O-I REPORTS THIRD QUARTER 2016 RESULTS; Steady improvement in earnings per share driven by further progress on strategic initiatives and the acquired business in Mexico
(Thomson Reuters ONE) -
FOR IMMEDIATE RELEASE
O-I REPORTS THIRD QUARTER 2016 RESULTS
Steady improvement in earnings per share driven by further progress on strategic
initiatives and the acquired business in Mexico
PERRYSBURG, Ohio (Oct. 25, 2016) - Owens-Illinois, Inc. (NYSE: OI) today
reported financial results for the third quarter ended Sept. 30, 2016.
Third Quarter Highlights
* Earnings from continuing operations were $0.68 per share (diluted), which
was in line with management's guidance of $0.65 to $0.70 per share. This
compares favorably with earnings from continuing operations in the third
quarter of 2015 of $0.11 per share (diluted), and, on an adjusted basis,[1]
of $0.57 per share.
* Net sales were $1.7 billion, up 9 percent from the prior year third quarter,
due to the incremental third quarter net sales from the Company's
acquisition of Vitro's food and beverage business (the "acquired business").
Excluding the impact of the acquired business, shipments were 2 percent
below the prior year period. Higher shipments in North America were more
than offset by lower volumes in Latin America, mainly due to the challenging
economic environment in Brazil and Ecuador.
* Earnings from continuing operations before income taxes were $153 million in
the quarter. Segment operating profit of reportable segments(1) was $237
million, an increase of $38 million, or 19 percent, compared with prior
year. The increase was largely attributable to $37 million of incremental
segment operating profit from the acquired business. All regions except
Europe posted higher segment operating profit compared with prior year.
* Strategic initiatives are on track to deliver on the 2016 targets. In the
quarter, these initiatives contributed approximately $15 million to segment
operating profit.
* With respect to full year guidance, the Company is narrowing its range for
earnings, while maintaining the midpoint of the range, and reaffirming its
target for cash flow.
"I'm pleased with our performance during the quarter and the progress we're
making against our strategic initiatives," said CEO Andres Lopez. "The steady,
year-on-year improvement we've achieved despite difficult market conditions
reflects the strength of our team, our plan and our solid operational
performance. For the full year, we're still expecting a double-digit increase in
earnings and continued deleveraging driven by strong cash flow."
Third Quarter 2016 Results
Net sales in the third quarter of 2016 were $1.7 billion, up $146 million, or 9
percent, from the prior year third quarter. The Company's investment in non-
organic growth continued to drive the top line higher; the acquired business
generated an incremental $162 million in net sales due to strong shipments
within Mexico and to the United States. Price was up $19 million on a global
basis, primarily driven by price adjustments that reflect cost inflation.
Excluding the acquired business, sales volumes declined approximately 2 percent
compared to the third quarter of 2015. As expected, shipments in Europe were
comparable to the prior year quarter; gains in wine were essentially offset by
lower beer shipments. In North America, legacy volumes were modestly up compared
to the prior year, due to higher beer shipments - primarily related to
contracted volumes to Constellation Brands, Inc. - and higher non-alcoholic
beverage shipments. Third quarter shipments for legacy Latin America declined
nearly 15 percent, mainly due to economic weakness in Brazil and Ecuador. Asia
Pacific reported a 5 percent decrease in shipments. In mature markets, sales
volumes were similar to prior year, while in-country production volumes were
lower due to planned engineering activity. Sales volumes in mature markets were
supported by intra-regional shipments; in turn, domestic sales in emerging
markets declined.
Earnings from continuing operations before income taxes were $153 million in the
quarter, an increase of $95 million compared with prior year. This was mainly
driven by higher segment operating profit ($38 million) and lower costs for
items not considered representative of ongoing operations ($64 million). These
were partially offset by higher retained corporate costs ($8 million).
Segment operating profit was $237 million in the third quarter, $38 million
higher than prior year third quarter.
* In the quarter, the acquired business contributed $37 million of incremental
segment operating profit. Strong domestic sales, the incremental impact of
the new furnace in Monterrey, cost synergies and higher productivity all
contributed to its strong performance. The acquired business is still on
target to exceed management's initial expectations of $140-145 million in
segment operating profit for the full year.
* Europe reported segment operating profit of $64 million, which was $4
million below the prior year, yet flat year-on-year on a constant currency
basis. Europe faced a $4 million currency headwind, mainly due to the
British pound. Operating performance continued to improve in the third
quarter buoyed by efforts across the region. These gains were essentially
offset by the impact of higher engineering activity and the negative price-
cost spread.
* Segment operating profit for North America was $79 million in the quarter.
This was $18 million, or 30 percent, higher than the prior year third
quarter. Approximately two-thirds of the increase was due to the acquired
business. The legacy business benefited from higher sales volumes and
further contributions from strategic initiatives.
* Latin America's segment operating profit reached $74 million, up 45 percent
compared with the prior year quarter. The very successful integration of the
acquired business contributed an incremental $25 million of segment
operating profit. The legacy business delivered a very solid performance
despite the challenging economic situation in Brazil and Ecuador. The
management team continues to focus on controlling costs and monetizing minor
non-strategic assets.
* Asia Pacific reported segment operating profit of $20 million, up 5 percent
compared with the prior year. Lower sales volumes did not adversely impact
segment operating profit due to the geographic mix of sales. The favorable
impact from currency was partially offset by lower production volume and the
costs for intra-regional shipments, which were necessitated by planned
engineering activity.
Retained corporate and other costs amounted to $18 million, which compares with
$10 million in the prior year quarter. The change from prior year mainly relates
to higher non-service pension costs and the impact of foreign currency hedges.
Net interest expense in the quarter was $66 million compared with $67 million
for the third quarter of 2015. Interest expense in the third quarter of 2015
included $14 million principally due to note repurchase premiums and the write-
off of finance fees related to debt redeemed in the quarter. Exclusive of these
items, net interest expense increased $13 million from the third quarter of the
prior year primarily due to acquisition-related interest expense. The Company
continues to benefit from low variable interest rates.
The Company reported third quarter 2016 earnings of $0.68 per share (diluted).
This was solidly within management's guidance of $0.65 to $0.70 per share.
Outlook
The Company expects earnings from continuing operations attributable to the
Company (diluted) for the full year 2016 to be in the range of $2.21 to $2.26
per share. Excluding certain items management considers not representative of
ongoing operations, this equates to adjusted earnings per share[2] for full year
2016 in the range of $2.27 to $2.32, which simply narrows prior guidance. The
earnings guidance ranges reflect uncertainty in macroeconomic conditions and
currency rates, among other factors. Reflecting the aforementioned assumptions,
the Company continues to expect cash provided by continuing operating activities
for 2016 to be approximately $750 million. After deducting additions to
property, plant and equipment of approximately $450 million, free cash flow[3]
for 2016 is expected to be approximately $300 million, which is consistent with
prior guidance.
Conference Call Scheduled for Oct. 26, 2016
O-I CEO Andres Lopez and CFO Jan Bertsch will conduct a conference call to
discuss the Company's latest results on Wednesday, Oct. 26, 2016, 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 Oct. 26. 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 2016 earnings conference call is currently scheduled for
Thursday, Feb. 2, 2017, at 8:00 a.m. EST.
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 $6.2 billion in 2015 and employs
27,000 people at 80 plants in 23 countries. With global headquarters in
Perrysburg, Ohio, O-I delivers safe, sustainable, pure, iconic, brand-building
glass packaging to a growing global marketplace. For more information, visit o-
i.com.
Non-GAAP Financial Measures
Management believes that its presentation and use of certain non-GAAP financial
measures, including adjusted EPS and free cash flow, provide relevant and useful
information, which is widely used by analysts, investors and competitors in the
industry, as well as by management in assessing both consolidated and business
unit performance. The information presented regarding adjusted EPS 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 normal earnings of the business, divided by
weighted average shares outstanding (diluted). Management has included adjusted
EPS to assist in understanding the comparability of results of ongoing
operations. Further, the information presented regarding free cash flow relates
to cash provided by continuing operating activities less capital spending and
management has included free cash flow 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 relation 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, 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 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 incurred 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) impacts from the United Kingdom's referendum of withdrawal from the European
Union on foreign currency exchange rates and the Company's business, (9)
consumer preferences for alternative forms of packaging, (10) cost and
availability of raw materials, labor, energy and transportation, (11) the
Company's ability to manage its cost structure, including its success in
implementing restructuring plans and achieving cost savings, (12) consolidation
among competitors and customers, (13) the Company's ability to acquire
businesses and expand plants, integrate operations of acquired businesses and
achieve expected synergies, (14) unanticipated expenditures with respect to
environmental, safety and health laws, (15) the Company's ability to further
develop its sales, marketing and product development capabilities, (16) 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, (17) the Company's
ability to accurately estimate its total asbestos-related liability, and (18)
the Company's ability to successfully remediate the material weakness in its
internal control over financial reporting, and the other risk factors discussed
in the Company's Amendment No. 1 to the Annual Report on Form 10-K/A for the
year ended December 31, 2015 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.
--------------------------------------------------------------------------------
[1] Adjusted earnings per share, segment operating profit of reportable segments
("segment operating profit"), segment operating profit in constant currency,
segment operating profit margin and free cash flow are each non-GAAP financial
measures. See tables included in this release for reconciliations to the most
directly comparable GAAP measures.
[2] See the table entitled Reconciliation to Expected Adjusted Earnings - FY16
Forecast in this release.
[3] See the table entitled Reconciliation to Free Cash Flow - FY16 Forecast in
this release.
3Q16 Earnings Release:
http://hugin.info/150659/R/2051052/767571.pdf
O-I Logo :
http://hugin.info/150659/R/2051052/767562.jpg
3Q16 Earnings Presentation :
http://hugin.info/150659/R/2051052/767572.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq 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
Unternehmensinformation / Kurzprofil:
Datum: 25.10.2016 - 22:30 Uhr
Sprache: Deutsch
News-ID 502780
Anzahl Zeichen: 18822
contact information:
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