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.
Condensed
Financial Statements (First Quarter 2020)
|
|
Unaudited
Condensed Consolidated Statements of Earnings
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
($ in millions,
except per share amounts)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
2,785
|
|
$
|
2,785
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
Cost of sales
(excluding depreciation and amortization)
|
|
|
(2,215)
|
|
|
(2,253)
|
Depreciation and
amortization
|
|
|
(169)
|
|
|
(170)
|
Selling, general and
administrative
|
|
|
(131)
|
|
|
(127)
|
Business consolidation
and other activities
|
|
|
(115)
|
|
|
(14)
|
|
|
|
(2,630)
|
|
|
(2,564)
|
|
|
|
|
|
|
|
Earnings before
interest and taxes
|
|
|
155
|
|
|
221
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(71)
|
|
|
(77)
|
Debt refinancing and
other costs
|
|
|
(40)
|
|
|
(4)
|
Total interest
expense
|
|
|
(111)
|
|
|
(81)
|
Earnings before
taxes
|
|
|
44
|
|
|
140
|
Tax (provision)
benefit
|
|
|
4
|
|
|
(10)
|
Equity in results of
affiliates, net of tax
|
|
|
(25)
|
|
|
(13)
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
23
|
|
|
117
|
|
|
|
|
|
|
|
Net earnings
attributable to noncontrolling interests, net of tax
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Net earnings
attributable to Ball Corporation
|
|
$
|
23
|
|
$
|
117
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
$
|
0.35
|
Diluted
|
|
$
|
0.07
|
|
$
|
0.34
|
|
|
|
|
|
|
|
Weighted average
shares outstanding (000s):
|
|
|
|
|
|
|
Basic
|
|
|
325,346
|
|
|
334,239
|
Diluted
|
|
|
332,326
|
|
|
342,676
|
Condensed
Financial Statements (First Quarter 2020)
|
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
($ in
millions)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
Net earnings
|
|
$
|
23
|
|
$
|
117
|
Depreciation and
amortization
|
|
|
169
|
|
|
170
|
Business consolidation
and other activities
|
|
|
115
|
|
|
14
|
Deferred tax provision
(benefit)
|
|
|
(36)
|
|
|
10
|
Other, net
|
|
|
58
|
|
|
47
|
Changes in working
capital
|
|
|
(1,037)
|
|
|
(487)
|
Cash provided by (used
in) operating activities
|
|
|
(708)
|
|
|
(129)
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(213)
|
|
|
(154)
|
Business
dispositions
|
|
|
(17)
|
|
|
-
|
Other, net
|
|
|
(4)
|
|
|
(9)
|
Cash provided by (used
in) investing activities
|
|
|
(234)
|
|
|
(163)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
Changes in borrowings,
net
|
|
|
198
|
|
|
419
|
Net issuances
(purchases) of common stock
|
|
|
(88)
|
|
|
(150)
|
Dividends
|
|
|
(51)
|
|
|
(34)
|
Other, net
|
|
|
(34)
|
|
|
(10)
|
Cash provided by (used
in) financing activities
|
|
|
25
|
|
|
225
|
Effect of currency
exchange rate changes on cash, cash equivalents and restricted
cash
|
|
|
(78)
|
|
|
11
|
Change in cash,
cash equivalents and restricted cash
|
|
|
(995)
|
|
|
(56)
|
Cash, cash
equivalents and restricted cash - beginning of
period
|
|
|
1,806
|
|
|
728
|
Cash, cash
equivalents and restricted cash - end of period
|
|
$
|
811
|
|
$
|
672
|
Condensed
Financial Statements (First Quarter 2020)
|
|
Unaudited
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
March
31,
|
($ in
millions)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
801
|
|
$
|
603
|
Receivables,
net
|
|
|
1,862
|
|
|
1,885
|
Inventories,
net
|
|
|
1,354
|
|
|
1,275
|
Other current
assets
|
|
|
224
|
|
|
636
|
Total current
assets
|
|
|
4,241
|
|
|
4,399
|
Property, plant
and equipment, net
|
|
|
4,499
|
|
|
4,360
|
Goodwill
|
|
|
4,270
|
|
|
4,410
|
Intangible assets,
net
|
|
|
1,914
|
|
|
2,137
|
Other
assets
|
|
|
1,621
|
|
|
1,617
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
16,545
|
|
$
|
16,923
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
|
$
|
522
|
|
$
|
399
|
Payables and other
accrued liabilities
|
|
|
3,481
|
|
|
3,636
|
Total current
liabilities
|
|
|
4,003
|
|
|
4,035
|
Long-term
debt
|
|
|
7,476
|
|
|
6,719
|
Other long-term
liabilities
|
|
|
2,366
|
|
|
2,520
|
Equity
|
|
|
2,700
|
|
|
3,649
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
|
16,545
|
|
$
|
16,923
|
Notes to the
Condensed Financial Statements (First Quarter 2020)
|
1. Business
Segment Information
|
|
Ball's operations are
organized and reviewed by management along its product lines and
geographical areas and presented in the four reportable segments
outlined below. Effective January 1, 2020, the company implemented
changes to its management and internal reporting structure for cost
reduction and operational efficiency purposes. As a result of these
changes, the company's plants in Cairo, Egypt, and Manisa, Turkey,
are now included in the beverage packaging, Europe, Middle East and
Africa (beverage packaging, EMEA), segment. The company's
operations in India and Saudi Arabia are now combined with the
former non-reportable beverage packaging, Asia Pacific, operating
segment as a new non-reportable beverage packaging, other,
operating segment. The company's segment results and disclosures
for the three months ended March 31, 2019, and the financial
position at December 31, 2019, have been retrospectively adjusted
to conform to the current year presentation.
|
|
Beverage
packaging, North and Central America: Consists of
operations in the U.S., Canada and Mexico that manufacture and sell
metal beverage containers.
|
|
Beverage
packaging, EMEA: Consists of operations in numerous
countries throughout Europe, including Russia, as well as Egypt and
Turkey that manufacture and sell metal beverage containers
throughout those regions.
|
|
Beverage
packaging, South America: Consists of operations in
Brazil, Argentina, Paraguay and Chile that manufacture and sell
metal beverage containers throughout most of South
America.
|
|
Aerospace: Consists of operations
that manufacture and sell aerospace and other related products and
the provision of services used in the defense, civil space and
commercial space industries.
|
|
Other consists of a
non-reportable operating segment (beverage packaging, other),
discussed above, that manufactures and sells aluminum beverage
containers; a non-reportable segment that manufactures and sells
extruded aluminum aerosol containers and aluminum slugs (aerosol
packaging); a non-reportable operating segment that manufactures
and sells aluminum cups (aluminum cups); undistributed corporate
expenses; intercompany eliminations and other business
activities.
|
|
The company also has
investments in operations in Guatemala, Panama, South Korea, the
U.S. and Vietnam that are accounted for under the equity method of
accounting and, accordingly, those results are not included in
segment sales or earnings.
|
|
1. Business
Segment Information (continued)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
($ in
millions)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Net
sales
|
|
|
|
|
|
|
Beverage packaging,
North and Central America
|
|
$
|
1,181
|
|
$
|
1,131
|
Beverage packaging,
EMEA
|
|
|
669
|
|
|
684
|
Beverage packaging,
South America
|
|
|
405
|
|
|
441
|
Aerospace
|
|
|
432
|
|
|
328
|
Reportable segment
sales
|
|
|
2,687
|
|
|
2,584
|
Other
|
|
|
98
|
|
|
201
|
Net
sales
|
|
$
|
2,785
|
|
$
|
2,785
|
|
|
|
|
|
|
|
Comparable
operating earnings
|
|
|
|
|
|
|
Beverage packaging,
North and Central America
|
|
$
|
146
|
|
$
|
118
|
Beverage packaging,
EMEA
|
|
|
68
|
|
|
74
|
Beverage packaging,
South America
|
|
|
63
|
|
|
68
|
Aerospace
|
|
|
40
|
|
|
30
|
Reportable segment
comparable operating earnings
|
|
|
317
|
|
|
290
|
|
|
|
|
|
|
|
Other
(a)
|
|
|
(10)
|
|
|
(15)
|
Comparable operating earnings
|
|
|
307
|
|
|
275
|
Reconciling
items
|
|
|
|
|
|
|
Business
consolidation and other activities
|
|
|
(115)
|
|
|
(14)
|
Amortization of
acquired Rexam intangibles
|
|
|
(37)
|
|
|
(40)
|
Earnings before
interest and taxes
|
|
$
|
155
|
|
$
|
221
|
|
|
|
|
|
|
(a)
|
Includes
undistributed corporate expenses, net, of $14 million and $23
million for the three months ended March 31, 2020 and 2019,
respectively.
|
2. Non-U.S. GAAP
Measures
|
|
Non-U.S. GAAP
Measures – Non-U.S. GAAP measures should not be considered
in isolation. They should not be considered superior to, or a
substitute for, financial measures calculated in accordance with
U.S. GAAP and may not be comparable to similarly titled measures of
other companies. Presentations of earnings and cash flows presented
in accordance with U.S. GAAP are available in the company's
earnings releases and quarterly and annual regulatory filings.
Information reconciling forward-looking U.S. GAAP measures to
non-U.S. GAAP measures is not available without unreasonable
effort. We have not provided guidance for the most directly
comparable U.S. GAAP financial measures, as they are not available
without unreasonable effort due to the high variability, complexity
and low visibility with respect to certain special items, including
restructuring charges, business consolidation and other costs,
gains and losses related to acquisition and divestiture of
businesses, the ultimate outcome of certain legal or tax
proceedings and other non-comparable items. These items are
uncertain, depend on various factors and could be material to our
results computed in accordance with U.S. GAAP.
|
|
Comparable
Earnings Before Interest, Taxes, Depreciation and Amortization
(Comparable EBITDA), Comparable Operating Earnings, Comparable Net
Earnings, Comparable Diluted Earnings Per Share and Net Debt –
Comparable EBITDA is earnings before interest, taxes, depreciation
and amortization, business consolidation and other non-comparable
costs. Comparable Operating Earnings is earnings before interest,
taxes, business consolidation and other non-comparable costs.
Comparable Net Earnings is net earnings attributable to Ball
Corporation before business consolidation and other non-comparable
costs after tax. Comparable Diluted Earnings Per Share is
Comparable Net Earnings divided by diluted weighted average shares
outstanding. We use Comparable EBITDA, Comparable Operating
Earnings, Comparable Net Earnings, and Comparable Diluted Earnings
Per Share internally to evaluate the company's operating
performance. Net Debt is total debt less cash and cash equivalents,
which are derived directly from the company's financial statements.
Ball management uses Net Debt to Comparable EBITDA and Comparable
EBITDA to interest expense as metrics to monitor the credit quality
of Ball Corporation.
|
|
2. Non-U.S. GAAP
Measures (continued)
|
|
Please see the
company's website for further details of the company's non-U.S.
GAAP financial measures at www.ball.com/investors under the
"FINANCIALS" tab.
|
|
A summary of
the effects of the above transactions on after tax earnings is as
follows:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
($ in millions,
except per share amounts)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Net earnings
attributable to Ball Corporation
|
|
$
|
23
|
|
$
|
117
|
Add: Business
consolidation and other activities
|
|
|
115
|
|
|
14
|
Add: Amortization of
acquired Rexam intangibles
|
|
|
37
|
|
|
40
|
Add: Share of equity
method affiliate non-comparable costs
|
|
|
30
|
|
|
12
|
Add: Debt refinancing
and other costs
|
|
|
40
|
|
|
4
|
Less: Noncontrolling
interest share of non-comparable costs
|
|
|
1
|
|
|
-
|
Less: Non-comparable
tax items
|
|
|
(44)
|
|
|
(20)
|
Net earnings
attributable to Ball Corporation before above transactions
(Comparable Net Earnings)
|
|
$
|
202
|
|
$
|
167
|
Comparable diluted
earnings per share
|
|
$
|
0.61
|
|
$
|
0.49
|
|
|
A summary of
the effects of the above transactions on earnings before interest
and taxes is as follows:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31,
|
($ in
millions)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Net earnings
attributable to Ball Corporation
|
|
$
|
23
|
|
$
|
117
|
Add: Net earnings
attributable to noncontrolling interests
|
|
|
-
|
|
|
-
|
Net
earnings
|
|
|
23
|
|
|
117
|
Less: Equity in
results of affiliates, net of tax
|
|
|
25
|
|
|
13
|
Add: Tax provision
(benefit)
|
|
|
(4)
|
|
|
10
|
Earnings before
taxes
|
|
|
44
|
|
|
140
|
Add: Total interest
expense
|
|
|
111
|
|
|
81
|
Earnings before
interest and taxes
|
|
|
155
|
|
|
221
|
Add: Business
consolidation and other activities
|
|
|
115
|
|
|
14
|
Add: Amortization of
acquired Rexam intangibles
|
|
|
37
|
|
|
40
|
Comparable Operating Earnings
|
|
$
|
307
|
|
$
|
275
|
2. Non-U.S. GAAP
Measures (continued)
A summary of
Comparable EBITDA and Net Debt is as follows:
|
|
|
|
|
|
|
|
Twelve Months
Ended
|
($ in millions,
except ratios)
|
|
March 31,
2020
|
|
|
|
|
Net earnings
attributable to Ball Corporation
|
|
$
|
472
|
Add: Net earnings
attributable to noncontrolling interests
|
|
|
(30)
|
Net
earnings
|
|
|
442
|
Less: Equity in
results of affiliates, net of tax
|
|
|
13
|
Add: Tax provision
(benefit)
|
|
|
57
|
Earnings before
taxes
|
|
|
512
|
Add: Total interest
expense
|
|
|
354
|
Earnings
before interest and taxes
|
|
|
866
|
Add: Business
consolidation and other activities
|
|
|
345
|
Add: Amortization of
acquired Rexam intangibles
|
|
|
152
|
Comparable Operating Earnings
|
|
|
1,363
|
Add: Depreciation and
amortization
|
|
|
677
|
Less: Amortization of
acquired Rexam intangibles
|
|
|
(152)
|
Comparable
EBITDA
|
|
$
|
1,888
|
|
|
|
|
Interest
expense
|
|
$
|
(311)
|
|
|
|
|
Total debt at period
end
|
|
$
|
7,998
|
Less: Cash and cash
equivalents
|
|
|
(801)
|
Net
Debt
|
|
$
|
7,197
|
|
|
|
|
Comparable
EBITDA/Interest Expense (Interest Coverage)
|
|
|
6.1x
|
Net Debt/Comparable
EBITDA
|
|
|
3.8x
|
2. Non-U.S. GAAP
Measures (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
|
|
Less:
Three
|
|
Add:
Three
|
|
Twelve
|
|
|
Months
Ended
|
|
Months
Ended
|
|
Months
Ended
|
|
Months
Ended
|
|
|
December
31,
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
($ in millions,
except ratios)
|
|
2019
|
|
2019
|
|
2020
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Ball Corporation
|
|
$
|
566
|
|
$
|
117
|
|
$
|
23
|
|
$
|
472
|
Add: Net earnings
attributable to noncontrolling interests
|
|
|
(30)
|
|
|
-
|
|
|
-
|
|
|
(30)
|
Net
earnings
|
|
|
536
|
|
|
117
|
|
|
23
|
|
|
442
|
Less: Equity in
results of affiliates, net of tax
|
|
|
1
|
|
|
13
|
|
|
25
|
|
|
13
|
Add: Tax provision
(benefit)
|
|
|
71
|
|
|
10
|
|
|
(4)
|
|
|
57
|
Earnings before
taxes
|
|
|
608
|
|
|
140
|
|
|
44
|
|
|
512
|
Add: Total interest
expense
|
|
|
324
|
|
|
81
|
|
|
111
|
|
|
354
|
Earnings before
interest and taxes (EBIT)
|
|
|
932
|
|
|
221
|
|
|
155
|
|
|
866
|
Add: Business
consolidation and other activities (a)
|
|
|
244
|
|
|
14
|
|
|
115
|
|
|
345
|
Add: Amortization of
acquired Rexam intangibles (a)
|
|
|
155
|
|
|
40
|
|
|
37
|
|
|
152
|
Comparable Operating
Earnings
|
|
|
1,331
|
|
|
275
|
|
|
307
|
|
|
1,363
|
Add: Depreciation and
amortization
|
|
|
678
|
|
|
170
|
|
|
169
|
|
|
677
|
Less: Amortization of
acquired Rexam intangibles (a)
|
|
|
(155)
|
|
|
(40)
|
|
|
(37)
|
|
|
(152)
|
Comparable
EBITDA
|
|
$
|
1,854
|
|
$
|
405
|
|
$
|
439
|
|
$
|
1,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest
expense
|
|
$
|
(324)
|
|
$
|
(81)
|
|
$
|
(111)
|
|
$
|
(354)
|
Less: Debt
refinancing and other costs
|
|
|
7
|
|
|
4
|
|
|
40
|
|
|
43
|
Interest
expense
|
|
$
|
(317)
|
|
$
|
(77)
|
|
$
|
(71)
|
|
$
|
(311)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt at period
end
|
|
|
|
|
|
|
|
|
$
|
7,998
|
Less: Cash and cash
equivalents
|
|
|
|
|
|
|
|
|
(801)
|
Net
Debt
|
|
|
|
|
|
|
|
|
|
|
$
|
7,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
EBITDA/Interest Expense (Interest Coverage)
|
|
|
|
|
|
6.1x
|
Net Debt/Comparable
EBITDA
|
|
|
|
|
|
|
|
|
3.8x
|
|
|
|
|
|
|
(a)
|
For detailed
information on these items, please see the respective quarterly
filings and/or earnings releases, which can be found on our website
at www.ball.com.
|
3. Non-Comparable
Items
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
($ in
millions)
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Non-comparable
items - income (expense)
|
|
|
|
|
|
|
Beverage packaging,
North and Central America
|
|
|
|
|
|
|
Business consolidation
and other activities
|
|
|
|
|
|
|
Facility closure costs
(1)
|
|
$
|
(1)
|
|
$
|
(1)
|
Individually
insignificant items
|
|
|
(2)
|
|
|
-
|
Other non-comparable
items
|
|
|
|
|
|
|
Amortization of
acquired Rexam intangibles
|
|
|
(7)
|
|
|
(8)
|
Total beverage
packaging, North and Central America
|
|
|
(10)
|
|
|
(9)
|
|
|
|
|
|
|
|
Beverage packaging,
EMEA
|
|
|
|
|
|
|
Business consolidation
and other activities
|
|
|
|
|
|
|
Facility closure and
restructuring costs (2)
|
|
|
(2)
|
|
|
2
|
Individually
insignificant items
|
|
|
(1)
|
|
|
(1)
|
Other non-comparable
items
|
|
|
|
|
|
|
Amortization of
acquired Rexam intangibles
|
|
|
(16)
|
|
|
(18)
|
Total beverage
packaging, EMEA
|
|
|
(19)
|
|
|
(17)
|
|
|
|
|
|
|
|
Beverage packaging,
South America
|
|
|
|
|
|
|
Business consolidation
and other activities
|
|
|
|
|
|
|
Individually
insignificant items
|
|
|
(1)
|
|
|
(1)
|
Other non-comparable
items
|
|
|
|
|
|
|
Amortization of
acquired Rexam intangibles
|
|
|
(14)
|
|
|
(14)
|
Total beverage
packaging, South America
|
|
|
(15)
|
|
|
(15)
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Business consolidation
and other activities
|
|
|
|
|
|
|
Rexam acquisition
related compensation arrangements
|
|
|
(6)
|
|
|
(4)
|
Goodwill impairment
charges in beverage packaging, other segment (3)
|
|
|
(62)
|
|
|
-
|
Reversal of certain
provisions in beverage packaging, other segment (4)
|
|
|
11
|
|
|
-
|
Adjustment to selling
price of steel food and steel aerosol business (5)
|
|
|
(15)
|
|
|
-
|
Loss on sale of China
business and related costs (6)
|
|
|
(23)
|
|
|
(13)
|
Individually
insignificant items
|
|
|
(13)
|
|
|
4
|
Other non-comparable
items
|
|
|
|
|
|
|
Share of equity method
affiliate non-comparable costs (7)
|
|
|
(30)
|
|
|
(12)
|
Noncontrolling
interest's share of non-comparable costs, net of tax
|
|
|
(1)
|
|
|
-
|
Debt extinguishment
and refinance costs (8)
|
|
|
(40)
|
|
|
(4)
|
Total other
|
|
|
(179)
|
|
|
(29)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Total business
consolidation and other activities
|
|
|
(115)
|
|
|
(14)
|
Total other
non-comparable items
|
|
|
(108)
|
|
|
(56)
|
Total non-comparable
items
|
|
|
(223)
|
|
|
(70)
|
|
|
|
|
|
|
|
Tax effect on business
consolidation and other activities
|
|
|
17
|
|
|
5
|
Tax effect on other
non-comparable items
|
|
|
27
|
|
|
15
|
Total non-comparable
tax items
|
|
|
44
|
|
|
20
|
Total
non-comparable items, net of tax
|
|
$
|
(179)
|
|
$
|
(50)
|
|
|
(1)
|
In August 2017, the
company announced the closure of its beverage can manufacturing
facilities in Chatsworth, California, and Longview, Texas, and its
beverage end manufacturing facility in Birmingham, Alabama. The
Birmingham plant ceased production during the second quarter of
2018, and the Longview and Chatsworth plants ceased production
during the third quarter of 2018. In December 2018, the company
completed the sale of its closed manufacturing facility in
Chatsworth, California. Charges in 2020 and 2019 were the result of
updated estimates for the costs of employee severance and benefits
and facility shutdown costs.
|
|
|
(2)
|
The company recorded
charges in 2020 and credits in 2019 for asset impairments,
accelerated depreciation and inventory impairments related to plant
closures and restructuring activities.
|
|
|
(3)
|
The company recorded
a non-cash impairment charge for the goodwill of the new beverage
packaging, other, reporting unit as the carrying amount of the
reporting unit exceeded its fair value.
|
(4)
|
The company reversed
provisions recorded in the fourth quarter of 2019 against working
capital in the new beverage packaging, other, segment as balances
due have now been collected.
|
|
|
(5)
|
The company recorded
a charge in connection with an adjustment to the selling price of
the company's steel food and aerosol business.
|
|
|
(6)
|
The company, noting a
current period deterioration in the real estate market in China,
reduced the contingent consideration due as part of the sale of the
company's China beverage packaging business.
|
|
|
(7)
|
In the first quarter
of 2020, the shareholders of Ball Metalpack provided additional
equity contributions and loans to Ball Metalpack, of which Ball's
share was $30 million, which resulted in Ball recognizing
previously unrecorded equity method losses associated with prior
periods.
|
|
|
(8)
|
In January 2020, Ball
redeemed the outstanding euro-denominated 3.50% senior notes due in
2020 in the amount of €400 million and the outstanding 4.375%
senior notes due in 2020 in the amount of $1 billion and recorded
debt extinguishment costs related to these
redemptions.
|
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SOURCE Ball Corporation