O-I Glass, Inc.

▲ Bull Case

• ◆Fit to Win $750M cumulative savings fully delivered by FY2027: FY2025 already demonstrated $300M in real, structural savings (plant closures, headcount reductions, procurement efficiencies). The remaining $450M by FY2027 drives EBITDA margin expansion from ~18% to ~23%, enabling EV/EBITDA multiple re-rating from 4.9x to 6-7.5x and share price appreciation to $37-59/share (+311-556%).
• ◆Leverage deleverages to <2.0x by FY2028 as FCF normalizes: With MAGMA CapEx ($200M+) fully eliminated, maintenance CapEx drops to ~$300M/yr. FCF recovers to ~$320M in FY2026E, ~$450M in FY2027E, and ~$500M in FY2028E — generating a 36.5% FCF yield on current market cap. Debt paydown accelerates deleveraging from 3.5x to ~2.0x by FY2028, removing the primary investor concern and enabling potential dividend reinstatement.
• ◆Strategic optionality / M&A at 5x EV/EBITDA: At current distressed valuation, OI is a credible acquisition target for Verallia or private equity. A control premium of $5-15/share on a takeout at 6-7x EV/EBITDA would represent 55-267% upside from current levels. Even absent M&A, any leverage milestone (<3.0x) or dividend reinstatement announcement would attract institutional income investors currently absent from the register, providing a significant re-rating catalyst.

▼ Bear Case

• ◆European structural volume decline accelerates beyond Fit to Win offset: Europe represents ~50% of OI's revenue and EBITDA. US beer consumption has declined for 10+ consecutive years, and European beer volumes are following the same trajectory 5-8 years behind. If mainstream beer volume loss outpaces glass's premium repositioning in wine, spirits, and craft beer, European EBITDA could decline >25% YoY for multiple consecutive periods — collapsing the recovery thesis and threatening leverage covenants.
• ◆Fit to Win savings shortfall + gross margin sustained compression: Q1 2026 gross margin of 12.9% vs. 17.9% Q1 2025 represents alarming 500bps compression whose cause (energy costs, volume, mix) is unclear without management transcripts. If the Q1 2026 compression is structural rather than seasonal, cumulative savings could fall below $500M by FY2026 year-end — rendering the $750M FY2027 target unachievable and forcing downward EBITDA revisions toward the bear case.
• ◆Leverage deterioration triggers covenant breach spiral: Net Debt/EBITDA of 3.5x provides limited cushion to estimated credit agreement covenants of 4.5-5.0x. Any combination of EBITDA shortfall and revenue weakness could push leverage above 4.0x, triggering credit rating downgrades to B- or lower, increased borrowing costs of 150-250bps, cross-acceleration clause activation, and forced selling by credit-mandated institutional bondholders — a self-reinforcing negative spiral that could impair equity value to near zero.

“The central Wall Street debate on OI is whether the Q1 2026 gross margin collapse (12.9% vs. 17.9%) represents a temporary trough or a structural deterioration signaling that Fit to Win cannot offset the combined headwinds of European volume decline, energy cost volatility, and post-MAGMA credibility damage. Bulls argue OI trades at 4.9x EV/EBITDA — historically rock-bottom for a glass oligopolist — and that $300M in already-delivered FY2025 savings proves the program's legitimacy, making the H2 2026 recovery thesis credible. Bears counter that (1) no insider buying cluster validates management's H2 recovery narrative with personal capital (unlike GPK where the CEO and two directors bought $1M+ at $11); (2) the MAGMA write-off permanently damaged CEO credibility for technology-led differentiation; and (3) at 3.5x leverage with no dividend buffer, any guidance cut below $1.1B EBITDA creates a dangerous leverage spiral. The critical debate resolution point is Q2 2026 earnings (July/August 2026): if management confirms full-year FY2026 EBITDA guidance of $1.25-1.30B and provides visibility into H2 new business win ramp, the bull case gains substantial credibility. If guidance is cut, the bear case accelerates.”

• ◆Q2 2026 earnings guidance confirmation: Management reaffirms FY2026 EBITDA of $1.25-1.30B and provides Q2 gross margin recovery above 15%, validating H2 2026 new business ramp
• ◆H2 2026 new business wins converting to revenue: Q3 2026 volume/revenue data confirms management-guided H2 benefit from new customer wins, providing first proof point of top-line stabilization
• ◆FY2026 Fit to Win cumulative savings reaching $500M run rate: Annual disclosure confirming $500M+ cumulative savings keeps $750M FY2027 target on track and restores program credibility post-MAGMA
• ◆Leverage milestone below 3.0x: Any quarter where management guides or achieves Net Debt/EBITDA below 3.0x is a significant catalyst for multiple expansion from distressed 4.9x toward sector-peer 6-8x
• ◆Dividend reinstatement announcement (FY2027-FY2028): Even a $0.20/share annual dividend signals management confidence and attracts income-oriented institutional investors currently absent, providing re-rating
• ◆M&A / strategic transaction: OI at 5x EV/EBITDA is a credible target for Verallia or private equity; any credible approach adds $5-15/share control premium

• ◆FY2026 full-year EBITDA guidance cut below $1.1B: Would signal H2 new business wins are not converting and Fit to Win is underdelivering — trigger 50% position reduction immediately
• ◆Net Debt/EBITDA rises above 4.0x on any LTM measure: Narrows covenant cushion dangerously; triggers immediate full exit within 48 hours regardless of management commentary
• ◆European segment EBITDA declines >25% YoY for two consecutive periods: Signals structural beer volume decline has accelerated beyond cost-savings offset; triggers 35% position reduction
• ◆Fit to Win cumulative savings below $500M by FY2026 year-end: $750M FY2027 target becomes mathematically implausible; triggers 30% position reduction and EBITDA forecast revision to bear case
• ◆S&P credit downgrade to B- or Moody's to B3: Restricts leveraged loan market access, increases borrowing costs 150-250bps, may trigger cross-acceleration clauses; triggers immediate full exit within 48 hours
• ◆Q1 2026 gross margin compression (12.9%) proves structural: Without transcripts, the cause is unknown — if energy costs or volume mix are structurally impaired rather than seasonally/temporarily weak, recovery to 17-18% margins is not achievable on the base case timeline
• ◆No insider buying cluster: Unlike GPK, no 2026 insider purchase cluster validates management's recovery narrative with personal capital, limiting near-term conviction