O-I Glass (OI) Q2 2024 earnings summary

Executive summary

• New CEO Gordon Hardie introduced the "Fit to Win" transformation program, aiming to reshape operations, enhance competitiveness, and drive economic profit 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 due to capacity curtailments.

• Net sales for Q2 2024 decreased 9% year-over-year to $1,729 million, with net earnings attributable to the company falling to $57 million ($0.36 per diluted share) from $110 million ($0.69 per diluted share) in Q2 2023.

• Market conditions remain sluggish but are gradually improving, with shipment declines moderating and expectations for year-over-year sales volume growth in the second half of 2024.

• The company is accelerating inventory reduction and network optimization, including the closure of at least six furnaces and reducing SG&A costs.

Financial highlights

• Q2 2024 net sales were $1,729 million (down from $1,890 million in Q2 2023); adjusted EPS was $0.44 (down from $0.88); reported EPS was $0.36 (down from $0.69).

• Segment operating profit for Q2 2024 was $233 million (Americas: $106 million, Europe: $127 million), down from $326 million in Q2 2023.

• Gross profit for Q2 2024 was $303 million, down from $416 million in the prior year period.

• Free cash flow guidance for FY24 is $50–$100 million, down from previous $100–$150 million.

• Q2 2024 gross margin was 17.5% (down from 22% in Q2 2023); operating margin was 5.1% (down from 8.7%).

Outlook and guidance

• Full-year 2024 sales volume expected to be flat or slightly down; adjusted EPS guidance lowered to $1.00–$1.25 from $1.50–$2.00.

• Inventory control actions, including at least six indefinite or permanent furnace closures, are planned to optimize the network and support future performance.

• Adjusted EBITDA guidance for FY24 is $1,150–$1,250 million; by 2027, targets include sustainable adjusted EBITDA of at least $1.45 billion, EBITDA margins of 20%+, and free cash flow of at least 5% of sales.

• Adjusted effective tax rate for 2024 now expected at 33–36.2%, up from prior outlook of 30–33%.

• Near-term results will be negatively impacted by curtailments, but actions are expected to position the company for stronger performance in 2025.