O-I Glass, Inc. (NYSE:OI) Q3 2022 Results Conference Call November 2, 2022 8:00 AM ET

Company Participants

Christopher Manuel - VP, IR

Andres Lopez - CEO

John Haudrich - CFO

Conference Call Participants

Ghansham Panjabi - Baird

George Staphos - Bank of America

Mike Roxland - Truist Securities

Anthony Pettinari - Citi

Mark Wilde - Bank of Montreal

Kyle White - Deutsche Bank

Gabe Hajde - Wells Fargo

Arun Viswanathan - RBC Capital Markets

Adam Josephson - KeyBanc

Jay Mayers - Goldman Sachs

Operator

Hello, everyone, and welcome to the O-I Glass Third Quarter 2022 Results Conference Call. My name is Sam, and I'll be coordinating your call today. [Operator Instructions]

I will now hand you over to your host, Chris Manuel, Vice President of Investor Relations to begin. Chris, please go ahead.

Christopher Manuel

Thank you, Sam, and welcome everyone to the O-I Glass third quarter earnings conference call. Today, our discussion will be led by Andres Lopez, our CEO; and by John Haudrich, our CFO. Today, we will discuss key business developments and review our financial results. Following prepared remarks, we'll host a Q&A session.

Presentation materials for this call are available on the company's website. Please review the safe harbor comments and our disclosure and use of non-GAAP financial measures included in those materials.

Now I'd like to turn the call over to Andres.

Andres Lopez

Good morning, everyone. I appreciate your interest in O-I Glass. Last night, O-I announced a strong third quarter adjusted earnings of $0.63 per share, which exceeded prior year results as well as guidance. As illustrated on the left, all key measures improved.

Segment operating profit and adjusted EPS increased nearly 10%, margins improved 60 basis points, and financial leverage was down more than a full turn. Earnings benefited from higher selling prices, which more than offset cost inflation. As expected, sales volume was up slightly amid record low inventories and capacity constraints in key markets. As we work to commission much needed new capacity, we did incurred some additional costs which were mostly offset by solid operating performance and benefits from our margin expansion initiatives.

In addition to a strong performance, we delivered on a number of key transformation initiatives during the third quarter. First, Paddock achieved a fair and final resolution of its legacy asbestos liabilities, and the trust was founded in July. O-I has reached an inflection point, and for the first time in decades, we are focusing all of our strong cash flow on efforts to increase shareholder value. Second, we also completed our $1.5 billion portfolio optimization program in August, which help reduce debt and prefund our expansion investments. Finally, our leverage ratio is now in line with our 2024 Investor Day target, well ahead of schedule and net debt was the lowest level since the O-I Mexico acquisition.