O-I Glass Q2 2026 Earnings Report

O-I Glass EPS Results

• Actual EPS: $0.09
• Consensus EPS: $0.24
• Beat/Miss: Missed by -$0.15
• One Year Ago EPS: $0.53

O-I Glass Revenue Results

• Actual Revenue: $1.67 billion
• Expected Revenue: $1.68 billion
• Beat/Miss: Missed by -$12.24 million
• YoY Revenue Growth: -2.20%

O-I Glass Announcement Details

• Quarter: Q2 2026
• Date: 7/28/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, July 29, 2026
• Conference Call Time: 8:00AM ET

O-I Glass (NYSE:OI) is a leading global manufacturer of glass containers, supplying the food and beverage, wine and spirits, pharmaceutical, cosmetic and personal care industries. Headquartered in Perrysburg, Ohio, the company produces a broad range of glass packaging solutions, including bottles and jars, designed to meet customer specifications for size, shape, color and performance. O-I leverages proprietary technologies in forming, decoration and quality control to serve both mass-market and premium brands.

Tracing its origins to the early 20th century through the merger of prominent regional glassmakers, the company adopted the Owens-Illinois name in 1929 before rebranding as O-I Glass in 2015. Over this lengthy history, O-I has been at the forefront of glassmaking innovation, investing in furnace efficiency, lightweighting and closed-loop recycling to reduce energy consumption and carbon emissions. Its heritage in technical research and development continues to drive product differentiation in areas such as lightweight containers and advanced barrier coatings.

Today, O-I operates a network of manufacturing facilities across the Americas, Europe and Asia-Pacific, serving customers in more than 70 countries. The company’s global footprint enables it to support regional brand owners as well as multinational corporations with tailored packaging solutions. O-I’s logistical strengths extend from raw‐material sourcing to container distribution, backed by technical and design services that help customers optimize their packaging and improve sustainability outcomes.

Andres F. Lopez serves as President and Chief Executive Officer of O-I Glass, leading a senior management team focused on operational excellence, innovation and growth. Under his leadership, the company has emphasized safety, cost discipline and investment in high-value products. O-I continues to pursue initiatives that advance circularity in glass packaging, collaborating with customers, suppliers and recycling partners to expand collection and reuse of glass containers worldwide.

O-I Glass Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Second-quarter adjusted EPS fell to $0.09 from $0.53 a year earlier, with an unusually high adjusted tax rate reducing results by $0.18 per share.
• Positive Sentiment: The Americas delivered a 22% year-over-year increase in segment operating profit, helping offset weakness in Europe despite a furnace event during the quarter.
• Negative Sentiment: Europe significantly underperformed expectations due to competitive pressure on selling prices, higher energy costs linked to the Middle East conflict, operational inefficiencies following restructuring, and two furnace events.
• Neutral Sentiment: Management characterized the European problems as largely transitional rather than structural, expecting improvement as market conditions recover and remaining restructuring challenges are addressed.

Presentation

[Operator]

Thank you for standing by. My name is Gabby, and I will be your conference moderator today. At this time, I would like to welcome everyone to the O-I Glass Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I would now like to turn the call over to Chris Manuel, Vice President of Investor Relations. Please go ahead.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Thank you, Gabby. Good morning, everyone, and welcome to the O-I Glass Second Quarter 2026 Earnings Conference Call. With me today are Gordon Hardie, our CEO, and John Haudrich, our CFO. After prepared remarks, we will open the line for Q&A. Our press release and earnings materials are available on the company's website.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Please review the safe harbor statements and disclosure regarding our use of Non-GAAP financial measures included in those materials. Today's remarks do include forward-looking statements, and actual results may differ materially from our current expectations. With that, I'll turn the call over to Gordon, who'll begin on slide three.

[Gordon Hardie, CEO at O-I Glass]

Thank you, Chris, and good morning, everyone. Today, we will review our second quarter results, discuss market conditions, and provide an updated view of our 2026 outlook and 2027 targets. Before I begin, I want to thank our O-I colleagues around the world for their continued commitment and flexibility during a challenging operating period. Let me start with a straightforward assessment.

[Gordon Hardie, CEO at O-I Glass]

We are clearly disappointed with our first half performance. Europe has not delivered the expected results as outlined in our investor day framework. We own those results. We are taking decisive action. We also think it is important to distinguish between a strategy that is not working and one where value realization has been delayed. We will address that distinction throughout today's discussion. With that, let me turn to recent performance.

[Gordon Hardie, CEO at O-I Glass]

Second quarter net sales were stable while adjusted earnings were $0.09 per share compared to $0.53 per share last year. Performance varied significantly by region. Strong Americas result helped offset substantially lower earnings in Europe, while an unusually high adjusted tax rate resulted in reduced results by $0.18 per share.

[Gordon Hardie, CEO at O-I Glass]

In the Americas, segment operating profit increased 22% year-over-year, which we believe demonstrates strong execution of our strategy and the resilience of the business, even with one furnace event during the quarter. Europe was significantly below our expectations and prior year performance. We do not believe this is a structural issue with the business or our strategy.

[Gordon Hardie, CEO at O-I Glass]

Rather, we believe the shortfall reflected three main factors: elevated competitive pressure affecting selling prices, higher energy costs related to Middle East conflict, and unanticipated operational inefficiencies following restructuring across multiple EU plants along with two furnace events. We believe these issues are largely transitional and should improve as market conditions recover and we work through the remaining restructuring challenges.

[Operator]

We are currently troubleshooting with the internal team. Sorry, folks. We're just troubleshooting the speaker. Give us one moment. Thank you.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Gabby, do you have us now? Okay. Gabby, do you have us?

[Operator]

Yes, we have you. Go ahead.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Okay. Put us back onto the main line.

[Operator]

Doing that now.

[John Haudrich, CFO at O-I Glass]

Is Q4 off?

[Chris Manuel, VP of Investor Relations at O-I Glass]

Yeah. They've completely disconnected us.

[John Haudrich, CFO at O-I Glass]

Okay. Hold on.

[Operator]

We're off again.

[John Haudrich, CFO at O-I Glass]

Okay. We're back.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Okay, we're live.

[Gordon Hardie, CEO at O-I Glass]

Good morning again, everybody. I'll now comment on recent performance. Second quarter net sales were stable while adjusted earnings were $0.09 per share compared with $0.53 per share last year. Performance varied significantly by region. Strong Americas results helped offset substantially lower earnings in Europe while an unusually high adjusted tax rate reduced results by $0.18 per share.

[Gordon Hardie, CEO at O-I Glass]

In the Americas, segment operating profit increased 22% year-over-year, which we believe demonstrates strong execution of our strategy and the resilience of the business, even with one furnace event during the quarter.

[Gordon Hardie, CEO at O-I Glass]

Europe was significantly below our expectations in prior year performance. We do not believe this is a structural issue with the business or our strategy. Rather, we believe the shortfall reflected three main factors. One, elevated competitive pressure affecting selling prices. Two, higher energy costs related to the Middle East conflict.

[Gordon Hardie, CEO at O-I Glass]

Three, unanticipated operational inefficiencies following restructuring across multiple EU plants along with two furnace events. We believe these issues are largely transitional and should improve as market conditions recover and we work through the remaining restructuring challenges.

[Gordon Hardie, CEO at O-I Glass]

Global demand was also softer than expected with shipments down approximately 4.5% year-over-year. However, trends improved through the quarter and June volumes were flat with last year. Operational disruptions also limited sales opportunities and accounted for about half of that decline. We believe Fit to Win remains a key driver of value creation.

[Gordon Hardie, CEO at O-I Glass]

We have delivered significant savings year to date despite operational disruption and inefficiencies. In light of these near-term challenges, we have adjusted our 2026 Fit to Win target, while our three-year target is now in line with our original expectations of $650 million.

[Gordon Hardie, CEO at O-I Glass]

Given these factors, we have updated our 2026 guidance and recalibrated our 2027 targets from last year's Investor Day. Importantly, we believe firmly in our strategy. We are realigning the timing to achieve our goals, not changing the strategy. Let's now discuss the top line on slide four.

[Gordon Hardie, CEO at O-I Glass]

Net sales remained relatively stable in the quarter. Volume performance continued to reflect soft demand, although trends improved as the quarter progressed. As noted, global shipments declined approximately 4.5% year-on-year, while June volumes were flat with last year. Recovery has been difficult to predict, given sluggish consumer demand and customer destocking in certain markets.

[Gordon Hardie, CEO at O-I Glass]

In the Americas, shipments were down 7%, reflecting challenging prior year comparisons, exiting some unprofitable business, and a furnace event that limited sales opportunities. In Europe, shipments declined 2%, primarily due to operational disruption that constrained sales.

[Gordon Hardie, CEO at O-I Glass]

Excluding that impact, underlying trends were roughly flat in Europe. We continue to see pockets of strength across the portfolio. Nonalcoholic containers remain a standout performer, and several geographies exceeded local market trends in prior year levels.

[Gordon Hardie, CEO at O-I Glass]

The Andean group delivered double-digit growth, while Brazil was up low single digits. In fact, we outperformed the market in the majority of category and market clusters amid generally sluggish demand. We continue to expect second half growth supported by easier comparisons and new business wins while maintaining a more cautious recovery outlook.

[Gordon Hardie, CEO at O-I Glass]

Our commercial transformation continues to gain traction. We are focused on business that generates economic profit and are applying greater discipline across the portfolio. Following strong execution in the Americas, we are starting to get more traction in Europe. New business wins represent approximately 2% of annual sales volume, with contributions expected later this year.

[Gordon Hardie, CEO at O-I Glass]

While the recovery remains gradual, improving momentum and portfolio optimization strengthen our confidence in delivering profitable growth. Let's now move to slide five. Fit to Win remains central to our strategy and continues to generate meaningful benefits.

[Gordon Hardie, CEO at O-I Glass]

We believe the program is improving our cost position, strengthening our competitiveness, and building the foundation for long-term profitable growth. Since launch, Fit to Win has generated more than $400 million of net benefits. Through the first half of 2026, we delivered $85 million of benefits. This is net of $30 million of direct operating inefficiencies, and the total impact of disruption was approximately $45 million when including constrained opportunities and additional logistics costs.

[Gordon Hardie, CEO at O-I Glass]

Phase A execution remains strong. Announced plant closures are complete, and we are advancing the final stages of organizational restructuring. Phase B continues to progress, although operational disruption has delayed COE benefits.

[Gordon Hardie, CEO at O-I Glass]

We are also advancing supply chain, procurement, and energy initiatives that should deliver increasing benefits over time. We have revised our 2026 and 2027 targets to reflect the headwinds discussed today. We now expect approximately $200 million of Fit to Win savings in 2026 and at least $650 million over the three-year period.

[Gordon Hardie, CEO at O-I Glass]

Importantly, this reflects timing and execution disruption, not a change in underlying opportunity. The Americas' performance and recent customer wins are encouraging signs of improved competitiveness through Fit to Win. As execution stabilizes, we believe this can deliver meaningful value over time. With that, I'll now turn it over to John on slide six.

[John Haudrich, CFO at O-I Glass]

Thanks, Gordon, good morning, everyone. The top line was fairly stable, while second quarter results were below our expectation, given challenges in Europe. Net sales were nearly $1.7 billion, down about 2% from the prior year.

[John Haudrich, CFO at O-I Glass]

Favorable currency and stable consolidated selling prices partially offset lower sales volumes. Adjusted earnings were $0.09 per share compared with $0.53 last year. Lower net price was the primary headwind. Selling prices increased in the Americas, declined in Europe amid competitive pressure.

[John Haudrich, CFO at O-I Glass]

Europe was also impacted by higher energy costs related to the Middle East conflict and the one-time reset we have discussed previously. Lower sales volume was offset by favorable operating costs, reflecting Fit to Win benefits net of unanticipated costs tied to operating inefficiencies and furnace events. Adjusted earnings also reflect an unusually high adjusted tax rate driven by lower European earnings and a reduced full-year outlook.

[John Haudrich, CFO at O-I Glass]

We also recorded a significant non-cash goodwill impairment charge and increased tax valuation allowances. Both are excluded from adjusted earnings. The impairment was triggered by the decline in the company's share price during the quarter and reflects Europe's current challenges from an accounting perspective.

[John Haudrich, CFO at O-I Glass]

These charges do not affect cash flow, operating plans, or Fit to Win milestones. Our priority is to bring the same discipline and execution to Europe that have improved performance in the Americas while recognizing that progress is taking longer than expected in a tough macro environment.

[John Haudrich, CFO at O-I Glass]

Regarding the balance sheet, leverage is up some given lower EBITDA. Liquidity is very good at $1.5 billion. We have no maturities until 2028, we have ample headroom on our senior secured covenant. Let's turn to slide seven. Segment operating profit was $171 million compared to $225 million in the prior year.

[John Haudrich, CFO at O-I Glass]

Strong performance in the Americas was more than offset by continued pressure in Europe. In the Americas, net sales were $949 million, up about 1%. Higher selling prices and favorable currency more than offset a 7% decline in volumes. Segment operating profit increased 22% to $165 million, and margins expanded by around 300 basis points to 17.4%.

[John Haudrich, CFO at O-I Glass]

Higher net price, favorable FX and operating costs, net of a furnace event, more than offset lower volumes. This represents the highest second quarter profit in the Americas over the past ten years and demonstrates the value of Fit to Win.

[John Haudrich, CFO at O-I Glass]

In Europe, net sales were $704 million, down 5%, with shipments down 2% as disruption limited sales opportunities. Segment operating profit was $6 million compared to $90 million last year. The decline primarily reflected unfavorable net price from competitive pressures and higher energy costs.

[John Haudrich, CFO at O-I Glass]

Europe delivered solid gross Fit to Win benefits. Temporary operational disruption and inefficiencies prevented those benefits from translating into net savings. Let's turn to slide eight. We are revising our full year 2026 guidance to reflect a second quarter shortfall and a more measured pace of improvement in Europe.

[John Haudrich, CFO at O-I Glass]

Please note that we have removed adjusted earnings guidance because the effective tax rate is highly sensitive to changes in operating earnings, particularly given the low level of anticipated earnings in Europe. We now expect adjusted EBITDA of $1.0 billion to $1.1 billion, with updated free cash flow and leverage guidance included on the chart. We continue to anticipate strong performance in America, with the results expected to be up nearly 60% in 2026 versus 2024.

[John Haudrich, CFO at O-I Glass]

Gordon noted, lower current year guidance is primarily driven by three factors in Europe: continued market challenges, including additional price pressure and higher energy costs related to the Middle East conflict, adjusted Fit to Win timing due to temporary operational disruption, and additional cost at a few specific plants.

[John Haudrich, CFO at O-I Glass]

We believe the revised outlook better reflects current operating conditions and the environment we expect through the balance of the year. Importantly, we believe performance in Europe should improve sequentially over the second half. Let's turn to slide nine. We are also realigning our 2027 targets to reflect the same factors affecting our 2026 outlook.

[John Haudrich, CFO at O-I Glass]

We now expect adjusted EBITDA of $1.2 billion to $1.3 billion in 2027, reflecting a more gradual improvement path in Europe. From our revised 2026 guidance, 2027 should benefit from at least $150 million of additional Fit to Win savings.

[John Haudrich, CFO at O-I Glass]

Potential upside could come from market improvement in Europe and energy price normalization following an eventual resolution of the Middle East conflict. Importantly, we remain committed to the original adjusted EBITDA target of $1.45 billion. We continue to believe that target is achievable. It will likely take longer than originally anticipated. With that, I'll turn it back to Gordon on slide 10.

[Gordon Hardie, CEO at O-I Glass]

Thanks, John. Before we close, I want to reinforce several key points. We are not satisfied with our performance. We understand that investors will expect clear evidence of improvement. At the same time, the framework we laid out around Fit to Win, profitable growth and strategic optionality remains the right path to create long-term value.

[Gordon Hardie, CEO at O-I Glass]

In Horizon One, Fit to Win is delivering meaningful savings and improving our competitive position. The Americas demonstrate the earnings potential of stronger execution. Europe is about a year behind the Americas on Fit to Win.

[Gordon Hardie, CEO at O-I Glass]

Ultimately, we believe Europe should improve to mid-teen segment profit margins within the next two years. This should be achieved through initiating recovery of excess cost inflation, addressing temporary disruption and normalizing energy markets, and completing our Fit to Win implementation.

[Gordon Hardie, CEO at O-I Glass]

In Horizon Two, improved competitiveness is supporting profitable growth, with new business opportunities expected to build volume momentum through the second half of 2026 and into 2027. In Horizon Three, we are evaluating strategic options to strengthen the portfolio, improve our position in the value chain, and preserve flexibility for long-term value creation.

[Gordon Hardie, CEO at O-I Glass]

In short, we are addressing near-term challenges with urgency while staying focused on the strategy we believe will create sustainable long-term value. With that, let me conclude on the next slide. To close, second quarter results were below expectations, primarily due to Europe. We understand the drivers and are addressing them directly and with urgency.

[Gordon Hardie, CEO at O-I Glass]

At the same time, the Americas performance highlights the earning potential of effectively executing our strategy. Demand remains soft, but volume trends improved through the quarter, and we expect gradual improvements in the second half.

[Gordon Hardie, CEO at O-I Glass]

Fit to Win continues to deliver meaningful value even with near-term disruption. Most importantly, our strategy remains intact. We are recalibrating timing, not changing direction. Our focus is clear. Restore performance in Europe, improve execution, and create sustainable long-term value. Thank you for your time this morning. We will now take your questions.

[Operator]

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.

[Operator]

We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. The first question comes from the line of Ghansham Panjabi with Baird. Your line is now open. Please go ahead.

[William Kaatz, Analyst at Baird]

Hi, Gordon and John. This is William Kaatz for Ghansham. I think my first question is just what gives you confidence on 2027's plan? Obviously, 2026 has shook out meaningfully below your initial expectations. Just some more color on 2027 would be great. I have a follow-up. Thanks.

[John Haudrich, CFO at O-I Glass]

Yeah. I'll take that first. When we talk about moving from 2026 to 2027, first of all, we've obviously rebased 2026 for the factors that we talked about. As we look going forward, we are highly confident of the $150 million-plus of Fit to Win benefits. Even in a disrupted environment, we're going to generate $200 million or more this year.

[John Haudrich, CFO at O-I Glass]

We're confident, especially as we get through the disruption elements and the benefit of exiting from some one-time elements into the next year. Beyond that, we're really not making a lot of forward estimates about strong recovery. We still have included in there a flattish volume environment. We still have the baseline of the Middle East conflict, sluggish demand, affordability issues, all things.

[John Haudrich, CFO at O-I Glass]

With that said, there are probably more upside opportunities with ultimately the resolution of the war, and the normalization of the energy markets, as well as with a better background in that regard, affordability elements, consumer consumption, and not to mention us putting into effect our Horizon Two profitable growth and the forward opportunities that we have on a number of the new wins that we have and the new businesses that Gordon mentioned. Those underpin our view of 2027, which of course has been rebased from the original expectation.

[Gordon Hardie, CEO at O-I Glass]

Just to build on that, William, we see what we can deliver, in the Americas with the tight execution of the strategy and Fit to Win, as we've said on previous calls and here again today. Europe is about a year behind the Fit to Win implementation. We expect that to improve sequentially through the next four to six quarters. That also is an underpinning of our thinking around our 2027 results.

[William Kaatz, Analyst at Baird]

Okay, great. That's super helpful. Thank you. Just one more on volume expectations for the back half of the year. How much would that be contracted new business versus just the general expectation of a market recovery? I know you said June was flat, but if we could just hear that and maybe how July is shaping up, too, that'd be great. Thanks.

[Gordon Hardie, CEO at O-I Glass]

Sure. As we've outlined, we rejigged and reconfigured our go-to-market approach in both the Americas and in Europe. We're seeing the early benefits of that coming through. I think last time, or last outing, we mentioned we have picked up 15 pieces of new business that equates to about 1%-1.5% of volume.

[Gordon Hardie, CEO at O-I Glass]

We've subsequently picked up more business that will start to flow in the back half of this year, and into next year, which represents about 2% of volume. We're gaining traction. We're becoming more competitive in the market.

[Gordon Hardie, CEO at O-I Glass]

When we look at it, we see it sequentially improving through this quarter and into the fourth quarter. All the early signs are positive, that we're becoming more competitive and we're translating that competitive into profitable volume growth.

[John Haudrich, CFO at O-I Glass]

I'll add just a couple data points on there, William. The new contracted business as far as what we expect, it's going to ramp up in the second half of the year. It probably adds something like 1% to 1.5% annual life run rate in the back half of the year as we then build into 2027 when you see the full 2% being realized. That comes as a tailwind.

[John Haudrich, CFO at O-I Glass]

To your question on July, basically all of our markets are performing in line with what we saw in June net net in total. The one thing that we have to say is that in one geography, we are still dealing with a little bit of transitional elements of one of the furnace events that we had. There was still a little bit of headway on volumes due to the ability to supply. Through July, we believe that we're out of that, going forward, we should see the trends fall through to the full market opportunity.

[William Kaatz, Analyst at Baird]

Okay, great. That's super helpful. Thanks, guys.

[Operator]

Your next question is from Mike Roxland with Truist Securities. Go ahead, your line is now open.

[Mike Roxland, Analyst at Truist Securities]

Yeah. Thank you, Gordon, John, Chris, for taking my questions.

[Gordon Hardie, CEO at O-I Glass]

Good morning, Mike.

[Mike Roxland, Analyst at Truist Securities]

Good morning. Just wanted some follow-up. If you could provide some more color on those operational efficiencies along with the two furnace events, in Europe. More color around what they are, what the disruptions were, when they started to occur, and what your plan has been to get them fixed and where that plan currently stands. Thank you.

[Gordon Hardie, CEO at O-I Glass]

Yeah. The events took place in Europe, one in France, one in the U.K. One was a fire, one was a leak. That caused us to short ship into the market and put extra pressure on the network in the context of a changing network that hadn't yet settled, and also in the context of increasing logistics costs.

[Gordon Hardie, CEO at O-I Glass]

What have we done about it? We've got both local engineering and expert furnace engineers that were in place, supported by some outside expertise to fix those issues. We're confident that those issues are now fixed, and both those plants are starting to resupply the market at getting up to what their full potential supply should be as we walk through July. They were the main issues.

[Gordon Hardie, CEO at O-I Glass]

When you're changing the supply network as we were with three plant closures in the first and second quarter, that disruption did add pressure into the network at a time when, as I said, costs were rising. There was less available logistics capacity that caused us to have to pay more for what was available.

[Gordon Hardie, CEO at O-I Glass]

That really was the root cause of that. We did also experience kind of a number of small one-time events around rail transport not being available in France and having to shift to road freight. That also caused us a bit of disruption and certainly put in a significant chunk of cost. Again, that's a once off, and we don't see that reoccurring as we go through the back half of the year.

[John Haudrich, CFO at O-I Glass]

Maybe just one other comment, Mike, on top of that, just to show, if you compare that to the Americas where we did have a furnace event and the segment was able to fully offset it and deliver, it just shows the resilience in the business that once you do get through all the restructuring and activities.

[John Haudrich, CFO at O-I Glass]

You get the TOE and the operations where you want it to be, we're confident that while this is a blip that occurred because of the combination of the furnace events and the closing the three factories at one time, we believe that we'll get out of that into a much more stable environment.

[Mike Roxland, Analyst at Truist Securities]

Got it. To put a bow on it, you're past these events now, though? They're in the rear-view mirror and things are corrected, and you should be operating better today than two years ago?

[Gordon Hardie, CEO at O-I Glass]

Yes, absolutely. We're past those events. The rest of the fleet in Europe is performing well, and we expect that performance to sequentially improve through the next four quarters as we embed the TOE, the total operating efficiency methodologies into the plant at the same level we have embedded them into the U.S. As I said, Europe is about a year behind the implementation of Fit to Win. We expect the catch-up is occurring as we speak. Yeah.

[Mike Roxland, Analyst at Truist Securities]

Got it. Then just one quick follow-up. You mentioned, Gordon, that you don't believe that what you're seeing in Europe is structural. What gives you confidence that it's really not a structural issue in Europe? What I'm trying to get is when I look at some of your peers that recently reported, one of your peers reported close to a 30% EBITDA margin in the first half.

[Gordon Hardie, CEO at O-I Glass]

Yes.

[Mike Roxland, Analyst at Truist Securities]

There obviously are benefits to be had in your key market. It seems like you guys are a little bit behind that, notably behind that. What are you trying to do to maybe catch up from a portfolio perspective, from an earnings and margin perspective to what some of your peers have been posting in terms of their earnings and their margins? Thank you.

[Gordon Hardie, CEO at O-I Glass]

First of all, let me just give some context around Europe. It's a very large market, very attractive market, 22 million tons and over $2.5 billion of profit pool in the region. Our peers are running businesses that are not going through a restructuring as we are in Europe.

[Gordon Hardie, CEO at O-I Glass]

I come back to our original thesis. The business was uncompetitive, we are going through the actions required to get this business more competitive in Europe. We're in transition, right? Executing that. Yes, we've had a stumble as a chunk of it of our own making.

[Gordon Hardie, CEO at O-I Glass]

We own that. We know how to fix it. We know what the issues are. We have the right resources in place. We've made the required changes of leadership and have now leadership in place with the skills that can address the supply chain network issues that we're facing.

[Gordon Hardie, CEO at O-I Glass]

We see ourselves being able to execute that in the months and quarters ahead to the standard that we've done it in the Americas. We have the right resources and governance around that. We expect within two years to be back at kind of high teens margins.

[Gordon Hardie, CEO at O-I Glass]

That's assuming energy markets somewhat normalize. There's some demand coming back into the market in certain categories. We don't need nor do we expect huge lifts in demand. We have a clear plan around our Fit to Win, running the operations and the supply chain in as fit a manner as we are now running it in the Americas.

[Gordon Hardie, CEO at O-I Glass]

We've also upgraded substantially our energy procurement, our energy risk management, and our energy usage capabilities in all these plants, and we expect those benefits to flow through in the coming quarters. To give you a data point on that, in terms of energy usage, we've put in a new system across all of the plants, and some of our plants in Europe are now generating savings of anywhere between 5%-7% year-over-year in energy usage.

[Gordon Hardie, CEO at O-I Glass]

There's a lot of good things happening in Europe. We're making a lot of progress in a lot of areas. We did have this stumble that is sort of masking that. We feel we're working through that. By year-end, we'll have settled the supply chain significantly, and we'll start to extract the full value of the restructuring and the capacity optimization. We have a lot of data points we feel gives us confidence that we can execute in a way that delivers into the high teens over the next 18-24 months.

[John Haudrich, CFO at O-I Glass]

Bryan, thank you.

[Operator]

Your next question comes from Arun Viswanathan with RBC Capital Markets.

[Gordon Hardie, CEO at O-I Glass]

Hey, Arun.

[John Haudrich, CFO at O-I Glass]

Arun.

[Arun Viswanathan, Analyst at RBC Capital Markets]

Great. Thanks for taking my question. I hope you guys are well. Okay. I just wanted to ask about Europe. I think you went into the quarter expecting a slight improvement there, but then I think you were down slightly. What kind of drove that?

[Arun Viswanathan, Analyst at RBC Capital Markets]

Would you say that there's some structural weakness in wine? Do you think this is more transitory in nature? I know the affordability issues have continued to linger and, obviously with that, the conflict going on as well. How do we see volumes kind of improving?

[Arun Viswanathan, Analyst at RBC Capital Markets]

Is there anything else under your control, whether it be business wins or anything else that you could do to potentially drive some of that volume? If it does not improve, what kind of footprint optimization actions would you be in a position to take? Thanks.

[John Haudrich, CFO at O-I Glass]

Hey, Arun, this is John. I'll just kick that off. For clarity, during the quarter, we expected Europe's performance would be about $25 million better than where it was. Okay? The majority, about 80% of that, had to do with the operating disruption one way or another. Okay?

[John Haudrich, CFO at O-I Glass]

The other, maybe $5 million, was a little bit of extra pricing pressure. Keep in mind, as we indicated, our volumes are down 2%, but they were flat if it wasn't for the disruption. We didn't really have a meaningful commercial difference in the environment. It was more of an operating element. I'll turn it over to Gordon.

[Gordon Hardie, CEO at O-I Glass]

Yeah. Arun, as I said, a large market, over 22 million tons and a very large profit pool. One way to maybe look at Europe is, and this is broad strokes, but bear with me. If you look at Northern Europe, it tends to be spirits dominated. Yeah? Spirits and food.

[Gordon Hardie, CEO at O-I Glass]

If you look at kind of Middle Europe, so across northern France, Benelux, into Germany and Poland, is very much beer and food. In Southern Europe, much more kind of wine dominated, but obviously with some beer. What we're seeing is wine in all markets, not just in Europe but across the world, is under significant pressure, and we do think there are some structural issues in that category.

[Gordon Hardie, CEO at O-I Glass]

We've taken what we feel are appropriate network optimization actions to make sure that our footprint mirrors what we feel we can supply at an economic profit. Yeah? In spirits, I think spirits generally are under pressure because the two largest markets, North America and China, have been underperforming for some years now.

[Gordon Hardie, CEO at O-I Glass]

We see, over the next probably 12 months, not a huge change in that picture in terms of exports, particularly into the U.S. or China. Although we are and expect to see stocks decline in the U.S. market and maybe some refill happening as we go through early mid 2027.

[Gordon Hardie, CEO at O-I Glass]

The bright side on spirits is travel retail continues to grow. Tends to be more premium, maybe a bit less volume, but it is growing. Then if you look at Europe, kind of what I call Middle Europe, beer performs strongly. Is performing strongly, particularly premium beers, as is food.

[Gordon Hardie, CEO at O-I Glass]

We see in all markets our food business growing quite strongly, and it is now our second largest category with a strong economic profit. As we look forward, we see pockets of growth that we can leverage. We've also tightened our network.

[Gordon Hardie, CEO at O-I Glass]

Our restructuring is behind us in Europe. We see our platform probably moving into 95, 97 kind of capacity utilization as we move through the rest of the year and into 2027. Our go-to-market model that we've instituted is absolutely bearing results for us.

[Gordon Hardie, CEO at O-I Glass]

We continually month-on-month see new business wins at margins that are attractive for us. You put all that together, we have a lot of confidence in the medium-long-term market opportunities in Europe. We see our margins improving. We know how to do that.

[Gordon Hardie, CEO at O-I Glass]

We've demonstrated that in the Americas. We actually have pockets of Europe where we're executing very well, and we see the margins coming through, particularly in Southern Europe. You put all that together, we're bullish on Europe over the medium-longer term.

[Gordon Hardie, CEO at O-I Glass]

We've got to execute more effectively on some of the basics around logistics and planning and get through this restructure, then continue to execute our Fit to Win, and our go-to-market. That's really how we're thinking about Europe. Still a very important market, very attractive market, and a market we can do very well in the quarters ahead.

[Arun Viswanathan, Analyst at RBC Capital Markets]

Okay, thanks for that. Just as a quick follow-up, or not so quick, but I did want to ask about some broad strokes for 2027. I think you mentioned that not calling for a big recovery, but how should we think about net price, obviously, the incremental Fit to Win benefits as well, would there be any other larger bucket items you can kind of help us with to frame where you could see 2027 EBITDA land versus the original $1.45 billion guidance that you'd provided previously?

[John Haudrich, CFO at O-I Glass]

Yeah, Arun, this is John. I can give you a little bit more color in that regard. As we look to 2027 and the levers there. From a net price standpoint, at this point in time, we're thinking kind of neutral-ish. Keep in mind, we've had a very large amount of inflation this year, and 55% of our business overall is covered under long-term agreements.

[John Haudrich, CFO at O-I Glass]

There'll be a PAF recovery. It's typical in our business. There's a lag effect associated with that will come through. Even in a world where we just assumed current elevated energy prices, the TTF at 55 to 60, we believe that we would have a neutral to even maybe modestly positive net price as we look forward. That does not include any other actions that might occur.

[John Haudrich, CFO at O-I Glass]

It doesn't include the potential of a resolution of the war, in which case energy prices could go down and that could be a bigger tailwind. Okay? On a sales volume standpoint, we're penciling in kind of a continued muted environment, but maybe flat to up 1%, given that we do have 2% volume growth coming through, and that continues to build.

[John Haudrich, CFO at O-I Glass]

We will see what the net effect of that is overall. You have your $150 million worth of plus of Fit to Win benefits, which are going to be substantially, they'll be skewed over to Europe as we work through the disruption this year, and we complete the program, which is, like we said, is a little bit further along to go and over Europe.

[John Haudrich, CFO at O-I Glass]

Those are the big pieces that kind of get you to from your midpoint of the current year to the entry point of our guidance range of the $1.2 next year, with the upside being potential resolution of war and a tailwind there and an evaluation of what happens more broadly in the European market if the market becomes more constructive.

[Arun Viswanathan, Analyst at RBC Capital Markets]

Thanks, John.

[Operator]

Your next question comes from George Staphos with Bank of America. Please go ahead. Your line is open.

[George Staphos, Analyst at Bank of America]

Hi, everyone. Good morning. Thanks for the details. I wanted to dig into the operations a bit with Fit to Win and in particular Europe. With Fit to Win, Gordon, you obviously made a lot of progress last year and the first portion of this year. Frankly, you've made a lot of progress this year.

[George Staphos, Analyst at Bank of America]

We've seen a bit more, you've acknowledged it, challenges in delivering as we've gotten into Phase B. Does that have, in any way from your vantage point, reflect that it gets tougher and tougher to do the operational within Fit to Win, especially given the nature of making glass, given how fixed cost leveraged it is, in some ways how abusive the process of making glass is in the first place. You're pulling tons through a furnace.

[George Staphos, Analyst at Bank of America]

Is there anything in Fit to Win that you're finding it's maybe a little bit tougher, given your past experiences, to execute in making glass, just given how challenging manufacturing glass is in the first place? I had a quick follow-on to that.

[Gordon Hardie, CEO at O-I Glass]

Sure. Yeah, let me address that in two ways. If I look at the Americas, I think you can see the results coming through, and I think we were about ahead. We kind of started the Phase B in the Americas. Fundamentally, you're changing culture, you're changing culture in plants, and you're changing some processes. With that comes some challenges.

[Gordon Hardie, CEO at O-I Glass]

The process we have is pretty simple in many ways, but it requires a lot of discipline, and it requires some change management. I think we've executed that well in the Americas. You are right, George. I mean, glass making is pretty unforgiving, and the parameters need to be tightly controlled. A miss on some of those parameters sometimes can throw you out for a week or two weeks.

[Gordon Hardie, CEO at O-I Glass]

If you have a furnace event, it tends to unsettle the whole network because you've then got to produce in maybe plants that wouldn't normally produce a particular product. That causes some disruption, right? That has unsettled us a bit this year, particularly in Europe.

[Gordon Hardie, CEO at O-I Glass]

Europe was really the last to go on the TOE disciplines. We're still bedding them in. The disruptions did have an impact on when the disruptions were probably in two plants. It probably impacted six. You're also kind of redirecting expert resources away from maybe their job and there's some firefighting going on. Truth be told, that was part of the story of the first half.

[Gordon Hardie, CEO at O-I Glass]

That notwithstanding, I would say in the vast majority of the plants, we have, what, 60 facilities. I would say in 50, 52 of them we see consistent improvements around the TOE, availability increasing, quality improving, speed of lines improving.

[Gordon Hardie, CEO at O-I Glass]

We are making improvements. Remember, some of our plants were already very high performing. On the high performing plants, there's probably chunks less to improve. That notwithstanding, I think weighted average, we are seeing significant improvements across the fleet. What happens is, and I think I laid this out at IDE, these kind of transformations are not linear.

[Gordon Hardie, CEO at O-I Glass]

You'll always get some sort of bump along the way. What I found in my experience is once you get through that, the system kind of reenergizes itself and you start to hit those higher levels of performance.

[Gordon Hardie, CEO at O-I Glass]

We certainly have enough data points around those three elements, availability, quality, speed, and energy reduction, to feel very confident that we are going to hit at least $650 million. We'll hit higher maybe over a bit longer timeframe. I'm not worried about that, if I could put it that way.

[Gordon Hardie, CEO at O-I Glass]

I'm frustrated that we've had these stumbles, particularly in Europe, right in the middle of when we were reconfiguring the networks to have two plants go down for a period. That's frustrating. That's held us back. We own it. We know what went wrong. We know what to fix it. We have the right resources on it. Let me tell you, we'll be quite maniacal about getting the performance back to where it needs to be.

[George Staphos, Analyst at Bank of America]

Well, I appreciate the thoughts on that, Gordon.

[Gordon Hardie, CEO at O-I Glass]

They're well taken points.

[George Staphos, Analyst at Bank of America]

I think I know-- What's that?

[Gordon Hardie, CEO at O-I Glass]

They're well taken point. It's a well-taken question.

[George Staphos, Analyst at Bank of America]

No, we appreciate it. I had a follow-on related. I think I know where you'll go with this, but nonetheless, I do want to ask the question. Traditionally, glass making, if you ran 92%, 93% utilization rates, those were very good.

[Gordon Hardie, CEO at O-I Glass]

Yeah.

[George Staphos, Analyst at Bank of America]

When you ran over 95%, the view was that you would stress the furnaces. You would pull too quickly. Is any of that filtering into what we've seen or not? I know you're trying to change the paradigm in glass, maybe not. As we think about Europe and some of the changes in the organization that we've seen over there, has that been because of alignment on the direction and the strategy, or just execution and going out of parameters in terms of the execution? Thanks, and good luck in the quarter.

[Gordon Hardie, CEO at O-I Glass]

Right. Two things. I'll take the second piece first, if you don't mind. I think one of the things that became apparent as we moved through the second quarter is the extent to which we needed to work cross-functionally. I did flag up on IDE that a goal was to get this business out of silos and working much more cross-functionally.

[Gordon Hardie, CEO at O-I Glass]

We've made huge progress on that. I don't think we made enough progress on that in Europe, right? We've now made changes in leadership in terms of driving a much more integrated cross-functional within the region, but also within the expert resources available at the global level to get them in as part of the team in a much more integrated way. Already in the last kind of six weeks, we see that working much more effectively.

[Gordon Hardie, CEO at O-I Glass]

The incidents we had that I called out both in France, the U.K., and indeed the U.S., is probably a result of what we would in the industry call over pulling on the furnace over years. What we've done in our new system of TOE is we have strict pull rates, depending on the kind of furnace.

[Gordon Hardie, CEO at O-I Glass]

Part of TOE is to make sure that we do not over pull and therefore damage or burn down these furnaces more quickly than they should be. That's a very rigorous discipline, and that's looked at every day now. Whereas in the past, I think that was on controls and you had plants over pulling, and therefore burning down the furnaces more quickly, or indeed under pulling and using way too much energy. We have tremendous visibility on that on a daily basis.

[Gordon Hardie, CEO at O-I Glass]

That's looked at on shift by the day at the plant manager level, then that rolls up through the organization into the value office to make sure that we're within the parameters that these facilities should be run at. As we look forward, you would expect over time to have far fewer of these events.

[Gordon Hardie, CEO at O-I Glass]

The other thing I would say is, one question you ask is Fit to Win the cause of some of these breakdowns? Again, the answer is absolutely no, because what we've done in Fit to Win is strip out cost and waste, and we've actually upped our reinvestment in maintenance and engineering across the fleet over the last two years. Our engineering and maintenance has actually increased slightly on a per ton basis. This is really cultural change, process change that we're bedding in.

[Gordon Hardie, CEO at O-I Glass]

We have huge support from the plants on TOE, and huge support from people on the line. They see their lives getting easier in managing these plants. I think we're in a good place. We stumbled in Europe, no question about that. We own that.

[Gordon Hardie, CEO at O-I Glass]

We know what went wrong. We know what the root causes are. We're all over the root causes, and we're fixing it. I expect that performance, the operational performance, to continue to improve in the Americas. I expect it to pick up a much faster pace in the next two to four quarters in Europe.

[George Staphos, Analyst at Bank of America]

Thank you very much, Gordon.

[Gordon Hardie, CEO at O-I Glass]

Thanks, George.

[Operator]

Your next question is from Anthony Pettinari with Citi.

[Gordon Hardie, CEO at O-I Glass]

Hey, Anthony.

[Operator]

Please go ahead. Your line is open.

[Bryan Bergmeier, Analyst at Citi]

Hey, good morning. This is actually Bryan Bergmeier on for Anthony. Thanks for taking the question.

[Gordon Hardie, CEO at O-I Glass]

Hey, Bryan.

[Bryan Bergmeier, Analyst at Citi]

Just on the Fit to Win savings, I know you're looking for another $120 million in the back half. I was just curious, maybe how much of that is sort of already locked in based on actions you've already taken in the first half? As we start to think about 2027, you're looking for another $150 million. Just sort of the same question. Is it possible to say how much could be sort of locked down by the end of the year and would just be maybe like a rollover benefit?

[Gordon Hardie, CEO at O-I Glass]

Yeah. Anything we publish in here and anything that's part of our value office program here is we have not only a clear target, but we have clear activities around timing, proper project management, and resources around that. I would say that as a governance piece. None of this is kind of aspirational, and none of it is we have a number, but we don't know how to get there. Okay?

[Gordon Hardie, CEO at O-I Glass]

We do have further ideas on how to add more value. We just haven't figured out the path on some of those above the $150 for next year. But everything you're seeing and everything we've published there, they're deliberate programs and actions taking place day in, day out to deliver on that. That's by way of kind of process. John?

[John Haudrich, CFO at O-I Glass]

Yeah. I would add on there, just looking at specifically at the numbers here, you're right. We have about $115-120 million in the back half. Just under half of that is pretty much already locked and loaded because we've done the restructuring, we've done the SG&A actions by and large, things like that.

[John Haudrich, CFO at O-I Glass]

The remaining component has to do with what we call more on that Phase D activity, more of this improving the operations, addressing the things that we're talking about in Europe, as well as moving forward some of those programs around energy usage that Gordon was talking about and other factors. Yeah. Going in the next year, too, in the $150, there's a decent number. I don't have a specific number.

[John Haudrich, CFO at O-I Glass]

I would say probably a third of it, off the top of my head, is probably locked and loaded because it is just a carry on effect, the annualization effect of things that are already done, and the remaining component has to do with more operational improvement, again, focused more on Europe.

[Gordon Hardie, CEO at O-I Glass]

Yeah. With the programs, they are set by plant, by supply chain. So it is a function of executing them month by month. Yeah.

[Bryan Bergmeier, Analyst at Citi]

Got it. Thanks for that. Then just one follow-up. It seems like South America, Brazil did pretty well in the quarter. Just kind of curious your assumptions there for the second half. I guess some other beverage factors maybe sound a little conservative in the second half, so maybe just curious how much of that kind of volume momentum could carry through. Thanks. I will turn it over.

[Gordon Hardie, CEO at O-I Glass]

Yeah. Bryan, is that in reference to Latin America or overall?

[Bryan Bergmeier, Analyst at Citi]

South America and Brazil specifically. Thanks.

[Gordon Hardie, CEO at O-I Glass]

Yeah. Our business is performing exceptionally well in Brazil and in the Andean region, and indeed Mexico, albeit off lower volumes. The teams there are executing our Fit to Win extremely well, executing our go-to-market extremely well. We're picking up new business, and executing the strategy as it should be. We expect that performance to continue to the end of the year and well into next year.

[Gordon Hardie, CEO at O-I Glass]

Yeah, demand is good for us. If I give you, we're up in spirits in Brazil, we're up in food, we're up in RTDs. When I say we're up, we're growing ahead of the market, and then we're growing at market in beer in Brazil. I see that market continuing to perform strongly.

[Gordon Hardie, CEO at O-I Glass]

In our Andean business, we're growing ahead of the market in beer, ahead of the market in spirits, ahead of the market in wine, ahead of the market in food, ahead of the market in RTDs, and growing at market in food. Very strong performance there. In Mexico, volumes are a bit off due to tequila exports being down and Mexican beer imports into the U.S.

[Gordon Hardie, CEO at O-I Glass]

Our team, they're executing Fit to Win exceptionally well and delivering very strong financial performance. Overall, we're very happy with how our Latin American business is performing, and we expect that performance to continue.

[Operator]

There are no further questions at this time. I will now turn the call back to Chris Manuel for the closing remarks.

[Chris Manuel, VP of Investor Relations at O-I Glass]

Thank you. That concludes our earnings call. Please note our third quarter call is scheduled for Wednesday, October 28, 2026. Remember, make it a memorable moment by choosing safe, sustainable glass. Thank you.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Chris Manuel, VP of Investor Relations
• Gordon Hardie, CEO
• John Haudrich, CFO

Analysts

• William Kaatz, Analyst at Baird
• Mike Roxland, Analyst at Truist Securities
• Arun Viswanathan, Analyst at RBC Capital Markets
• George Staphos, Analyst at Bank of America
• Bryan Bergmeier, Analyst at Citi