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O-I Glass (OI) Q3 Earnings Beat Estimates, Raises '21 View

O-I Glass, Inc. OI reported third-quarter 2021 adjusted earnings of 58 cents per share, up 41% from the prior-year quarter’s 41 cent per share. The bottom line beat the Zacks Consensus Estimate of 52 cents. The upbeat results can be attributed to higher selling prices and continued solid operating and cost performance supported by the company’s Margin Expansion initiatives.

Including one-time items, the company reported earnings per share of 48 cents in the quarter under review compared with $2.06 in the prior-year quarter.

Operational Update

Revenues dipped 0.4% year over year to $1,609 million in the quarter under review. Gains from higher selling prices and favorable foreign currency translation were offset by weaker sales volumes and a dip in revenues from technical services due to lower engineering project activity. The top line missed the Zacks Consensus Estimate of $1,616 million. Demand for glass containers remained strong through the quarter but sales volume was down primarily due to choppy demand patterns, mix management and ongoing supply chain disruptions. Excluding the impact of recent divestitures, sales volume was down 1% from the prior-year period.

OI Glass, Inc. Price, Consensus and EPS Surprise

OI Glass, Inc. price-consensus-eps-surprise-chart | OI Glass, Inc. Quote

Cost of sales was down 2% year over year to $1,307 million. Gross profit increased 9% year on year to $302 million. Selling and administrative expenses flared up 13.7% year over year to $108 million.

Segment operating profit amounted to $243 million in the reported quarter, up from the prior-year quarter’s $204 million.

Segmental Performance

Net sales in the Americas segment grew 4% year over year to $925 million in the third quarter. Operating profit went up 18% year over year to $133 million.

Net sales in the Europe segment were $655 million in the reported quarter, up 1.7% year over year. The segment’s operating profit improved 25% year over year to $110 million.

Financial Update

O-I Glass had cash and cash equivalents of $628 million at the end of the third quarter of 2021, up from the $606 million at the end of the prior-year quarter. The company generated $306 million of cash from operating activities in the third quarter of 2021 compared with the prior-year quarter’s $262 million. Its long-term debt stood at $4.8 billion as of Sep 30, 2021, down from $5.2 billion as of Sep 30, 2020.

As part of its ongoing portfolio optimization program, the company recently announced that it will sell its Le Parfait brand and business in France at an attractive valuation, which also includes a long-term strategic supply agreement.

Outlook

O-I Glass now projects adjusted earnings per share between $1.77 and $1.82 for the current year, up from its prior guidance of $1.70 to $1.75. It expects to generate free cash flow of $260 million in 2021.

For the current quarter, the company anticipates adjusted earnings between 30 cents and 35 cents per share. Higher selling prices are expected to offset cost inflation. Sales volume will be in-line with prior year levels given the ongoing supply chain challenges. The company expects earnings to reflect solid operating performance and cost savings from its Margin Expansion initiatives.

Price Performance

Image Source: Zacks Investment Research

Shares of the company have gained 36.9% over the past year, against the industry’s decline of 9.9%.

Zacks Rank & Stocks to Consider

O-I Glass currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include Alcoa Corporation AA, DXP Enterprises, Inc. DXPE and Nordson Corporation NDSN. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa has an anticipated earnings growth rate of 690.5% for fiscal 2021. The company’s shares have soared 301%, in the past year.

DXP Enterprises has an estimated earnings growth rate of 77.6% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 110%.

Nordson has a projected earnings growth rate of 45.2% for 2021. The stock has appreciated 31% over the past year.


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OI Glass, Inc. (OI): Free Stock Analysis Report
 
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