2020 FULL YEAR AND
FOURTH QUARTEREARNINGSFEBRUARY 10, 2021

SAFE HARBOR COMMENTS
Forward-Looking Statements
This press release contains “forward-looking” statements related to O-I Glass, Inc. (“O-I Glass” or the “company”) within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”) and Section 27A of the Securities Act of 1933. Forward-looking statements reflect the company’s current expectations and projections about future events at the time, and thus involve
uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and othersimilar expressions generally identify forward-looking statements.
It is possible that the company’s future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) the company’s ability to obtain the benefits it
anticipates from the Corporate Modernization, (2) risks inherent in, and potentially adverse developments related to, the Chapter 11 bankruptcy proceeding involving the company’s wholly owned subsidiary
Paddock Enterprise, LLC (“Paddock”), that could adversely affect the company and the company’s liquidity or results of operations, including the impact of deconsolidating Paddock from the company’s
financials, risks from asbestos-related claimant representatives asserting claims against the company and potential for litigation and payment demands against the company by such representatives and otherthird parties, (3) the amount that will be necessary to fully and finally resolve all of Paddock’s asbestos-related claims and the company’s obligations to make payments to resolve such claims under the termsof its support agreement with Paddock, (4) the company’s ability to manage its cost structure, including its success in implementing restructuring or other plans aimed at improving the company’s operating
efficiency and working capital management, achieving cost savings, and remaining well-positioned to address the company’s legacy liabilities, (5) the company’s ability to acquire or divest businesses, acquireand expand plants, integrate operations of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, (6) the company’s ability to achieve its strategic plan, (7) foreign
currency fluctuations relative to the U.S. dollar, (8) changes in capital availability or cost, including interest rate fluctuations and the ability of the company to refinance debt on favorable terms, (9) the generalpolitical, economic and competitive conditions in markets and countries where the company has operations, including uncertainties related to Brexit, economic and social conditions, disruptions in the supply
chain, competitive pricing pressures, inflation or deflation, changes in tax rates and laws, natural disasters, and weather, (10) the impact of COVID-19 and the various governmental, industry and consumer
actions related thereto, (11) the company’s ability to generate sufficient future cash flows to ensure the company’s goodwill is not impaired, (12) consumer preferences for alternative forms of packaging, (13)cost and availability of raw materials, labor, energy and transportation, (14) consolidation among competitors and customers, (15) unanticipated expenditures with respect to data privacy, environmental, safety
and health laws, (16) unanticipated operational disruptions, including higher capital spending, (17) the company’s ability to further develop its sales, marketing and product development capabilities, (18) the
failure of the company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, (19) the ability of the company and the third parties on which it relies for information
technology system support to prevent and detect security breaches related to cybersecurity and data privacy, (20) changes in U.S. trade policies, and the other risk factors discussed in the company’s Annual
Report on Form 10-K for the year ended December 31, 2019, Quarterly Report on form 10-Q for the quarterly period ended September 30, 2020 and any subsequently filed Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q or the company’s other filings with the Securities and Exchange Commission.
It is not possible to foresee or identify all such factors. Any forward-looking statements in this document are based on certain assumptions and analyses made by the company in light of its experience andperception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. Forward-looking statements are not a guarantee of future
performance and actual results or developments may differ materially from expectations. While the company continually reviews trends and uncertainties affecting the company’s results or operations andfinancial condition, the company does not assume any obligation to update or supplement any particular forward-looking statements contained in this document.

2

OVERVIEW
Results exceeded management guidance●

4Q20 aEPS1 was $0.40, above guidance of $0.30 - $0.35●

FY20 FCF2 was $146M, above guidance of ≥ $100M

Stable demand amid ongoing global pandemic●

4Q20 shipments ~ flat with prior year●

Consumers trust glass packaging on and off premise regardless of venue●

Strong preference for glass as the healthy, premium and sustainable option for Food and Beverage

Improved results reflect strong execution of O-I’s value creation strategy●

Margin Expansion initiatives continue to drive significant cost savings and top line enhancements●

Optimizing structure through strategic and tactical divestiture programs●

Revolutionizing glass as MAGMA continues to advance

Improving business outlook●

FY21 aEPS expected to be $1.55 - $1.75; 1Q21 aEPS expected to be $0.32 - $0.37●

FY21 FCF expected to approximate $240 million (20-25% EBITDA to FCF conversion)

3

1
2

Adjusted EPS excludes items management does not consider representative of ongoing operations. See the appendix for further disclosure.
Management defines free cash flow as cash provided by continuing operating activities less cash paid for property, plant and equipment (all components as determined in accordance with GAAP).
See the appendix for further disclosure.

SHIPMENTS STABILIZE ACROSS ALL GEOGRAPHIE S
2020 Retail/Off Premise Consumer
Consumption Trends (vs PY)

2020 O-I Shipment Trends (vs PY)
5%

40%

O-I
AM
EU

0%

30%

U.S. Beer

U.S. Wine

U.S. Spirits

U.S. FoodEurope Alcohol

Europe Food

-5%
20%

-10%

10%

-15%
-20%

Q1

Q2

Q3

Note: Volumes are on a year over year and same structure basis excluding ANZ.

O-I Shipment Trends Reflect Disruption from Pandemic
Consumers Value Sustainability and Trust Premium Glass

Q4

0%

Q1

Q2

Q3

Q4

Source: Various syndicated and broker reports

Underlying Retail Consumer Consumption is Strong (~75-80% of O-I Vol)
Offsetting Decline in On-Premise Consumption (~20-25% of O-I Vol)E X P E C T S H I P M E N T S W I L L I M P R O V E 2 - 4 % I N 2 0 2 1 A S P O P U L AT I O N I S
VA C C I N AT E D A N D M A R K E T S G R A D U A L LY R E O P E N
42020 KEY ACCOMPLISHMENTS■ Executing the Strategic and Tactical divestiture programs including ANZ sale; reducing debt

• Anticipate total proceeds ~ $1.1B, including $677 million from ANZ and $400-$500 million from Tactical divestitures upon completion■ Improved financial flexibility despite pandemic• FCF exceeded guidance• Reduced net debt ~ $429M and leverage ratio was comfortably below covenant• Historically high liquidity and no near-term debt maturities■ Successfully navigated the brunt of the pandemic through O-I’s COVID response plan
• Quickly aligned supply with demand and achieved historically lower inventory/IDS levels■ Generated ~$115M Margin Expansion initiative benefits, significantly exceeded original target• Significantly mitigated the unfavorable impact of lower production due to the pandemic■ Advanced MAGMA with full scale Generation 1 deployment in Germany remaining on track for 1Q21
■ Paddock Chapter 11 initiated to establish a fair and final resolution to legacy asbestos liabilities
5

ORGANIZED FOR SOLID EXECUTIO N
L E V E R A G I N G A D VA N C E D C A PA B I L I T I E S B U I LT I N R E C E N T Y E A R S
People and Organization

Rigorous / integrated O-I People System
New org structure and operating model in 2020
Upgrade talent – internal / external succession
Incentives aligned with strategy / performance

CapitalPeople andStructure
Organization
Discipline

•
•
•
•

Breakthrough R&D

Unique org structure to support incubation
New MAGMA business model development
R&D global partner network
Modeling / 3D Engineering

•
•
•
•

Portfolio
Optimization

Breakthrough
R&D

ESG

Appointed Chief Sustainability Officer •New global sustainability network •Establish ESG roadmap •Glass advocacy campaign to balance dialogue •Management
Systems

ESG

Commercial Excellence

Key Account Management •Customer Relationship Management •Value Based Pricing and Net Promoter Score •Marketing and Innovation

Digital marketing glass advocacy campaign •NPD process and capability development •Marketing research capabilities •6

Commercial
ExcellenceMarketingandInnovation

MarginExpansion

Capital Structure Discipline••••

Maximize FCF / EBITDA Conversion
Maintain strong liquidity
Reduce debt / Plan to ~ 3x leverage
Address legacy liabilities / Paddock Ch11

Portfolio Optimization••••

Align portfolio to market / customer strategy
All assets evaluated for return / cash flow
Improve / restructure to enhance portfolio return
Strategic and tactical divestiture program

Management Systems

•
•
•
•
•
•

Integrated Business Planning (IBP)
End-to-end management system
Completed 3-year implementation timeline
3-year rollup planning, synced with strategy
Advanced demand planning capabilities
Rapid supply chain alignment

Margin Expansion
•
•
•
•
•

Turnaround initiatives shifting to structural programs
Revenue optimization embedded in commercial
Factory performance across entire network
Cost Transformation leverage zero based budgeting
Org. simplification expedites decision making

2020-2021 ESG ACCELERATION
Expanded Initiatives and New Goals Across 9 Dimensions

Our Structural Acceleration●

Enhanced Rigor of Board Governance●Appointed CSO mid-2020●

Established Internal Global Sustainability
Network●●Created Executive Diversity & Inclusion
Council and signed the CEO action pledge
2021 Sustainability report and expanded
website disclosure

Leading the Way●

First glass container maker to have SBTiapproved emissions target●

First packaging company to offer green bond●

MAGMA expected to improve glass sustainability
profile, including bottle light weighting●

Investing in improving sustainability of legacy
furnaces

RE-BALANCING THE PACKAGING DIALOGUE
Glass Advocacy ● Recycling Funding ● Donations for COVID Vaccine In Our Communities7

2021 PRIORITIESB O L D S T R U C T U R A L A C T I O N S T O C H A N G E O - I ’ S B U S I N E S S F U N D A M E N TA L S

1

2

3

MARGINEXPANSIONREVOLUTIONIZE
GLASS

OPTIMIZESTRUCTURE

STRONG OPERATING PERFORMANCEAND COST EFFICIENCIESC R E AT E A N E W B U S I N E S S M O D E L
F O R G L A S S PA C K A G I N GREBALANCE BUSINESS PORTFOLIOAND IMPROVE BALANCE SHEET ~$50M gross initiative benefits

 Validate MAGMA Gen 1 in Germany• Revenue Optimization• Factory Performance• Cost transformation

 Improve performance in North America

 Glass advocacy campaign
 Reposition ESG

 Complete the tactical divestiture program• $400-$500M 2019 to 2021

 Evaluate expansion initiatives• Potentially funded by incremental tactical divestitures

 Advance Paddock Chapter 11
 Further efforts for a simple, agile organization
 Increase cash flow and reduce debt

8

O-I WILL HOST INVESTOR WORKSHOPS DURING 2021 TO
SHARE LONG-TERM PLANS INCLUDING MAGMA AND ESG

2020 RESULTS

PA N D E M I C I M PA C T E D E A R N I N G S : ~ 4 % L O W E R S A L E S , ~ 7 . 5 % L O W E R P R O D U C T I O N
SEGMENTOPERATING
PROFIT1 ($M)

FY20 aEPS was $1.22 compared to $2.24 in PY● ~ $1/sh gross impact of lower sales and production levels due to the pandemic● Very good operating and cost performance partially mitigated lower volumes● Earnings also reflect unfavorable FX, temporary items and divestitures

Segment operating profit reflects impact of global pandemic● Higher selling prices offset cost inflation● Sales volume down 4% from prior year
● Down ~ 15% in 2Q20 during peak of pandemic; stable demand in other quarters● Very good operating performance despite lower production● Production down ~ 7.5% from prior year due to pandemic ~ $155M unfav impact● Lower production partially mitigated by Margin Expansion initiatives● Total Margin Expansion initiatives ~ $115M fav benefit● Revenue optimization, factory performance and cost transformation

Non-operating items● Higher retained corporate cost due to additional R&D and higher management incentives● Lower interest expense reflects debt reduction and refinancing activities● Elevated tax rate due to lower earnings and change in regional earnings mix
9

aEPS

FY19 AS REPORTED

$856

$2.24

FX2

(19)

(0.09)

Temporary items3(17)(0.08)Divestitures (ANZ/Soda Ash JV4)(24)

(0.17)SUB-TOTAL

$796

$1.90

3

0.01

Volume and mix (incl. acquisitions)(83)(0.40)

Operating costs (excl. cost inflation)(38)(0.18)

Retained corporate costs--(0.07)Net interest expense6 / NCI

--

0.11

Change in tax rate6--(0.14)

Share count--(0.01)

$678

$1.22

Net price5 (incl. cost inflation)

FY20 RESULTS

1 Segment operating profit is defined as consolidated earnings before interest income, interest expense, and provision for income taxes
and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain
retained corporate costs and the Company’s global equipment business. See the appendix for further disclosure.
2 Foreign currency effect determined by using 2020 foreign currency exchange rates to translate 2019 local currency results.
3 Temporary items primarily refer to the European energy certificates and white certificates.
4 Divestiture of Soda Ash JV impacts aEPS only, ANZ divestiture impacts both segment operating profit and aEPS
5 Net price represents the net impact of movement in selling prices and cost inflation.
6 Adjusted interest expense and adjusted effective tax rate exclude certain items that management
considers not representative of ongoing operations.

2020 FCF AND CAPITAL STRUCTURE
HIGHER FCF AND LOWER NET DEBT

CAPITAL ALLOCATION GUIDING PRINCIPLESGUIDING PRINCIPLE

FY20 FCF1 AND NET DEBT2 FAVORABLE TO PY

PROGRESS

Maximize Free Cash Flow1● CapEx ~ $300M● FYE20 IDS at or below PY● FY20 FCF $146M vs $(18)M in PY● FYE CapEx $311M (higher due to FX)(800)● Manage leverage position● Improve balance sheet position

1

10

2
3

● FYE20 net debt $4.6B, down ~ $429M from PY● ANZ net proceeds applied to debt

● BCA leverage ratio3 well below covenant (5.0x)● No significant bond maturities until 2023
● Discretionary funding to de-risk pensions

Management defines free cash flow as cash provided by continuing operating activities less cash paid for property, plant and equipment (all components as determined in accordance with GAAP).
See the appendix for further disclosure.
Net Debt is defined as Total Debt less Cash. See appendix for further disclosure.
BCA leverage ratio is defined as Net Debt divided by EBITDA, after credit agreement adjustments.

316

264

146
(18)

(179)
(435)
(716)

1Q

2Q

3Q
2020

($B)

● Divestitures for further deleveraging

112● FYE20 committed liquidity > $2.2B

Reduce Net Debt2● FYE20 net debt below PY of $5.0B

205

0
(400)

● FYE IDS 9 days below PY

Preserve Strong Liquidity● Liquidity ≥ $1.25B across 2020

561

400
($M)

● Strong free cash flow

FCF Progression

800

6.3
6.0
5.8
5.5
5.3
5.0
4.8
4.5
4.3
4.0

4Q

FY

2019

Net Debt Progression
5.96

5.51

5.59

5.62

5.44

5.01
4.77

1Q

2Q
2020

3Q
2019

4.58

4Q

4Q20 RESULTSHIGHER SEGMENT OPERATING PROFIT (EXCLUDING DIVESTITURES AND FX)
4Q20 aEPS was $0.40 compared to $0.50 in PY● Current year results reflect recent divestitures

Higher segment operating profit (excluding divestitures and FX)● Higher selling prices fully offset cost inflation● Sales volume ~ flat with prior year; favorable mix● Very good operating performance reflects margin expansion initiatives● Production volume consistent with prior year levels● Higher plant incentive costs, elevated logistics, inventory adjustments● Margin expansion initiatives and cost control actions benefited results ~ $45M

Non-operating items● Higher retained corporate cost: additional R&D, higher management incentives● 32% adjusted effective tax rate5 compared to 31% in prior year

11

SEGMENTOPERATING
PROFIT1 ($M)
4Q19 AS REPORTED

aEPS

$203

$0.50

FX2

(4)

(0.03)Divestitures (ANZ/Soda Ash JV3)

(19)

(0.09)SUB-TOTAL

$180

$0.38

Net price4 (incl. cost inflation)

6

0.03

Volume and mix (incl. acquisitions)

3

0.01

Operating costs (excl. cost inflation)

11

0.05

Retained corporate costs--(0.05)Net interest expense5 / NCI

--

0.00

Change in tax rate5--(0.01)

Share count--(0.01)

$200

$0.40

4Q20 RESULTS

1 Segment operating profit is defined as consolidated earnings before interest income, interest expense, and provision for income taxes
and excludes amounts related to certain items that management considers not representative of ongoing operations as well as certain
retained corporate costs and the Company’s global equipment business. See the appendix for further disclosure.
2 Foreign currency effect determined by using 2020 foreign currency exchange rates to translate 2019 local currency results.
3 Divestiture of Soda Ash JV impacts aEPS only, ANZ divestiture impacts both segment operating profit and aEPS
4 Net price represents the net impact of movement in selling prices and cost inflation.
5 Adjusted interest expense and adjusted effective tax rate exclude certain items that management
considers not representative of ongoing operations.

4Q20 SEGMENT REVIEWIMPROVED PROFITS IN BOTH AMERICAS AND EUROPE
AMERICASSEGMENTOPERATING
PROFIT($M)

COMMENTSEUROPE
SEGMENTOPERATING
PROFIT

COMMENTSASIA PACIFIC1
SEGMENTOPERATING
PROFIT

COMMENTS

4Q19

$115

$69

$19

FX

(8)

4

--

Divestitures

--

--

(19)

$107

$73

$0

SUBTOTAL
Net price(incl. cost inflation)(9)

Volume and mix(incl. acquisitions)Operating costs(excl. cost inflation)

15▼

Constructive price environment• Revenue Optimization
FX induced inflation

6▲

Sales volume increased 2.4%

23▲

Margin expansion initiatives• Factory Performance• Cost Transformation
Improved JV performance
Plant performance incentives

▲

▲
▼

4Q20

12

$127

▲

---

►

Constructive price environment• Revenue Optimization
Modest inflation(3)▼

Sales volume decreased 2.3%

---

(12)

▲

Margin expansion initiatives• Factory Performance• Cost Transformation
Improved JV performance
Plant performance incentives
Higher logistics costs
Aged inventory adjustment

---

▲
▼
▼
▼

$73

▼

ANZ sale$0

1 Following the sale of ANZ on July 31, 2020, the remaining businesses in the Asia Pacific region do not meet the criteria of an individually reportable segment. Therefore, the results for the company’s remaining Asia businesses will be included in retained corporate and other costs following that date.

2021 BUSINESS OUTLOOKI M P R O V I N G O U T L O O K A S M A R K E T S S TA B I L I Z E A N D R E C O V E R
FCF OUTLOOK ($M)

EARNINGS OUTLOOK (aEPS)
FY21

FY21

1Q21

2020 AS REPORTED

$1.22

$0.41

2020 AS REPORTED

$146

FX1

$0.02

$0.00

FX1

($15)

Divestitures2($0.04)($0.04)

Divestitures2$50

SUBTOTAL

$1.20

$0.37

SUBTOTAL$181

Net price3▼

PAF lag effect▲+ 2 to 4%►~ Flat▲Fav prod volume
Fav net margin expansion Initiatives
Higher depreciation, maintenance,
insurance and pension expense▲

Fav initiatives
Higher maintenance,
insurance and pension

R&D, incentives▼(incl. cost inflation)

Volume and mix(incl. acquisitions)Operating costs(excl. cost inflation)►

Retained corporate costs▼

Net interest exp4 / NCI►

Change in tax rate4▲~28 to 32% tax rate▼

Share count►

SBB offset new incentive awards▼

2021 GUIDANCE

13

R&D

►

~ $1.55 - $1.75~30% tax rate

~ $0.32 - $0.37

1. Foreign currency effect determined by using January 31, 2021 foreign currency exchange rates to translate 2020 local currency results.
2. Divestiture of ANZ and Argentina, net of lower interest expense due to debt reduction. Excludes factoring impact.
3. Net price represents the net impact of movement in selling prices and cost inflation.
4. Adjusted interest expense and adjusted effective tax rate exclude certain items that management considers not representative of ongoing operations.
5. See the appendix for further disclosure on the non-GAAP measure, Adj EBITDA conversion

14% Adj EBITDA conversion5

EBITDA▲$475M of D&A

Working Capital▲$50M to $75M use of cash in 2021

CapEx

▼

$375M in 2021

Restructuring cash►

Pension▲$35 cash above exp in 2021

Equity investments▲

Dividends = income in 2021

Interest payments►

Cash taxes▼$110M in 2021

Returnable packaging / Other▼

Government programs lapse
Additional packaging as vol incr.

~$240M

20-25% EBITDA conversion

2021 GUIDANCECONCLUSIO N
2020 results above most recent guidance
Stable demand amid ongoing pandemic
Organized for execution – leveraging new capabilities
Clear priorities for 2021
Improving business outlook and volume growth14

Sustainability
MessageFINANCIAL APPENDIXFX I M PACT O N EARNI NG S

APPROXIMATE ANNUAL IMPACT ON
EPS FROM 10% FX CHANGE
EUR
MXN
BRL
COP

16

0.13
0.04
0.03
0.01

FX RATES AT KEY POINTSJan 31st
Avg
2021
1Q20
EUR
1.21
1.10
MXN
20.35
20.74
BRL
5.44
4.64
COP
3,558
3,655

Avg
2020
1.15
21.56
5.21
3,715

NO N- G AAP FI NANCI AL M EASUR E S
The company uses certain non-GAAP financial measures, which are measures of its historical or future financial performance that are not calculated and presented in accordance with
GAAP, within the meaning of applicable SEC rules. Management believes that its presentation and use of certain non-GAAP financial measures, including adjusted earnings, adjusted
earnings per share, segment operating profit, net debt, free cash flow, adjusted EBITDA, adjusted EBITDA to free cash flow conversion, adjusted interest expense and adjusted effective
tax rate provide relevant and useful supplemental financial information, that is widely used by analysts and investors, as well as by management in assessing both consolidated andbusiness unit performance. These non-GAAP measures are reconciled to the most directly comparable GAAP measures and should be considered supplemental in nature and should not
be considered in isolation or be construed as being more important than comparable GAAP measures.
Adjusted earnings relates to net earnings from continuing operations attributable to the company, exclusive of items management considers not representative of ongoing operations
because such items are not reflective of the company’s principal business activity, which is glass container production. Adjusted earnings are divided by weighted average shares
outstanding (diluted) to derive adjusted earnings per share. Segment operating profit relates to earnings from continuing operations before interest expense, net, and before income taxes
and is also exclusive of items management considers not representative of ongoing operations as well as certain retained corporate costs. Management uses adjusted earnings, adjusted
earnings per share, and segment operating profit to evaluate its period-over-period operating performance because it believes these provide useful supplemental measures of the resultsof operations of its principal business activity by excluding items that are not reflective of such operations. Adjusted earnings, adjusted earnings per share, and segment operating profit
may be useful to investors in evaluating the underlying operating performance of the company’s business as these measures eliminate items that are not reflective of its principal businessactivity.
Net debt is defined as total debt less cash. Management uses net debt to analyze the liquidity of the company.
Further, free cash flow relates to cash provided by continuing operating activities less cash payments for property, plant and equipment. Management has historically used free cash flow
to evaluate its period-over-period cash generation performance because it believes this has provided a useful supplemental measure related to its principal business activity. Adjusted
EBITDA relates to net earnings from continuing operations attributable to the company, less interest, taxes, depreciation and amortization as well as items management considers not
representative of ongoing operations because such items are not reflective of the company’s principal business activity, which is glass container production. Free cash flow to adjusted
EBITDA conversion may be useful to investors to assist in understanding the comparability of cash flows generated by the company’s principal business activity. It should not be inferredthat the entire free cash flow amount is available for discretionary expenditures, since the company has mandatory debt service requirements and other non-discretionary expenditures thatare not deducted from the measure. Management uses non-GAAP information principally for internal reporting, forecasting, budgeting and calculating compensation payments.
The Company routinely posts important information on its website at www.o-i.com/investors.

17

The reconciliation below describes the items that management considers not representative of ongoing operations.

RECO NCI LI AT I O N FO R
ADJUSTED EARNI NG S

Three months ended
December 31
2020
2019

Unaudited
Earnings (loss) from continuing operations attributable to the Company

$

(29)

$

32

2020
$

Year ended
December 31
249

$

2019
(397)

Items impacting cost of goods sold:
Acquisition-related fair value inventory adjustments

1

Items impacting other selling and administrative expense:
Restructuring, asset impairment and other charges
Items impacting equity earnings (losses) :Restructuring, asset impairment and other charges

236

Items impacting other expense, net:
Gain on sale of ANZ businesses
Charge for asbestos-related costs

36

5

Charge for goodwill impairment
Restructuring, asset impairment and other charges
Strategic transaction and corporate modernization costs
Charge for deconsolidation of Paddock
Pension settlement charges
Gain on sale of equity investment
Items impacting interest expense:
Charges for note repurchase premiums and write-off of finance fees
Items impacting income tax:
Net benefit for income tax on items above
Tax charge recorded for certain tax adjustments
Items impacting net earnings attributable to noncontrolling interests:
Net impact of noncontrolling interests on items above

(275)

35

26
1

41
31

18

13
(107)

35
595
111
31

106
8
14
26

26
(107)

39

44

65

7

(7)
3

(13)

(13)
3

(1)

(1)

(1)

(1)

Total adjusting items (non-GAAP)

$

92

$

47

$

(55)

$

748

Adjusted earnings (non-GAAP)

$

63

$

79

$

194

$

351

Diluted average shares (thousands)

157,274

156,907

158,785

155,250

Earnings (loss) per share from continuing operations (diluted)$(0.18)

$

0.20

$

1.57

$

(2.56)

Adjusted earnings per share (non-GAAP) (a)

$

0.40

$

0.50

$

1.22

$

2.24

(a) For purposes of computing adjusted earnings per share, the diluted average shares (in thousands) are 156,651 for the year ended Dec. 31, 2019.
For purposes of computing adjusted earnings per share, the diluted average shares (in thousands) are 159,824 for the three months ended Dec. 31, 2020.

18

The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measure, adjusted earnings and adjusted earnings per share, for the quarter
ending March 31, 2021 or year ending December 31, 2021, to its most directly comparable GAAP financial measure, earnings from continuing operations attributable to theCompany, because management cannot reliably predict all of the necessary components of this GAAP financial measure without unreasonable efforts. Earnings fromcontinuing operations attributable to the Company includes several significant items, such as restructuring charges, asset impairment charges, charges for the write-off offinance fees, and the income tax effect on such items. The decisions and events that typically lead to the recognition of these and other similar items are complex andinherently unpredictable, and the amount recognized for each item can vary significantly. Accordingly, the Company is unable to provide a reconciliation of adjusted
earnings and adjusted earnings per share to earnings from continuing operations attributable to the Company or address the probable significance of the unavailable
information, which could be material to the Company's future financial results.

R E C O N C I L I AT I O N T O E A R N I N G S
F R O M C O N T I N U I N G O P E R AT I O N S
B E F O R E I N C O M E TA X E S

Three months ended
December 31
2020
2019

Unaudited
Net sales:
Americas
EuropeAsia Pacific$

Reportable segment totals
Other
Net sales

880
589
-

$

1,469
$

28
1,497

$

Year ended
December 31
2020
2019

890
553
153

$ 3,322
2,364
281

1,596

5,967

32
1,628

124
$ 6,091

115
69
19

$ 395
264
19

$

3,622
2,387
534
6,543

$

148
6,691

Segment operating profit (a):Americas
EuropeAsia Pacific

$

127
73
-

$

$

495
317
44

Reportable segment totals

200

203

678

856

Items excluded from segment operating profit:
Retained corporate costs and otherItems not considered representative of ongoing operations (b)

(47)
(86)

(29)
(13)

(145)
85

(112)
(694)

(96)
65

(265)
$ 353

0.9%

4.0%

5.8%

-3.9%

Americas
EuropeAsia Pacific

14.4%
12.4%
-

12.9%
12.5%
12.4%

11.9%
11.2%
6.8%

13.7%
13.3%
8.2%

Reportable segment margin totals

13.6%

12.7%

11.4%

13.1%

Interest expense, net
Earnings (loss) from continuing operations before income taxes
Ratio of earnings (loss) from continuing operations before income taxes to net sales

$

(53)
14

$

$

(311)
(261)

Segment operating profit margin (c):(a)

Segment operating profit consists of consolidated earnings before interest income, interest expense, and provision for income taxes and excludes
amounts related to certain items that management considers not representative of ongoing operations as well as certain retained corporate costs.
The Company presents information on segment operating profit because management believes that it provides investors with a measure ofoperating performance separate from the level of indebtedness or other related costs of capital. The most directly comparable GAAP financial
measure to segment operating profit is earnings from continuing operations before income taxes. The Company presents segment operating profit
because management uses the measure, in combination with net sales and selected cash flow information, to evaluate performance and toallocate resources.

19

(b)

Reference Reconciliation to Adjusted Earnings.

(c)

Segment operating profit margin is segment operating profit divided by segment net sales.

4Q PRI CE, VO LUM E AND CURRENCY I M PACTO N REPO RTABL E SEG M ENT SALES
Three months ended December 31,
EuropeAsia Pacific

Americas
Net sales for reportable segments- 2019
Effects of changing foreign currency rates (a)PriceSales volume & mix
Divestiture (ANZ)
Total reconciling items
Net sales for reportable segments- 2020

$

$

890
(47)
19
18
(10)
880

$

$

553
36
14
(14)
36
589

Total

$

153

$

$

(153)
(153)
-

$

1,596
(11)
33
4
(153)
(127)
1,469

4Q PRI CE, SALES VO LUM E, O PERATI NG CO STS AND CURRENCYI M PACT O N REPO RTABL E SEG M ENT O PERATI NG PRO FI T
Segment operating profit - 2019
Effects of changing foreign currency rates (a)Net Price (net of cost inflation)
Sales volume & mix
Operating costs
Divestiture (ANZ)
Total reconciling items
Segment operating profit - 2020

20

Americas
$
115
(8)
(9)
6
23

$

12
127

Three months ended December 31,
EuropeAsia Pacific
$
69
$
19
4
15
(3)
(12)
(19)
4
(19)
$
73
$
-

(a) Currency effect on net sales and segment operating profit determined by using 2020 foreign currency exchange rates totranslate 2019 local currency results.

$

$

Total

203
(4)
6
3
11
(19)
(3)
200

FULL YEAR PRI CE, VO LUM E AND CURRENC Y I M PACTO N REPO RTABL E SEG M ENT SALES
Year ended December 31,
EuropeAsia Pacific

Americas
Net sales for reportable segments- 2019
Effects of changing foreign currency rates (a)PriceSales volume & mix
Divestiture (ANZ)
Total reconciling items
Net sales for reportable segments- 2020

$

$

3,622
(204)
30
(126)
(300)
3,322

$

2,387
41
51
(115)
(23)
2,364

$

$

$

534
(17)
(7)
(229)
(253)
281

Total
$

$

6,543
(180)
81
(248)
(229)
(576)
5,967

FULL YEAR PRI CE, SALES VO LUM E, O PERATI NG CO STS AND
CURRENCY I M PACT O N REPO RTABL E SEG M ENT O PERATI NG PRO FI T
Segment operating profit - 2019
Effects of changing foreign currency rates (a)Net Price (net of cost inflation)
Sales volume & mix
Operating costs
Divestiture
Total reconciling items
Segment operating profit - 2020
21

Americas
$
495
(19)
(38)
(54)
11

$

(100)
395

$

$

Year ended December 31,
EuropeAsia Pacific
317
$
44
1
(1)
51
(10)
(27)
(2)
(78)
12
(24)
(53)
(25)
264
$
19

(a) Currency effect on net sales and segment operating profit determined by using 2020 foreign currency exchange rates totranslate 2019 local currency results.

$

$

Total

856
(19)
3
(83)
(55)
(24)
(178)
678

RECO NCI LI AT I O N FO R FREE CASH FLO W
March 31,
2020
Cash provided by (utilized in) continuing operating activities
Cash payments for property, plant and equipment
Free cash flow (non-GAAP)$$

June 30,2020(315) $
(120)(435) $

Sept 30,
2020

181 $
(69)
112 $

Three Months Ended
Dec 31,March 31,
2020
2019

262 $
(57)
205 $

329
(65)
264

$
$

June 30,2019(595) $
(121)(716) $

Sept 30,2019(67) $(112)(179) $

Year Ended
Dec 31,
Dec 31,2020
2019

Dec 31,
2019

416 $
(100)
316 $

654
(93)
561

$
$

457 $
(311)
146 $

408
(426)
(18)

RECO NCI LI AT I O N FO R NET DEBT

Total debt
Cash and cash equivalents
Net Debt

22

March 31,2020

June 30,2020

Sept 30,2020$$ 6,5071,067$ 5,440

$

$

6,398
891
5,507

$

5,375
606
4,769

Three Months Ended
March 31,
Dec 31,
20192020$ 5,142563$ 4,579

$

5,911
326
$ 5,585

June 30,2019

Sept 30,2019

Dec 31,
2019

$

$

$

6,331
371
$ 5,960

5,888
273$ 5,6155,559
551$ 5,008

Forecast forYear Ended
Dec 31, 2021
$
$

615
(375)
240

RECO NCI LI AT I O N FO R ADJUSTED EBI TDA CO NVERSI O N
Year Ended
Dec 31,
2020
Earnings (loss) from continuing operations before income taxes
Interest expense, net
Earnings (loss) before interest and taxes (non GAAP)

$

353
(265)
618

Depreciation and amortization
Earnings (loss) before interest, taxes, depreciation and amortization (non GAAP)

$

482
1,100

Items not considered representative of ongoing operations (a)Adjusted Earnings (loss) before interest, taxes, depreciation and amortization (non GAAP)

$

(85)
1,015

Cash provided by (utilized in) continuing operating activities
Cash payments for property, plant and equipment
Free cash flow (non-GAAP)
Adjusted EBITDA to Free cash flow conversion
(a)

23

$

$
$

457
(311)
146
14.4%

Reference Reconciliation to Adjusted Earnings.

The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measures, EBITDA and free cash flow, for the year ending December 31, 2021,
to its most directly comparable GAAP financial measures, earnings (loss) from continuing operations before income taxes plus items that management considers not
representative of ongoing operations, depreciation and amortization and cash provided by continuing operations less cash payments for property, plant and equipment,  
because management cannot reliably predict all of the necessary components of these GAAP financial measures without unreasonable efforts.  Earnings (loss) fromcontinuing operations before income taxes includes several significant items, such as restructuring charges, asset impairment charges, charges for the write-off of financefees. The decisions and events that typically lead to the recognition of these and other similar items are complex and inherently unpredictable, and the amount recognizedfor each item can vary significantly. Accordingly, the Company is unable to provide a reconciliation of EBITDA to earnings (loss) from continuing operations before income
taxes and free cash flow to cash provided by continuing operating activities or address the probable significance of the unavailable information, which could be material to theCompany's future financial results.

RECO NCI LI AT I O N FO R ADJUSTED NET I NTERES T EXPEN S E

UnauditedThree Months Ended
Dec 31,
Dec 31,2020
2019Year Ended
Dec 31,
Dec 31,
2020
2019

Interest expense, net
Items impacting interest expense (a)Adjusted Net Interest Expense

$

$

(a)

$

(53)
(53)

$
$

(96)
39
(57)

$

(265)
44
(221)

$
$

(311)
65
(246)

Reference Reconciliation to Adjusted Earnings.

The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measure, adjusted net interest expense, for the year ending December 31, 2021 and quarter ended March 31, 2021,
to its most directly comparable GAAP financial measure, Interest expense, net, because management cannot reliably predict all of the necessary components of these GAAP financial measures
without unreasonable efforts.  Interest expense, net, includes several significant items, such as charges for the write-off of finance fees and note repurchase fees.
The decisions and events that typically lead to the recognition of these and other similar items are complex and inherently unpredictable, and the amount recognized for each item
can vary significantly. Accordingly, the Company is unable to provide a reconciliation of adjusted interest expense, net or address the probable significance of the unavailable information,
which could be material to the Company's future financial results.

24

RECO NCI LI AT I O N FO R ADJUSTED EFFECT I V E TAX RATE
UnauditedThree Months Ended
December 31, 2020
December 31, 2019Year Ended
December 31, 2020
December 31, 2019

Earnings (loss) from continuing operations before income taxes (A)Items management considers not representative of ongoing operations
Adjusted Earnings (loss) from continuing operations before income taxes (C)

$14
86
$100

$65
52
$117

$353
(41)
$312

Benefit (Provision) for income taxes (B)Tax items management considers not representative of ongoing operations
Adjusted benefit (provision) for income taxes (D)

(39)
7
(32)

(32)
(4)
(36)

(89)
(13)
(102)

(118)
(10)
(128)

278.6%
32.0%

49.2%
30.8%

25.2%
32.7%

-45.2%
25.7%

Effective Tax Rate (B)/(A)Adjusted Effective Tax Rate (D)/(C)

$

(261)
759
$498

The Company is unable to present a quantitative reconciliation of its forward-looking non-GAAP measure, adjusted effective tax rate, for the year ending December 31, 2021,
to its most directly comparable GAAP financial measure, provision for income taxes divided by earnings (loss) from continuing operations before income taxes, because
management cannot reliably predict all of the necessary components of these GAAP financial measures without unreasonable efforts.  Earnings (loss) from continuing
operations before income taxes includes several significant items, such as restructuring charges, asset impairment charges, charges for the write-off of finance fees, andthe provision for income taxes would include the income tax effect on such items.  The decisions and events that typically lead to the recognition of these and other similar
items are complex and inherently unpredictable, and the amount recognized for each item can vary significantly. Accordingly, the Company is unable to provide areconciliation of adjusted effective tax rate to earnings (loss) from continuing operations before income taxes divided by provision for income taxes or address the probable significanceof the unavailable information, which could be material to the Company's future financial results.

25

RECO NCI LI AT I O N FO R 1Q 20 ADJUSTE D EARNI NG S

26