Ball Reports First Quarter Results

BROOMFIELD, Colo., May 7, 2020 /PRNewswire/ -- Ball Corporation (NYSE: BLL) today reported, on a U.S. GAAP basis, first quarter 2020 net earnings attributable to the corporation of $23 million (including net after-tax charges of $179 million, or 54 cents per diluted share for business consolidation, debt refinancing and other non-comparable costs) or 7 cents per diluted share, on sales of $2.8 billion, compared to $117 million net earnings attributable to the corporation, or 34 cents per diluted share (including net after-tax charges of $50 million, or 15 cents per diluted share for business consolidation, debt refinancing and other non-comparable costs), on sales of $2.8 billion in 2019. Ball's first quarter 2020 comparable net earnings were $202 million, or 61 cents per diluted share versus first quarter 2019 comparable net earnings of $167 million or 49 cents per diluted share.

First quarter results reflect the 2019 sale of the company's Argentine steel aerosol business and Chinese beverage can assets, and new segment reporting for the company's beverage packaging, EMEA business and other non-reportable results. References to volume data represent units shipped, and year-over-year global beverage volumes referenced exclude the impact of the 2019 sale of the Chinese beverage can assets. Details of comparable segment earnings, business consolidation activities, business segment descriptions and other non-comparable items can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release.

"First and foremost, we extend our gratitude to our front-line manufacturing teams, our supply chain and our customers for their dedication to working safely and maintaining a reliable supply of packaging, aerospace technologies and services to our customers and consumers. Ball is fortunate to have a strong balance sheet, ample liquidity, a "can-do" culture and a business model that has successfully weathered other turbulent economic times over our 140-year history. Our company is humbled by the resiliency with which we are able to execute our strategy, maintain employment across global economies and give back to the communities where we operate," said John A. Hayes, chairman, president and chief executive officer.

"During the quarter, our company posted 24 percent comparable earnings per diluted share growth and 12 percent operating earnings growth across our corporation. Our global beverage business' comparable operating earnings grew 5 percent despite meaningful volume declines in South America during the second half of March, our aluminum aerosol business grew operating earnings 5 percent, and our aerospace business earnings increased 33 percent. With customer and consumer demand for aluminum packaging solutions continuing to outpace existing supply in North America, and our aerospace business supporting critical missions for the U.S. government, our previously announced growth projects are largely on track to add much needed capacity throughout 2020 and beyond."

"Our global business is resilient and, though certain regions may be impacted more significantly during the second quarter due to the socioeconomic dynamics associated with the pandemic, the long-term demand for our products continues to be strong and our strategy remains intact. We are focused on working safely, improving our operational excellence, amplifying the sustainability benefits of aluminum packaging, and executing on previously announced growth projects. Ball remains well positioned to grow diluted earnings per share, and deliver shareholder returns now and into the future."

Beverage Packaging, North and Central America

Beverage packaging, North and Central America, comparable segment operating earnings for first quarter 2020 were $146 million on sales of $1.2 billion compared to $118 million on sales of $1.1 billion during the same period in 2019.

Four percent volume growth during the quarter, benefits from new contractual terms and improved operational performance led to strong performance, and were partially offset by employee costs related to continued hiring in preparation for new production lines starting up in the second half of 2020. Late in the quarter, a surge in at-home consumption led to tighter supply conditions and SKU rationalization with certain customers in order to align availability for consumers' significant demand for soft drinks, sparkling water, spiked seltzers and beer. Higher demand for at-home consumption is anticipated to continue for the foreseeable future though the duration of lower demand for convenience store and on-premise channels as well as incremental costs related to the COVID-19 pandemic may dampen near-term price/mix.

Throughout 2020, continued benefits from new customer contracts, operational efficiency, strong demand for aluminum beverage packaging, and increased availability of cans from our new production lines in Georgia and Texas starting up in the second half are expected to add significantly to year-over-year results.

Beverage Packaging, EMEA

Beverage packaging, EMEA, comparable segment operating earnings for the first quarter 2020 were $68 million on sales of $669 million compared to $74 million on sales of $684 million during the same period in 2019. Beginning this quarter, current and historical quarterly results for the company's existing facilities in Cairo, Egypt, and Manisa, Turkey, have been consolidated into the segment.

Five percent segment volume growth was unable to fully offset euro earnings translation headwinds, higher freight and warehousing costs due to sales demand shifts by region and intermittent production line downtime late in the quarter. Demand was driven by packaging mix shift to cans for traditional and non-traditional beverages, strong growth for energy drinks and higher at-home consumption in the U.K., Europe and Russia offset lower demand in Turkey.

Projects for multiple beverage can line additions will be executed across the existing European plant network in 2020 and beyond to meet demand recovery, however, certain work has been delayed to the second half due to country-specific travel restrictions and employee safety considerations associated with our project engineering team. Demand and business conditions are expected to be challenging in the second quarter and the company currently expects earnings in this segment to be down mid-single digits as overall consumption – particularly in the immediate consumption channels – remains subdued, while results for the second half are expected to reflect notable year-over-year improvement as new capacity ramps up, and the expectation that consumer demand improves.

Beverage Packaging, South America

Beverage packaging, South America, comparable segment operating earnings for the first quarter 2020, were $63 million on sales of $405 million compared to $68 million on sales of $441 million during the same period in 2019.

Segment demand was up 1 percent in the quarter with solid demand in Chile, Argentina and Paraguay offset by meaningfully slower market conditions in Brazil during the second half of March. Foreign exchange headwinds and customer mix also impacted year-over-year results.

As we look forward, performance in the second quarter is expected to be significantly lower in Brazil due to regional government decisions to close small grocery stores and gas stations during the initial impact of the pandemic in April and lower overall consumer spending for beverages. Segment operations will continue to monitor trends and closely align production with customer demand in the near-term, and focus on operational and cost efficiencies until an anticipated market rebound in late 2020. As such, the two Brazilian production lines slated to come on line in the fourth quarter will likely shift into 2021 and, when appropriate, existing plants in Brazil will support surrounding countries given stronger demand in those regions.

Aerospace

Aerospace comparable segment operating earnings for first quarter 2020 were $40 million on sales of $432 million compared to $30 million on sales of $328 million during the same period in 2019. Contracted backlog remains strong at $2.3 billion and contracts already won, but not yet booked into current contracted backlog, increased to $4.8 billion.

Program execution remains at a high level across the business, and the company continues to win and provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers. Multiple projects to expand manufacturing capacity, test capabilities and engineering and support space are on track. In 2020 and beyond, the larger labor base will execute on a broad base of defense, civil, climate monitoring and weather prediction contracts leading segment comparable operating earnings to grow on a full-year basis for the foreseeable future.

Non-reportable

Year-over-year results in non-reportable reflect the benefit of lower undistributed corporate expenses and were partially offset by the impact of the 2019 sale of the Chinese beverage can assets and Argentine steel aerosol business. The current and historical results from the existing facilities in Cairo, Egypt, and Manisa, Turkey, have been consolidated into the beverage packaging, EMEA segment beginning in the first quarter of 2020.

The results for the company's global aluminum aerosol business and beverage can manufacturing facilities located in India, Saudi Arabia and Myanmar continue to be reported as non-reportable segments. During the quarter, the company's global aluminum aerosol volumes increased 2 percent due to strong demand in North America and India. The company also announced its intent to acquire an aluminum aerosol manufacturing facility in Brazil. The transaction is expected to close in the third quarter.

Outlook

"The company continues to operate with a high-functioning global supply chain, well-capitalized operations and ample committed liquidity composed of $800 million in cash on hand, $550 million in committed credit facilities as well as an additional $500 million in uncommitted lines of credit. During the initial stages of the pandemic, we have taken appropriate actions to focus on cash and liquidity, while continuing to pay dividends and execute on our growth investments. Looking forward, we expect to generate free cash flow in the range of $500 million in 2020, and will have the opportunity to accelerate the return of value to shareholders later in 2020 and beyond," said Scott C. Morrison, senior vice president and chief financial officer.

"We are proud of our company's ability to effectively run our global business remotely and safely while being nimble and responsive to our stakeholders' needs during this unprecedented time. Executing our disciplined capital allocation strategy and being recession resistant is important as we bridge this near-term uncertainty with a long-term outlook that remains bright. While there are near-term challenges, our business is resilient and our strategy remains intact. We currently expect to grow our earnings per diluted share this year and beyond, and we look forward to continuing to grow our EVA dollars on a larger capital base, and returning capital to our shareholders," Hayes said.

About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care and household products customers, as well as aerospace and other technologies and services primarily for the U.S. government. Ball Corporation and its subsidiaries employ 18,300 people worldwide and reported 2019 net sales of $11.5 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.

Conference Call Details
Ball Corporation (NYSE: BLL) will hold its first quarter 2020 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is 800-675-6207. International callers should dial 303-223-4389. Please use the following URL for a webcast of the live call:

https://edge.media-server.com/mmc/p/fvc4pa4o 

For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on May 7, 2020, until 11 a.m. Mountain time on May 14, 2020. To access the replay, call 800-633-8284 (North American callers) or 402-977-9140 (international callers) and use reservation number 21959125. A written transcript of the call will be posted within 48 hours of the call's conclusion to Ball's website at www.ball.com/investors under "news and presentations."

Forward-Looking Statements
This release contains "forward-looking" statements concerning future events and financial performance. Words such as "expects," "anticipates," "estimates," "believes," "targets," "likely," "positions" and similar expressions typically identify forward-looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon any forward-looking statements and any such statements should be read in conjunction with, and, qualified in their entirety by, the cautionary statements referenced below. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key factors, risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in our Form 10-K, which are available on our website and at www.sec.gov. Additional factors that might affect: a) our packaging segments include product capacity, supply, and demand constraints and fluctuations; availability/cost of raw materials and logistics; competitive packaging, pricing and substitution; changes in climate and weather; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; mandatory deposit or other restrictive packaging laws; customer and supplier consolidation; power and supply chain interruptions, including due to virus and disease outbreaks; potential delays and tariffs related to the U.K's departure from the EU; changes in major customer or supplier contracts or a loss of a major customer or supplier; political instability and sanctions; currency controls; changes in foreign exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and shelter-in-place orders in any country affecting goods produced by us or in our supply chain, including imported raw materials, such as those related to COVID-19 and those pursuant to Section 232 of the U.S. Trade Expansion Act of 1962 or Section 301 of Trade Act of 1974; b) our aerospace segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; c) the company as a whole include those listed plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; regulatory action or issues including tax, environmental, health and workplace safety, including U.S. FDA and other actions or public concerns affecting products filled in our containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; the ability to manage cyber threats and the success of information technology initiatives; litigation; strikes; disease; pandemic; labor cost changes; rates of return on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies both in the U.S. and in other countries, including policies, orders and actions related to COVID-19, the U.S. government elections, budget, sequestration and debt limit; reduced cash flow; interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on our operating results and business generally.

SOURCE Ball Corporation

Related Links

http://www.ball.com

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