FOR IMMEDIATE RELEASE
O-I REPORTS SECOND QUARTER 2013 RESULTS
Earnings on par with prior year
as benefits from footprint optimization offset soft demand
PERRYSBURG, Ohio (July 24, 2013) - Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the second quarter ending June 30, 2013.
Second quarter 2013 earnings from continuing operations attributable to the Company were $0.81 per share (diluted), compared with $0.81 per share in the same period of 2012.
Operating profits in Europe and Asia Pacific were higher, primarily driven by the benefits of ongoing footprint optimization.
Global volumes were down approximately 1 percent. Wine gains in all regions were more than offset by softness in beer markets.
The Company reaffirms its full year 2013 free cash flow outlook of at least $300 million.
Commenting on the Company's second quarter results, Chairman and Chief Executive Officer Al Stroucken said, "The Company performed in line with our expectations, notwithstanding weaker than expected demand. We are squarely focused on execution, especially asset optimization and wine share recovery in Europe, as well as labor productivity savings in North America. These actions are allowing us to achieve our targets despite headwinds."
Net sales in the second quarter of 2013 were $1.78 billion, similar to the prior year second quarter. Volume, in terms of tonnes shipped, decreased by 1 percent year-over-year. Unfavorable weather conditions in Europe and North America, as well as macroeconomic pressures in South America, led to lower beer volumes globally. This was partially offset by global gains in wine and double digit growth overall in Southeast Asia. The 2 percent increase in sales prices globally offset cost inflation.
In the second quarter of 2013, segment operating profit was $267 million, in line with the prior year. The Company achieved improved profitability in Europe and Asia Pacific due to ongoing actions to optimize its footprint. South America's profit was negatively impacted by a higher level of planned furnace rebuilds.
Net interest expense was $4 million lower than the prior year, primarily due to debt reduction and lower interest rates as the Company continues to strengthen its financial flexibility.
The Company's leverage ratio (net debt to EBITDA) was 2.9 times at the end of the second quarter of 2013, compared with 2.8 times in the previous year quarter. The Company expects to improve its leverage ratio to approximately 2.5 times by the end of the year.
During the quarter, the Company continued to execute on its capital allocation priorities by purchasing approximately $10 million of outstanding stock.
Commenting on the Company's outlook, Stroucken said, "Our plans called for an environment marked by slow growth globally and macroeconomic volatility. We are seeing just that, with modest contraction in Europe, stability in North America, and slower expansion in South America. Currency headwinds, however, particularly in Brazil and Australia, are more pronounced than expected.
"We will continue to execute on our priorities that impact the bottom line in the near term, principally structural cost reductions, asset optimization, and managing production volatility. In the back half of the year, we expect higher volumes globally, partly driven by our efforts to recapture wine share in Europe. We remain steadfast in our commitment to generate higher earnings and cash flow, and to allocate capital in ways that enhance our financial flexibility and generate shareholder value."
Management continues to expect free cash flow of at least $300 million in 2013. The Company has tightened the expected range of adjusted EPS in 2013 to $2.65 to $2.85 per share based on results to date, aforementioned currency and macroeconomic headwinds, and concerted management actions to reduce costs.
The table below describes the items that management considers not representative of ongoing operations.
|$ Millions, except per-share amounts||Three months ended June 30|
|Earnings from Continuing Operations Attributable to the Company||$135||$0.81||$134||$0.81|
|Items that management considers not representative of ongoing operations consistent with Segment Operating Profit|
|Restructuring, asset impairment and related charges||-||-||-||-|
|Charges for note repurchase premiums and write-off of finance fees||-||-||-||-|
|Adjusted Net Earnings ||$135||$0.81||$134||$0.81|
|$ Millions, except per-share amounts||Six months ended June 30|
|Earnings from Continuing Operations Attributable to the Company||$214||$1.29||$256||$1.54|
|Items that management considers not representative of ongoing operations consistent with Segment Operating Profit|
|Restructuring, asset impairment and related charges||9||0.05||-||-|
|Charges for note repurchase premiums and write-off of finance fees||11||0.07||-||-|
|Adjusted Net Earnings ||$234||$1.41||$256||$1.54|
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. With revenues of $7.0 billion in 2012, the Company is headquartered in Perrysburg, Ohio, USA, and employs approximately 22,500 people at 79 plants in 21 countries. O-I delivers safe, sustainable, pure, iconic, brand-building glass packaging to a growing global marketplace. O-I's Glass Is Life(TM) movement promotes the widespread benefits of glass packaging in key markets around the globe. For more information, visit www.o-i.com or www.glassislife.com.
The information presented above regarding adjusted net earnings relates to net earnings 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. Management uses this non-GAAP information principally for internal reporting, forecasting, budgeting and calculating compensation payments. 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 this non-GAAP information principally for internal reporting, forecasting and budgeting. 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 the economic conditions in Australia, Europe and South America 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, 2012 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 July 25, 2013
O-I CEO Al Stroucken and CFO Steve Bramlage will conduct a conference call to discuss the Company's latest results on Thursday, July 25, 2013, 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 July 25. 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 90 days following the call.
Contact: Erin Crandall, 567-336-2355 - 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 third quarter 2013 earnings conference call is currently scheduled for Thursday, October 31, 2013, at 8:00 a.m., Eastern Time.
In the second quarter of 2013 and the corresponding period of 2012, adjusted earnings were equal to GAAP earnings. 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 Note 1 in this release.