Ball Reports First Quarter 2024 Results
Ball Reports First Quarter 2024 Results |
[26-April-2024] |
Highlights
WESTMINSTER, Colo., April 26, 2024 /PRNewswire/ -- Ball Corporation (NYSE: BALL) today reported first quarter results. References to net sales and comparable operating earnings in today's release do not include the company's former aerospace business. Year-over-year net earnings attributable to the corporation and comparable net earnings do include the performance of the company's former aerospace business through the sale date of February 16, 2024. On a U.S. GAAP basis, the company reported, first quarter 2024 net earnings attributable to the corporation of $3.69 billion (including a net after-tax gain of $3.47 billion, or $10.93 per diluted share for the aerospace business sale, business consolidation and other non-comparable items) or total diluted earnings per share of $11.61, on sales of $2.87 billion, compared to $177 million net earnings attributable to the corporation, or total diluted earnings per share of 56 cents (including a net after-tax loss of $40 million, or 13 cents per diluted share for business consolidation and other non-comparable items) on sales of $2.98 billion in 2023. Ball's first quarter 2024 comparable net earnings were $217 million, or 68 cents per diluted share compared to $217 million, or 69 cents per diluted share in 2023. "We delivered strong first quarter results. Following the successful sale of the aerospace business in mid-February, we have executed on our plans to immediately deleverage, initiate a large multi-year share repurchase program and position the company to enable our purpose of advancing the greater use of sustainable aluminum packaging. We continue to complement our purpose by driving innovation and sustainability on a global scale, unlocking additional manufacturing efficiencies and activating an operating model to enable high-quality, long-term shareholder value creation," said Daniel W. Fisher, chairman and chief executive officer. Details of reportable segment comparable operating earnings, business consolidation and other 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. References to volume data represent units shipped. Beverage Packaging, North and Central America Beverage packaging, North and Central America, segment comparable operating earnings for first quarter 2024 were $192 million on sales of $1.40 billion compared to $183 million on sales of $1.50 billion during the same period in 2023. First quarter sales reflect lower shipments and the contractual pass through of lower aluminum costs favorably offset by the annual pass-through of inflationary costs. First quarter segment comparable operating earnings increased year-over-year largely due to the annual pass-through of inflationary costs net of current year inflation, benefits from fixed and variable cost out actions and improved operational performance despite year-over-year headwinds driven largely by our customer exposure to a U.S. mass beer brand disruption and a benefit associated with a U.S. virtual power agreement termination in the first quarter of 2023. Aluminum beverage cans continue to outperform other substrates. We remain dedicated to enabling the greater use of low-carbon, best-value innovative aluminum packaging solutions across our customer mix over the long term. Quarterly sequential volume improvement returned earlier than anticipated in our North and Central American business due to the incremental pull forward of contracted volume by certain customers in advance of the summer selling season and following customers' notable destocking in the fourth quarter of 2023. Segment volumes decreased 2.4 percent year-over-year in the first quarter of 2024 versus a decrease of 3.7 percent in the fourth quarter of 2023. Going forward, growth supported by business development efforts and innovation across diverse beverage categories, additional benefits from fixed and variable cost-out initiatives and improved operational efficiencies are expected to improve results throughout 2024 and beyond. Beverage Packaging, EMEA Beverage packaging, EMEA, segment comparable operating earnings for first quarter 2024 were $85 million on sales of $810 million compared to $73 million on sales of $834 million during the same period in 2023. First quarter sales reflect higher year-over-year shipments offset by the contractual pass through of lower aluminum costs. First quarter comparable operating earnings reflect higher volumes, favorable cost management and improved operational efficiencies. Packaging mix shift to aluminum cans supported by ongoing packaging legislation in certain countries continues to be a driver of aluminum beverage packaging growth despite recent inflation-induced consumer demand pressure. Year-over-year first quarter segment volumes increased 1.1 percent reflecting growth in the United Kingdom, Nordics and Turkey offset by lower than anticipated demand in Egypt. Going forward, sustainability tailwinds and seasonal trends are anticipated to improve demand throughout the year. Beverage Packaging, South America Beverage packaging, South America, segment comparable operating earnings for first quarter 2024 were $55 million on sales of $482 million compared to $50 million on sales of $450 million during the same period in 2023. Year-over-year sales reflect higher volumes partially offset by the contractual pass through of lower aluminum costs. First quarter segment comparable operating earnings increased year-over-year driven by higher segment volumes and favorable customer mix in Brazil offset by the impact of product mix and continuing disruptive economic and operating conditions in Argentina. Demand trends across the company's South American operations improved significantly year-over-year. Segment volumes increased 26.3 percent in the first quarter driven by customer mix and substrate mix shift to aluminum cans versus other substrates, particularly in Brazil. In Argentina, the company continues to serve customers and assess risks given the dynamic economic and policy environment. Non-reportable Included within undistributed corporate expenses are corporate interest income, incremental compensation cost from the successful sale of the aerospace business, the results of the company's global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and the company's aluminum cup business. First quarter 2024 results reflect higher year-over-year undistributed corporate expenses offset by improved comparable operating earnings for the aluminum packaging businesses in other non-reportable. Amid challenging year-over-year comparisons and seasonal customer filling downtime, volume across the company's global extruded aluminum bottles and aerosol containers decreased 3.0 percent during the quarter. The company's global aluminum aerosol, aluminum bottle and cups customers continue to collaborate with Ball to activate growth opportunities and tailored offerings for personal and home care brands, refill and reuse packaging for water, other beverages and venue specific needs to advance the circular economy. Outlook "During the quarter, incremental volume growth, favorable cost management and the immediate use of aerospace business sale proceeds combined with cash on hand resulted in strong results, $2.8 billion of debt retirement and the initiation of our multi-year share repurchase program. Throughout the remainder of the year, our strong cash flow and cash on hand will support prudent business investments, pay quarterly taxes due on the aerospace sale totaling approximately $1.0 billion, and expand share repurchases to in the range of $1.3 billion by year end," said Howard Yu, executive vice president and chief financial officer. "The strategic actions we have taken have strengthened our company in the short- to medium-term and position us for opportunity over the long-term. The team is operating at a high level and is focused on executing our enterprise-wide strategy with purpose and pace to advance aluminum packaging and consistently deliver high-quality results, products and returns. In 2024, we are positioned to achieve comparable diluted earnings per share growth, generate strong free cash flow and return in excess of $1.5 billion to shareholders through a combination of share repurchases and dividends," Fisher said. About Ball Corporation Conference Call Details https://event.choruscall.com/mediaframe/webcast.html?webcastid=aiuPuLZY For those unable to listen to the live call, a webcast replay and 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 Statement
Notes to the Condensed Financial Statements (First Quarter 2024) 1. U.S. GAAP Measures Business Segment Information Ball's operations are organized and reviewed by management along its product lines and geographical areas. On February 16, 2024, the company completed the divestiture of its aerospace business. The transaction represents a strategic shift; therefore, the company's consolidated financial statements reflect the aerospace business' financial results as discontinued operations for all periods presented. The aerospace business was historically presented as a reportable segment. Effective as of the first quarter of 2024, the company will report its financial performance in the three reportable segments outlined below: (1) beverage packaging, North and Central America; (2) beverage packaging, Europe, Middle East and Africa (beverage packaging, EMEA) and (3) beverage packaging, South America. Beverage packaging, North and Central America: Consists of operations in the U.S., Canada and Mexico that manufacture and sell aluminum beverage containers throughout those countries. Beverage packaging, EMEA: Consists of operations in numerous countries throughout Europe, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries. Beverage packaging, South America: Consists of operations in Brazil, Argentina, Paraguay and Chile that manufacture and sell aluminum beverage containers throughout most of South America. Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers in India, Saudi Arabia and Myanmar; a non-reportable operating segment that manufactures and sells extruded aluminum aerosol containers and recloseable aluminum bottles across multiple consumer categories as well as aluminum slugs (aerosol packaging) throughout North America, South America, Europe, and Asia; a non-reportable operating segment that manufactures and sells aluminum cups (aluminum cups); undistributed corporate expenses; and intercompany eliminations and other business activities. The company also has investments in operations in Guatemala, Panama, 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. In the third quarter of 2023, Ball entered into a Stock Purchase Agreement (Agreement) with BAE Systems, Inc. (BAE) and, for the limited purposes set forth therein, BAE Systems plc, to sell all outstanding equity interests in Ball's aerospace business. On February 16, 2024, the company completed the divestiture of the aerospace business for a purchase price of $5.6 billion, subject to working capital adjustments and other customary closing adjustments under the terms of the Agreement, which are expected to be resolved mid-2024 and could impact the gain recognized. The divestiture resulted in a pre-tax gain of $4.67 billion, which is net of $20 million of costs to sell incurred and paid in 2023 related to the disposal. Cash proceeds received at close from the sale of $5.42 billion, net of the cash disposed, are presented in business dispositions, net of cash sold, in the unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2024. The company expects to pay approximately $1.00 billion in income taxes related to the transaction throughout 2024, which are recorded in other current liabilities in the unaudited condensed consolidated balance sheet. Additionally, the completion of the divestiture results in the removal of the aerospace business from the company's obligor group, as the business will no longer guarantee the company's senior notes and senior credit facilities.
Discontinued Operations The following table presents components of discontinued operations, net of tax for the three months ended March 31, 2024 and 2023:
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 EBITDA is earnings before interest expense, taxes, depreciation and amortization, business consolidation and other non-comparable items. We use Comparable EBITDA, Comparable Operating Earnings, Comparable Net Earnings, and Comparable Diluted Earnings Per Share internally to evaluate the company's operating performance. Ball management uses Interest Coverage (Comparable EBITDA to interest expense) and Leverage (Net Debt to Comparable EBITDA) as metrics to monitor the credit quality of Ball Corporation. Management internally uses a free cash flow measure to: (1) evaluate the company's liquidity, (2) evaluate strategic investments, (3) plan stock buyback and dividend levels and (4) evaluate the company's ability to incur and service debt. Note that when non-U.S. GAAP measures exclude amortization of acquired Rexam intangibles, the measures include the revenue of the acquired entities and all other expenses unless otherwise stated and the acquired assets contribute to revenue generation. 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 non-comparable items on after tax earnings is as follows:
A summary of the effects of non-comparable items on earnings before interest and taxesis as follows:
A summary of Comparable EBITDA, Net Debt, Interest Coverage and Leverage is as follows:
Based on the company's definition, free cash flow for the first quarter of 2024 was:
View original content to download multimedia:https://www.prnewswire.com/news-releases/ball-reports-first-quarter-2024-results-302128172.html SOURCE Ball Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: NYSE:BALL |