Ball Reports Strong Second Quarter 2016 Results; Provides Key Financial Metrics

BROOMFIELD, Colo., Aug. 4, 2016 /PRNewswire/ -- Ball Corporation (NYSE: BLL) today reported second quarter 2016 net earnings attributable to the corporation of $369 million, or $2.54 per diluted share (including the net effect of after-tax income of $217 million, or $1.49 per diluted share for business consolidation, debt refinancing and other costs and the estimated gain on the sale of divested assets) on sales of $2.0 billion, compared to $160 million of net earnings attributable to the corporation, or $1.13 per diluted share (including after-tax income of $35 million, or 24 cents per diluted share for debt refinancing costs, economic hedging gains, business consolidation and other costs), on sales of $2.2 billion in the second quarter of 2015. Results for the first six months of 2016 were net earnings attributable to the corporation of $242 million, or $1.67 per diluted share, on sales of $3.8 billion compared to $181 million, or $1.28 per diluted share, on sales of $4.1 billion for the first six months of 2015.

Comparable earnings per diluted share for the second quarter and year-to-date 2016 were $1.05 and $1.63, respectively, versus second quarter and year-to-date 2015 comparable earnings per diluted share of 89 cents and $1.57, respectively.

Details of comparable segment earnings, business consolidation activities, Rexam acquisition-related hedging, purchase accounting and costs, as well as divestment-related accounting, can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release. The company's unaudited condensed statements of cash flows will be provided in the company's Form 10-Q expected to be filed by August 12, 2016.

"Our strong second quarter results, the completion of legacy metal packaging growth projects, a robust aerospace backlog and the recent Rexam acquisition provide a very solid foundation for a multi-year, value-compounding growth period for our company and our shareholders," said John A. Hayes, chairman, president and chief executive officer. "One month into the acquisition integration, business-related services and manufacturing operations are running smoothly. The past 17 months of planning have evolved into action, and the synergy execution process is well underway in all value-capture work streams."

Metal Beverage Packaging, Americas & Asia

Metal beverage packaging, Americas and Asia, comparable segment earnings in the second quarter 2016 were $137 million on sales of $1.1 billion, compared to $126 million on sales of $1.1 billion in the second quarter 2015. For the first six months, comparable segment operating earnings were $239 million on sales of $2.0 billion, compared to $252 million on sales of $2.2 billion during the same period in 2015.       

In the Americas, second quarter volumes improved with continued strength in specialty can demand in North America and Brazil. Successful cost-out initiatives in China were unable to fully offset the second quarter impact of high single-digit volume declines and lower pricing in the region. Year-to-date Americas and Asia revenues were impacted by the pass through of lower year-over-year aluminum prices and price compression in China.

In June, the company started up the second beverage can line at its Monterrey, Mexico, facility, as well as production at its new facility in Myanmar. These projects represent the remaining legacy capital projects that Ball began prior to the initiation of the company's offer for Rexam.

Metal Beverage Packaging, Europe

Metal beverage packaging, Europe, comparable segment earnings in the second quarter 2016 were $74 million on sales of $479 million, compared to $59 million on sales of $481 million in the second quarter 2015.  For the first six months, comparable segment operating earnings were $113 million on sales of $835 million, compared to $88 million on sales of $860 million during the same period in 2015.

Comparable segment earnings were higher in the second quarter and year-to-date due to lower year-over-year aluminum premiums and solid demand for specialty containers.

Food and Aerosol Packaging

Food and aerosol packaging comparable segment earnings in the second quarter 2016 were $33 million on sales of $298 million, compared to $29 million on sales of $332 million in the second quarter 2015. For the first six months, comparable segment operating earnings were $53 million on sales of $583 million, compared to $59 million on sales of $640 million during the same period in 2015.

During the second quarter, strong global demand for aerosol containers outpaced single-digit declines for food cans in North America.

Operational performance across the segment was strong in the quarter and the previously announced actions to reposition steel cutting and coating equipment across Ball's existing U.S. manufacturing locations is on schedule.

Aerospace

Aerospace comparable quarterly segment earnings in the second quarter 2016 were $19 million on sales of $193 million, compared to $20 million on sales of $230 million in the second quarter 2015. For the first six months, comparable segment operating earnings were $37 million on sales of $373 million, compared to $39 million on sales of $445 million during the same period in 2015.      

Contracted backlog grew to more than $1 billion at the end of second quarter, with more of the new business awards being oriented to cost-plus contracts. A diverse portfolio of new contracts will leverage Ball's existing technologies and value-added approach to deliver solutions to our customers. The aerospace team is staffing up to further support this backlog and the added labor base will bolster revenue growth in the second half of the year.

Outlook

"While we are still in the midst of our 90-day business review, our early estimate is for full-year 2017 free cash flow to be in the range of $750 million to $850 million, excluding one-time items related to the Rexam acquisition. Though not precluded from repurchasing our shares in the near term, our current plan is to reduce our leverage as quickly as possible, continue our dividend and then return value to shareholders via notable share repurchases as soon as our targeted capital structure is in the range of 3.0 to 3.5 times net debt to comparable EBITDA," said Scott C. Morrison, senior vice president and chief financial officer.

"This acquisition is truly a step change for our company, and we take this responsibility seriously, both operationally and strategically. We have hit the ground running with respect to our synergy realization around the Rexam transaction. The second half of 2016 will be a time to implement many of these efforts, with the benefits beginning to be realized in 2017," Hayes said. "We look forward to the many opportunities that lie ahead to grow EVA, earnings and cash flow. Given the strength of our underlying businesses and the value potential of the Rexam acquisition, we see a path to doubling Ball's long-term goal of 10 to 15 percent comparable diluted earnings per share growth over each of the next three years." 

About Ball Corporation

Ball Corporation supplies innovative, sustainable packaging solutions for beverage, food 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 18,700 people worldwide and reported pro forma 2015 sales of $11.0 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.

Conference Call Details
Ball Corporation (NYSE: BLL) will announce its second quarter 2016 earnings on Thursday, August 4, 2016, before trading begins on the New York Stock Exchange. At 9 a.m. Mountain time on that day (11 a.m. Eastern), Ball will hold its regular quarterly conference call on the company's results and performance. The North American toll-free number for the call is 800-671-8540. International callers should dial 303-223-4385. Please use the following URL for a webcast of the live call:

http://edge.media-server.com/m/p/ztodtpsq/lan/en

For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on August 4, 2016, until 11 a.m. Mountain time on August 11, 2016. To access the replay, call 800-633-8284 (North American callers) or 402-977-9140 (international callers) and use reservation number 21813900. 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" and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied. 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 risks and uncertainties 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. Factors that might affect: a) our packaging segments include product demand fluctuations; availability/cost of raw materials; competitive packaging, pricing and substitution; changes in climate and weather;  competitive activity; failure to achieve synergies, productivity improvements or cost  reductions; mandatory deposit or other restrictive packaging laws; customer and supplier consolidation, power and supply chain influence; changes in major customer or supplier contracts or loss of a major customer or supplier; political instability and sanctions; currency controls; and changes in foreign exchange or tax rates; 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: changes in senior management; 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; litigation; strikes; labor cost changes; rates of return on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding the U.S. government budget, sequestration and debt limit; reduced cash flow; ability to achieve cost-out initiatives and synergies; interest rates affecting our debt; and successful or unsuccessful acquisitions and divestitures, including with respect to the Rexam PLC acquisition or the associated divestiture; the effect of the acquisition or the divestiture on our business relationships, operating results and business generally; the outcome of any legal proceedings that may be instituted against us related to the acquisition or the divestiture.

 

 

 

 

 

 

 

 

 

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SOURCE Ball Corporation