O-I Glass (OI) Q2 2024 earnings summary

Executive summary

• New CEO Gordon Hardie introduced the "Fit to Win" transformation program, targeting end-to-end operational improvements, competitiveness, and sustainable value creation as markets gradually improve.

• Q2 2024 adjusted EPS was $0.44, down from $0.88 in Q2 2023, reflecting lower net price realization, reduced shipments, and higher operating costs from capacity curtailments.

• Net sales for Q2 2024 were $1.729 billion, down 9% year-over-year, with net earnings attributable to the company at $57 million, down from $110 million.

• The company is accelerating network optimization, including temporary production curtailments and at least six furnace closures over the next three quarters.

• Focus is shifting toward premium segments, operational efficiency, and cash generation, with a clear roadmap for improvement through 2027.

Financial highlights

• Q2 2024 net sales were $1,729 million (down from $1,890 million in Q2 2023); segment operating profit was $233 million (Americas: $106 million, Europe: $127 million), both down year-over-year.

• Adjusted EPS for Q2 2024 was $0.44, compared to $0.88 in Q2 2023; reported EPS was $0.36 versus $0.69.

• Gross profit for Q2 2024 was $303 million, down from $416 million; gross margin declined to 17.5% from 22%.

• Free cash flow guidance for FY24 was revised to $50–$100 million, down from $100–$150 million previously.

• Temporary production curtailments increased to 15% of capacity in 2024, up from 8% in 2023, incurring $180 million in additional costs.

Outlook and guidance

• Full-year 2024 guidance was revised downward, with sales volume expected to be flat or slightly down year-over-year and adjusted EPS guidance lowered to $1.00–$1.25.

• Production is projected to be down about 7% from last year, with inventory levels targeted to reach historic lows by year-end.

• Adjusted EBITDA guidance for FY24 is $1,150–$1,250 million; free cash flow guidance adjusted to reflect restructuring and Fit to Win actions.

• Management expects a significant performance rebound in 2025 as inventory and cost actions take effect, with targets for at least $1.45 billion in adjusted EBITDA and 20%+ EBITDA margins by 2027.

• Adjusted effective tax rate for 2024 now expected at 33–36.2%, up from prior outlook.