FOR IMMEDIATE
RELEASE
O-I REPORTS FULL
YEAR AND FOURTH QUARTER 2014 RESULTS
O-I generates second highest free cash flow in the
Company's history
PERRYSBURG, Ohio (February 2,
2015) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the full year and fourth quarter ending
December 31, 2014.
-
Full year 2014 earnings
from continuing operations attributable to the Company were $1.01
per share (diluted), compared with $1.22 per share in 2013.
Excluding certain items management considers not representative of
ongoing operations, adjusted earnings[1] were $2.63
per share compared with $2.72 per share in the prior year.
-
Fourth quarter 2014 adjusted
earnings were $0.46 per share, compared with $0.51 per share in
the same period of 2013.
-
Global volumes for 2014 were
flat compared to the prior year, excluding the deliberate
retrenchment in China. Volume growth in Europe was 2 percent,
and South America posted 4 percent growth for the year, led by
broad-based gains in beer.
-
O-I positioned itself to
benefit from fast-growing Mexican beer imports to the U.S.
through a joint venture with Constellation Brands, Inc. in Mexico,
as well as a related long-term supply agreement with
Constellation.
-
O-I generated $329 million of
free cash flow[2] for the
full year 2014, the Company's second highest on record, despite an
adverse currency impact of approximately $40 million.
-
The Company continues to employ
disciplined capital allocation. As committed, O-I used 10
percent of its free cash flow to repurchase shares and also funded
non-organic growth opportunities and reduced net debt. O-I's
leverage ratio[3] improved to
2.4 at year-end.
-
The Board of Directors
authorized $500 million in share repurchases through 2017. The
Company expects to repurchase at least $125 million in shares in
2015.
-
In 2015, the Company expects to
generate $300 million of free cash flow for the third
consecutive year, despite an expected $30 million headwind from
currency exchange rates.
Commenting on the Company's 2014 results, Chairman
and Chief Executive Officer Al Stroucken said, "We successfully
generated significant free cash flow, despite strong currency
headwinds that intensified in the fourth quarter. Our European
asset optimization program has strengthened financial performance
in our largest region, and volume growth in South America allowed
us to reach our margin target of 20 percent in that region. We are
confident that our concentrated efforts to optimize our operations
will improve financial performance, particularly in North America
and Asia Pacific, where we experienced challenges in 2014.
"We successfully drove financial improvement by
reducing our pension obligations and refinancing $600 million in
debt. We will distribute benefits derived from our value-added
actions to our shareholders through a $500 million share repurchase
program. O-I is the world's leading glass container maker, and we
are well-positioned to generate sustainable, long-term value for
our shareholders."
Fourth Quarter 2014
Net sales in the fourth quarter of 2014 were $1.6 billion, down 9
percent from the prior year fourth quarter. The Company benefited
from price gains of 1 percent. The stronger U.S. dollar adversely
impacted the value of sales by 6 percent.
Sales volume declined by 4 percent. Volume in
Europe increased 1 percent, driven by higher beer sales. Shipments
in South America were down 4 percent. Volume in the Andean
countries was on par with the prior year, while shipments in Brazil
were down mid-single digits, as expected.
Volume in North America fell approximately 4
percent. Whereas sales volumes in most categories in the region
were flat with prior year, volumes in beer were lower, consistent
with the ongoing decline in major domestic beer sales. Shipments in
Asia Pacific declined nearly 20 percent, due primarily to the
deliberate retrenchment in China and lower sales in Australia.
Fourth quarter segment operating profit was $180
million, down $15 million compared with the prior year fourth
quarter. Europe reported a nearly 40 percent increase in operating
profit, primarily due to benefits from the asset optimization
program and cost containment measures. South America's operating
profit was on par with prior year, driven by improved productivity
and a geographic sales mix that offset lower shipments and currency
headwinds in the quarter. North America's profit contracted
significantly year on year, due to sales volume declines and deeper
production curtailments to control inventory. Asia Pacific reported
lower profit due to lower sales and production volumes.
Corporate and other costs improved by $6 million
compared with prior year, primarily driven by lower pension
expense.
In the fourth quarter of 2014, the Company
recorded several significant non-cash charges to reported results
as presented in the table entitled Reconciliation to Adjusted
Earnings. Management considers these charges not representative of
ongoing operations.
Full Year 2014
Full year net sales were $6.8 billion, down 3 percent from 2013.
Price increased 1 percent on a global basis. Currency was a more
than 2 percent headwind, primarily due to the Australian dollar,
the Brazilian real and the Colombian peso.
Although sales volume fell nearly 2 percent for
the year, shipments were on par with prior year when excluding the
Company's planned retrenchment in China. South America reported
strong sales volumes on growth of 4 percent, led by record volumes
in Brazil and recovery in the Andean region. Shipments in Europe
increased 2 percent, driven by wine and beer gains.
Volume in North America was dampened by the
ongoing decline in major domestic beer brands. Shipments in Asia
Pacific were down 20 percent, primarily due to China, as well as
the decline in beer and wine demand in Australia.
Segment operating profit was $908 million in 2014,
compared with $947 million in the prior year. In Europe, operating
profit increased 16 percent, driven by the asset optimization
program, as well as sales volume gains. South America also achieved
a double-digit expansion in operating profit due to productivity
improvement and higher sales volumes.
North America and Asia Pacific reported lower
operating profit in 2014. In North America, operating profit was
dampened by reduced sales and production volumes, as well as lower
productivity. In Asia Pacific, the Company responded to lower wine
volumes in Australia by modestly reducing capacity to improve
financial returns.
The Company entered into two promising agreements
with Constellation Brands to supply glass containers for CBI's
growing Mexican beer export business to the United States. O-I and
Constellation Brands created a joint venture to operate and expand
a glass container plant adjacent to CBI's brewery in Nava, Mexico.
Separately, O-I will supply additional containers from North
America under a long-term supply contract with Constellation
Brands. These transactions are expected to be accretive to earnings
in 2016 and allow the Company to benefit from the fast-growing
Mexican beer import market in the United States.
Full year 2014 earnings from continuing operations
attributable to the Company were $1.01 per share (diluted),
compared with $1.22 per share in full year 2013. Excluding certain
items management considers not representative of ongoing
operations, adjusted earnings were $2.63 per share compared with
$2.72 per share in the prior year.
Cash payments and new claims filed related to
asbestos continued to decline. In 2014, payments were $148 million,
down $10 million from 2013. In the fourth quarter, the Company
conducted its annual comprehensive review of asbestos-related
liabilities and recorded a charge of $135 million, as presented in
the table entitled Reconciliation to Adjusted Earnings.
The Company continued its strong focus on cash
generation in 2014. Despite lower segment operating profits, cash
provided by continuing operations in 2014 was $698 million, similar
to the strong performance in the prior year. The Company generated
$329 million of free cash flow in 2014, the second highest in the
Company's history. This includes the nearly $40 million adverse
impact of currency exchange rates.
The Company successfully refinanced $600 million
in debt in the fourth quarter as part of its ongoing efforts to
enhance financial flexibility. The new bonds extended the Company's
debt maturity profile. Net debt declined by $236 million for the
year, aided by foreign exchange rates, resulting in an improved
leverage ratio of 2.4 at year end 2014.
The Company's ongoing efforts to reduce the cost
and risk associated with its pension plans has resulted in a
reduction of approximately $600 million in pension obligations in
2014.
In line with stated capital allocation priorities
for free cash flow in 2014, the Company repurchased 1.1 million
shares worth $32 million, funded the initial $115 million
investment in the joint venture with Constellation Brands, and
reduced net debt.
Outlook
Commenting on the Company's outlook for 2015, Stroucken said,
"While we are not projecting much change in local market
conditions, we are expecting solid improvement in our operations
due to our strong manufacturing and technology expertise and our
concentrated focus on optimizing our manufacturing process. In
addition, we will see some benefit from our re-financing
activities, and we will adjust our approach to capital allocation
by returning at least $125 million to our shareholders through
share repurchases. In all, we expect to generate $300 million in
free cash flow, despite a strong U.S. dollar causing an expected
$30 million translation headwind."
Reflecting unfavorable currency translation, O-I
expects adjusted earnings for full year 2015 to be in the range of
$2.20 to $2.60. Assuming constant currency (at 2014 currency
rates), comparable adjusted earnings for full year 2015 are
expected to be in the range of $2.60 to $3.00. The midpoint of the
range using constant currency is higher than prior year adjusted
earnings due to an anticipated improvement in operating
results.
About O-I
Owens-Illinois, Inc. (NYSE: OI) is the world's largest glass
container manufacturer and preferred partner for many of the
world's leading food and beverage brands. The Company had revenues
of $6.8 billion in 2014 and employs approximately 21,100 people at
75 plants in 21 countries. With global headquarters in Perrysburg,
Ohio, USA, O-I delivers safe, sustainable, pure, iconic,
brand-building glass packaging to a growing global marketplace. For
more information, visit
o-i.com.
O-I's Glass Is Life(TM) movement promotes the
widespread benefits of glass packaging in key markets around the
globe. Learn more about the reasons to choose glass and join the
movement at glassislife.com.
Regulation G
The information presented above regarding adjusted net earnings
relates to net earnings from continuing operations attributable to
the Company exclusive of items management considers not
representative of ongoing operations and does not conform to U.S.
generally accepted accounting principles (GAAP). It should not be
construed as an alternative to the reported results determined in
accordance with GAAP. Management has included this non-GAAP
information to assist in understanding the comparability of results
of ongoing operations. Further, the information presented above
regarding free cash flow does not conform to GAAP. Management
defines free cash flow as cash provided by continuing operating
activities less capital spending (both as determined in accordance
with GAAP) and has included this non-GAAP information to assist in
understanding the comparability of cash flows. Management uses
non-GAAP information principally for internal reporting,
forecasting, budgeting and calculating compensation payments.
Management believes that the non-GAAP presentation allows the board
of directors, management, investors and analysts to better
understand the Company's financial performance in relationship to
core operating results and the business outlook.
The Company routinely posts important information
on its website - www.o-i.com/investors.
Forward looking
statements
This document contains "forward looking" statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 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 the Company's future
financial performance may differ from expectations due to a variety
of factors including, but not limited to the following: (1) foreign
currency fluctuations relative to the U.S. dollar, specifically the
Euro, Brazilian real and Australian dollar, (2) changes in capital
availability or cost, including interest rate fluctuations and the
ability of the Company to refinance debt at favorable terms, (3)
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 capital markets, disruptions in the supply chain,
competitive pricing pressures, inflation or deflation, and changes
in tax rates and laws, (4) consumer preferences for alternative
forms of packaging, (5) cost and availability of raw materials,
labor, energy and transportation, (6) the Company's ability to
manage its cost structure, including its success in implementing
restructuring plans and achieving cost savings, (7) consolidation
among competitors and customers, (8) the ability of the Company to
acquire businesses and expand plants, integrate operations of
acquired businesses and achieve expected synergies, (9)
unanticipated expenditures with respect to environmental, safety
and health laws, (10) the Company's ability to further develop its
sales, marketing and product development capabilities, and (11) the
timing and occurrence of events which are beyond the control of the
Company, including any expropriation of the Company's operations,
floods and other natural disasters, events related to
asbestos-related claims, and the other risk factors discussed in
the Company's Annual Report on Form 10-K for the year ended
December 31, 2013 and any subsequently filed Annual Report on Form
10-K or Quarterly Report on Form 10-Q. 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.
Conference call scheduled for
February 3, 2015
O-I CEO Al Stroucken and CFO
Steve Bramlage will conduct a conference call to discuss the
Company's latest results on Tuesday, February 3, 2015, at 8:00
a.m., Eastern Time. 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 Presentations & Webcast
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., Eastern Time, on February 3. 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
Lisa Babington, 567-336-1445 - O-I Corporate Communications
O-I news releases are available on the O-I website
at www.o-i.com.
O-I's first quarter 2015 earnings conference call
is currently scheduled for Wednesday, April 29, 2015, at 8:00 a.m.,
Eastern Time.
[1] Adjusted
earnings refers to earnings from continuing operations attributable
to the Company, excluding items management does not consider
representative of ongoing operations, as cited in the table
entitled Reconciliation to Adjusted Earnings in this release.
[2] Free cash
flow is calculated as cash provided by continuing operating
activities less additions to property, plant and equipment as
presented in the appendix of the Company's fourth quarter and full
year 2014 earnings presentation.
[3] The
leverage ratio is calculated as total debt, less cash, divided by
adjusted EBITDA as presented in the appendix of the Company's
fourth quarter and full year 2014 earnings presentation.
4Q14 Earnings Release
4Q14 Earnings Presentation
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Owens-Illinois, Inc. via Globenewswire
HUG#1891182
OI Glass (NYSE:OI)
Historical Stock Chart
From Mar 2024 to Apr 2024
OI Glass (NYSE:OI)
Historical Stock Chart
From Apr 2023 to Apr 2024