | |
| | |
| | | |
| | |
|
|
|
|
| $ | 173 | | |
$ | 369 | |
| Difference | |
| | | |
| 196 | |
|
|
|
|
| | | | |
| | |
| | |
| | | |
| | |
|
|
|
|
| Free cash flow Adjusted for Factoring (non-GAAP) | |
$ | 216 | | |
$ | 120 | |
|
|
|
|
The Company is unable to present a quantitative reconciliation
of its forward-looking non-GAAP measures, EBITDA and free cash flow, for the year ending December 31, 2020, to its most directly
comparable GAAP financial measures, earnings (loss) from continuing operations before income taxes plus items that management considers
not representative of ongoing operations, depreciation and amortization and cash provided by continuing operations less cash payments
for property, plant and equipment, because management cannot reliably predict all of the necessary components of these GAAP financial
measures without unreasonable efforts. Earnings (loss) from continuing operations before income taxes includes several
significant items, such as restructuring charges, asset impairment charges, charges for the write-off of finance fees. The decisions
and events that typically lead to the recognition of these and other similar items are complex and inherently unpredictable, and
the amount recognized for each item can vary significantly. Accordingly, the Company is unable to provide a reconciliation of EBITDA
to earnings (loss) from continuing operations before income taxes and free cash flow to cash provided by continuing operating activities
or address the probable significance of the unavailable information, which could be material to the Company's future financial
results.
O-I GLASS, INC.
Reconciliation to Adjusted Interest Expense
| | |
Three Months Ended | | |
Three Months Ended | |
|
|
|
|
| Unaudited | |
September 30, 2020 | | |
September 30, 2019 | |
|
|
|
|
| Interest Expense, net | |
$ | 61 | | |
$ | 83 | |
|
|
|
|
| Items management considers not representative of ongoing operations | |
| (6 | ) | |
| (24 | ) |
|
|
|
|
| Adjusted Interest Expense, net | |
$ | 55 | | |
$ | 59 | |
|
|
|
|
O-I GLASS, INC.
Reconciliation to Net Debt
Unaudited
| | |
September 30, 2020 | | |
June 30, 2020 | | |
September 30, 2019 | |
| Total debt | |
$ | 5,375 | | |
$ | 6,507 | | |
$ | 5,888 | |
| Cash and cash equivalents | |
| 606 | | |
| 1,067 | | |
| 273 | |
| Net Debt | |
$ | 4,769 | | |
$ | 5,440 | | |
$ | 5,615 | |
O-I GLASS, INC.
Reconciliation to Adjusted Effective Tax
Rate
Unaudited
| | |
Three Months Ended | | |
Three Months Ended | |
|
|
|
|
| | |
September 30, 2020 | | |
September 30, 2019 | |
|
|
|
|
| Earnings (loss) from continuing operations before income taxes (A) | |
$ | 376 | | |
$ | (536 | ) |
|
|
|
|
| Items management considers not representative of ongoing operations | |
| (262 | ) | |
| 663 | |
|
|
|
|
| Adjusted Earnings (loss) from continuing operations before income taxes (C) | |
$ | 114 | | |
$ | 127 | |
|
|
|
|
| | |
| | | |
| | |
|
|
|
|
| Benefit (Provision) for income taxes (B) | |
$ | (41 | ) | |
$ | (31 | ) |
|
|
|
|
| Tax items management considers not representative of ongoing operations | |
| (1 | ) | |
| (4 | ) |
|
|
|
|
| Adjusted benefit (provision) for income taxes (D) | |
$ | (42 | ) | |
$ | (35 | ) |
|
|
|
|
| | |
| | | |
| | |
|
|
|
|
| | |
| | | |
| | |
|
|
|
|
| Effective Tax Rate (B)/(A) | |
| 10.9 | % | |
| -5.8 | % |
|
|
|
|
| Adjusted Effective Tax Rate (D)/(C) | |
| 36.9 | % | |
| 27.6 | % |
|
|
|
|
The Company is unable to present a quantitative reconciliation
of its forward-looking non-GAAP measure, adjusted effective tax rate, for the quarter ending December 31, 2020, to its most directly
comparable GAAP financial measure, provision for income taxes divided by earnings (loss) from continuing operations before income
taxes, because management cannot reliably predict all of the necessary components of these GAAP financial measures without unreasonable
efforts. Earnings (loss) from continuing operations before income taxes includes several significant items, such as restructuring
charges, asset impairment charges, charges for the write-off of finance fees, and the provision for income taxes would include
the income tax effect on such items. The decisions and events that typically lead to the recognition of these and other similar
items are complex and inherently unpredictable, and the amount recognized for each item can vary significantly. Accordingly, the
Company is unable to provide a reconciliation of adjusted effective tax rate to earnings (loss) from continuing operations before
income and provision for income taxes or address the probable significance of the unavailable information, which could be material
to the Company's future financial results.
