O-i Glass, Inc. · NYSE:OI
O-i Glass — Owens Illinois — Deutsche Bank 2011 Global Industrials and Basic Materials Conference
21 slides from O-i Glass's conference presentation, Jun 15, 2011
Slide 1: Deutsche Bank 2011 Global Industrials and Basic Materials Conference
Deutsche Bank 2011 Global Industrials and Basic Materials Conference June 15, 2011
Slide 2: Management Introduction, Regulation G and Forward Looking Statements
1 Management Introduction Ed White Senior Vice President and CFO John Haudrich Vice President, Finance Jason Bissell Director, Investor Relations Regulation G The information included in this presentation regarding adjusted net earnings relates to net earnings attributable to the Company exclusive o
Slide 3: Key Messages
Key Messages 2 Strategy Focused on Organic Growth, Investment to Expand In Profitable Emerging Markets, and Improved Capital Efficiency Long Term Focus on Improved Financial Performance and Greater Free Cash Flow Generation Challenging Market Conditions in Asia Pacific and Higher Manufacturing Costs
Slide 4: Owens-Illinois, Inc: Global Leader in Glass Containers
3 Owens-Illinois, Inc (NYSE: OI) Global Leader in Glass Containers $6.6 Billion Net Sales in 2010 Broad Geographic Footprint 80 glass plants 159 furnaces 432 glass forming machines Global Enterprise Operating in 21 Countries Based in U.S. but ~ 70% of sales international Competitive Advantages Scale
Slide 5: Strategic Priorities Drive Value Creation
4 Strategic Priorities Drive Value Creation Free cash flow is defined as cash from continuing operations less capital spending from continuing operations. Adjusted earning excludes items that management considers not representative of ongoing operations. For both metrics, data for years 2006 and lat
Slide 6: Priorities to Improve Shareholder Value
5 Priorities to Improve Shareholder Value Drive Organic Growth Improve Top-line Operating Excellence Invest in Profitable Growth Emerging Markets & High Return Projects Healthy Balance Sheet Increased Capital Efficiency Strong Free Cash Flow
Slide 7: Global Leader in Glass Packaging
6 Largest manufacturer of glass containers in the world Leading positions in Europe, North America, South America and Asia Pacific Leading glass manufacturer in 16 of the 21 countries of operations Sole manufacturer of glass containers in 7 of these countries Drive Organic Growth Global Leader in Gl
Slide 8: Europe Trends & Outlook
7 Trends & Outlook Positive organic volume improvement in 2011 across all major end-use categories Higher production Significant cost inflation leading to implementation of energy surcharges 2H11 Drive Organic Growth Europe Net Sales & Segment Operating Profit Margin Margin is defined as segment ope
Slide 9: North America Trends & Outlook
8 Drive Organic Growth North America Trends & Outlook Positive 2011 organic growth 2Q11 supply chain challenges Higher production Restarting two idled furnaces Footprint restructuring benefits 1H11 Net Sales & Segment Operating Profit Margin Margin is defined as segment operating profit divided by s
Slide 10: Asia Pacific Trends & Outlook
9 Drive Organic Growth Asia Pacific Trends & Outlook O-I #2 glass container company in China Plans for further expansion Beer/wine weakness in Australia/NZ Macro issues: High FX/interest rates Cost curtailment plans under review Net Sales & Segment Operating Profit Margin Margin is defined as segmen
Slide 11: South America Trends & Outlook
10 Drive Organic Growth South America Trends & Outlook High growth continues into 2011 Driven by acquisitions All end-uses positive Brazil strongest market Assessing further expansion Margin is defined as segment operating profit divided by segment sales Net Sales & Segment Operating Profit Margin $
Slide 12: Focused Investment in High Growth Regions
11 (1) Source: Euromonitor, China Daily Glass Association, Company Sources Invest in Profitable Growth Focused Investment in High Growth Regions Asia Pacific 2010 Growth - M&A – 3 plants - 50% JV – 3 plants - Greenfield – 1 furnace South America 2010 Growth - M&A – 4 plants - Greenfield – 2 furnaces
Slide 13: O-I Acquires Remaining Interest in Brazil
Invest in Profitable Growth O-I Acquires Remaining Interest in Brazil O-I Now Owns 100% of Its Brazilian Business Purchased remaining 21% from minority partner of southern Brazil glass container business (Comercio) Purchase price of $140 million ~$10 million of 2010 non-controlling interest ~$18 mil
Slide 14: Recent Refinancing Activity Decreases Interest Expense
Invest in Profitable Growth Recent Refinancing Activity Decreases Interest Expense New $2 billion Credit Agreement $1.1 billion – bank term loans $900 million – revolving credit agreement LIBOR +175 bps 4.0x leverage ratio covenant limit May 2016 maturity Higher-Cost Fixed-Rate Debt Redeemed May 31
Slide 15: Capital Allocation Focused on Higher Free Cash Flow
14 Increased Capital Efficiency Capital Allocation Focused on Higher Free Cash Flow Free Cash Flow (1) Free cash flow is defined as cash from continuing operations less capital spending from continuing operations. Capital Expenditures $301 $320 $322 $100 $300 ($196) 2006 2007 2008 2009 2010 2011E $3
Slide 16: 2Q11 Business Update
2Q11 Business Update Challenging Market Conditions in Asia Pacific and Higher Manufacturing and Delivery Costs to Impact Second Quarter Results 15 2Q11 vs 2Q10 2Q11 Trends Since Last Conference Call Net Income Adjusted Earnings Benefits of higher YoY volume offset by greater costs Segment Profit Eur
Slide 17: Concluding Comments
16 Concluding Comments Drive Organic Growth Volume: + 5 to 10% in 2011 Invest in Profitable Growth Emerging Markets & High Return Projects < 3x Net Debt/EBITDA Increased Capital Efficiency ~ $350M Capex in 2011 ~ $300M Free Cash Flow in 2011
Slide 18: Appendix
Appendix 17
Slide 19: Regional Customer Contract Models
Regional Customer Contract Models 18
Slide 20: Historic Net Sales
Historic Net Sales 19 ($ Millions) 2010 2009 2008 2007 Net Sales: Europe $ 2,746 $ 2,918 $ 3,498 $ 3,299 North America 1,879 2,074 2,210 2,271 South America 975 689 791 706 Asia Pacific 996 925 964 934 Reportable segment totals 6,596 6,606 7,463 7,210 Other 37 46 77 92 Net sales $ 6,633 $ 6,652 $ 7,
Slide 21: Historic Segment Operating Profit
Historic Segment Operating Profit 20 ($ Millions) 2010 2009 2008 2007 Segment Operating Profit Europe $ 324 $ 333 $ 478 $ 433 North America 275 282 185 265 South America 224 145 221 176 Asia Pacific 141 131 163 154 Reportable segment totals 964 891 1,047 1,028 Items excluded from Segment Operating P
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