• Adjusted Net Loss: $0.04 per share for Q3 2024.

• Sales Volume Growth: Increased by 2% in Q3 2024.

• Americas Segment Operating Profit: $88 million, down from $116 million last year.

• Europe Segment Operating Profit: $56 million, down from $185 million last year.

• Capacity Curtailment: 18% reduction in Q3 2024 to manage inventory levels.

• Full-Year Adjusted Earnings Guidance: $0.70 to $0.80 per share, revised down from $1 to $1.25 per share.

• Free Cash Flow Guidance: Expected use of cash between $130 million and $170 million.

• Inventory Days Supply (IDS): Reduced by 17% to 59 days in Q3 2024.

• 2027 EBITDA Target: At least $1.45 billion.

• 2027 Free Cash Flow Target: At least 5% of sales.

• Warning! GuruFocus has detected 2 Warning Sign with OI.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• O-I Glass Inc (NYSE:OI) reported a modest increase in sales volumes during the third quarter, with shipments rising in nearly all geographies.

• The company is implementing its Fit to Win program, which is expected to drive significant improvements in profitability, cash flow generation, and competitive positioning.

• O-I Glass Inc (NYSE:OI) achieved a key milestone with the commencement of operations at its first greenfield plant in Bowling Green, Kentucky.

• The company anticipates generating at least $300 million in savings by 2027 through its Fit to Win initiatives, with $175 million expected in 2025.

• O-I Glass Inc (NYSE:OI) is focusing on reducing SG&A expenses to no more than 5% of sales by early 2026, aiming for over $200 million in annualized savings.

Negative Points

• O-I Glass Inc (NYSE:OI) reported an adjusted net loss of $0.04 per share for the third quarter of 2024, a decline from the previous year's performance.

• The company faced higher operating costs due to the curtailment of 18% of its production capacity to manage inflated inventory levels.

• Net price realization was down, contributing to the lower earnings, although it was partially offset by increased shipment levels.

• The company revised its full-year 2024 guidance downward due to softer-than-anticipated demand, impacting sales volume and earnings expectations.

• O-I Glass Inc (NYSE:OI) anticipates a use of cash between $130 million and $170 million for the year, a significant adjustment from previous expectations.

Q & A Highlights

Q: Can you explain the higher-than-expected working capital and inventory levels as we move into 2025? A: John Haudrich, CFO, explained that due to softer sales volumes and the challenge of quickly adjusting the network, inventory levels are expected to be higher than initially targeted. The company anticipates that at least half of the $125 million incurred in expenses due to inventory drawdown will be recovered next year as the worst of the destocking is completed.