O-i Glass, Inc. · NYSE:OI
O-i Glass — Credit Suisse 35th Annual Specialties & Basics Conference (September 2022)
22 slides from O-i Glass's conference presentation, Sep 14, 2022
Slide 1: 3Q22 Capital Markets Presentation
3Q22 CAPITAL MARKETS PRESENTATION SEPTEMBER 2022
Slide 2: Safe Harbor Comments
SAFE HARBOR COMMENTS FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking” statements related to O-I Glass, Inc. (“O-I” or the “company”) within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.
Slide 3: At a Glance
AT A G L ANCE DIVERSE ATTRACTIVE PRODUCT PORTFOLIO CUSTOMER BASE 33% beer 20% wine 18% food 15% spirits 14% NAB 6,000+ direct customers GLASS IS THE MOST MAGMA SUSTAINABLE PACKAGE reimagines glass making to all natural, endlessly recyclable, support customer aspirations NEVER trash and enable profit
Slide 4: Attractive Investment Opportunity
AT T R AC TIV E I N V E S T ME N T O P P O RTUN ITY SUSTAINABILTY Glass is Set to Win in the BREAKTHROUGH New Green Economy INNOVATION MAGMA Creates a New PROFITABLE Paradigm for Glass GROWTH Strongest Glass Fundamentals in 20+ yr AGILE EXECUTION Bold Transformation and Delivering on Commitments RED
Slide 5: Reduce Risk Profile: Resolve Legacy Liabilities and Improve Balance Sheet
R E D UC E R I S K P RO F I LE Resolve Legacy Liabilities and Improve The Balance Sheet R E D U CI N G F I N A N C I A L L E V E R AG E 1 6.0 Resolved Legacy Asbestos Liabilities in Mid-2022 ▲ Funded $610M Asbestos Trust as of July 18, 2022 5.0 Eliminating Net Unfunded Pension Position by 2024 ▲ Mul
Slide 6: Bold Transformation and Delivering on Commitments
AG I L E E X E C UT I ON INCREASE SUPPLY CHAIN EFFICIENCY BOLD TRANSFORMATION AND ENABLE A MORE FLEXIBLE, SCALABLE AND DELIVERING ON COMMITMENTS SUSTAINABLE PRODUCTION CAPABILITY INCREASE COST COMPETITIVENESS OPTIMIZE BUSINESS PORTFOLIO AND STRUCTURE BUILD A SIMPLE, AGILE AND EFFECTIVE ORGANIZATION
Slide 7: Strongest Glass Fundamentals in 20+ Years
P RO F I TABLE G ROW T H Strongest Glass Fundamentals in 20+ Years PROJECTED PACKAGING MARKET GROWTH (2022-2024) ▲ Structural shifts in LatAm: Premium products, brand localization, one way/returnable mix 4% ▲ North America mix improvement: O-I shifting away from beer to higher value categories 3.5%
Slide 8: O-I Leveraging Strong Glass Fundamentals to Expand the Business
P RO F I TABLE G ROW T H O-I EXPANSION PLAN: 2022 – 2024 • Enables ~ 600KT (5% - 6%) Growth • ~ $630M Investment, $110M EBIT Run Rate, ~ 20% IRR O-I Leveraging Strong Glass Fundamental to Expand the Business O-I VOLUME GROWTH (IN TONS, ADJUSTED FOR DIVESTITURES) 8% CAGR ‘16-1H22 6.2% 6% O-I Consolid
Slide 9: Creates a New Paradigm for Glass
B R E AK T HRO UGH I N N OVATION EXPAND RIGHT TO WIN WITH RAPID COLOR, SHAPE & SIZE CHANGES GROW WITH THE MARKET WITH SCALABLE CAPACITY ENTER NEW MARKETS WITH SCALABILITY & LOWER CAPITAL COST EFFICIENT WITH MORE VARIABLE COST STRUCTURE CREATES A NEW AGILE THROUGH ECONOMIC CYCLES & SEASONALITY PARADI
Slide 10: Glass is Set to Win in the New Green Economy
S US TAI N ABILT Y Glass is Set to Win in the New Green Economy GLASS IS HIGHLY SUSTAINABLE MAJOR LEVERS FOR IMPROVEMENT PROGRESS AND RECOGNITION ▲ 100% recyclable ▲ Increase cullet usage ▲ Elevated Goals ▲ Reusable and circular ▲ Light weight containers ▲ Doubled ESG Initiatives ▲ All natural and i
Slide 11: Delivering on O-I's Transformation Commitments
2022 KEY OBJECTIVES Delivering on O-I’s Transformation Commitments PRIORITIES 2022 KEY OBJECTIVES PROGRESS MARGIN Higher selling prices offset PY unfav Net Price and 2022 inflation ▲ Fav 2Q22 Net Price, on track to exceed FY22 guidance EXPANSION ≥ $50M margin expansion initiative benefits ▲ $55M
Slide 12: Improving Business Outlook
D E L I VE RING O N O UR C O M M I TM E NT S Improving Business Outlook 3Q22 FY22 FY24 Outlook as of 9/13/22 Outlook as of 9/13/22 Targets from Sept 28, 2021 I-Day Volume1 Growth Flat or slightly up Approximately +1% 1-2% CAGR 2022-2024 (Affirmed) (Affirmed) Earnings (aEPS2) $0.55 - $0.60 /sh $2.10
Slide 13: Resilience Amid Elevated Macro Volatility
R E S I LIE NCE AM I D E L E VAT E D M AC RO VO L IT ITY ▲ Sound balance sheet with leverage at lowest levels since prior to acquisition of O-I Mexico ▲ Favorable resolution of legacy asbestos liabilities improves cash flow ▲ Stable Food/Beverage end markets that are more resilient amid recession cy
Slide 14: Conclusion
C O N CLUS ION COMPELLING INVESTMENT THESIS ▲ CLEAR STRATEGY TO CREATE VALUE ▲ DELIVERING ON KEY TRANSFORMATON INITIATIVES ▲ IMPROVING 3Q22 AND FY22 BUSINESS OUTLOOK ▲ RESILIENCE AMID ELEVATED MACRO VOLITILITY ▲ O-I REPRESENTS AN ATTRACTIVE INVESTMENT OPPORTUNITY O-I is aggressively addressing many
Slide 15: Appendix
APPENDIX
Slide 16: Russian Gas Curtailment Risk
RU S S I A N G C U RTA I L M E N T R I S K EU NG PROFILE BY COUNTRY O-I Well Positioned to Manage Potential Curtailment Risk COUNTRY % RUSSIA NG1 % NG STORAGE2 # O-I PLANTS Czech Republic 100% 83% 2 Hungary 90% 65% 1 EU MANAGING POTENTIAL RUSSIA CURTAILMENT Germany 65% 65% 3 • Actively sourcing more
Slide 17: O-I ESG Goals
O - I E S G G OAL S Increase recycled content to 50% Reduce the amount of natural average by 2030. O-I is taking a resource used and reduce the We are committed to reducing tailored approach to increase generation of waste by reuse our global water usage 25% by recycled content rates across its and
Slide 18: Segment FX Impact on Earnings
S E G M E N T F X I M PACT O N E AR N I N GS APPROXIMATE ANNUAL IMPACT ON FX RATES AT KEY POINTS EPS FROM 10% FX CHANGE Jul 31, AVG AVG 2022 2Q22 2Q21 EUR 0.16 EUR 1.02 1.06 1.21 MXN 0.05 MXN 20.27 20.02 19.92 BRL 0.02 BRL 5.18 4.96 5.18 COP 0.01 COP 4,369 3,956 3,733 18
Slide 19: Non-GAAP Financial Measures
N O N - GAAP F I N AN CIAL M E AS UR E S The company uses certain non-GAAP financial measures, which are measures of its historical or future financial performance that are not calculated and presented in accordance with GAAP, within the meaning of applicable SEC rules. Management believes that its
Slide 20: Reconciliation to FCF & Adjusted FCF
R E C O NCILIATIO N TO F C F & AD J US T E D F C F The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measures, free cash flow and adjusted free cash flow, for all periods after December 31, 2022, to its most directly comparable U.S. GAAP financial measure
Slide 21: Reconciliation to Financial Leverage
R E C O N C I L I AT I O N TO F I N A N C I A L L E V E R AG E $ millions 2019 2020 2021 Earnings (loss) from continuing operations $ (379) $ 264 $ 165 Interest expense (net) 311 265 $ 216 Interest income 9 5 $ 7 Provision for income taxes 118 89 $ 167 Depreciation 390 369 $ 356 Amortization of inta
Slide 22: Reconciliation to Adjusted Earnings and Adjusted EPS
A D D I T I O N A L R E C O N C I L I AT I O N S RECONCILIATION TO ADJUSTED EARNINGS AND ADJUSTED EARNINGS PER SHARE The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measures, adjusted earnings and adjusted earnings per share, for the quarter ending Sept
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