OI

O-I is a deep-value, high-leverage turnaround. The headline is ugly — a third straight GAAP loss (net income -$129M, EPS -$0.84, ROE -10%) on revenue that has now fallen two years running to $6.43B (-1.6% YoY, down from $7.11B in FY2023) as glass shipments dropped ~3% on soft demand and deliberate exits from unprofitable, heavier-format business. But the loss is largely self-inflicted accounting noise: management flags $378M ($2.44/share) of items 'not representative of ongoing operations,' driven by restructuring/impairment charges that jumped to $443M (from $206M) under the 'Fit to Win' footprint-rationalization program. Strip those out and the underlying business is improving — segment operating profit rose $98M to $846M (Americas $549M vs $392M), gross profit grew 6.1% to $1.11B, and operating cash flow climbed 22.7% to $600M against capex cut 30% to $432M, leaving roughly $168M of free cash flow.

The valuation reflects the pessimism: at $9.59 the market cap is just $1.46B, a P/S of 0.2, and an ~11% FCF yield. The problem is the balance sheet does the cheapness. Long-term debt is $4.84B against only $1.29B of equity — well over 3x leverage — and net interest expense of $341M nearly consumes the entire reported pre-tax result (loss before tax of -$49M). With $759M cash and only $66M current debt, near-term liquidity is fine, but the capital structure means equity holders are a thin sliver beneath a large, rising debt load, and refinancing ('higher write-offs of deferred finance fees' drove interest up) is an ongoing cost.