Ball's Q1 net earnings attributable to company up 29.9% year-over-year to US$93.5M due to stable beverage can volumes in North America, stronger-than-expected volumes in Europe and Brazil; net sales up 0.8% to US$2.01B

BROOMFIELD, Colorado , May 1, 2014 (press release) – Ball Corporation (NYSE:BLL) today reported first quarter net earnings attributable to the corporation of $93.5 million, or 65 cents per diluted share (including after tax charges of $23.8 million, or 16 cents per diluted share for business consolidation costs, debt extinguishment costs and other activities) on sales of $2.0 billion, compared to $72.0 million, or 47 cents per diluted share, on sales of $2.0 billion in the first quarter of 2013. Comparable earnings per diluted share were 81 cents versus 58 cents in the first quarter of 2013.

"Stable beverage can volumes in North America, stronger than expected volumes in Europe and Brazil, as well as excellent plant and program performance, led to our strong first quarter results," said John A. Hayes, chairman, president and chief executive officer. "We are pleased with our results and our people continue to rise to any challenges we might face."

Details of comparable segment earnings and business consolidation activities can be found in the notes to the unaudited consolidated financial statements that accompany this news release.

Metal Beverage Packaging, Americas & Asia

Metal beverage packaging, Americas and Asia, comparable segment operating earnings were $124.9 million in the first quarter on sales of $997.6 million, compared to $104.0 million on sales of $995.2 million in 2013.

Solid demand for specialty beverage packaging and strong beer can volumes in North America, coupled with a lower cost asset base, enabled us to offset continued weakness in carbonated soft drink consumption. In Brazil, volumes continued to grow year-over-year due to the addition of the second line in our Alagoinhas beverage can plant, favorable weather and strong demand in advance of the 2014 World Cup. In China, volumes were down slightly due to tight capacity in our system and the transition from the relocation of our Shenzhen facility. Strong plant performance and efficiencies related to the Foshan plant optimization aided results.

Metal Beverage Packaging, Europe

 Metal beverage packaging, Europe, comparable segment results in the quarter were operating earnings of $55.5 million on sales of $450.2 million, compared to $30.9 million on sales of $402.9 million in 2013.

Mid-single-digit volume growth for beverage cans across Europe, as well as excellent plant performance and good progress on our cost management programs, favorably impacted first quarter results. 

Metal Food & Household Products Packaging

 Metal food and household products packaging comparable segment results in the quarter were operating earnings of $36.3 million on sales of $341.1 million, compared to $34.7 million on sales of $367.2 million in 2013.

Segment results in the quarter were influenced by weaker demand in U.S. food and aerosol containers. In Europe, stronger than expected volumes and the commercial rollout of our lightweight, recycled content extruded aluminum container contributed to stronger results.

Aerospace and Technologies

Aerospace and technologies comparable quarterly segment results were operating earnings of $24.1 million on sales of $220.7 million, compared to $17.9 million on sales of $231.4 million in 2013.

Segment earnings reflected consistent delivery of contracted product and effective completion of key program milestones. During the quarter, the planet-hunting Kepler Mission celebrated five years of operations since its 2009 launch from Cape Canaveral Air Force Station in Florida. Additionally, GMI, the multi-channel, conical-scanning microwave radiometer built for NASA, successfully launched in late February and began collecting data on the Earth's rain and snow fall. Contracted backlog levels were $868 million for the quarter and the segment is pursuing several large programs that are expected to be awarded by year end.

Outlook

"Year-to-date we have returned more than $200 million to shareholders in the form of share repurchases and dividends, and we continue to expect free cash flow in the range of $550 million for 2014," said Scott C. Morrison, senior vice president and chief financial officer.

"Our first quarter results exceeded our expectations. While challenges still exist, we remain confident in our ability to increase EVA dollar generation and achieve our long-term diluted earnings per share growth goal of 10 to 15 percent in 2014," Hayes said.

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 14,500 people worldwide and reported 2013 sales of $8.5 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.

Condensed Financial Statements (First Quarter 2014)

   

Unaudited Condensed Consolidated Statements of Earnings

         
   

Three Months Ended

   

March 31,

($ in millions, except per share amounts)

2014

 

2013

         

Net sales

$ 2,006.8

 

$ 1,991.0

         

Costs and expenses

     
 

Cost of sales (excluding depreciation and amortization)

(1,612.9)

 

(1,643.5)

 

Depreciation and amortization

(68.8)

 

(72.5)

 

Selling, general and administrative

(107.7)

 

(109.3)

 

Business consolidation and other activities

-

 

(22.7)

   

(1,789.4)

 

(1,848.0)

         

Earnings before interest and taxes

217.4

 

143.0

         

Interest expense

(40.2)

 

(44.8)

Debt refinancing costs

(33.1)

 

-

 

Total interest expense

(73.3)

 

(44.8)

Earnings before taxes

144.1

 

98.2

Tax provision

(39.6)

 

(18.1)

Equity in results of affiliates, net of tax

0.4

 

(0.8)

         

Net earnings from continuing operations

104.9

 

79.3

         

Discontinued operations, net of tax

-

 

0.1

         

Net earnings

104.9

 

79.4

         

Less net earnings attributable to noncontrolling interests

(11.4)

 

(7.4)

         

Net earnings attributable to Ball Corporation

$ 93.5

 

$ 72.0

         

Earnings per share:

     
 

Basic - continuing operations

$ 0.67

 

$ 0.48

 

Basic - discontinued operations

-

 

-

 

Total basic earnings per share

$ 0.67

 

$ 0.48

         
 

Diluted - continuing operations

$ 0.65

 

$ 0.47

 

Diluted - discontinued operations

-

 

-

 

Total diluted earnings per share

$ 0.65

 

$ 0.47

         
 

Weighted average shares outstanding (000s):

     
 

Basic

140,405

 

148,976

 

Diluted

144,058

 

152,316

 

 

Condensed Financial Statements (First Quarter 2014)

 

Unaudited Condensed Consolidated Statements of Cash Flows

       
 

Three Months Ended

 

March 31,

($ in millions)

2014

 

2013

       

Cash Flows from Operating Activities:

     

Net earnings

$ 104.9

 

$ 79.4

Discontinued operations, net of tax

-

 

(0.1)

Depreciation and amortization

68.8

 

72.5

Business consolidation and other activities

-

 

22.7

Deferred tax provision

2.6

 

9.6

Other, net

(12.9)

 

(56.4)

Changes in working capital

(299.6)

 

(450.3)

Cash provided by (used in) continuing operating activities

(136.2)

 

(322.6)

Cash provided by (used in) discontinued operating activities

-

 

(2.0)

Total cash provided by (used in) operating activities

(136.2)

 

(324.6)

Cash Flows from Investing Activities:

     

Capital expenditures

(61.4)

 

(88.7)

Business acquisitions, net of cash acquired

-

 

(12.6)

Other, net

6.3

 

(8.0)

Cash provided by (used in) investing activities

(55.1)

 

(109.3)

Cash Flows from Financing Activities:

     

Changes in borrowings, net

161.2

 

545.6

Purchases of common stock, net of issuances

(193.5)

 

(65.8)

Dividends

(18.6)

 

(19.3)

Other, net

5.8

 

8.5

Cash provided by (used in) financing activities

(45.1)

 

469.0

Effect of currency exchange rate changes on cash

(4.2)

 

(1.2)

Change in cash

(240.6)

 

33.9

Cash - beginning of period

416.0

 

174.1

Cash - end of period

$ 175.4

 

$ 208.0

 

 

Condensed Financial Statements (First Quarter 2014)

   

Unaudited Condensed Consolidated Balance Sheets

         
   

March 31,

($ in millions)

2014

 

2013

         

Assets

     

Current assets

     
 

Cash and cash equivalents

$ 175.4

 

$ 208.0

 

Receivables, net

981.1

 

1,057.7

 

Inventories, net

1,081.6

 

1,143.6

 

Deferred taxes and other current assets

166.2

 

213.4

 

Total current assets

2,404.3

 

2,622.7

Property, plant and equipment, net

2,360.2

 

2,280.1

Goodwill

2,398.8

 

2,319.5

Other assets, net

581.2

 

553.7

         
 

Total assets

$ 7,744.5

 

$ 7,776.0

         

Liabilities and Shareholders' Equity

     

Current liabilities

     
 

Short-term debt and current portion of long-term debt

$ 412.9

 

$ 425.6

 

Payables and other accrued liabilities

1,408.4

 

1,317.3

 

Total current liabilities

1,821.3

 

1,742.9

Long-term debt

3,357.7

 

3,405.3

Other long-term liabilities

1,283.4

 

1,370.3

Shareholders' equity

1,282.1

 

1,257.5

         
 

Total liabilities and shareholders' equity

$ 7,744.5

 

$ 7,776.0

 

 

Notes to the Condensed Financial Statements (First Quarter 2014)

       

1. Business Segment Information

     
       
 

Three Months Ended

 

March 31,

($ in millions)

2014

 

2013

       

Net sales -

     

Metal beverage packaging, Americas & Asia

$ 997.6

 

$ 995.2

Metal beverage packaging, Europe

450.2

 

402.9

Metal food & household products packaging

341.1

 

367.2

Aerospace & technologies

220.7

 

231.4

Corporate and intercompany eliminations

(2.8)

 

(5.7)

Net sales

$ 2,006.8

 

$ 1,991.0

       

Earnings before interest and taxes -

     

Metal beverage packaging, Americas & Asia

$ 124.9

 

$ 104.0

Business consolidation and other activities

4.8

 

(1.5)

Total metal beverage packaging, Americas & Asia

129.7

 

102.5

       

Metal beverage packaging, Europe

55.5

 

30.9

Business consolidation and other activities

(1.2)

 

(1.7)

Total metal beverage packaging, Europe

54.3

 

29.2

       

Metal food & household products packaging

36.3

 

34.7

Business consolidation and other activities

(3.1)

 

(18.8)

Total metal food & household products packaging

33.2

 

15.9

       

Aerospace & technologies

24.1

 

17.9

       

Segment earnings before interest and taxes

241.3

 

165.5

       

Undistributed and corporate expenses and intercompany eliminations, net

(23.4)

 

(21.8)

Business consolidation and other activities

(0.5)

 

(0.7)

Total undistributed and corporate expenses and intercompany

     

eliminations, net

(23.9)

 

(22.5)

       

Earnings before interest and taxes

$ 217.4

 

$ 143.0

 

 

Notes to the Condensed Financial Statements (First Quarter 2014)

           

2. Significant Business Consolidation Activities and Other Noncomparable Items

   
           

2014

       
           

Metal Beverage Packaging, Americas and Asia

       
           

During the first quarter, the company received and recorded compensation of $5.0 million ($3.7 million after tax) for the reimbursement of severance costs incurred in connection with the company's closure and relocation of the Shenzhen manufacturing facility in 2013.

           

Metal Food and Household Products Packaging

       
           

During the fourth quarter of 2013, the company announced the closure of its Danville, Illinois, steel aerosol packaging facility in the second half of 2014. Charges of $2.0 million ($1.2 million after tax) were recorded during the first quarter in connection with the pending closure. The first quarter also included charges of $1.1 million ($0.7 million after tax) for other insignificant activities.

           

Metal Beverage Packaging, Europe, and Corporate

       
           

The company recorded charges of $1.2 million ($1.1 million after tax), primarily for headcount reductions, cost-out initiatives and the relocation of the company's European headquarters from Germany to Switzerland, as well as additional tax expense of $2.1 million related to this relocation. The quarter also included charges of $0.5 million ($0.4 million after tax) for other insignificant activities.

           

In January, Ball completed the redemption of its outstanding 7.375 percent senior notes due in September 2019. The redemption of the bonds resulted in a charge of $33.1 million ($20.6 million after tax) for the call premium and the write off of unamortized financing costs and premiums.

           

2013

       
           

In February 2013, Ball announced it would close its Elgin, Illinois, food and household products packaging facility in December 2013. The first quarter included charges of $20.8 million ($12.6 million after tax) in connection with the closure. The first quarter also included charges of $1.1 million ($0.6 million after tax) related to the previously announced closures of Ball's Columbus, Ohio, and Gainesville, Florida, metal beverage packaging facilities and voluntary separation programs.

           

Other items in the quarter included charges of $2.1 million ($1.6 million after tax) for the third quarter 2012 relocation of the company's European headquarters from Germany to Switzerland, as well as additional tax expense of $1.9 million related to this relocation. Additionally, the quarter included income of $2.0 million ($1.2 million after tax) related to the reimbursement of funds paid in 2012 for the settlement of certain Canadian defined benefit pension liabilities related to previously closed facilities.

           

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)

 

2014

 

2013

           
 

Net earnings attributable to Ball Corporation, as reported

 

$ 93.5

 

$ 72.0

 

Discontinued operations, net of tax

 

-

 

(0.1)

 

Business consolidation and other activities, net of tax

 

3.2

 

16.0

 

Debt refinancing costs, net of tax

 

20.6

 

-

 

Net earnings attributable to Ball Corporation

       
 

before above transactions (Comparable Net Earnings)

 

$ 117.3

 

$ 87.9

           
 

Per diluted share before above transactions

 

$ 0.81

 

$ 0.58

 

 

Notes to the Condensed Financial Statements (First Quarter 2014)

         

2. Significant Business Consolidation Activities and Other Noncomparable Items (continued)

         

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)

2014

 

2013

         
 

Earnings before interest and taxes, as reported

$ 217.4

 

$ 143.0

 

Business consolidation and other activities

-

 

22.7

 

EBIT before above transactions (Comparable EBIT)

$ 217.4

 

$ 165.7

         

 


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