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O-I Glass (OI) Completes $1.5B Portfolio Optimization Plan

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O-I Glass, Inc. (OI - Free Report) recently announced that it has completed the sale and leaseback transaction for its plant located in Vernon, CA. The $181-million agreement includes a long-term lease as well as additional renewal options.

With this move, O-I has successfully completed its $1.5-billion Portfolio Optimization program way ahead of its original target of 2024. The company had embarked on this initiative to re-align its  business portfolio, improve Return on Invested Capital, and fund organic growth.

Earlier in May, OI had  announced that its subsidiary completed a sale and leaseback transaction for a plant located in Brampton, Ontario, for CAD $244 million ($191 million).

In March, O-I Glass had completed the sale of Cristar TableTop S.A.S. (“Cristar”) to Vidros Colombia S.A.S, an affiliate of Nadir Figueiredo S.A for gross proceeds of $96 million. Cristar owns dedicated tableware manufacturing plant in Buga, Colombia. It exports tableware across 40 countries globally. OI had earlier sold its Le Parfait brand and business in France.

Proceeds from the portfolio optimization program will be utilized to fund attractive expansion projects and improve financial strength. O-I Glass has plans in place to invest up to $680 million in new capacity through 2024 to achieve volume growth and meet demand. These investments are anticipated to generate an average internal rate of return of 20%. The plan includes an addition of up to 11 MAGMA lines. OI recently announced new greenfield glass packaging production facility in Bowling Green, KY, that will leverage its revolutionary MAGMA technology.

Recently O-I Glass reported second-quarter 2022 adjusted earnings per share of 73 cents, reflecting a 35% increase year on year, driven by gains from higher selling prices as well as solid operating and cost performance supported by OI’s ongoing margin expansion initiatives.

For 2022, O-I Glass raised 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 the company have fallen 10.3% in a year’s time compared with the industry’s decline of 26%.

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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 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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