O-i Glass, Inc. · NYSE:OI
O-i Glass — Owens Illinois — Merger or Acquisition (May 2015)
20 slides from O-i Glass's merger presentation, May 13, 2015
Slide 1: O-I's Acquisition of Vitro's Food & Beverage Glass Container Business
O-I’s Acquisition of Vitro’s Food & Beverage Glass Container Business May 13, 2015
Slide 2: Safe Harbor Comments: Forward-Looking Statements
Safe Harbor Comments 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 projec
Slide 3: Safe Harbor Comments: Regulation G
Safe Harbor Comments Regulation G The information presented here regarding EBITDA, EBITDA margins, EBITDA less capital spending and leverage ratio (non-GAAP measures) are not defined terms under U.S. generally accepted accounting principles (GAAP). Non-GAAP measures should not be construed as an alt
Slide 4: Compelling strategic transaction
Compelling strategic transaction 3 Acquisition of Vitro’s food & beverage glass container business Well-run, profitable glass container business A leading producer in Mexico and Bolivia High margin business, in line with O-I South America performance Expands presence into an important, strategic geo
Slide 5: Overview of Vitro F&B business
Overview of Vitro F&B business 4 A leading Mexican multi-segment glass packaging supplier Long-term relationships with blue-chip customers 19 furnaces across 5 facilities in Mexico and 1 in Bolivia Produced ~4.7 billion glass containers in 2014 ~4,700 employees 2014 sales by end use1 1 Vitro’s food
Slide 6: Mexican markets strong and growing
Mexican markets strong and growing 5 Glass holds stable share of Mexican packaging market Glass Other Source: Vitro management estimates Source: Euromonitor Mexico is 4th largest market for beer production Sustainable growth for glass segment of food & beverage packaging Source: Euromonitor Higher g
Slide 7: Vitro F&B: a natural fit with O-I
6 Vitro F&B: a natural fit with O-I Seamlessly serve our customers Complementary manufacturing systems Similar technology to O-I Opportunities to leverage know-how Vitro F&B and O-I have similar product offerings Key segments: beer, food, spirits, wine Long history of operations Equal commitments to
Slide 8: Expanding our customer base
Expanding our customer base 7 More than 50% of sales under contract Price adjustment formulas for key costs New Customers Common Customers
Slide 9: O-I broadened its relationship with CBI in 2014
O-I broadened its relationship with CBI in 2014 Operating JV with CBI in Mexico to supply adjacent brewery Signed supplemental long-term supply agreement Vitro signed 7-year supply contract with CBI in 2014 Phase 1 implemented in 2015, served from pre-existing footprint Phase 2 to begin in Jan 2016,
Slide 10: Transaction economics
Transaction economics 9 Consideration $2.15 billion, all cash Purchase multiple 7.0x1 on LTM 3/31/15 pro forma adj. EBITDA, incl. synergies Synergies $30 million annual savings run rate expected by Year 3 Financing Financing package of $2.25 billion has been fully committed by Deutsche Bank Includes
Slide 11: Vitro F&B growth: 3% CAGR in revenue and 8% in EBITDA
Vitro F&B growth: 3% CAGR in revenue and 8% in EBITDA1 Vitro F&B: superior financial performance 10 Strong EBITDA margins2 Proven ability to generate cash2 1 Historical growth for Vitro F&B from 2011 through LTM 3/31/15 (not including incremental CBI impact) 2 Source: Vitro data from Vitro managemen
Slide 12: Clear opportunities to achieve synergies
Clear opportunities to achieve synergies 11 $30 million annual synergy target ~3% of Vitro F&B revenue Operational efficiencies Procurement savings Highly confident in achieving synergies Leverage O-I’s glass making expertise O-I’s history of productivity gains At JV with CBI in Mexico At CIV in Bra
Slide 13: Significant positive impact on O-I
Significant positive impact on O-I 12 2 $ millions Owens-Illinois (LTM 3/31/15)1 Vitro F&B Total Sales $6,566 $9452 $7,511 Adjusted EBITDA $1,180 $3083 $1,488 % margin 18.0% 32.6% 19.8% Adjusted EBITDA – CapEx $813 $247 $1,060 % of sales 12.4% 26.1% 14.1% 1 See Appendix: O-I: Reconciliations of adju
Slide 14: Balanced capital allocation
Balanced capital allocation Transaction increases O-I’s net leverage ratio to ~3.8x1 Primarily focused on debt reduction in Year 1 Anti-dilutive share repurchases of ~$25 million in Year 1 Ramp up shareholder yield in Years 2 and 3 Deleveraging still a priority May initiate a modest dividend Shareho
Slide 15: Transaction to drive long-term value creation
Transaction to drive long-term value creation 14 Aligns well with O-I market strategy and global footprint Includes highly productive operations and effective management Shares commitment to high-quality product for leading brand owners Expands top-tier customer base Provides low-risk opportunities
Slide 16: Appendix
Appendix 15
Slide 17: Vitro F&B pro forma adjusted EBITDA and transaction multiple calculation
Vitro F&B pro forma adjusted EBITDA and transaction multiple calculation Source: Based on Vitro management estimates Vitro F&B ($ millions) Pro forma revenue (3/31/15 LTM + estimate of full year 2016 new business signed in 2014) $ 945 Pro forma adjusted EBITDA (3/31/15 LTM + estimate of full year 20
Slide 18: Combined leverage ratio
Combined leverage ratio 17 1 Includes $100 million for value-added tax to be paid at closing and refunded post-closing. 2 The combined leverage ratio calculated here does not necessarily conform with the definition in the Bank Credit Agreement. ($ millions) O-I Gross Debt as of March 31, 2015 $ 3,62
Slide 19: O-I: Reconciliations of adjusted EBITDA and margins
O-I: Reconciliations of adjusted EBITDA and margins 18 $ Millions LTM ended Year ended December 31 March 31, 2015 2014 2013 2012 2010 Earnings (loss) from continuing operations $ 94 $ 126 $ 215 $ 220 $ 297 Interest expense 229 235 239 248 249 Provision for income taxes 90 92 120 108 129 Depreciation
Slide 20: O-I South America: reconciliation of segment operating profit
O-I South America: reconciliation of segment operating profit to earnings from continuing operations before income taxes 19 $ Millions Years ended December 31, Segment Operating Profit: 2014 2013 2012 Europe $ 353 $ 305 $ 307 North America 240 307 288 South America 227 204 227 Asia Pacific 88 131 11