O-I Glass (OI) Earnings & Revenues Beat Estimates in Q1
O-I Glass, Inc. OI reported first-quarter 2021 adjusted earnings of 35 cents per share, reflecting a 15% fall from the prior-year quarter highlighting recent divestitures. However, the bottom line surpassed the Zacks Consensus Estimate of 28 cents and came within management’s guidance of earnings between 32 cents and 37 cents.
Excluding the impact of recent divestitures, sales volume was consistent with last year despite the impact of severe weather that disrupted operations in Texas, Oklahoma and Mexico, and COVID-19 related restrictions. Favorable market trends, strong operating performance and the company’s margin enhancement initiatives somewhat helped offset the impact of severe weather.
Including one-time items, the company reported loss per share of 62 cents in the quarter, against an earnings per share of 32 cents in the prior-year quarter.
OI Glass, Inc. Price, Consensus and EPS Surprise
OI Glass, Inc. price-consensus-eps-surprise-chart | OI Glass, Inc. Quote
Operational Update
Revenues declined 4% year over year to $1,500 million during the March-end quarter. The top line declined on the Australia and New Zealand ("ANZ") businesses divestment. Adjusted for divestitures, net sales increased $66 million aided by higher average selling prices, favorable mix and beneficial foreign currency translation. Notably, the top line outpaced the Zacks Consensus Estimate of $1,460 million.
Cost of sales was down 3% year over year to $1,256 million. Gross profit slid 9% year on year to $244 million. Selling and administrative expenses fell 12% year over year to $102 million.
Segment operating profit amounted to $175 million in the reported quarter, down from the prior-year quarter’s $176 million. Despite the July 2020 divestiture of the company’s ANZ business, which had contributed $12 million of segment operating profit in first-quarter 2020, the segment operating profit came in-line with the prior-year quarter. Sales volume was stable with prior-year levels, excluding the impact from recent divestitures. Ongoing strong operating performance and the benefits from margin enhancement initiatives offset the significant impact of severe weather.
Segmental Performance
Net sales in the Americas segment inched up 1.1% year over year to $837 million in the first quarter. Operating profit was down 3% year on year to $100 million.
Net sales in the Europe segment were $639 million in the reported quarter, up 11% year over year. The segment’s operating profit was up 23% year over year to $75 million.
Financial Update
O-I Glass had cash and cash equivalents of $742 million at the end of the first quarter of 2021, up from the $563 million witnessed at the end of 2020. The company utilized $56 million of cash from operating activities in the first quarter of 2021 compared with the prior-year quarter’s $315 million, reflecting improved working capital management. Its long-term debt was at $5.17 billion as of Mar 31, 2021, from $4.9 billion as of Dec 31, 2020.
Outlook
O-I Glass projects adjusted earnings per share for the ongoing year between $1.55 and $1.75. For the current quarter, the company anticipates adjusted earnings between 45 cents and 50 cents per share. Higher selling prices are expected to offset cost inflation. It expects double-digit sales and production volume improvement from the prior-year quarter. Notably, the company’s sales and production volume was significantly impacted by the pandemic induced disruption.
Price Performance
Shares of the company have gained 85.7% over the past year, outperforming the industry’s rally of 29%.
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 Dover Corporation DOV, Caterpillar Inc. CAT and Pentair plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 54%.
Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 94% in the past year.
Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 82% in a year’s time.
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