Owens-Illinois, Inc. (NYSE: OI) today reported financial results for the first quarter ended March 31, 2018.
“This quarter marks the company’s ninth consecutive quarter of higher earnings year-over-year,” said Andres Lopez, CEO. “We delivered strong performance in-line with our guidance, while executing the planned, finite investments in asset stability. This reflects our focus and commitment to delivering on our strategic initiatives, including programs aimed at improving the customer experience, shifting to higher-value segments, becoming more cost-competitive, leveraging technology and simplifying our organization.”
“Our European and Americas regions delivered particularly strong sales and margin expansion in the first quarter. We continue to be positive about our 2018 outlook,” said Lopez. “Our teams are aligned and energized like never before, executing with rigor and discipline. This, combined with our balanced capital allocation strategy, is expected to create significant value for our shareholders for years to come.”
Highlights
• For the first quarter 2018, the Company recorded earnings from continuing operations of $0.59 per share (diluted). This was on the upper end of management guidance of $0.55 to $0.60 per share.
• Net sales were $1.7 billion, an increase of nearly 8 percent compared to the prior year, due to higher prices and favorable currency translation. Total glass container shipments in the first quarter of 2018 were comparable to the prior year quarter, with low-single-digit gains reported in the Americas.
• Earnings from continuing operations before income taxes were $135 million, compared with $73 million in the prior year, driven by solid operational performance and non-recurrence of certain expenses in the prior year.
• Segment operating profit[1] of reportable segments for the first quarter 2018 was $224 million, an increase of 3 percent compared with prior year. Solid gains were reported in the Americas and Europe. As expected, Asia Pacific reported lower segment operating profit, mainly reflecting temporary higher costs associated with asset improvements.
• Strategic initiatives in commercial programs and end-to-end supply chain management generated benefits as planned. Total systems cost improvements were broad based across key cost categories.
• The Company repurchased 2 million shares in the quarter. The impact on earnings per share in the quarter was de minimis because most of the shares were repurchased near quarter end. The Company is on track to repurchase approximately $100 million in shares for the full year 2018.
• The Company is maintaining its full year guidance. In 2018, the Company expects to deliver higher earnings from continuing operations mainly driven by higher segment operating profit. Earnings from continuing operations, and adjusted earnings, are expected to be in the range of $2.75 to $2.85 per share, which compares favorably with adjusted earnings of $2.65 per share in 2017. Cash provided by continuing operating activities is expected to be approximately $800 million, whereas adjusted free cash flow[2] for the year 2018 is expected to be approximately $400 million.
First Quarter 2018 Results
The Company consolidated the North America and Latin America segments into one segment, named the Americas, to better leverage critical resources and competencies across a larger geography, to replicate best practices and to reduce costs.
First quarter 2018 net sales were $1.7 billion, up $121 million from prior year, an increase of nearly 8 percent. Prices were 2 percent higher on a global basis, mainly due to price adjustment formulas and a constructive environment in Europe. Favorable foreign currency translation benefited net sales by $99 million, primarily due to a stronger Euro. In line with guidance for the quarter, total glass container shipments were comparable with the prior year.
In the Americas, shipments increased nearly 2 percent compared to the prior year period, driven primarily by higher shipments to food and alcoholic beverage customers. Consistent with the past several quarters, year-over-year shipments in Brazil recovered strongly. However, in the U.S., solid growth in food and non-alcoholic beverages were more than offset by a decline in alcoholic beverages, which is largely due to ongoing trends in megabeer. The Company is well positioned to benefit, however, from U.S. beer imports, as evidenced by strong volume growth in the joint venture with CBI[3], which has successfully ramped up its fourth furnace.
In Europe, sales volumes continue to be robust. Shipments in first quarter 2018 were essentially on par with the strong comparable in the prior year and are 4 percent higher than 2016. Asia Pacific shipments declined, partially driven by the timing of returnable float replenishment in Southeast Asia.
Segment operating profit was $224 million in the first quarter 2018, compared with $218 million in the prior year, an improvement of 3 percent, and the ratio of earnings from continuing operations before income taxes to net sales increased substantially.
more detail at: http://investors.o-i.com/phoenix.zhtml?c=88324&p=irol-newsArticle&ID=2344039