OI
CAPITAL MARKETS
PRESENTATION
SEPTEMBER 4, 2024
PRESENTERS
Gordon Hardie
President and CEO
John Haudrich
SVP and CFO
2
SAFE HARBOR COMMENTS
This presentation contains "forward-looking" statements related to O-I Glass, Inc. ("O-I Glass" or the "Company") 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, as amended. 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 that 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 general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to economic and social conditions, trade disputes, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, changes in tax rates and laws, war, civil disturbance or acts of terrorism, natural disasters, public health issues and weather, (2) cost and availability of raw materials, labor, energy and transportation (including impacts related to the current Ukraine-Russia and Israel-Hamas conflicts and disruptions in supply of raw materials caused by transportation delays), (3) competitive pressures from other glass container producers and alternative forms of packaging or consolidation among competitors and customers, (4) changes in consumer preferences or customer inventory management practices, (5) the continuing consolidation of the Company's customer base, (6) the Company's ability to improve its glass melting technology, known as the MAGMA program, and implement it within the timeframe expected, (7) unanticipated supply chain and operational disruptions, including higher capital spending, (8) the Company's ability to achieve expected benefits from margin expansion and profitability initiatives, such as its Fit to Win program, including expected impacts from production curtailments and furnace closures, (9) seasonality of customer demand, (10) the failure of the Company's joint venture partners to meet their obligations or commit additional capital to the joint venture, (11) labor shortages, labor cost increases or strikes, (12) the Company's ability to acquire or divest businesses, acquire and expand plants, integrate operations of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, (13) the Company's ability to generate sufficient future cash flows to ensure the Company's goodwill is not impaired, (14) any increases in the underfunded status of the Company's pension plans, (15) any failure or disruption of the Company's information technology, or those of third parties on which the Company relies, or any cybersecurity or data privacy incidents affecting the Company or its third-party service providers, (16) risks related to the Company's indebtedness or changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to generate cash to service indebtedness and refinance debt on favorable terms, (17) risks associated with operating in foreign countries, (18) foreign currency fluctuations relative to the U.S. dollar, (19) changes in tax laws or U.S. trade policies, (20) the Company's ability to comply with various environmental legal requirements, (21) risks related to recycling and recycled content laws and regulations, (22) risks related to climate-change and air emissions, including related laws or regulations and increased ESG scrutiny and changing expectations from stakeholders, and the other risk factors discussed in the Company's filings with the Securities and Exchange Commission.
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.
Additionally, certain forward-looking and other statements in this presentation or other locations, such as the Company's corporate website, regarding ESG matters are informed by various ESG standards and frameworks (which may include standards for the measurement of underlying data) and the interests of various stakeholders. Accordingly, such information may not be, and should not be interpreted as necessarily being "material" under the federal securities laws for SEC reporting purposes, even if the Company uses the word "material" or "materiality" in such discussions. ESG information is also often reliant on third-party information or methodologies that are subject to evolving expectations and best practices, and the Company's approach to and discussion of these matters may continue to evolve as well. For example, the Company's disclosures may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policies, or other factors, some of which may be beyond its control.
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O-I AT A GLANCE
GLOBAL LEADER IN GLASS PACKAGING FOCUSED ON WINNING WITH CUSTOMERS, IMPROVING ECONOMIC PROFIT, AND INCREASING THE VALUE OF THE COMPANY
#1
6,000
36
glass containers
Sustainability
~23,000
manufactured in 2023
Leadership
employees
BILLION
broad product portfolio
customer demand
in 19 countries
customers across a
is driving
across 68 plants
global leader in glass packaging
Glass is the
preferred choice
for premium and health-oriented products
BREAKTHROUGH
FIT TO WIN
INNOVATION
MAGMA
Economic profit mindset to
& ULTRA
improve competitiveness and
boost results
$7.1B NET SALES
FY 2023
ADJUSTED EPS & FINANCIAL LEVERAGE
5.5x
6.0x
4.4x
5.0x
3.5x
4.0x
2.9x
3.0x
2.0x
$1.83
1.0x
$1.22
$2.30
$3.09
0.0x
2020
2021
2022
2023
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O-I SERVES THE BRANDS YOU TRUST AND LOVE
LEADING CUSTOMER RELATIONSHIPS, DESIGN CAPABILITIES AND SERVICE LEVELS
5
PORTFOLIO OVERVIEW
PRIVILEGED FOOTPRINT WITH DEEP TECHNICAL AND MANUFACTURING CAPABILITIES
2023
AMERICAS
EU
Category Mix
Net Sales ($B)
$3.9
$3.1
$7.1
Beer
# Plants
32
34
68
# Countries
7
10
19
Wine
Long Term Contracts
75%
35%
55%
Long Term CAGR1
-1% to +2%
0% to 1%
0% to 1%
Food
NAB
32%
19%
17%
16%
Spirits
16%
6 O-I'snon-reportable segment includes operations in Asia as well as machine part sales and engineering services 1) 2023-2028 Euromonitor estimates for one way domestic + imported consumption.
COMPETITIVE GLASS OFFERING LEVERAGES MEGA TRENDS
Increased demand
Health and
CPG innovation
Glass is the most
for premium
wellness favors
and diversification
sustainable rigid
beverages
glass over plastics
of product portfolios
packaging
Glass
Metal
Plastics
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Favorable
Neutral
Unfavorable
VALUE CREATION ROADMAP
EARNINGS IMPROVEMENT AND VALUE CREATION OPPORTUNITY SUPPORTED MORE BY SELF HELP RATHER THAN SIGNIFICANT MARKET RECOVERY
ECONOMIC PROFIT MINDSET
CAPTURING MORE OF THE ECONOMIC PROFIT
IN THE PACKAGING VALUE CHAIN
Horizon 3
(2028+)
STRATEGIC
OPTIONALITY
Horizon 2
(2026-2027)
BUILD VALUE
Horizon 1
MOMENTUM
FUTURE
O-I EP
(Thru 2025)
CAPTURE
FIT TO WIN
CURRENT
O-I EP
CAPTURE
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REVERSE TREND IN
ECONOMIC PROFIT
$500
8%
$400
7%
6%
$300
5%
($M)EP
$200
4%
ES%
2%
$100
3%
1%
$0
0%
-$100
-1%
-2%
-$200
-3%
2022 2023
1H24 LTM
EP
ES %
Preliminary Targets¹ (2027)
Economic profit (EP) refers to net earnings (loss) attributable to the Company, excluding interest expense, net, and non-cash goodwill impairment charges, minus the product of the Company's average invested capital and its weighted average cost of capital. Economic spread percentage (ES %) refers to economic profit divided by the Company's average invested capital.
HORIZON 1: FIT TO WIN
FIT TO WIN WILL DRIVE A STEP CHANGE IN O-I'S COMPETITIVE POSITION
PILLARS
ACTIONS AND NEXT STEPS
ENHANCE COMPETITIVENESS
• Decentralize business model to align accountability
• 24% capacity temporarily curtailed QTD 3Q24 due to slow demand / reduce IDS
• End-to-end supply chain review / network optimization
• Announced closure of 4 furnaces as part of program to close 6+ furnaces
• Deliver economically profitable mix and growth
•
In 3Q24 earnings call: Detail furnace closure program & 2025 SG&A savings plan
DRIVE CAPITAL DISCIPLINE AND CASH GENERATION
• Incorporate an economic profit (EP) model
• Initiated analysis of EP performance across all countries, plants, customers, and SKUs
• Increased capital accountability
• All discretionary capital halted at EP negative operations pending further review
• In 2H24: Develop draft restructuring and CapEx plan based on EP analysis
CONSISTENT FINANCIAL PERFORMANCE
• Economic profit will be a key financial KPI
•
Shared enterprise EP and ES % for 2022, 2023 and YTD 2024 (see previous page)
• Evaluate aligning incentives with economic profit
•
In 2H24: Integrate EP as an element into future incentive plan structure
PERFORMANCE = POTENTIAL MINUS INTERFERENCE
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FIT TO WIN TO ADDRESS THE INTERFERENCE
MONETIZING MAGMA
MAGMA CONTINUES TO ADVANCE WITH INCREASED
FOCUS ON ACCELERATING ECONOMIC PROFIT
GEN 2 MAGMA GREENFIELD
(Bowling Green, KY)
►
►
MAGMA CORE TECHNOLOGY WORKS
RAMPING UP MAGMA GEN 2 GREENFIELD IN BOWLING GREEN
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Disclaimer
O-I Glass Inc. published this content on 04 September 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on September 04, 2024 at 10:44:01 UTC.