“O-I’s first quarter business performance was strong and consistent with our original guidance. This was accomplished despite the significant impact of severe weather that disrupted operations in Texas, Oklahoma and Mexico. Aside from this temporary event, business trends were favorable. Excluding the effect of recent divestitures, sales volume was consistent with last year despite the impact of severe weather and COVID-19 related restrictions. Favorable trends accelerated as the quarter progressed. Furthermore, continued strong operating performance and the company’s margin enhancement initiatives offset the impact of severe weather. First quarter cash flow trends were favorable considering typical business seasonality reflecting our continued focus on working capital management,” said Andres Lopez, CEO.
“We continue to take bold actions to improve O-I’s business fundamentals. Following a very successful startup, our first full-scale commercial MAGMA production line is now operational and the team is conducting the necessary tests to validate this revolutionary technology. In addition, we recently announced a $75 million investment to further expand a facility in the Andean market where demand for glass containers exceeds current capacity. Also, as part of its margin enhancement initiatives, O-I has formed a strategic partnership with Accenture to manage its global shared service center activity that is expected to increase capability, improve agility and reduce future SG&A costs. Finally, as announced on Monday, our Paddock Enterprises, LLC subsidiary reached an agreement in principle to accept the terms of a mediator’s proposal regarding a consensual plan of reorganization under the Bankruptcy Code. The agreement provides for total consideration of $610 million to fund a trust on the effective date of a plan of reorganization, subject to definitive documentation and satisfaction of certain conditions. This represents a major milestone as we seek a fair and final resolution to legacy asbestos-related liabilities. All of these actions are consistent with our strategy to increase shareholder value.”
“I believe the company is at an important inflection point as we advance our bold plan to change O-I’s business fundamentals. Reflecting our efforts to increase stability and agility, we have demonstrated a step change in our resilience as well as ability to consistently perform and deliver on our commitments. At the same time, we are removing the constraints of the past including legacy asbestos liabilities while moving forward with breakthrough innovations like MAGMA. We expect these and other key strategic actions will usher in a new period of prosperity for O-I,” concluded Lopez.
First Quarter 2021 Results
*Reported Results: For the first quarter 2021, the company recorded a loss of $0.62 per share compared to earnings of $0.32 per share (diluted) in the prior year. The current year loss before income taxes was $65 million, compared to earnings before income taxes of $81 million in the first quarter of 2020. Both periods include items management considers not representative of ongoing operations. In the first quarter of 2021, this included a $154 million adjustment to the company’s Paddock support agreement liability primarily to reflect the subsidiary’s agreement in principle for a consensual plan of reorganization.
*Adjusted Earnings1: Excluding certain items management considers not representative of ongoing operations, first quarter 2021 adjusted earnings1 were $0.35 per share compared with the prior year of $0.41 per share. Lower earnings primarily reflected recent divestitures. Current results were within management’s earnings guidance of $0.32 to $0.37.
*Segment Operating Profit1: First quarter 2021 segment operating profit was $175 million compared to $176 million in the prior year period. These results were in-line with the prior year period despite the July 2020 divestiture of the company’s Australia and New Zealand (“ANZ”) business, which contributed $12 million of segment operating profit in the first quarter of 2020. Sales volume was stable with prior year levels on a comparable basis, excluding the impact from recent divestitures. Continued strong operating performance and the benefit of margin enhancement initiatives offset the significant impact of severe weather.
*Cash Flows: Cash utilized by operating activities was $56 million in first quarter 2021, compared to a $315 million use of cash in 2020. First quarter 2021 free cash flow1 was a $149 million use of cash compared to a $435 million use of cash in 2020. The first quarter is typically a use of cash due to the seasonality of the business. The lower use of cash in 2021 primarily reflected improved working capital management.
*Capital Structure: Total debt was $5.3 billion at March 31, 2021 compared to $6.4 billion at March 31, 2020. Net debt1 was $4.6 billion at March 31, 2021 which was down more than $900 million from the prior year. Lower debt levels primarily reflected favorable cash flow and use of proceeds from divestitures partially offset by unfavorable foreign currency translation. Committed liquidity approximated $2.1 billion at March 31, 2021.
Net sales were $1.5 billion in the first quarter of 2021 compared to $1.6 billion in the prior year quarter. Adjusted for divestitures, net sales increased $66 million. Higher average selling prices contributed $28 million to this increase while favorable mix contributed $10 million. In addition, foreign currency translation added $35 million of higher sales in the quarter. Finally, revenue from technical services declined $7 million reflecting lower engineering project activity. Shipments in tons were essentially flat to the prior year yet the company estimates global shipments increased 1.5 percent excluding the negative effects of severe weather in the U.S. and Mexico.
Segment operating profit was $175 million in the first quarter of 2021 compared to $176 million in the prior year period.
details at: http://investors.o-i.com/news-releases/news-release-details/o-i-glass-reports-first-quarter-2021-results