Ball (BALL) - 2024 Q2 - Quarterly Results

Ball Reports Second Quarter 2024 Results Ball Corporation reports robust second quarter 2024 financial performance, marked by increased comparable diluted EPS, strong global beverage can and aerosol shipments, and substantial shareholder returns Financial Highlights Ball Corporation reported strong second quarter 2024 results with comparable diluted EPS of $0.74, a significant increase from $0.61 in the prior year. This performance was supported by a 2.8% rise in global beverage can shipments and a 5.6% increase in aluminum aerosol shipments. The company has been actively returning value to shareholders, with $790 million distributed in the first half of 2024 through share repurchases and dividends Q2 2024 Key Financial Metrics vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | U.S. GAAP Diluted EPS | $0.51 | $0.55 | | Comparable Diluted EPS | $0.74 | $0.61 | | Net Sales | $2.96 billion | $3.07 billion | | Net Earnings Attributable to Corporation | $158 million | $173 million | - Global beverage can shipments increased by 2.8% and global aluminum aerosol shipments grew by 5.6% in the second quarter[3] - The company returned $790 million to shareholders via share repurchases and dividends in the first half of 2024 and is on track to exceed $1.6 billion for the full year[3][13] - Financial results for 2024 include the performance of the former aerospace business through its sale date of February 16, 2024. The sale resulted in a net after-tax gain of $3.39 billion for the first six months of 2024[3] Segment Performance All beverage packaging segments reported higher year-over-year comparable operating earnings in Q2 2024. North and Central America led with $210 million, driven by lower costs and higher volumes. EMEA earnings grew to $113 million on strong 6.5% volume growth. South America's earnings increased to $37 million due to favorable price/mix, despite a 3.2% volume decline caused by economic disruption in Argentina. The non-reportable segment also saw improved results from lower corporate expenses and a 5.6% volume increase in the global aerosol business Q2 2024 Segment Comparable Operating Earnings vs. Q2 2023 | Segment | Q2 2024 Earnings | Q2 2023 Earnings | Change | | :--- | :--- | :--- | :--- | | Beverage Packaging, North & Central America | $210 million | $175 million | +$35 million | | Beverage Packaging, EMEA | $113 million | $98 million | +$15 million | | Beverage Packaging, South America | $37 million | $30 million | +$7 million | Beverage Packaging, North and Central America The North and Central America segment's comparable operating earnings increased to $210 million from $175 million year-over-year, despite a decrease in sales to $1.47 billion. This improvement was primarily driven by a 1.1% increase in volumes and lower operational costs. The lower sales figure reflects the contractual pass-through of reduced aluminum prices Q2 Performance (North & Central America) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Comparable Operating Earnings | $210 million | $175 million | | Sales | $1.47 billion | $1.54 billion | | Volume Growth | +1.1% | N/A | - The increase in comparable operating earnings was primarily due to lower costs and higher volumes[7] Beverage Packaging, EMEA The EMEA segment reported a rise in comparable operating earnings to $113 million from $98 million in the prior-year quarter. This was fueled by strong volume growth of 6.5% and favorable price/mix, which offset higher year-over-year costs. Sales were $880 million, down from $920 million, due to the pass-through of lower aluminum costs Q2 Performance (EMEA) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Comparable Operating Earnings | $113 million | $98 million | | Sales | $880 million | $920 million | | Volume Growth | +6.5% | N/A | - Growth was driven by a packaging mix shift to aluminum cans, supported by ongoing packaging legislation in certain countries[8] Beverage Packaging, South America The South America segment's comparable operating earnings grew to $37 million from $30 million year-over-year, with sales increasing to $422 million. The earnings growth was driven by favorable price/mix, which more than compensated for a 3.2% decline in segment volumes caused by disruptive economic and operating conditions in Argentina Q2 Performance (South America) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Comparable Operating Earnings | $37 million | $30 million | | Sales | $422 million | $405 million | | Volume Change | -3.2% | N/A | - The volume decline was attributed to continuing disruptive economic and operating conditions in Argentina[9] Non-reportable Segments This category, which includes the global aluminum aerosol business, beverage can facilities in Asia and the Middle East, and the aluminum cup business, showed improved results in Q2 2024. This was due to lower year-over-year undistributed corporate expenses. The global extruded aluminum bottles and aerosol containers business experienced a 5.6% volume increase - Volume in the global extruded aluminum bottles and aerosol containers business increased by 5.6% in the second quarter[12] - Improved results reflect lower year-over-year undistributed corporate expenses[12] Business Outlook Management expressed confidence in the company's performance, reiterating plans to return over $1.6 billion to shareholders in 2024. The company is positioned to achieve mid-single-digit plus comparable diluted EPS growth for the full year 2024, driven by strong free cash flow and operational excellence. Looking further ahead, Ball aims for comparable diluted EPS growth greater than 10% per annum in 2025 and beyond - The company is on track to return in excess of $1.6 billion to shareholders in 2024[13] - Positioned to achieve mid-single digit plus comparable diluted earnings per share growth in 2024[14] - The company targets comparable diluted earnings per share growth of greater than 10 percent per annum in 2025 and beyond[14] Condensed Financial Statements The unaudited financial statements detail the company's performance. For the six months ended June 30, 2024, net earnings surged to $3.85 billion, primarily due to a $3.61 billion gain from discontinued operations (the aerospace business sale). Cash flow from operations was negative $995 million, heavily impacted by the gain on disposal, but investing activities provided $5.2 billion in cash. The balance sheet reflects a stronger equity position of $6.98 billion, up from $3.91 billion, and a significant reduction in total debt following the aerospace divestiture Unaudited Condensed Consolidated Statements of Earnings For Q2 2024, net sales were $2.96 billion, down from $3.07 billion in Q2 2023. Net earnings attributable to the corporation were $158 million, or $0.51 per diluted share. For the first six months of 2024, net earnings were $3.84 billion, significantly inflated by a $3.61 billion gain from discontinued operations, compared to $350 million in the first half of 2023 Consolidated Earnings Summary (Six Months Ended June 30) | ($ in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Net sales | $5,833 | $6,048 | | Earnings from continuing operations | $238 | $253 | | Discontinued operations, net of tax | $3,607 | $100 | | Net earnings attributable to Ball Corporation | $3,843 | $350 | | Total diluted earnings per share | $12.21 | $1.10 | Unaudited Condensed Consolidated Statements of Cash Flows For the first six months of 2024, cash used in operating activities was $995 million, a significant shift from $361 million provided in the same period of 2023, largely due to the non-cash gain on the aerospace disposal. Investing activities provided $5.2 billion, driven by the $5.42 billion in proceeds from the business disposition. Financing activities used $3.5 billion, primarily for debt repayment ($2.73 billion) and share repurchases ($665 million) Cash Flow Summary (Six Months Ended June 30) | ($ in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | ($995) | $361 | | Cash provided by (used in) investing activities | $5,204 | ($604) | | Cash provided by (used in) financing activities | ($3,496) | $644 | | Change in cash, cash equivalents and restricted cash | $638 | $410 | Unaudited Condensed Consolidated Balance Sheets As of June 30, 2024, Ball's total assets were $19.0 billion, down from $20.2 billion a year prior, reflecting the aerospace divestiture. Total debt (short-term and long-term) was significantly reduced to $5.79 billion from $9.75 billion. Consequently, total equity increased substantially to $6.98 billion from $3.91 billion Balance Sheet Summary (As of June 30) | ($ in millions) | 2024 | 2023 | | :--- | :--- | :--- | | Total current assets | $5,752 | $5,435 | | Total assets | $18,961 | $20,171 | | Total current liabilities | $4,889 | $6,926 | | Long-term debt | $5,517 | $7,507 | | Total liabilities | $11,978 | $16,266 | | Total equity | $6,983 | $3,905 | Notes to the Condensed Financial Statements The notes clarify key accounting treatments and definitions. The company completed the divestiture of its aerospace business on February 16, 2024, for $5.6 billion, resulting in a pre-tax gain of $4.67 billion; this business is now reported as discontinued operations. The report also provides detailed reconciliations of U.S. GAAP results to non-U.S. GAAP measures like Comparable Net Earnings and Comparable EBITDA, adjusting for items such as facility closure costs, amortization, and the gain on the aerospace disposal. As of June 30, 2024, the company's leverage ratio (Net Debt/Comparable EBITDA) stood at 2.3x Business Segment Information & Discontinued Operations Following the sale of the aerospace business, Ball now reports three segments: Beverage Packaging for North and Central America; EMEA; and South America. The aerospace business was sold on February 16, 2024, for $5.6 billion, generating a pre-tax gain of $4.67 billion. Its financial results are now classified as discontinued operations for all periods presented - The company completed the divestiture of its aerospace business on February 16, 2024, for a purchase price of $5.6 billion[32] - The divestiture resulted in a pre-tax gain of $4.67 billion and is presented as discontinued operations[32][35] - The company now reports financial performance in three segments: (1) beverage packaging, North and Central America; (2) beverage packaging, EMEA; and (3) beverage packaging, South America[29] Non-U.S. GAAP Measures & Reconciliations This section reconciles GAAP to non-GAAP metrics. For Q2 2024, Net Earnings of $158 million were adjusted for items like facility closure costs ($60M) and amortization ($33M) to arrive at Comparable Net Earnings of $232 million, or $0.74 per share. For the trailing twelve months ended June 30, 2024, Comparable EBITDA was $1.91 billion. With Net Debt at $4.45 billion, the company's leverage ratio (Net Debt/Comparable EBITDA) was 2.3x Reconciliation of Net Earnings to Comparable Net Earnings (Q2 2024) | ($ in millions) | Amount | | :--- | :--- | | Net earnings attributable to Ball Corporation (GAAP) | $158 | | Add: Facility closure costs and other items | $60 | | Add: Amortization of acquired Rexam intangibles | $33 | | Add: Debt refinancing and other costs | $1 | | Add: Aerospace disposition compensation | $3 | | Less: Non-comparable tax items | ($23) | | Comparable Net Earnings (Non-GAAP) | $232 | Key Credit Metrics (Year Ended June 30, 2024) | Metric | Value | | :--- | :--- | | Comparable EBITDA | $1,910 million | | Net Debt | $4,447 million | | Interest Coverage Ratio | 4.9x | | Leverage Ratio (Net Debt/Comparable EBITDA) | 2.3x | - Adjusted Free Cash Flow for the six months ended June 30, 2024 was negative $794 million, after adjusting for $461 million in cash taxes paid for the Aerospace disposition[49]