FOR IMMEDIATE RELEASE
O-I REPORTS THIRD
QUARTER 2015 RESULTS
Adjusted earnings in line with
expectations
PERRYSBURG, Ohio (Oct. 27,
2015) - Owens-Illinois, Inc. (NYSE: OI) today reported
financial results for the third quarter ending Sept. 30,
2015.
-
Third quarter 2015 earnings from continuing
operations attributable to the Company were $0.11 per share
(diluted) compared with $0.37 per share in the same period of 2014.
Excluding certain items management considers not representative of
ongoing operations, adjusted earnings[1] were $0.57
per share, in line with management guidance. These results compared
with $0.75 per share in the same period of 2014 and $0.60 per share
on a constant currency basis.
-
On Sept. 1, 2015, the Company
completed the acquisition of the food and beverage glass container
business of Vitro, S.A.B. de C.V. The $2.15 billion transaction
included operations in Mexico, Bolivia and the U.S. In 2016, the
acquisition is expected to contribute $0.30 in earnings per share
and generate substantial free cash flow.
-
Year-over-year volumes were up
nearly 4 percent on a global basis. Excluding the acquisition,
volumes were on par with prior year.
-
Segment operating profit
declined $49 million, or $9 million on a constant currency
basis. The decline was largely attributed to Europe, which
faced pricing pressure and elevated engineering activity. Improving
operational performance in Asia Pacific more than offset currency
headwinds in the region. The acquisition contributed $14 million of
segment operating profit in the quarter.
-
Retained corporate and other
costs improved by $10 million compared with the prior year
third quarter. This was primarily driven by lower pension expense,
reduced management incentive accruals and favorable currency
hedges.
Commenting on the Company's third quarter results, Chairman and
Chief Executive Officer Al Stroucken said, "We had good underlying
performance in the quarter, with increased profitability in Asia
Pacific and Latin America in constant currency. Operating results
in Europe were in line with expectations, but impacted by the delay
of a substantial energy credit. We accelerated engineering activity
in North America to reduce long term costs, setting the stage for
increased profitability in the future. We are pleased to have
completed the acquisition of Vitro's food and beverage business
earlier than expected and are making excellent progress with the
integration."
Net sales in the third quarter of 2015 were $1.6
billion, down $179 million from the prior year third quarter. Price
was essentially flat on a global basis, with higher prices in Latin
America largely offset by lower prices in North America and Europe.
Adverse currency translation due to the stronger U.S. dollar caused
an approximate $240 million decline in net sales. The Company
benefited from the addition of $61 million in sales from the newly
acquired food and beverage business.
Global sales volume increased by nearly 4 percent
year over year. Excluding the acquired business, global shipments
were on par with prior year. Shipments in Europe increased 2
percent, driven by higher beer sales, and Asia Pacific shipments
were equal to the prior year quarter.
Including the newly acquired business, volume in
Latin America increased nearly 16 percent, and shipments in North
America improved by 2 percent. Excluding the acquisition, Latin
America sales volume declined 4 percent, primarily due to the
decline reported in Brazil. Excluding beer, shipments in
Brazil were flat compared to prior year. Ongoing weak megabeer
trends brought North America sales volume down 1 percent, excluding
the acquisition.
Segment operating profit was $199 million in the
third quarter, $49 million lower than prior year, primarily due to
the strength of the U.S. dollar compared with the Euro, the
Brazilian real and the Colombian peso. On a constant currency
basis, segment operating profit was down $9 million as earnings
improved in Asia Pacific and Latin America, yet declined in Europe
and North America. The acquisition contributed $14 million of
segment operating profit, reflected in Latin America and North
America.
Excluding the impact of foreign currency, Asia
Pacific's operating profit increased more than 35 percent compared
to the prior year third quarter due to cost reduction efforts and
the favorable impact of prior restructuring actions.
On a constant currency basis, Latin America's
operating profit increased $9 million compared with prior year
third quarter. The contribution of the acquired business in Mexico
and Bolivia more than offset the adverse impact of lower shipments
elsewhere in the region.
Europe's operating profit declined $36 million,
with nearly half of the decrease caused by devaluation of the Euro.
Similar to the trend experienced in the first half of 2015, average
selling prices in Europe were approximately 1 percent lower year on
year due to competitive pressures, primarily in the south. Europe
reported more production downtime as compared to the prior year due
to engineering activities associated with ongoing asset
optimization. These investments also drove a year-on-year increase
in depreciation. Due to legislative delays, Europe did not receive
an $8 million energy credit expected in the quarter.
Despite continued productivity gains, North America reported a $5
million decline in operating profit. Results were impacted by
planned furnace rebuild activity, incremental investments the
Company made to improve its cost structure and a weaker Canadian
dollar.
Net interest expense[2] in the
quarter was consistent with the same period of 2014. The positive
impacts of debt refinancing and the currency impact on
Euro-denominated debt were offset by acquisition-related interest
expense.
The effective tax rate on adjusted earnings was 27
percent. The tax rate was higher than prior year, reflecting timing
issues associated with the set-up of the optimal legal structure
for the acquired operations in Mexico.
In the quarter, the acquisition reduced adjusted
earnings per share by approximately $0.03. This was modestly better
than expectations. The acquisition's contribution to segment
operating profit was more than offset by incremental interest and
tax expense. The acquisition is expected to be neutral to earnings
in the fourth quarter, and then to become accretive in 2016.
Earlier this month, the Company announced that COO
Andres Lopez has been named CEO effective Jan. 1, 2016.
Commenting on the Company's outlook for the fourth quarter, Lopez
said, "While we expect current economic and industry trends,
including currency headwinds, to continue in the fourth quarter, we
anticipate gains in sales and production volume. We will continue
to integrate Vitro's former food and beverage business, and work on
stabilizing and improving business performance."
Due to additional currency impact, the Company now
expects adjusted EPS for full year 2015 to be approximately $2.00.
The Company expects free cash flow to be approximately $200 million
for the year, based on currency rates at the end of the third
quarter. Because the majority of the Company's free cash flow is
generated in the fourth quarter, the amount will be heavily
influenced by year-end currency rates.
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. Following the acquisition of Vitro's food
and beverage business, the company now employs approximately 27,000
people at 81 plants in 23 countries. With global headquarters in
Perrysburg, Ohio, U.S., 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 and
adjusted EPS 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) the
Company's ability to integrate the Vitro Business in a timely and
cost effective manner, to maintain on existing terms the permits,
licenses and other approvals required for the Vitro Business to
operate as currently operated, and to realize the expected
synergies from the Vitro Acquisition, (2) risks related to the
impact of integration of the Vitro Acquisition on earnings and cash
flow, (3) risks associated with the significant transaction costs
and additional indebtedness that the Company expects to incur in
financing the Vitro Acquisition, (4) the Company's ability to
realize expected growth opportunities and cost savings from the
Vitro Acquisition, (5) foreign currency fluctuations relative to
the U.S. dollar, specifically the Euro, Brazilian real, Mexican
peso, Colombian peso and Australian dollar, (6) changes in capital
availability or cost, including interest rate fluctuations and the
ability of the Company to refinance debt at favorable terms, (7)
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, (8) consumer preferences for alternative
forms of packaging, (9) cost and availability of raw materials,
labor, energy and transportation, (10) the Company's ability to
manage its cost structure, including its success in implementing
restructuring plans and achieving cost savings, (11) consolidation
among competitors and customers, (12) the ability of the Company to
acquire businesses and expand plants, integrate operations of
acquired businesses and achieve expected synergies, (13)
unanticipated expenditures with respect to environmental, safety
and health laws, (14) the Company's ability to further develop its
sales, marketing and product development capabilities, and (15) 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, 2014 and any subsequently filed 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
October 28, 2015
O-I CEO Al Stroucken, COO
Andres Lopez and acting CFO John Haudrich will conduct a conference
call to discuss the Company's latest results on Wednesday, Oct. 28,
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 Oct. 28. 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
Kristin Kelley, 567-336-2395 - O-I Corporate Communications
O-I news releases are available on the O-I website
at www.o-i.com.
O-I's fourth quarter 2015 earnings conference call
is currently scheduled for Tuesday, Feb. 9, 2016, 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. In constant currency terms,
the prior year amount reflects January through September 2015
exchange rates. See the table entitled Reconciliation to Adjusted
Earnings and Constant Currency in this release.
[2] Excluding
charges of $14 million during the third quarter of 2015 for note
repurchase premiums and the write-off of finance fees related to
debt that was repaid prior to its maturity.
O-I Logo
3Q15 Earnings Presentation
3Q15 Earnings Release
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#1961850
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