Financial Performance & Strategic Achievements - O-I Glass's Q2 2022 adjusted earnings per share (aEPS) reached $0.73, exceeding both the prior year's $0.54 and the guidance of >$0.65 [5] - Net sales increased by 7% year-over-year (14% on a currency-neutral basis), with sales volume growth of 0.6% [6] - Segment operating profit increased by 11%, leading to a 0.6% improvement in segment operating margin and a 35% increase in aEPS [6] - Total financial leverage reduced by 1.1x, reaching the lowest level since before the O-I Mexico acquisition in 2015 [5, 6] Guidance & Outlook - Full year 2022 business outlook increased, with updated guidance of $2.05 - $2.20 aEPS, $175 million+ free cash flow (FCF), and $400 million+ adjusted free cash flow (aFCF) [6] - FY22 Free cash flow is expected to be greater than or equal to $175 million and adjusted free cash flow is expected to be greater than or equal to $400 million, assuming approximately $600 million in capital expenditures [32] Capital Allocation & Portfolio Optimization - The company expects to complete its $1.5 billion portfolio optimization program in the second half of 2022 [16] - Revised capital expansion plan for 2022-2024 anticipates up to $630 million in expansion CapEx with a portfolio IRR of approximately 20% [17] MAGMA Program - Announced the first U S MAGMA greenfield project in Bowling Green, KY, targeting first shipments by mid-2024 [5] - Accelerating MAGMA Generation 2 and 3 development and commercialization [17]

[Part I — FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter [Item 1. Financial Statements.](index=2&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements, including the results of operations, comprehensive income, balance sheets, and cash flows, along with detailed notes providing additional context and breakdowns for segments, revenue, debt, contingencies, and other financial items [Condensed Consolidated Results of Operations](index=3&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) This section presents the company's net sales, gross profit, and earnings per share for the three months ended March 31, 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net sales | $1,692 | $1,500 | | Gross profit | $304 | $244 | | Earnings (loss) before income taxes | $170 | $(65) | | Net earnings (loss) | $122 | $(91) | | Net earnings (loss) attributable to the Company | $88 | $(97) | | Basic earnings per share | $0.56 | $(0.62) | | Diluted earnings per share | $0.55 | $(0.62) | [Condensed Consolidated Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Comprehensive%20Income%20(Loss)) This section details the company's net earnings, foreign currency translation adjustments, and total comprehensive income or loss for the three months ended March 31, 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net earnings (loss) | $122 | $(91) | | Foreign currency translation adjustments | $135 | $(85) | | Other comprehensive income (loss) | $156 | $(52) | | Total comprehensive income (loss) | $278 | $(143) | | Comprehensive income (loss) attributable to the Company | $239 | $(145) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at March 31, 2022, December 31, 2021, and March 31, 2021 | Metric | March 31, 2022 (Millions) | December 31, 2021 (Millions) | March 31, 2021 (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | :-------------------------- | | Cash and cash equivalents | $519 | $725 | $742 | | Trade receivables, net | $900 | $692 | $714 | | Inventories | $837 | $816 | $827 | | Total current assets | $2,490 | $2,519 | $2,486 | | Total assets | $8,877 | $8,832 | $8,825 | | Accounts payable | $1,169 | $1,210 | $998 | | Total current liabilities | $1,750 | $1,846 | $1,702 | | Long-term debt | $4,621 | $4,753 | $5,168 | | Share owners' equity | $1,102 | $827 | $262 | [Condensed Consolidated Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Cash%20Flows) This section outlines the cash flows from operating, investing, and financing activities, as well as the overall change in cash for the three months ended March 31, 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Cash utilized in operating activities | $(73) | $(56) | | Cash utilized in investing activities | $(2) | $(31) | | Cash provided by (utilized in) financing activities | $(152) | $288 | | Effect of exchange rate fluctuations on cash | $21 | $(22) | | Change in cash | $(206) | $179 | | Cash at end of period | $519 | $742 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns for various financial statement line items, including segment information, revenue, debt, and contingencies [Note 1. Segment Information](index=7&type=section&id=Note%201.%20Segment%20Information) The Company operates in two reportable segments, Americas and Europe, which are aligned with its internal management structure. Segment operating profit, a non-GAAP measure, is used to evaluate performance and allocate resources. Both segments reported increased net sales and operating profit in Q1 2022 compared to Q1 2021 | Segment | Q1 2022 Net Sales (Millions) | Q1 2021 Net Sales (Millions) | Q1 2022 Segment Operating Profit (Millions) | Q1 2021 Segment Operating Profit (Millions) | | :------------------------ | :--------------------------- | :--------------------------- | :---------------------------------------- | :---------------------------------------- | | Americas | $940 | $837 | $129 | $100 | | Europe | $708 | $639 | $102 | $75 | | **Reportable segment totals** | **$1,648** | **$1,476** | **$231** | **$175** | - **Segment operating profit** is a **non-GAAP measure** used by management, including the CEO, to **evaluate performance and allocate resources**, and it includes an allocation of some **corporate expenses**[21](index=21&type=chunk) [Note 2. Revenue](index=8&type=section&id=Note%202.%20Revenue) Revenue is recognized when control of glass containers transfers to the customer, primarily upon shipment. The Company disaggregates its revenue by customer end use, with alcoholic beverages being the largest category - **Revenue is recognized** at the point of **transfer of control of glass containers**, which **primarily occurs when products are shipped** from the Company's facilities to the customer[24](index=24&type=chunk) | Customer End Use | Three months ended March 31, 2022 (Total Millions) | Three months ended March 31, 2021 (Total Millions) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Alcoholic beverages | $1,111 | $979 | | Food and other | $324 | $327 | | Non-alcoholic beverages | $213 | $170 | | **Reportable segment totals** | **$1,648** | **$1,476** | | Other | $44 | $24 | | **Net sales** | **$1,692** | **$1,500** | [Note 3. Credit Losses](index=9&type=section&id=Note%203.%20Credit%20Losses) The Company manages credit risk through customer credit reviews, establishing credit limits, and monitoring balances. Trade receivables, net of allowances, increased to $900 million at March 31, 2022, from $714 million at March 31, 2021 - The Company assesses each **customer's ability to pay** by conducting a **credit review**, establishing **credit limits**, and **monitoring ongoing credit exposure**[26](index=26&type=chunk) | Metric | March 31, 2022 (Millions) | March 31, 2021 (Millions) | | :----------------------- | :-------------------------- | :-------------------------- | | Accounts receivable, net | $900 | $714 | | Allowance for doubtful accounts | $30 | $32 | [Note 4. Inventories](index=9&type=section&id=Note%204.%20Inventories) Total inventories increased slightly to $837 million at March 31, 2022, from $827 million at March 31, 2021, with finished goods representing the largest component | Inventory Class | March 31, 2022 (Millions) | December 31, 2021 (Millions) | March 31, 2021 (Millions) | | :---------------- | :-------------------------- | :--------------------------- | :-------------------------- | | Finished goods | $676 | $659 | $672 | | Raw materials | $121 | $119 | $119 | | Operating supplies | $40 | $38 | $36 | | **Total** | **$837** | **$816** | **$827** | [Note 5. Derivative Instruments](index=9&type=section&id=Note%205.%20Derivative%20Instruments) The Company utilizes various derivative instruments, including foreign exchange options, forward contracts, interest rate swaps, and cross-currency swaps, to manage foreign exchange and interest rate risks. These instruments are classified as Level 2 in the fair value hierarchy - The Company uses **derivatives to manage exposures** to fluctuations in **foreign currency exchange rates** and **interest rates**, designating them as **cash flow hedges**, **fair value hedges**, or **net investment hedges**[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) | Type of Derivative | March 31, 2022 (Assets, Millions) | March 31, 2022 (Liabilities, Millions) | December 31, 2021 (Assets, Millions) | December 31, 2021 (Liabilities, Millions) | March 31, 2021 (Assets, Millions) | March 31, 2021 (Liabilities, Millions) | | :------------------------------------------ | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------------------- | :-------------------------------- | :----------------------------------- | | Interest rate swaps - fair value hedges | $0 | $20 | $4 | $2 | $13 | $0 | | Cash flow hedges of foreign exchange risk | $0 | $1 | $2 | $23 | $8 | $67 | | Fair value hedges of foreign exchange risk | $12 | $5 | $9 | $0 | $0 | $0 | | Net investment hedges | $2 | $15 | $3 | $17 | $2 | $39 | | Foreign exchange derivative contracts (not hedges) | $6 | $0 | $1 | $2 | $5 | $3 | | **Total derivatives** | **$20** | **$41** | **$19** | **$44** | **$28** | **$109** | - An **unrecognized gain of $1 million** related to **cross-currency swaps** at March 31, 2022, was included in **Accumulated OCI** and is **expected to be reclassified into earnings** within the next **12 months**[31](index=31&type=chunk) [Note 6. Restructuring Accruals](index=12&type=section&id=Note%206.%20Restructuring%20Accruals) Restructuring accruals decreased to $27 million at March 31, 2022, from $31 million at January 1, 2022, primarily due to cash payments for severance and related benefits. No major restructuring programs were in effect during these periods | Category | Balance at January 1, 2022 (Millions) | Net cash paid (Millions) | Balance at March 31, 2022 (Millions) | | :--------------- | :---------------------------------- | :----------------------- | :--------------------------------- | | Employee Costs | $20 | $(3) | $17 | | Asset Impairment | $0 | $0 | $0 | | Other Exit Costs | $11 | $(1) | $10 | | **Total Restructuring** | **$31** | **$(4)** | **$27** | - The Company manages and accounts for **restructuring actions programmatically**, separate from ongoing operations, and **no major restructuring programs were in effect** as of March 31, 2022 and 2021[42](index=42&type=chunk) [Note 7. Pension Benefit Plans](index=13&type=section&id=Note%207.%20Pension%20Benefit%20Plans) The net periodic pension cost for Q1 2022 remained consistent with Q1 2021, totaling $8 million for U.S. plans and $0 for Non-U.S. plans | Component | Q1 2022 (U.S., Millions) | Q1 2021 (U.S., Millions) | Q1 2022 (Non-U.S., Millions) | Q1 2021 (Non-U.S., Millions) | | :-------------------------- | :----------------------- | :----------------------- | :--------------------------- | :--------------------------- | | Service cost | $3 | $3 | $2 | $3 | | Interest cost | $9 | $10 | $6 | $5 | | Expected asset return | $(15) | $(21) | $(11) | $(11) | | Amortization of actuarial loss | $11 | $16 | $3 | $3 | | **Net periodic pension cost** | **$8** | **$8** | **$0** | **$0** | [Note 8. Income Taxes](index=13&type=section&id=Note%208.%20Income%20Taxes) The Company calculates its interim tax provision using the estimated annual effective tax rate (EAETR) methodology, which can be volatile due to discrete items and changes in earnings mix. The Company is currently contesting tax assessments in various jurisdictions, believing adequate provisions have been made, but acknowledges potential material impacts if settled adversely - The **interim tax provision** is calculated using the **estimated annual effective tax rate (EAETR)** methodology, which can experience **significant volatility** due to **discrete items** and changes in the **mix of earnings** across jurisdictions[45](index=45&type=chunk) - The Company is under **income tax examination** in several jurisdictions (e.g., Brazil, Canada, Colombia, France, Indonesia, Mexico, Peru) and is **contesting assessments**, believing **adequate provisions** have been made, but **adverse settlements could materially impact financial results**[46](index=46&type=chunk) [Note 9. Debt](index=14&type=section&id=Note%209.%20Debt) Total long-term debt decreased to $4,647 million at March 31, 2022. The Company refinanced its credit agreement in March 2022, securing up to $2.8 billion in borrowings, and repurchased $238.2 million of senior notes in Q1 2022. The Company was in compliance with all debt covenants as of March 31, 2022 | Debt Type | March 31, 2022 (Millions) | December 31, 2021 (Millions) | March 31, 2021 (Millions) | | :------------------------------------ | :-------------------------- | :--------------------------- | :-------------------------- | | Revolving Loans | $100 | $0 | $292 | | Term Loan A | $946 | $923 | $1,068 | | Senior Notes (various maturities) | $3,192 | $3,460 | $3,433 | | Finance leases | $108 | $98 | $102 | | Other | $4 | $5 | $6 | | **Total long-term debt** | **$4,647** | **$4,791** | **$5,309** | | Less amounts due within one year | $26 | $38 | $141 | | **Long-term debt (net of current portion)** | **$4,621** | **$4,753** | **$5,168** | - On March 25, 2022, the Company **refinanced its credit agreement**, providing for up to **$2.8 billion of borrowings**, including **term loans** and **revolving credit facilities**, maturing in March 2027[48](index=48&type=chunk) - In Q1 2022, the Company **repurchased $150.0 million of 5.875% Senior Notes due 2023** and **$88.2 million of 6.625% Senior Notes due 2027**, **funded with cash on hand**[55](index=55&type=chunk) - As of March 31, 2022, the Company was **in compliance with all covenants and restrictions** in the new credit agreement[52](index=52&type=chunk) [Note 10. Contingencies](index=17&type=section&id=Note%2010.%20Contingencies) Paddock Enterprises, LLC, a subsidiary, filed for Chapter 11 bankruptcy in January 2020 to resolve asbestos claims. An agreement in principle was reached in April 2021 to fund a trust with $610 million, providing permanent injunctive relief for the Company and its affiliates. The Plan of Reorganization was accepted by over 99% of voting asbestos claimants in April 2022, pending court approval - **Paddock Enterprises, LLC** voluntarily filed for **Chapter 11 bankruptcy** on January 6, 2020, to equitably and finally resolve all current and future **asbestos claims**, with **O-I Glass and O-I Group not included** in the filing[65](index=65&type=chunk) - An **agreement in principle** was reached in April 2021 to **fund an asbestos settlement trust** (Paddock Trust) with **$610 million**, which will provide **permanent injunctive relief** protecting the Company and its affiliates from **asbestos claims**[68](index=68&type=chunk) - The **Plan of Reorganization** was jointly filed in January 2022 and subsequently **accepted by over 99% of voting asbestos claimants** by April 25, 2022, with a confirmation hearing scheduled for May 16, 2022[71](index=71&type=chunk)[73](index=73&type=chunk) - The **Paddock support agreement liability of $625 million is recorded** on the Company's March 31, 2022, **Condensed Consolidated Balance Sheet**[74](index=74&type=chunk) [Note 11. Share Owners' Equity](index=22&type=section&id=Note%2011.%20Share%20Owners%27%20Equity) Share owners' equity increased to $1,102 million at March 31, 2022, from $827 million at January 1, 2022, primarily due to net earnings and other comprehensive income. The Company repurchased 0.8 million shares for $10 million in Q1 2022 under an anti-dilutive program | Component | Balance on January 1, 2022 (Millions) | Q1 2022 Activity (Millions) | Balance on March 31, 2022 (Millions) | | :-------------------------------- | :---------------------------------- | :-------------------------- | :--------------------------------- | | Common Stock | $2 | $0 | $2 | | Capital in Excess of Par Value | $3,090 | $(5) | $3,085 | | Treasury Stock | $(701) | $2 | $(699) | | Retained Earnings | $301 | $88 | $389 | | Accumulated Other Comprehensive Loss | $(1,972) | $151 | $(1,821) | | Non-controlling Interests | $107 | $39 | $146 | | **Total Share Owners' Equity** | **$827** | **$275** | **$1,102** | - During Q1 2022, the Company **repurchased 764,501 shares of its common stock for approximately $10 million** as part of a **$150 million anti-dilutive share repurchase program**, with **approximately $100 million remaining available**[87](index=87&type=chunk)[183](index=183&type=chunk) [Note 12. Accumulated Other Comprehensive Loss](index=23&type=section&id=Note%2012.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss improved to $(1,821) million at March 31, 2022, from $(1,972) million at January 1, 2022, primarily due to positive net effects of exchange rate fluctuations and changes in certain derivative instruments | Component | Balance on January 1, 2022 (Millions) | Change before Reclassifications (Millions) | Amounts Reclassified (Millions) | Translation Effect (Millions) | Balance on March 31, 2022 (Millions) | | :------------------------------------------ | :---------------------------------- | :--------------------------------------- | :------------------------------ | :---------------------------- | :--------------------------------- | | Net Effect of Exchange Rate Fluctuations | $(1,290) | $130 | $0 | $0 | $(1,160) | | Change in Certain Derivative Instruments | $(21) | $18 | $(15) | $0 | $(18) | | Employee Benefit Plans | $(661) | $(2) | $14 | $6 | $(643) | | **Total Accumulated Other Comprehensive Loss** | **$(1,972)** | **$146** | **$(1)** | **$6** | **$(1,821)** | [Note 13. Other Income (Expense), Net](index=23&type=section&id=Note%2013.%20Other%20Income%20(Expense),%20Net) Other income (expense), net, significantly improved to $51 million in Q1 2022 from $(156) million in Q1 2021, primarily driven by a $55 million gain on the sale of a divested business and the non-recurrence of a $154 million charge related to the Paddock support agreement liability | Item | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Gain on sale of divested business | $55 | $0 | | Charge related to Paddock support agreement liability | $0 | $(154) | | Intangible amortization expense | $(8) | $(9) | | Foreign currency exchange loss | $0 | $(2) | | Royalty income | $6 | $5 | | Other | $(2) | $4 | | **Other income (expense), net** | **$51** | **$(156)** | [Note 14. Earnings Per Share](index=24&type=section&id=Note%2014.%20Earnings%20Per%20Share) Basic earnings per share improved to $0.56 in Q1 2022 from a loss of $(0.62) in Q1 2021, and diluted earnings per share improved to $0.55 from $(0.62) over the same period | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net earnings (loss) attributable to the Company | $88 | $(97) | | Weighted average shares outstanding (thousands) | 155,849 | 157,571 | | Basic earnings per share | $0.56 | $(0.62) | | Diluted earnings per share | $0.55 | $(0.62) | - The **diluted EPS computation** for Q1 2022 excludes **1,576,542 weighted average shares** due to their **antidilutive effect**, including options with exercise prices greater than the average market price[93](index=93&type=chunk) [Note 15. Supplemental Cash Flow Information](index=24&type=section&id=Note%2015.%20Supplemental%20Cash%20Flow%20Information) Cash income taxes paid increased to $23 million in Q1 2022 from $10 million in Q1 2021. Interest paid, including note repurchase premiums, rose to $64 million from $49 million. The use of factoring programs resulted in a $20 million decrease to cash from operating activities in Q1 2022, compared to an $8 million increase in Q1 2021 | Item | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total income taxes paid in cash | $23 | $10 | | Interest paid in cash | $64 | $49 | | Receivables sold (factoring programs) | $461 | $444 | | Impact of factoring on operating cash flows | $(20) | $8 | [Note 16. New Accounting Pronouncement](index=25&type=section&id=Note%2016.%20New%20Accounting%20Pronouncement) The Company adopted ASU No. 2020-04, 'Reference Rate Reform,' effective July 1, 2020, which had no material impact on its consolidated financial statements. No material portions of the Company's debt reference LIBOR as of March 31, 2022 - The **adoption of ASU No. 2020-04, 'Reference Rate Reform,'** effective July 1, 2020, had **no material impact** on the Company's **consolidated balance sheet, results of operations, or cash flows**[96](index=96&type=chunk) - As of March 31, 2022, **no material portions of the Company's debt reference LIBOR**[96](index=96&type=chunk) [Note 17. COVID-19 Impacts](index=25&type=section&id=Note%2017.%20COVID-19%20Impacts) The COVID-19 pandemic negatively impacted the Company's business in 2020, and to a lesser extent in 2021 and Q1 2022, with ongoing supply chain issues. While glass container manufacturing is essential, future impacts remain uncertain, though no material impact on key accounting estimates was observed in Q1 2022 or Q1 2021 - The **COVID-19 pandemic negatively impacted** the Company's business in 2020, and to a lesser extent in 2021 and the first three months of 2022, with **ongoing broader supply chain issues**[97](index=97&type=chunk)[103](index=103&type=chunk) - There was **no material impact to accounting estimates** (allowance for doubtful accounts, inventory carrying value, goodwill, and other long-lived assets) in the Condensed Consolidated Financial Statements for Q1 2022 or Q1 2021[98](index=98&type=chunk) [Note 18. Divestitures](index=25&type=section&id=Note%2018.%20Divestitures) In March 2022, the Company completed the sale of its Cristar TableTop S.A.S. business for approximately $96 million, recording a pretax gain of $55 million. In January 2021, it sold a plant in Argentina for $10 million, with an immaterial gain - In March 2022, the Company **completed the sale of its Cristar TableTop S.A.S. business for approximately $96 million**, resulting in a **pretax gain of $55 million**[99](index=99&type=chunk) - In January 2021, the Company **completed the sale of its plant in Argentina for approximately $10 million**, with an **immaterial gain**[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the Company's financial performance, condition, and future outlook for the first quarter of 2022 compared to 2021. It highlights key drivers of changes in net sales, earnings, and cash flows, discusses ongoing risks, and outlines strategic initiatives [Executive Overview — Quarters ended March 31, 2022 and 2021](index=27&type=section&id=Executive%20Overview%20%E2%80%94%20Quarters%20ended%20March%2031,%202022%20and%202021) This overview highlights key financial performance drivers for Q1 2022 compared to Q1 2021, including net sales, earnings before income taxes, and segment operating profit - **Net sales** in Q1 2022 were **$192 million** (**approximately 13%**) **higher** than in Q1 2021, **primarily due to higher prices and stronger shipments**, despite negative impacts from foreign currency exchange rates and a divestiture[107](index=107&type=chunk) - **Earnings before income taxes increased by $235 million** in Q1 2022, driven by **higher segment operating profit**, a **gain on divestiture**, and the **non-recurrence of the Paddock-related charge** from Q1 2021[108](index=108&type=chunk) - **Segment operating profit** for reportable segments **increased by $56 million** (**32%**) in Q1 2022, **attributed to higher sales and production**, **strong operating performance**, **margin expansion initiatives**, and **higher net prices**[109](index=109&type=chunk) - **Net interest expense increased by $15 million** in Q1 2022, mainly due to **higher note repurchase premiums and refinancing fees**, partially offset by lower debt levels[111](index=111&type=chunk) [Results of Operations — First Quarter of 2022 Compared with First Quarter of 2021](index=28&type=section&id=Results%20of%20Operations%20%E2%80%94%20First%20Quarter%20of%202022%20Compared%20with%20First%20Quarter%20of%202021) This section provides a detailed analysis of the Company's consolidated and segment-level financial performance for Q1 2022 compared to Q1 2021, breaking down changes in net sales, earnings before income taxes, segment operating profit, interest expense, income taxes, and net earnings attributable to non-controlling interests and the Company [Net Sales](index=28&type=section&id=Net%20Sales_MD%26A) This section analyzes the drivers of changes in net sales for the Americas and Europe segments, including price, volume, and foreign currency effects | Factor | Impact on Reportable Segment Net Sales (Millions) | | :-------------------------------- | :---------------------------------------------- | | Price | +$140 | | Sales volume and mix | +$73 | | Effects of changing foreign currency rates | $(37) | | Divestitures | $(4) | | **Total effect on reportable segment net sales** | **+$172** | - **Americas net sales increased by $103 million** (**12%**), driven by **higher selling prices** (**$80 million**) and a **3.1% increase in glass container shipments**, despite ongoing supply chain challenges[114](index=114&type=chunk) - **Europe net sales increased by $69 million** (**11%**), driven by a **9.9% increase in glass container shipments** (**$51 million**) and **higher selling prices** (**$60 million**), partially offset by unfavorable foreign currency exchange rates (**$42 million**)[116](index=116&type=chunk) [Earnings (loss) before Income Taxes and Segment Operating Profit](index=29&type=section&id=Earnings%20(loss)%20before%20Income%20Taxes%20and%20Segment%20Operating%20Profit_MD%26A) This section details the factors influencing earnings before income taxes and segment operating profit, including net price, sales volume, operating costs, and foreign currency impacts | Factor | Impact on Reportable Segment Operating Profit (Millions) | | :------------------------------------------ | :----------------------------------------------------- | | Net price (net of cost inflation) | +$15 | | Sales volume and mix | +$17 | | Operating costs | +$26 | | Effects of changing foreign currency rates | +$1 | | Divestitures | $(3) | | **Total net effect on reportable segment operating profit** | **+$56** | - **Americas segment operating profit increased by $29 million** (**29%**), **benefiting from higher sales**, **selling prices exceeding cost inflation** (**$12 million net**), and **lower operating costs** (**$11 million**), including the **non-recurrence of a $40 million negative impact from severe weather** in Q1 2021[120](index=120&type=chunk)[121](index=121&type=chunk) - **Europe segment operating profit increased by $27 million** (**36%**), **driven by higher shipments** (**$14 million**), **improved operating costs** (**$15 million**), and **selling prices exceeding cost inflation** (**$3 million**)[123](index=123&type=chunk)[124](index=124&type=chunk) - The **conflict between Russia and Ukraine** has caused **significant increases and volatility in natural gas prices**, posing a **risk to the Company's European operations** regarding **energy supply and operating costs**[125](index=125&type=chunk) [Interest Expense, Net](index=30&type=section&id=Interest%20Expense,%20Net_MD%26A) This section provides a breakdown of net interest expense, including note repurchase premiums and refinancing fees, for the first quarters of 2022 and 2021 | Metric | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net interest expense | $66 | $51 | | Note repurchase premiums and refinancing fees | $18 | $0 | [Provision for Income Taxes](index=30&type=section&id=Provision%20for%20Income%20Taxes_MD%26A) This section explains the effective tax rates for Q1 2022 and Q1 2021, highlighting factors such as capital gains and the Paddock charge | Period | Effective Tax Rate | | :----- | :----------------- | | Q1 2022 | 28.2% | | Q1 2021 | (40.0%) | - The change in **effective tax rate** was due to a **favorable capital gains tax rate** on the sale of the tableware business in Q1 2022 and the **non-tax-benefited Paddock charge** in Q1 2021, as well as a change in the **mix of geographic earnings**[127](index=127&type=chunk) [Net Earnings Attributable to Non-Controlling Interests](index=30&type=section&id=Net%20Earnings%20Attributable%20to%20Non-Controlling%20Interests_MD%26A) This section details the net earnings attributable to non-controlling interests for Q1 2022 and Q1 2021, primarily driven by a gain on divestiture | Period | Net Earnings Attributable to Non-Controlling Interests (Millions) | | :----- | :-------------------------------------------------------------- | | Q1 2022 | $34 | | Q1 2021 | $6 | - The increase was **primarily due to approximately $29 million of non-controlling interest recorded** in Q1 2022 associated with the **gain on the sale of the Company's glass tableware business in Colombia**[128](index=128&type=chunk) [Net Earnings (Loss) Attributable to the Company](index=30&type=section&id=Net%20Earnings%20(Loss)%20Attributable%20to%20the%20Company_MD%26A) This section presents the net earnings or loss attributable to the company and diluted earnings per share for Q1 2022 and Q1 2021, along with significant impacting items | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net earnings (loss) attributable to the Company | $88 | $(97) | | Diluted earnings per share | $0.55 | $(0.62) | | Description | Q1 2022 Impact (Millions) | Q1 2021 Impact (Millions) | | :------------------------------------------ | :------------------------ | :------------------------ | | Gain on sale of divested business | $55 | $0 | | Charges for note repurchase premiums and write-off of finance fees | $(18) | $0 | | Charge related to Paddock support agreement liability | $0 | $(154) | | Net provision for income tax on items above | $(10) | $0 | | Net impact of noncontrolling interests on items above | $(29) | $0 | | **Total** | **$(2)** | **$(154)** | [Forward Looking Operational and Financial Impacts](index=31&type=section&id=Forward%20Looking%20Operational%20and%20Financial%20Impacts) The Company anticipates full-year 2022 sales shipment growth of at least 1%, continued margin expansion, and higher selling prices to offset cost inflation. Strategic priorities include advancing MAGMA deployment, completing divestitures, and finalizing the Paddock Chapter 11 reorganization. Cash from operations is expected to be at least $725 million, with capital expenditures around $600 million - The Company expects **full-year 2022 sales shipment growth** (in tons) to **increase up to or exceed 1%** compared to 2021, with continued benefits from **margin expansion initiatives** and **higher selling prices offsetting cost inflation**[134](index=134&type=chunk) - **Strategic priorities** include **advancing MAGMA deployment**, **completing the strategic and tactical divestiture program** (with proceeds funding capital expenditures and debt reduction), and **completing the Paddock Chapter 11 reorganization** and **funding the related $610 million trust** in 2022[134](index=134&type=chunk) - **Cash provided by continuing operating activities is expected to be at least $725 million** in 2022, with **capital expenditures estimated at approximately $600 million**[134](index=134&type=chunk) - The Company continues to **actively monitor the impacts of the COVID-19 pandemic and the conflict between Russia and Ukraine**, which could **materially affect its operations**[134](index=134&type=chunk) [Items Excluded from Reportable Segment Totals](index=31&type=section&id=Items%20Excluded%20from%20Reportable%20Segment%20Totals) This section details specific financial items that are excluded from segment operating profit to provide a clearer view of ongoing operational performance, including retained corporate costs, gains from divestitures, and charges related to the Paddock support agreement [Retained Corporate Costs and Other](index=31&type=section&id=Retained%20Corporate%20Costs%20and%20Other) This section details the retained corporate costs and other expenses, highlighting the increase in Q1 2022 due to R&D and incentive expenses | Period | Retained Corporate Costs and Other (Millions) | | :----- | :------------------------------------------ | | Q1 2022 | $50 | | Q1 2021 | $35 | - The increase in Q1 2022 was **primarily due to additional research and development expenses related to MAGMA** and **higher management incentive expense**[133](index=133&type=chunk) [Gain on Sale of Divested Business](index=31&type=section&id=Gain%20on%20Sale%20of%20Divested%20Business) This section reports the pretax gain recognized from the sale of the Cristar TableTop S.A.S. business in Q1 2022 - A **pretax gain of approximately $55 million was recorded** in Q1 2022 from the **sale of the Cristar TableTop S.A.S. business**[135](index=135&type=chunk) [Charge for Paddock Support Agreement Liability](index=32&type=section&id=Charge%20for%20Paddock%20Support%20Agreement%20Liability) This section explains the $154 million charge related to the Paddock support agreement liability recorded in Q1 2021 - A **$154 million charge related to the Paddock support agreement liability was recorded** in Q1 2021, **primarily due to an increase in Paddock's asbestos reserve estimate** for the channeling injunction[136](index=136&type=chunk) [Capital Resources and Liquidity](index=32&type=section&id=Capital%20Resources%20and%20Liquidity) The Company refinanced its credit agreement in March 2022, securing up to $2.8 billion in borrowings and maintaining $1,140 million in unused credit. It also repurchased $238.2 million in senior notes. The Company expects sufficient cash flows from operations and available credit to meet its short-term and long-term obligations - On March 25, 2022, the Company's subsidiaries entered into a **new Credit Agreement and Syndicated Facility Agreement**, refinancing the previous agreement and providing for up to **$2.8 billion of borrowings**[138](index=138&type=chunk) - As of March 31, 2022, the Company had **unused credit of $1,140 million** available under the new Agreement, with a weighted average interest rate of **2.12%** on outstanding borrowings[139](index=139&type=chunk) - The Company **repurchased $150.0 million of 5.875% Senior Notes due 2023** and **$88.2 million of 6.625% Senior Notes due 2027** in Q1 2022, **funded with cash on hand**[145](index=145&type=chunk) - The Company was **in compliance with all covenants and restrictions** in the Agreement as of March 31, 2022, and believes its **ability to borrow funds will not be adversely affected**[142](index=142&type=chunk) [Material Cash Requirements](index=34&type=section&id=Material%20Cash%20Requirements) This section confirms no material changes to the company's cash requirements from the prior annual report - There have been **no material changes to the Company's material cash requirements** at March 31, 2022, from those described in its **Annual Report on Form 10-K** for the year ended December 31, 2021[149](index=149&type=chunk) [Cash Flows](index=34&type=section&id=Cash%20Flows_MD%26A) This section analyzes cash flows from operating, investing, and financing activities, including the impact of working capital and capital expenditures | Activity | Three months ended March 31, 2022 (Millions) | Three months ended March 31, 2021 (Millions) | | :------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Cash utilized in operating activities | $(73) | $(56) | | Cash utilized in investing activities | $(2) | $(31) | | Cash provided by (utilized in) financing activities | $(152) | $288 | - **Working capital was a $259 million use of cash** in Q1 2022, compared to a **$229 million use** in Q1 2021, **primarily due to higher accounts receivable**[151](index=151&type=chunk) - **Capital spending for property, plant and equipment was $96 million** in Q1 2022, with **full-year 2022 capital expenditures estimated at approximately $600 million**[152](index=152&type=chunk) - **Cash proceeds of approximately $96 million were received** in Q1 2022 from the **sale of the Company's glass tableware business in Colombia**[153](index=153&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) The Company's financial statements are prepared using estimates and assumptions that are continuously evaluated. No material changes in critical accounting estimates were reported at March 31, 2022, compared to the 2021 Form 10-K - The **preparation of financial statements requires management to make estimates and assumptions** that affect reported amounts, which are **evaluated on an ongoing basis**[158](index=158&type=chunk) - There have been **no material changes in critical accounting estimates** at March 31, 2022, from those described in the Company's **Annual Report on Form 10-K** for the year ended December 31, 2021[160](index=160&type=chunk) [Forward-Looking Statements](index=35&type=section&id=Forward-Looking%20Statements) This section highlights that the document contains forward-looking statements, which are subject to various risks and uncertainties, including the Paddock bankruptcy resolution, COVID-19 impacts, capital structure management, and geopolitical events like the Russia-Ukraine conflict. The Company does not undertake to update these statements - **Forward-looking statements are subject to various factors** including the approval of the Paddock Plan, actions of bankruptcy participants, COVID-19 impacts, capital availability, geopolitical conditions (e.g., Russia-Ukraine conflict), and supply chain disruptions[162](index=162&type=chunk)[163](index=163&type=chunk) - The Company **does not assume any obligation to update or supplement** any particular forward-looking statements contained in this document[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) No material changes in market risk were reported at March 31, 2022, from those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been **no material changes in market risk** at March 31, 2022, from those described in the Company's **Annual Report on Form 10-K** for the year ended December 31, 2021[165](index=165&type=chunk) [Item 4. Controls and Procedures.](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures.) The Company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022. No material changes in internal control over financial reporting occurred during the quarter, despite workplace modifications due to the COVID-19 pandemic - The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's **disclosure controls and procedures were effective at the reasonable assurance level** as of March 31, 2022[167](index=167&type=chunk) - There have been **no material changes in the Company's internal control over financial reporting** during the fiscal quarter ended March 31, 2022, despite modifications to workplace practices due to the COVID-19 pandemic[169](index=169&type=chunk) [PART II — OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section provides additional information beyond the financial statements, including legal proceedings, updated risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings.](index=38&type=section&id=Item%201.%20Legal%20Proceedings.) No environmental proceedings requiring disclosure (monetary sanctions above $1 million) were pending or contemplated as of March 31, 2022. Further information on legal proceedings, particularly asbestos-related, is incorporated by reference from Note 10 to the financial statements - **No environmental proceedings** that may result in **monetary sanctions above $1 million** were pending or contemplated as of March 31, 2022[171](index=171&type=chunk) - **Further information on legal proceedings is provided in Note 10** to the Condensed Consolidated Financial Statements[172](index=172&type=chunk) [Item 1A. Risk Factors.](index=38&type=section&id=Item%201A.%20Risk%20Factors.) This section updates risk factors, highlighting increased energy costs and availability risks due to the Russia-Ukraine conflict, potential labor shortages and cost increases, and delays in new glass melting technologies (MAGMA program) due to supply chain challenges [Energy Costs or Availability](index=38&type=section&id=Energy%20Costs%20or%20Availability) This section covers energy costs or availability - **Higher energy costs worldwide and interrupted power supplies**, including as a result of the current **conflict between Russia and Ukraine**, may have a **material adverse effect on the Company's consolidated assets or operations**[174](index=174&type=chunk) - The **Russia-Ukraine conflict has caused a significant increase in natural gas prices and volatility**, posing a **risk to European operations' energy supply and costs**, potentially leading to **increased operating costs or temporary/permanent plant cessations**[175](index=175&type=chunk)[176](index=176&type=chunk) [Labor](index=38&type=section&id=Labor) This section covers labor - **Approximately 74% of the Company's employees** directly associated with its operations in the U.S. and Canada are **covered by collective bargaining agreements**, with the **principal agreement extended** beyond March 31, 2022[177](index=177&type=chunk)[178](index=178&type=chunk) - **Labor shortages and increased competition in the labor market**, exacerbated by the **COVID-19 pandemic**, could result in **higher compensation costs or significant disruptions to operations**[180](index=180&type=chunk) [New Glass Melting Technologies](index=39&type=section&id=New%20Glass%20Melting%20Technologies) This section covers new glass melting technologies - The **MAGMA program**, **aimed at improving glass melting technology to reduce capital, enhance operational flexibility, increase recycled glass use, and lower carbon emissions**, **faces delays due to current supply chain challenges**[181](index=181&type=chunk) - **Inability to continue improving glass melting technology could affect the Company's competitiveness** and its **ability to transition to lower-carbon processes**[181](index=181&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During Q1 2022, the Company repurchased 764,501 shares of its common stock for approximately $10 million under a $150 million anti-dilutive share repurchase program, with $100 million remaining available | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | | :--------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :--------------------------------------------------------------------------------------------------- | | January 1 - January 31, 2022 | 764,501 | $13.06 | 764,501 | $100 | | February 1 - February 28, 2022 | 0 | $0 | 0 | $100 | | March 1 - March 31, 2022 | 0 | $0 | 0 | $100 | | **Total** | **764,501** | **$13.06** | **764,501** | **$100** | - The **share repurchase program is authorized by the Board of Directors** and is **intended to offset stock-based compensation** provided to the Company's directors, officers, and employees[183](index=183&type=chunk) [Item 6. Exhibits.](index=41&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the 10-Q report, including various credit and security agreements, executive compensation policies, stock unit agreements, and certifications. It also specifies the iXBRL formatting for the financial statements and cover page data - **Exhibits include the Credit Agreement and Syndicated Facility Agreement**, Intercreditor Agreement, Pledge Agreement, Security Agreement, and various forms of Employee Performance Stock Unit and Restricted Stock Unit Agreements[186](index=186&type=chunk) - **Financial statements and the Cover Page Interactive Data file are formatted in iXBRL** (Inline eXtensible Business Reporting Language)[187](index=187&type=chunk)[188](index=188&type=chunk) [SIGNATURES](index=44&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy and completeness of the report - The report was **signed on April 26, 2022**, by **John A. Haudrich, Senior Vice President and Chief Financial Officer of O-I Glass, Inc**[192](index=192&type=chunk)

Financial Data and Key Metrics Changes - O-I Glass reported adjusted earnings of $0.56 per share, a 60% increase from the prior year, significantly exceeding guidance due to better-than-expected shipments and production levels [5][32] - Segment operating profit rose to $231 million from $175 million year-over-year, driven by favorable net pricing and increased sales volume [33][36] - Shipments increased by 6.4% compared to the prior year, with a notable 10% growth in Europe [11][36] Business Line Data and Key Metrics Changes - The Americas segment reported a profit of $129 million, up from $100 million, reflecting over 3% sales volume growth and improved operating costs [35] - Europe’s segment operating profit increased to $102 million from $75 million, supported by nearly 10% higher shipments and effective margin expansion initiatives [35][36] Market Data and Key Metrics Changes - Demand for glass containers has been strong, particularly in Europe, driven by increased at-home dining and a rebound in on-premise consumption as markets reopen [12][14] - The conflict in Ukraine has displaced glass historically imported from the region, increasing demand for locally produced glass in Europe [13][14] Company Strategy and Development Direction - O-I Glass is focused on margin expansion initiatives and has raised selling prices to offset cost inflation, with a target of achieving $50 million in annual margin improvements [18][19] - The company is advancing its MAGMA initiative and optimizing its portfolio, with plans to resolve legacy asbestos liabilities by mid-2022 [9][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the business outlook, expecting higher second-quarter results and raising the top end of earnings guidance for the year [10][43] - The company is navigating macroeconomic uncertainties, including elevated cost inflation and supply chain challenges, while maintaining strong operational performance [42][75] Other Important Information - O-I Glass has completed or entered into sales agreements totaling $1.3 billion as part of its portfolio optimization program [25][37] - The company is investing in renewable energy, with nearly one-third of its electricity now sourced from renewables, aiming for 40% by 2030 [23] Q&A Session Summary Question: What has driven the strong volume growth in Europe? - Management noted that demand has rebounded across multiple segments, including mineral water and wine, with local demand and exports contributing significantly [52][54] Question: What are the tax implications of the asbestos settlement? - The asbestos settlement payments are expected to be tax-deductible, but the timing of benefits will depend on the company's net loss carryforward position [56] Question: How is the MAGMA rollout progressing? - The rollout has faced delays due to supply chain issues, but the company is focusing on smaller, more manageable projects to meet its objectives [62][65] Question: How are energy prices affecting the business? - The company has been proactive in managing energy costs and has implemented price increases to offset inflation, with plans to invest in alternative energy sources for the long term [86][88] Question: What is the outlook for free cash flow? - Free cash flow expectations remain stable, with potential for improvement if earnings continue to outperform guidance [117][120]

FIRST QUARTER 2022 EARNINGS APRIL 26,2022 | --- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-9576 O-I GLASS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 22 ...

FULL YEAR AND FOURTH QUARTER 2021 EARNINGS FEBRUARY 1, 2022 | --- ...

Financial Data and Key Metrics Changes - For the full year 2021, adjusted earnings were reported at $1.83 per share, a 50% improvement from the prior year, with free cash flow of $282 million, exceeding original guidance [4][20]. - Fourth quarter adjusted earnings were $0.36 per share, also exceeding business outlook, while segment operating profit was $177 million, down $21 million from the prior year [21][22]. - Sales volumes increased by 5.3% in 2021, with production levels up 7.3%, significantly boosting earnings despite elevated cost inflation [5][21]. Business Line Data and Key Metrics Changes - In the Americas, segment operating profit was $99 million, down $27 million from the prior year, with shipments down 1.7% due to low inventory levels and elevated maintenance activity [23]. - In Europe, segment profit increased to $78 million, with shipments up 13% driven by strong demand in the wine category [24]. - Overall, the company achieved $70 million in benefits from margin expansion initiatives, exceeding the target of $50 million [13][21]. Market Data and Key Metrics Changes - Shipments improved by 1.1% from pre-pandemic levels in 2019, reflecting strong consumer preference for premium glass packaging [10]. - Strong demand continued into January 2022, with shipments up more than 3% from the prior year period [11]. - The company anticipates organic growth of 1% to 2% per year across its consolidated network as new capacity comes online [12]. Company Strategy and Development Direction - The company is focused on margin expansion, with plans to achieve higher selling prices to offset cost inflation and improve profitability [16][18]. - A $1.5 billion Portfolio Optimization Program is expected to be completed in 2022, supporting future expansion projects [32]. - The company aims to resolve legacy asbestos liabilities and further reduce pension plan risks by mid-2022 [18][32]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, expecting improved adjusted earnings and strong free cash flow despite anticipated challenges from cost inflation and divestitures [8][36]. - The company is actively managing supply chain challenges and has established strong relationships with customers to navigate glass shortages [43][54]. - Management noted that the demand for glass is robust, driven by consumer preferences for premium and sustainable products [54]. Other Important Information - The company reported a significant reduction in net debt to $4.1 billion, well below the 2021 target of $4.4 billion, reflecting improved cash flow and proceeds from divestitures [25][26]. - Free cash flow is expected to be at least $125 million in 2022, with adjusted free cash flow projected to exceed $350 million [29][31]. - The company plans to implement price increases effectively to recover inflation costs and improve margins [46][48]. Q&A Session Summary Question: Can you provide more details on the 1% volume growth guidance for 2022? - Management indicated that the growth is primarily driven by the Americas, with incremental productivity and line extensions in place to meet strong demand despite glass shortages [42][43]. Question: What are the assumptions for price cost recovery in 2022? - Management expects to fully recover inflation costs through implemented price increases, with inflation anticipated to exceed 2021 levels [46][47]. Question: How is the company managing project activity headwinds? - Management noted that project activity will be high in the first quarter but is expected to normalize thereafter, with ongoing efforts to mitigate risks and improve execution [60][61]. Question: What is the outlook for growth in Europe? - Management expressed confidence in sustained demand in Europe, driven by consumer preferences for premium products and local supply [53][54]. Question: How is the company addressing high European gas prices? - Management stated that they have a mature process for managing energy costs and are confident in their contracted energy prices [86].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-9576 O-I GLASS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (IRS Employer inco ...

Financial Data and Key Metrics Changes - The company reported adjusted earnings of $0.58 per share for Q3 2021, exceeding guidance of $0.47 to $0.52 per share [6][21] - Segment operating profit was $243 million, significantly higher than the previous year, driven by higher selling prices that offset elevated cost inflation [21][22] - Year-to-date free cash flow was approximately $181 million, with expectations to exceed $260 million for the full year [26][31] Business Line Data and Key Metrics Changes - In the Americas segment, profit increased to $133 million from $113 million last year, despite a 3% decline in sales volume [23] - The European segment profit rose to $110 million from $88 million, with nearly 2% growth in sales volume, particularly in the wine category [24] - Production levels improved by 9% in the Americas, contributing to better operating performance [23][22] Market Data and Key Metrics Changes - Demand for glass containers remains strong, although shipments were down about 1% due to supply chain challenges [6][22] - The company noted strong growth in premium categories such as wine and beer in Europe, with high single-digit growth in beer in key markets [46][72] - The global market for glass is expected to grow at an average rate of 1.6% annually, with higher growth in principal regions [16] Company Strategy and Development Direction - The company is focused on margin expansion, targeting $60 million in initiative benefits for 2021, up from an initial target of $50 million [12] - The introduction of the MAGMA production line is part of the company's strategy to revolutionize glass production and enhance operational efficiency [13][18] - The company is actively pursuing a portfolio optimization program, including the sale of the Le Parfait brand for approximately $84 million [14][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in recovering inflation through pricing strategies in 2022, despite ongoing supply chain challenges [44][46] - The company anticipates fourth quarter adjusted earnings to be between $0.30 and $0.35 per share, with expectations of flat sales volume compared to the previous year [31][33] - Management highlighted strong demand fundamentals in Europe, particularly in the wine and beer categories, supporting confidence in price increases [46] Other Important Information - The company has entered into agreements for over $1 billion in asset sales as part of its divestiture program [14] - The net debt was reported at $4.3 billion, the lowest level since 2015, with a leverage ratio of around 3.6 times [27] - The company is addressing legacy liabilities through the Paddock Chapter 11 process, with a total consideration of $610 million for a reorganization plan [30] Q&A Session Summary Question: Impact of supply chain issues on volume and pricing - Management noted that external factors like input delays and labor shortages have led to reduced orders from customers, impacting volume by approximately 2-3% [42][45] - They expect to fully recover inflation through planned price increases in 2022, with solid demand fundamentals in Europe [44][46] Question: Response to potential aluminum shortages - The company is operating at high utilization levels and has a three-year plan for capacity expansions to address potential volume shifts from aluminum to glass [50] Question: Price cost recovery and contract coverage - Approximately 55% to 60% of the business is covered under long-term agreements with price adjustment formulas, while 40% to 45% is open market [53] Question: European energy issues and operational impact - Management has policies in place to mitigate energy price increases and does not foresee supply issues impacting operations [58] Question: Glass bottle shortages in North America - Demand for glass is strong, but tight inventories and reduced imports from China are compounding supply challenges [60] Question: Free cash flow outlook - The company expects free cash flow to remain positive but may dip in the next couple of years due to strategic capital investments [86] Question: Hard seltzer market opportunities - The company sees potential in the hard seltzer market, although its current share is small, and attributes of glass packaging align well with branding needs in this category [107]

SECOND QUARTER 2021 EARNINGS AUGUST 04, 2021 C | --- ...