Ball Reports First Quarter 2024 Results
- First quarter U.S. GAAP total diluted earnings per share of $11.61 compared to 56 cents in 2023.
- Global beverage can shipments increased by 3.7%.
- Returned $245 million to shareholders via share repurchases and dividends in the first quarter.
- Positioned to advance sustainable aluminum packaging and grow comparable diluted earnings per share.
- Reported net earnings of $3.69 billion in the first quarter 2024 compared to $177 million in 2023.
- Segment volumes improved in North and Central America and South America.
- Initiated a multi-year share repurchase program and debt retirement of $2.8 billion.
- Expected to achieve comparable diluted earnings per share growth and return over $1.5 billion to shareholders in 2024.
- Challenges in segments like North and Central America due to lower shipments.
- Impact of disruptive economic and operating conditions in Argentina.
- Decrease in volume across global extruded aluminum bottles and aerosol containers.
- Anticipated seasonal demand trends and inflation-induced consumer demand pressure.
Insights
The substantial earnings per share (EPS) increase to
It's important for investors to differentiate between non-recurring gains and operational performance. The comparable EPS, a more indicative measure of the company's performance, remained relatively flat year-over-year. This suggests stable profitability, despite a modest decrease in global beverage can shipments. Investors should monitor the company's ability to maintain or improve margins in the face of competitive pressures and material cost fluctuations.
Ball Corporation's commitment to and positioning in sustainable aluminum packaging aligns with growing consumer and regulatory trends favoring eco-friendly products. This strategic focus may increase the company's long-term value proposition in the face of changing consumer preferences. From a market trend perspective, the shift towards aluminum packaging, supported by packaging legislation in several countries, is particularly noteworthy.
Investors should be aware of potential supply chain risks, such as fluctuating aluminum costs and their impact on the company's profitability. While current results have benefited from lower aluminum costs, it is uncertain how long this trend will continue. Demand resilience in Brazil, alongside operational improvements, indicates a strong foothold in emerging markets, which could be a key growth driver.
The company's focus on sustainability and innovation within aluminum packaging not only caters to a growing market demand but also anticipates tighter environmental regulations. The increased use of low-carbon aluminum solutions may offer Ball Corporation a competitive edge and enhance brand reputation. However, the actual impact on the company's carbon footprint and cost efficiency warrants close examination.
The circular economy initiatives, such as refill and reuse packaging, could open new revenue streams and partnerships. It is prudent for investors to consider how these initiatives could influence future R&D expenditures and whether they may result in long-term cost savings and market expansion.
Highlights
- First quarter U.S. GAAP total diluted earnings per share of
$11.61 56 cents in 2023 - First quarter comparable diluted earnings per share of
68 cents vs.69 cents in 2023 - Global beverage can shipments increased
3.7% - Significantly deleveraged and returned
$245 million - In 2024 and beyond, positioned to advance the use of sustainable aluminum packaging, grow comparable diluted earnings per share, generate strong free cash flow and expand long-term return of value to shareholders
"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
Beverage packaging, North and
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
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
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
Beverage Packaging,
Beverage packaging,
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
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
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,
"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
About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care and household products customers. Ball Corporation employs 16,000 people worldwide (excluding divested aerospace staff) and reported 2023 net sales of
Conference Call Details
Ball Corporation (NYSE: BALL) will hold its first quarter 2024 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is +1 877-497-9071. International callers should dial +1 201-689-8727. Please use the following URL for a webcast of the live call:
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
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. Ball 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 Ball's Form 10-K, which are available on Ball's website and at www.sec.gov. Additional factors that might affect: a) Ball's 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 and related events such as drought, wildfires, storms, hurricanes, tornadoes and floods; 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
Condensed Financial Statements (First Quarter 2024) | ||||||
Unaudited Condensed Consolidated Statements of Earnings | ||||||
Three Months Ended | ||||||
March 31, | ||||||
($ in millions, except per share amounts) | 2024 | 2023 | ||||
Net sales | $ | 2,874 | $ | 2,981 | ||
Costs and expenses | ||||||
Cost of sales (excluding depreciation and amortization) | (2,283) | (2,432) | ||||
Depreciation and amortization | (158) | (147) | ||||
Selling, general and administrative | (211) | (115) | ||||
Business consolidation and other activities | (26) | (20) | ||||
(2,678) | (2,714) | |||||
Earnings before interest and taxes | 196 | 267 | ||||
Interest expense | (93) | (113) | ||||
Debt refinancing and other costs | (2) | - | ||||
Total interest expense | (95) | (113) | ||||
Earnings before taxes | 101 | 154 | ||||
Tax (provision) benefit | (27) | (33) | ||||
Equity in results of affiliates, net of tax | 5 | 7 | ||||
Earnings from continuing operations | 79 | 128 | ||||
Discontinued operations, net of tax | 3,607 | 52 | ||||
Net earnings | 3,686 | 180 | ||||
Net earnings attributable to noncontrolling interests, net of tax | 1 | 3 | ||||
Net earnings attributable to Ball Corporation | $ | 3,685 | $ | 177 | ||
Earnings per share: | ||||||
Basic - continuing operations | $ | 0.25 | $ | 0.40 | ||
Basic - discontinued operations | 11.45 | 0.16 | ||||
Total basic earnings per share | $ | 11.70 | $ | 0.56 | ||
Diluted - continuing operations | $ | 0.25 | $ | 0.40 | ||
Diluted - discontinued operations | 11.36 | 0.16 | ||||
Total diluted earnings per share | $ | 11.61 | $ | 0.56 | ||
Weighted average shares outstanding (000s): | ||||||
Basic | 314,950 | 314,236 | ||||
Diluted | 317,385 | 316,667 | ||||
Condensed Financial Statements (First Quarter 2024) | ||||||
Unaudited Condensed Consolidated Statements of Cash Flows | ||||||
Three Months Ended | ||||||
March 31, | ||||||
($ in millions) | 2024 | 2023 | ||||
Cash Flows from Operating Activities: | ||||||
Net earnings | $ | 3,686 | $ | 180 | ||
Depreciation and amortization | 167 | 166 | ||||
Business consolidation and other activities | 26 | 20 | ||||
Deferred tax provision (benefit) | 176 | - | ||||
Gain on Aerospace disposal | (4,695) | - | ||||
Pension contributions | (10) | (4) | ||||
Other, net | 46 | 49 | ||||
Changes in working capital components, net of dispositions | (643) | (686) | ||||
Cash provided by (used in) operating activities | (1,247) | (275) | ||||
Cash Flows from Investing Activities: | ||||||
Capital expenditures | (154) | (343) | ||||
Business dispositions, net of cash sold | 5,422 | - | ||||
Other, net | 24 | 7 | ||||
Cash provided by (used in) investing activities | 5,292 | (336) | ||||
Cash Flows from Financing Activities: | ||||||
Changes in borrowings, net | (2,750) | 700 | ||||
Acquisitions of treasury stock | (182) | (3) | ||||
Dividends | (63) | (63) | ||||
Other, net | 17 | 15 | ||||
Cash provided by (used in) financing activities | (2,978) | 649 | ||||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | (52) | (2) | ||||
Change in cash, cash equivalents and restricted cash | 1,015 | 36 | ||||
Cash, cash equivalents and restricted cash - beginning of period | 710 | 558 | ||||
Cash, cash equivalents and restricted cash - end of period | $ | 1,725 | $ | 594 | ||
Condensed Financial Statements (First Quarter 2024) | ||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||
March 31, | ||||||
($ in millions) | 2024 | 2023 | ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 1,719 | $ | 572 | ||
Receivables, net | 3,050 | 2,244 | ||||
Inventories, net | 1,498 | 2,166 | ||||
Other current assets | 225 | 154 | ||||
Current assets held for sale | 32 | 371 | ||||
Total current assets | 6,524 | 5,507 | ||||
Property, plant and equipment, net | 6,634 | 6,543 | ||||
Goodwill | 4,211 | 4,215 | ||||
Intangible assets, net | 1,199 | 1,350 | ||||
Other assets | 1,330 | 1,661 | ||||
Noncurrent assets held for sale | - | 833 | ||||
Total assets | $ | 19,898 | $ | 20,109 | ||
Liabilities and Equity | ||||||
Current liabilities | ||||||
Short-term debt and current portion of long-term debt | $ | 281 | $ | 2,356 | ||
Payables and other accrued liabilities | 5,103 | 4,420 | ||||
Current liabilities held for sale | - | 444 | ||||
Total current liabilities | 5,384 | 7,220 | ||||
Long-term debt | 5,519 | 7,322 | ||||
Other long-term liabilities | 1,618 | 1,659 | ||||
Noncurrent liabilities held for sale | - | 200 | ||||
Equity | 7,377 | 3,708 | ||||
Total liabilities and equity | $ | 19,898 | $ | 20,109 | ||
Notes to the Condensed Financial Statements (First Quarter 2024)
1.
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
Beverage packaging, North and
Beverage packaging, EMEA: Consists of operations in numerous countries throughout
Beverage packaging,
Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers in
The company also has investments in operations in
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
Three Months Ended | ||||||
March 31, | ||||||
($ in millions) | 2024 | 2023 | ||||
Net sales | ||||||
Beverage packaging, North and | $ | 1,403 | $ | 1,504 | ||
Beverage packaging, EMEA | 810 | 834 | ||||
Beverage packaging, | 482 | 450 | ||||
Reportable segment sales | 2,695 | 2,788 | ||||
Other | 179 | 193 | ||||
Net sales | $ | 2,874 | $ | 2,981 | ||
Comparable operating earnings | ||||||
Beverage packaging, North and | $ | 192 | $ | 183 | ||
Beverage packaging, EMEA | 85 | 73 | ||||
Beverage packaging, | 55 | 50 | ||||
Reportable segment comparable operating earnings | 332 | 306 | ||||
Reconciling items | ||||||
Other (a) | (72) | 15 | ||||
Business consolidation and other activities | (26) | (20) | ||||
Amortization of acquired Rexam intangibles | (38) | (34) | ||||
Earnings before interest and taxes | $ | 196 | $ | 267 | ||
___________________ | |
(a) | Includes undistributed corporate expenses, net, of |
Discontinued Operations
The following table presents components of discontinued operations, net of tax for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, | ||||||
($ in millions) | 2024 | 2023 | ||||
Net sales | $ | 261 | $ | 508 | ||
Cost of sales (excluding depreciation and amortization) | (214) | (413) | ||||
Depreciation and amortization | (9) | (19) | ||||
Selling, general and administrative | (11) | (16) | ||||
Gain on disposition | 4,695 | — | ||||
Tax (provision) benefit | (1,115) | (8) | ||||
Discontinued operations, net of tax | $ | 3,607 | $ | 52 | ||
2. Non-
Non-
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.
Comparable Operating Earnings, Comparable Operating Earnings is earnings before interest expense, taxes, business consolidation and other non-comparable items.
Comparable Net Earnings, Comparable Net Earnings is net earnings attributable to Ball Corporation before business consolidation and other non-comparable items after tax.
Comparable Diluted Earnings Per Share, Comparable Diluted Earnings Per Share is Comparable Net Earnings divided by diluted weighted average shares outstanding.
Net Debt, Net Debt is total debt less cash and cash equivalents, which are derived directly from the company's financial statements.
Free Cash Flow, Free cash flow is typically derived directly from the company's cash flow statements and is defined as cash flows from operating activities less capital expenditures; and, it may be adjusted for additional items that affect comparability between periods. Free cash flow is not a defined term under
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-
Please see the company's website for further details of the company's non-
A summary of the effects of non-comparable items on after tax earnings is as follows:
Three Months Ended | ||||||
March 31, | ||||||
($ in millions, except per share amounts) | 2024 | 2023 | ||||
Net earnings attributable to Ball Corporation | $ | 3,685 | $ | 177 | ||
Facility closure costs and other items (1) | 26 | 20 | ||||
Amortization of acquired Rexam intangibles | 38 | 34 | ||||
Debt refinancing and other costs | 2 | - | ||||
Non-comparable tax items | 1,082 | (14) | ||||
Gain on Aerospace disposal (2) | (4,695) | - | ||||
Aerospace disposition compensation (3) | 79 | - | ||||
Comparable Net Earnings | $ | 217 | $ | 217 | ||
Comparable Diluted Earnings Per Share | $ | 0.68 | $ | 0.69 | ||
(1) | In the fourth quarter of 2023, Ball announced the planned closure of its aluminum beverage can manufacturing facility in |
(2) | In the first quarter of 2024, the company recorded a pre-tax gain for the sale of the aerospace business. |
(3) | In the first quarter of 2024, the company recorded incremental compensation cost from the successful sale of the aerospace business, which consisted of cash bonuses and stock based compensation. These amounts were recorded in selling, general and administrative expenses in the unaudited condensed consolidated statement of earnings. |
A summary of the effects of non-comparable items on earnings before interest and taxes is as follows:
Three Months Ended | ||||||
March 31, | ||||||
($ in millions) | 2024 | 2023 | ||||
Net earnings attributable to Ball Corporation | $ | 3,685 | $ | 177 | ||
Net earnings attributable to noncontrolling interests, net of tax | 1 | 3 | ||||
Discontinued operations, net of tax | (3,607) | (52) | ||||
Earnings from continuing operations | 79 | 128 | ||||
Equity in results of affiliates, net of tax | (5) | (7) | ||||
Tax provision (benefit) | 27 | 33 | ||||
Earnings before taxes | 101 | 154 | ||||
Total interest expense | 95 | 113 | ||||
Earnings before interest and taxes | 196 | 267 | ||||
Business consolidation and other activities | 26 | 20 | ||||
Aerospace disposition compensation | 79 | - | ||||
Amortization of acquired Rexam intangibles | 38 | 34 | ||||
Comparable Operating Earnings | $ | 339 | $ | 321 | ||
A summary of Comparable EBITDA, Net Debt, Interest Coverage and Leverage is as follows:
Twelve | Less: Three | Add: Three | |||||||||||
Months Ended | Months Ended | Months Ended | Year Ended | ||||||||||
December 31, | March 31, | March 31, | March 31, | ||||||||||
($ in millions, except ratios) | 2023 | 2023 | 2024 | 2024 | |||||||||
Net earnings attributable to Ball Corporation | $ | 707 | $ | 177 | $ | 3,685 | $ | 4,215 | |||||
Net earnings attributable to noncontrolling interests, net of tax | 4 | 3 | 1 | 2 | |||||||||
Discontinued operations, net of tax | (223) | (52) | (3,607) | (3,778) | |||||||||
Earnings from continuing operations | 488 | 128 | 79 | 439 | |||||||||
Equity in results of affiliates, net of tax | (20) | (7) | (5) | (18) | |||||||||
Tax provision (benefit) | 146 | 33 | 27 | 140 | |||||||||
Earnings before taxes | 614 | 154 | 101 | 561 | |||||||||
Total interest expense | 460 | 113 | 95 | 442 | |||||||||
Earnings before interest and taxes | 1,074 | 267 | 196 | 1,003 | |||||||||
Business consolidation and other activities | 133 | 20 | 26 | 139 | |||||||||
Aerospace disposition compensation | - | - | 79 | 79 | |||||||||
Amortization of acquired Rexam intangibles | 135 | 34 | 38 | 139 | |||||||||
Comparable Operating Earnings | 1,342 | 321 | 339 | 1,360 | |||||||||
Depreciation and amortization | 605 | 147 | 158 | 616 | |||||||||
Amortization of acquired Rexam intangibles | (135) | (34) | (38) | (139) | |||||||||
Comparable EBITDA | $ | 1,812 | $ | 434 | $ | 459 | $ | 1,837 | |||||
Total interest expense | $ | (460) | $ | (113) | $ | (95) | $ | (442) | |||||
Debt refinancing and other costs | - | - | 2 | 2 | |||||||||
Interest expense | $ | (460) | $ | (113) | $ | (93) | $ | (440) | |||||
Total debt at period end | $ | 5,800 | |||||||||||
Cash and cash equivalents | (1,719) | ||||||||||||
Net Debt | $ | 4,081 | |||||||||||
Interest Coverage (Comparable EBITDA/Interest Expense) | 4.2 | x | |||||||||||
Leverage (Net Debt/Comparable EBITDA) | 2.2 | x | |||||||||||
Based on the company's definition, free cash flow for the first quarter of 2024 was:
Three Months Ended | |||
March 31, | |||
($ in millions) | 2024 | ||
Total cash provided by (used in) operating activities | $ | (1,247) | |
Less: Capital expenditures | (154) | ||
Free cash flow | $ | (1,401) | |
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SOURCE Ball Corporation
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