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O-I Glass (OI) Beats Q2 Earnings Estimates, Hikes '22 View

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O-I Glass, Inc. (OI - Free Report) reported second-quarter 2022 adjusted earnings per share (EPS) of 73 cents, which surpassed the Zacks Consensus Estimate of 67 cents. The bottom line came in higher than the company’s guidance of 65 cents per share. On a year-over-year basis, earnings increased 35%, driven by gains from higher selling prices as well as solid operating and cost performance supported by OI’s ongoing margin expansion initiatives.

Including one-time items, O-I Glass reported EPS of $1.59 for the quarter compared with 73 cents in the prior-year quarter.

Operational Update

Revenues were $1.78 billion for the quarter under review, up from the year-ago quarter’s $1.66 billion. The top line also beat the Zacks Consensus Estimate of $1.74 billion. Excluding the unfavorable impact of foreign currency translation and divestitures that had an impact of $95 million and $11 million, respectively, average selling prices increased and contributed $208 million to sales. Other sales were up $17 million due to higher machine part sales to third parties.

Cost of sales was up 7% year over year to $1,453 million. Gross profit increased 6% year on year to $325 million. The gross margin was 18.3% for the quarter under review, unchanged year over year. Selling and administrative expenses were up 6% year over year to $123 million.

Adjusted segment operating profit amounted to $257 million for the reported quarter, up from the prior-year period’s $232 million. The segment operating margin was 14.5% compared with the prior-year quarter’s 13.9%.

OI Glass, Inc. Price and EPS Surprise

 

OI Glass, Inc. Price and EPS Surprise

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

 

Segmental Performance

Net sales in the Americas segment rose 9% year over year to $971 million for the second quarter. Operating profit was up 5% year over year to $130 million.

Net sales in the Europe segment were $765 million for the reported quarter, up 2.7% year over year. The segment’s operating profit surged 17% year over year to $127 million.

Financial Update

O-I Glass had cash and cash equivalents of $661 million at the end of the second quarter of 2022, up from the $531 million at the prior-year quarter’s end. The company generated $193 million of cash from operating activities in the quarter under review compared with the prior-year quarter’s $199 million.

Its long-term debt was $4.42 billion as of Jun 30, 2022, down from $4.97 billion as of Jun 30, 2021.

Outlook for 2022

For 2022, O-I Glass is increasing earnings and free cash flow guidance, reflecting strong year-to-date performance and expected favorable performance in the remaining period of 2022. Strong demand for healthy, sustainable glass containers will continue to support its earnings. The company projects adjusted earnings per share between $2.05 and $2.20 for the current year, up from the previous guidance of $1.85-$2.10. Management expects adjusted free cash flow of at least $400 million and free cash flow of at least $175 million, up from the prior estimate of $350 million and $125 million, respectively.

For the current quarter, the company anticipates adjusted earnings between 55 cents and 60 cents per share.

Price Performance

Shares of O-I Glass have declined 1.3% in the past year compared with the industry’s fall of 20.5%.

 

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Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the Industrial Products sector are Greif Inc. (GEF - Free Report) , Titan International (TWI - Free Report) and MRC Global (MRC - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 17% in the past year.

Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. TWI’s shares have soared 101% in a year.

MRC Global has an expected earnings growth rate of 259% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 24% in the past 60 days.

MRC Global has a trailing four-quarter earnings surprise of 140.8%, on average. MRC’s shares have surged 35% in the past year.


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