Ball Announces Second Quarter 2022 Results and Rephasing of Certain Growth Capital Projects
Ball Corporation reported a second quarter 2022 U.S. GAAP loss of 55 cents per diluted share, contrasting with a profit of 61 cents per diluted share in 2021. Total sales reached $4.13 billion, up from $3.46 billion a year prior. Comparable earnings per share were 82 cents, down from 86 cents in 2021. The aerospace backlog stands at $3.0 billion, with contracts not yet booked at $4.7 billion. The company is positioned to return $1.0 billion to shareholders through buybacks and dividends. Despite challenges, Ball aims for a long-term EPS growth of 10 to 15 percent.
- Global beverage can shipments increased by 3.3%.
- Strong aerospace backlog of $3.0 billion.
- Contracts won-not-booked totaled $4.7 billion.
- Positioned to return $1.0 billion to shareholders in 2022.
- Second quarter net loss of $174 million, primarily due to impairment in Russian operations.
- Comparable operating earnings in North and Central America fell from $193 million to $164 million.
- Segment comparable operating earnings for South America decreased by 33%.
- Delays in construction of a new manufacturing facility due to lower customer demand.
Highlights
- Second quarter U.S. GAAP loss per diluted share of 55 cents vs. earnings per diluted share of 61 cents in 2021; company recorded non-cash, long-lived asset impairment for Russian operations during second quarter of 2022
- Second quarter comparable earnings per diluted share of 82 cents vs. 86 cents in 2021
- Global beverage can shipments up
3.3% ; multi-year sustainability and growth thesis intact - Strong aerospace backlog and contracts won-not-booked of
$3.0 billion and$4.7 billion , respectively - Rephasing certain beverage can growth capital projects and optimizing production capabilities to meet near-term market growth, enable long-term customer demand and maximize shareholder returns
- Positioned to return approximately
$1.0 billion to shareholders via share repurchases and dividends in 2022 and to accelerate shareholder returns in 2023 - Beyond 2022, positioned to achieve long-term diluted earnings per share growth goal of 10 to 15 percent
- Biennial investor day management briefing scheduled for September 22
WESTMINSTER, Colo., Aug. 4, 2022 /PRNewswire/ -- Ball Corporation (NYSE: BALL) today reported, on a U.S. GAAP basis, a second quarter 2022 net loss attributable to the corporation of
Ball's second quarter and year-to-date 2022 comparable earnings per diluted share were 82 cents and
Details of 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.
"We delivered stable year-over-year comparable operating earnings amid notable cost inflation, demand volatility and euro earnings translation headwinds. Global growth for sustainable aluminum beverage and personal care products packaging continues and, in certain regions, varied from original expectations. To balance the near-term effects of economic volatility on consumer demand with long-term growth opportunities for our aluminum packaging portfolio and aerospace technologies, the global team has initiated actions to rephase capital projects and further manage costs to maximize EVA, cash, and returns. Through our capital discipline, financial strength, ownership mindset, manufacturing footprint and innovative product portfolio, we can successfully navigate the current economic environment and create value for our stakeholders," said Daniel W. Fisher, president and CEO.
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, segment comparable operating earnings for the second quarter 2022 were
Second quarter segment comparable operating earnings were down year-over-year and include the impact of higher manufacturing and inflationary costs. Segment volumes were flat in the second quarter and reflect the deceleration of customer demand resulting from significant retail pricing actions by customers to pass through inflationary costs to consumers, particularly in the U.S.
In response to the deceleration in customer demand late in the second quarter, the construction of a new beverage can manufacturing facility in North Las Vegas, Nevada, has been delayed, and certain actions across the existing North American manufacturing footprint, including ceasing production at our Phoenix, Arizona, and St. Paul, Minnesota, facilities, have been announced to address localized supply/demand imbalances.
Beverage Packaging, EMEA
Beverage packaging, EMEA, segment comparable operating earnings for second quarter 2022 were
Second quarter segment comparable operating earnings improved versus the same period in 2021 and reflect 7.7 percent segment volume growth and favorable specialty mix offset by
As a result of the war in Ukraine, the company previously announced its intention to suspend future investments in Russia and pursue a sale of its Russian business. As of June 30, 2022, the Russian business does not meet the accounting criteria to be presented as held for sale in the consolidated financial statements. See Note 1 "Business Segment Information" for additional information on the non-cash, long-lived asset impairment for the Russian operations recorded in business consolidation and other activities during second quarter of 2022. The company continues to support humanitarian efforts in Ukraine and surrounding European countries as well as manage costs across the segment in advance of the impending Russian business sale. Going forward, the business continues to monitor ongoing inflation and consumer behaviors and will remain agile and disciplined relative to deploying growth capital.
Beverage Packaging, South America
Beverage packaging, South America, segment comparable operating earnings for second quarter 2022 were
Second quarter segment comparable operating earnings decreased 33 percent due to a 2.9 percent decline in segment volumes versus 15.4 percent volume growth in the second quarter of 2021 and unfavorable regional customer/product mix in Brazil.
Demand trends in the company's South American operations outside of Brazil remain favorable. During the quarter, the company announced construction of a new beverage can manufacturing plant in Peru. The segment's performance is expected to improve in the second half of 2022 due to higher single-serve beverage consumption during the World Cup and a seasonally strong fourth quarter.
Aerospace
Aerospace segment comparable operating earnings for second quarter 2022 were
Second quarter segment comparable operating earnings reflect year-over-year sales growth offset by supply chain inefficiencies and rate adjustments. The segment continues to leverage its talent pool and manufacturing capacity, test capabilities, engineering, and support workspace to secure additional defense, climate change and Earth-monitoring contracts to provide mission-critical programs and technologies to U.S. government, defense, intelligence, and reconnaissance and surveillance customers.
Following decades of collaboration, the company joined NASA and industry partners to celebrate the successful initial images from the James Webb Space Telescope. Ball Aerospace designed and built the advanced optical technology and lightweight mirror system that made these unprecedented images possible. Also, during the quarter, the team successfully completed a critical design review of the NOAA Space Weather Follow On-Lagrange 1 Spacecraft (SWFO-L1). Ball will now proceed with the production, integration and test of the space weather monitoring satellite. Expected to launch in 2025, SWFO-L1 will collect solar wind data and coronal imagery to meet NOAA's operational requirements to monitor and forecast impacts from solar storm activity.
Non-reportable
In addition to undistributed corporate expenses, the results for the company's global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and investments in the company's aluminum cup business continue to be reported in other non-reportable.
Second quarter 2022 results reflect lower year-over-year undistributed corporate expenses, higher aluminum cup demand in the retail and food service channels, 11.3 percent volume growth for extruded aluminum aerosol containers and 51.7 percent volume growth in the other non-reportable beverage can manufacturing facilities where certain production is being exported to support EMEA segment demand prior to new capital projects coming online in 2022. During the quarter, the company's global aluminum aerosol customers continued to pursue next generation lightweight sustainable personal care packaging solutions including the company's Infinity aluminum bottle and refillable aluminum bottles for new categories.
Outlook
"Business execution, being good stewards of our cash and controlling the things we can control in today's global economic and geopolitical environments is key. Our company's resiliency, financial strength, recession resistant business portfolio and low cost of capital continue to provide stability, optionality and opportunities for long-term growth. We remain well-positioned for medium-term and long-term growth and returning significant value to shareholders through share repurchases and dividends," said Scott C. Morrison, executive vice president and chief financial officer.
"We will continue to actively manage our businesses through the lens of EVA and sustainability. Over our 142-year history, we have remained agile and successfully weathered numerous periods of economic volatility and its associated effects. Through our ability to offset inflationary costs over time, achieve higher returns on invested capital, leverage sustainability and enable supply chain partnerships to support continued mix shift to aluminum packaging, as well as to serve growing demand for our critical aerospace technologies and environmental intelligence, we look forward to achieving our long-term diluted earnings per share growth goal over time and returning even more value to shareholders," Fisher 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 24,300 people worldwide and reported 2021 net sales of
Conference Call Details
Ball Corporation (NYSE: BALL) will hold its second quarter 2022 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is 877-846-2691. International callers should dial +1 212-231-2907. Please use the following URL for a webcast of the live call:
https://edge.media-server.com/mmc/p/35t6ao7d
For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on August 4, 2022, until 11 a.m. Mountain time on August 11, 2022. To access the replay, call 800-633-8284 (North American callers) or +1 402-977-9140 (international callers) and use reservation number 22019534. 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," 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 they 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 and changes in consumption patterns; availability/cost of raw materials, equipment, 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; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; war, political instability and sanctions, including relating to the situation in Russia and Ukraine and its impact on our supply chain and our ability to operate in Russia and the EMEA region generally; 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 or jurisdiction affecting goods produced by us or in our supply chain, including imported raw materials; 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 above 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 actions or issues including those related to tax, ESG reporting, competition, 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; litigation; strikes; disease; pandemic; labor cost changes; inflation; rates of return on assets of the Company's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies, including policies, orders, and actions related to COVID-19; reduced cash flow; interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, including the announced sale of our Russian business, and their effects on our operating results and business generally.
Condensed Financial Statements (Second Quarter 2022)
Unaudited Condensed Consolidated Statements of Earnings (Loss) | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
($ in millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||
Net sales | $ | 4,134 | $ | 3,459 | $ | 7,850 | $ | 6,584 | ||||
Costs and expenses | ||||||||||||
Cost of sales (excluding depreciation and amortization) | (3,445) | (2,760) | (6,461) | (5,253) | ||||||||
Depreciation and amortization | (168) | (172) | (353) | (340) | ||||||||
Selling, general and administrative | (161) | (166) | (347) | (323) | ||||||||
Business consolidation and other activities | (467) | 12 | (186) | 5 | ||||||||
(4,241) | (3,086) | (7,347) | (5,911) | |||||||||
Earnings (loss) before interest and taxes | (107) | 373 | 503 | 673 | ||||||||
Interest expense | (68) | (66) | (137) | (133) | ||||||||
Debt refinancing and other costs | (2) | - | (2) | - | ||||||||
Total interest expense | (70) | (66) | (139) | (133) | ||||||||
Earnings (loss) before taxes | (177) | 307 | 364 | 540 | ||||||||
Tax (provision) benefit | (1) | (116) | (101) | (148) | ||||||||
Equity in results of affiliates, net of tax | 13 | 11 | 19 | 10 | ||||||||
Net earnings (loss) | (165) | 202 | 282 | 402 | ||||||||
Net earnings (loss) attributable to noncontrolling interests, net of | (9) | - | (10) | - | ||||||||
Net earnings (loss) attributable to Ball Corporation | $ | (174) | $ | 202 | $ | 272 | $ | 402 | ||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | (0.55) | $ | 0.62 | $ | 0.85 | $ | 1.23 | ||||
Diluted | $ | (0.55) | $ | 0.61 | $ | 0.84 | $ | 1.20 | ||||
Weighted average shares outstanding (000s): | ||||||||||||
Basic | 317,006 | 327,625 | 318,944 | 327,718 | ||||||||
Diluted | 317,006 | 333,378 | 323,316 | 333,615 | ||||||||
Condensed Financial Statements (Second Quarter 2022)
Unaudited Condensed Consolidated Statements of Cash Flows | ||||||
Six Months Ended | ||||||
June 30, | ||||||
($ in millions) | 2022 | 2021 | ||||
Cash Flows from Operating Activities: | ||||||
Net earnings (loss) | $ | 282 | $ | 402 | ||
Depreciation and amortization | 353 | 340 | ||||
Business consolidation and other activities | 186 | (5) | ||||
Deferred tax provision (benefit) | (32) | 73 | ||||
Other, net | (204) | (146) | ||||
Changes in working capital | (983) | (496) | ||||
Cash provided by (used in) operating activities | (398) | 168 | ||||
Cash Flows from Investing Activities: | ||||||
Capital expenditures | (819) | (757) | ||||
Business dispositions | 298 | 1 | ||||
Other, net | 25 | 20 | ||||
Cash provided by (used in) investing activities | (496) | (736) | ||||
Cash Flows from Financing Activities: | ||||||
Changes in borrowings, net | 1,541 | 5 | ||||
Net issuances (purchases) of common stock | (566) | (128) | ||||
Dividends | (128) | (99) | ||||
Other, net | (13) | - | ||||
Cash provided by (used in) financing activities | 834 | (222) | ||||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | (13) | (5) | ||||
Change in cash, cash equivalents and restricted cash | (73) | (795) | ||||
Cash, cash equivalents and restricted cash - beginning of period | 579 | 1,381 | ||||
Cash, cash equivalents and restricted cash - end of period | $ | 506 | $ | 586 | ||
Condensed Financial Statements (Second Quarter 2022)
Unaudited Condensed Consolidated Balance Sheets | ||||||
June 30, | ||||||
($ in millions) | 2022 | 2021 | ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 480 | $ | 571 | ||
Receivables, net | 3,139 | 2,620 | ||||
Inventories, net | 2,473 | 1,490 | ||||
Other current assets | 401 | 348 | ||||
Total current assets | 6,493 | 5,029 | ||||
Property, plant and equipment, net | 6,629 | 5,915 | ||||
Goodwill | 4,350 | 4,448 | ||||
Intangible assets, net | 1,474 | 1,785 | ||||
Other assets | 1,980 | 1,969 | ||||
Total assets | $ | 20,926 | $ | 19,146 | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Short-term debt and current portion of long-term debt | $ | 251 | $ | 771 | ||
Payables and other accrued liabilities | 6,232 | 5,146 | ||||
Total current liabilities | 6,483 | 5,917 | ||||
Long-term debt | 8,847 | 6,970 | ||||
Other long-term liabilities | 2,063 | 2,558 | ||||
Equity | 3,533 | 3,701 | ||||
Total liabilities and equity | $ | 20,926 | $ | 19,146 | ||
Notes to the Condensed Financial Statements (Second Quarter 2022)
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.
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, including Russia, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries.
The current global business environment is being impacted directly and indirectly by the effects of the Russian invasion of Ukraine. Ball has suspended future investments in Russia and is pursuing the sale of its aluminum beverage packaging business located in Russia. During the second quarter of 2022, Ball experienced deteriorating conditions and determined this constituted a triggering event for its Russian long-lived asset group. As a result, Ball performed an expected cash flow recoverability analysis to estimate the fair value of the long-lived assets, and recorded an impairment loss of
As of June 30, 2022, Ball's Russian aluminum packaging business does not meet the requirements for held for sale presentation in Ball's unaudited condensed consolidated financial statements. The ongoing conflict continues to have the potential to increase Ball's vulnerabilities to near-term, severe impacts related to its Russian business and facilities and it is not possible to accurately predict all future impacts of the invasion. The Russian government has made warnings to companies that cease operations during its invasion of Ukraine and the potential exists that Ball's operations in Russia could be negatively impacted. As such, Russia's invasion of Ukraine and the resulting effects have the potential to impact significant estimates used by Ball in the preparation of its consolidated financial statements, which could result in additional impairments.
Ball's Russian business, which is presented in its beverage packaging, EMEA, reportable operating segment, represented approximately 4 percent of the company's total net sales and 8 percent of the company's total comparable operating earnings for the twelve months ended December 31, 2021. In addition, our plants in Russia accounted for approximately 5 percent of the company's 112.5 billion global beverage can unit shipments for the twelve months ended December 31, 2021. As of June 30, 2022, after the
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.
Aerospace: Consists of operations that manufacture and sell aerospace and other related products and provide services used in the defense, civil space and commercial space industries.
Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers; a non-reportable operating segment that manufactures and sells extruded aluminum aerosol containers and recloseable aluminum bottles across multiple consumer categories as well as slugs (aerosol packaging); 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.
During the first quarter of 2022, Ball sold its remaining 49 percent owned equity method investment in Ball Metalpack to Sonoco, a global provider of consumer, industrial, healthcare and protective packaging, for total consideration of approximately
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
($ in millions) | 2022 | 2021 | 2022 | 2021 | |||||||
Net sales | |||||||||||
Beverage packaging, North and Central America | $ | 1,775 | $ | 1,524 | $ | 3,384 | $ | 2,820 | |||
Beverage packaging, EMEA | 1,133 | 906 | 2,075 | 1,702 | |||||||
Beverage packaging, South America | 534 | 452 | 1,028 | 939 | |||||||
Aerospace | 490 | 459 | 994 | 883 | |||||||
Reportable segment sales | 3,932 | 3,341 | 7,481 | 6,344 | |||||||
Other | 202 | 118 | 369 | 240 | |||||||
Net sales | $ | 4,134 | $ | 3,459 | $ | 7,850 | $ | 6,584 | |||
Comparable operating earnings | |||||||||||
Beverage packaging, North and Central America | $ | 164 | $ | 193 | $ | 338 | $ | 333 | |||
Beverage packaging, EMEA | 129 | 124 | 229 | 224 | |||||||
Beverage packaging, South America | 52 | 78 | 130 | 171 | |||||||
Aerospace | 36 | 34 | 79 | 69 | |||||||
Reportable segment comparable operating earnings | 381 | 429 | 776 | 797 | |||||||
Other (a) | 11 | (30) | (18) | (53) | |||||||
Comparable operating earnings | 392 | 399 | 758 | 744 | |||||||
Reconciling items | |||||||||||
Business consolidation and other activities | (467) | 12 | (186) | 5 | |||||||
Amortization of acquired Rexam intangibles | (32) | (38) | (69) | (76) | |||||||
Earnings (loss) before interest and taxes | $ | (107) | $ | 373 | $ | 503 | $ | 673 | |||
(a) Includes undistributed corporate expenses, net, of
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.
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: | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
($ in millions, except per share amounts) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Net earnings (loss) attributable to Ball Corporation | $ | (174) | $ | 202 | $ | 272 | $ | 402 | |||||||
Business consolidation and other activities | 467 | (12) | 186 | (5) | |||||||||||
Amortization of acquired Rexam intangibles | 32 | 38 | 69 | 76 | |||||||||||
Share of equity method affiliate non-comparable costs, net of tax | - | - | - | 6 | |||||||||||
Debt refinancing and other costs | 2 | - | 2 | - | |||||||||||
Non-comparable tax items | (64) | 59 | (14) | 48 | |||||||||||
Comparable Net Earnings | $ | 263 | $ | 287 | $ | 515 | $ | 527 | |||||||
Comparable diluted earnings per share | $ | 0.82 | (a) | $ | 0.86 | $ | 1.59 | $ | 1.58 | ||||||
(a) The company reported a U.S. GAAP net loss in the three months ended June 30, 2022, and, as a result, all potentially issuable securities were excluded in the diluted earnings (loss) per share calculation as their effect would have been anti-dilutive. Had these securities been included, approximately 320.8 million weighted average shares would have been used in calculating diluted earnings (loss) per share for the three ended June 30, 2022. Comparable net earnings for the three months ended June 30, 2022, was positive; therefore, approximately 320.8 million weighted average shares were used to calculate comparable diluted earnings per share.
A summary of the effects of non-comparable items on earnings before interest and taxes is as follows: | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
($ in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||
Net earnings (loss) attributable to Ball Corporation | $ | (174) | $ | 202 | $ | 272 | $ | 402 | |||||
Net earnings (loss) attributable to noncontrolling interests, net of tax | 9 | - | 10 | - | |||||||||
Net earnings (loss) | (165) | 202 | 282 | 402 | |||||||||
Equity in results of affiliates, net of tax | (13) | (11) | (19) | (10) | |||||||||
Tax provision (benefit) | 1 | 116 | 101 | 148 | |||||||||
Earnings (loss) before taxes | (177) | 307 | 364 | 540 | |||||||||
Total interest expense | 70 | 66 | 139 | 133 | |||||||||
Earnings (loss) before interest and taxes | (107) | 373 | 503 | 673 | |||||||||
Business consolidation and other activities | 467 | (12) | 186 | (5) | |||||||||
Amortization of acquired Rexam intangibles | 32 | 38 | 69 | 76 | |||||||||
Comparable Operating Earnings | $ | 392 | $ | 399 | $ | 758 | $ | 744 | |||||
A summary of Comparable EBITDA and Net Debt is as follows: | |||||||||||||
Twelve | Less: Six | Add: Six | |||||||||||
Months Ended | Months Ended | Year Ended | Year Ended | ||||||||||
December 31, | June 30, | June 30, | June 30, | ||||||||||
($ in millions, except ratios) | 2021 | 2021 | 2022 | 2022 | |||||||||
Net earnings attributable to Ball Corporation | $ | 878 | $ | 402 | $ | 272 | $ | 748 | |||||
Net earnings attributable to noncontrolling interests, net of tax | - | - | 10 | 10 | |||||||||
Net earnings | 878 | 402 | 282 | 758 | |||||||||
Equity in results of affiliates, net of tax | (26) | (10) | (19) | (35) | |||||||||
Tax provision (benefit) | 156 | 148 | 101 | 109 | |||||||||
Earnings before taxes | 1,008 | 540 | 364 | 832 | |||||||||
Total interest expense | 283 | 133 | 139 | 289 | |||||||||
Earnings before interest and taxes | 1,291 | 673 | 503 | 1,121 | |||||||||
Business consolidation and other activities | 142 | (5) | 186 | 333 | |||||||||
Amortization of acquired Rexam intangibles | 152 | 76 | 69 | 145 | |||||||||
Comparable Operating Earnings | 1,585 | 744 | 758 | 1,599 | |||||||||
Depreciation and amortization | 700 | 340 | 353 | 713 | |||||||||
Amortization of acquired Rexam intangibles | (152) | (76) | (69) | (145) | |||||||||
Comparable EBITDA | $ | 2,133 | $ | 1,008 | $ | 1,042 | $ | 2,167 | |||||
Total interest expense | $ | (283) | $ | (133) | $ | (139) | $ | (289) | |||||
Debt refinancing and other costs | 13 | - | 2 | 15 | |||||||||
Interest expense | $ | (270) | $ | (133) | $ | (137) | $ | (274) | |||||
Total debt at period end | $ | 9,098 | |||||||||||
Cash and cash equivalents | (480) | ||||||||||||
Net Debt | $ | 8,618 | |||||||||||
Comparable EBITDA/Interest Expense (Interest Coverage) | 7.9 | x | |||||||||||
Net Debt/Comparable EBITDA | 4.0 | x | |||||||||||
3. Non-Comparable Items
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
($ in millions) | 2022 | 2021 | 2022 | 2021 | ||||||||
Non-comparable items - income (expense) | ||||||||||||
Beverage packaging, North and Central America | ||||||||||||
Business consolidation and other activities | ||||||||||||
Individually insignificant items | $ | (2) | $ | (2) | $ | (1) | $ | (1) | ||||
Other non-comparable items | ||||||||||||
Amortization of acquired Rexam intangibles | (7) | (7) | (14) | (14) | ||||||||
Total beverage packaging, North and Central America | (9) | (9) | (15) | (15) | ||||||||
Beverage packaging, EMEA | ||||||||||||
Business consolidation and other activities | ||||||||||||
Russia impairment (1) | (435) | - | (435) | - | ||||||||
Individually insignificant items | (3) | (1) | (4) | (3) | ||||||||
Other non-comparable items | ||||||||||||
Amortization of acquired Rexam intangibles | (14) | (16) | (29) | (33) | ||||||||
Total beverage packaging, EMEA | (452) | (17) | (468) | (36) | ||||||||
Beverage packaging, South America | ||||||||||||
Business consolidation and other activities | ||||||||||||
Dispute with regional customer (2) | (22) | - | (22) | - | ||||||||
Brazilian indirect taxes | - | 22 | - | 22 | ||||||||
Individually insignificant items | 1 | (1) | - | (2) | ||||||||
Other non-comparable items | ||||||||||||
Amortization of acquired Rexam intangibles | (14) | (14) | (28) | (28) | ||||||||
Total beverage packaging, South America | (35) | 7 | (50) | (8) | ||||||||
Other | ||||||||||||
Business consolidation and other activities | ||||||||||||
Sale of equity method investment in Metalpack (3) | (7) | - | 298 | - | ||||||||
Donation to The Ball Foundation (4) | - | - | (30) | - | ||||||||
Metalpack loan repayment (5) | - | - | 16 | - | ||||||||
Net Russian ruble currency movements (6) | 4 | - | (5) | - | ||||||||
Impairment of equity method investment in South Korea | - | (5) | - | (5) | ||||||||
Individually insignificant items | (3) | (1) | (3) | (6) | ||||||||
Other non-comparable items | ||||||||||||
Share of equity method affiliate non-comparable costs, net of tax | - | - | - | (6) | ||||||||
Amortization of acquired Rexam intangibles | 3 | (1) | 2 | - | ||||||||
Debt extinguishment and refinance costs | (2) | - | (2) | (1) | ||||||||
Total other | (5) | (7) | 276 | (18) | ||||||||
Total business consolidation and other activities | (467) | 12 | (186) | 5 | ||||||||
Total other non-comparable items | (34) | (38) | (71) | (82) | ||||||||
Total non-comparable items | (501) | (26) | (257) | (77) | ||||||||
Impact of U.K. tax rate change | - | (57) | - | (57) | ||||||||
Discrete non-comparable tax items (7) | - | (1) | 6 | (1) | ||||||||
Tax effect on business consolidation and other activities | 54 | (11) | (12) | (9) | ||||||||
Tax effect on other non-comparable items | 10 | 10 | 20 | 19 | ||||||||
Total non-comparable tax items | 64 | (59) | 14 | (48) | ||||||||
Total non-comparable items, net of tax | $ | (437) | $ | (85) | $ | (243) | $ | (125) | ||||
(1) Ball recorded a non-cash impairment for its Russian long-lived asset group. During the second quarter of 2022, Ball experienced deteriorating conditions due to the escalating conflict and associated effects from the Russian invasion of Ukraine. As a result, after taking into account the progress of our ongoing sales process, currency exchange movements, supply challenges and effects of the escalating conflict, the company has concluded the long-lived assets are impaired.
(2) In July 2022, Ball's beverage packaging, South America, segment formally notified a regional customer in Brazil of its breach of a long-term committed supply agreement since the first quarter of 2022, inclusive of beverage can and end volume requirements and associated accounts payable with Ball. In the event that satisfactory rectifying action is not taken in response to the notification of breach, Ball intends to pursue legal action to recover all amounts due and seek damages for non-performance. Ball recorded a charge reflecting an increased risk of not being able to fully collect amounts due from the customer. After recording this charge, Ball has financial exposure on balances due from the customer of
(3) Ball sold its remaining 49 percent owned equity method investment in Ball Metalpack and recorded a gain. In the second quarter of 2022, Ball recorded charges associated with the reduction of sales price due to customary closing adjustments related to the sale.
(4) The company donated funds to The Ball Foundation, a non-profit philanthropic organization with efforts to build a better world. The Ball Foundation awards grants to nonprofit organizations primarily in communities where the company operates, focusing on priorities related to education, recycling, and disaster relief and preparedness.
(5) Ball recorded a gain from Ball Metalpack's repayment of a loan which was formerly fully reserved.
(6) Ball recorded net impacts associated with its inability to hedge Russian ruble currency exposures.
(7) Ball recorded a benefit for a reduction in the deferred tax liability on the investment in its Russian business which was partially offset by a charge to settle a tax dispute in Uruguay.
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SOURCE Ball Corporation
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