Ball (BALL) - 2024 Q3 - Quarterly Results

Ball Reports Third Quarter 2024 Results Financial Highlights Ball Corporation reported strong Q3 2024 results, with comparable diluted EPS increasing and significant shareholder returns, reflecting a leaner operating model and recent acquisition Q3 2024 Key Performance Indicators | Indicator | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | U.S. GAAP Total Diluted EPS | $0.65 | $0.64 | | Comparable Diluted EPS | $0.91 | $0.83 | - Returned $1.25 billion to shareholders via share repurchases and dividends in the first nine months of 2024, and is on track to exceed $1.6 billion by year-end[1] - In late-October, the company completed the acquisition of Alucan Entec, S.A., a European impact extruded aluminum packaging business[1] Q3 2024 vs Q3 2023 Financial Summary | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Sales | $3.08 billion | $3.11 billion | | Net Earnings Attributable to Corporation | $197 million | $203 million | Segment Performance Overall segment performance in Q3 2024 was mixed, with EMEA showing strong volume growth while other regions experienced declines, yet all beverage packaging segments saw increased comparable operating earnings due to favorable price/mix and cost savings Beverage Packaging, North and Central America The North and Central America segment experienced a 3.1% volume decline, leading to decreased Q3 sales, yet comparable operating earnings increased due to favorable price/mix and operational efficiencies Q3 2024 Performance: North and Central America | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Sales | $1.46 billion | $1.54 billion | | Comparable Operating Earnings | $203 million | $196 million | | Volume Change | -3.1% | N/A | - The increase in comparable operating earnings was primarily due to favorable price/mix, partially offset by lower volumes[5] - Future results are expected to improve due to benefits from fixed and variable cost-out initiatives and enhanced operational efficiencies[5] Beverage Packaging, EMEA The EMEA segment reported increased Q3 sales and comparable operating earnings, primarily driven by a 6.7% volume increase, supported by a packaging mix shift to aluminum cans due to sustainability trends and legislation Q3 2024 Performance: EMEA | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Sales | $950 million | $902 million | | Comparable Operating Earnings | $128 million | $103 million | | Volume Change | +6.7% | N/A | - Growth was driven by a packaging mix shift to aluminum cans, supported by ongoing packaging legislation in certain countries[7] Beverage Packaging, South America The South America segment experienced a 10.0% volume decline, leading to a slight decrease in Q3 sales, yet comparable operating earnings significantly increased due to favorable price/mix despite challenging economic conditions Q3 2024 Performance: South America | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Sales | $484 million | $489 million | | Comparable Operating Earnings | $78 million | $61 million | | Volume Change | -10.0% | N/A | - Lower volumes were driven by disruptive economic and operating conditions in Argentina and demand outstripping supply in Brazil late in the quarter[8] Non-reportable Segments Non-reportable segments, including global aluminum aerosol and cup businesses, showed improved Q3 2024 results due to higher comparable operating earnings, further expanded by the acquisition of Alucan Entec, S.A. for €82 million ($88 million) - Q3 2024 results improved due to higher comparable operating earnings for the aluminum packaging businesses, partially offset by increased undistributed corporate expenses[9] - Completed the acquisition of Alucan Entec, S.A. for €82 million ($88 million), which complements Ball's existing global extruded aluminum aerosol and bottle business[10] Business Outlook Management is confident in achieving 2024 goals, including mid-single-digit plus comparable diluted EPS growth and returning over $1.6 billion to shareholders, with a target of greater than 10 percent comparable diluted EPS growth annually from 2025 - The company is on target to return in excess of $1.6 billion to shareholders in 2024[11] - Positioned to achieve mid-single digit plus comparable diluted earnings per share growth in 2024[12] - The company aims to deliver comparable diluted earnings per share growth greater than 10 percent per annum in 2025 and beyond[12] Condensed Financial Statements Unaudited Condensed Consolidated Statements of Earnings For Q3 2024, Ball reported net sales of $3.08 billion and net earnings of $197 million, while nine-month net earnings reached $4.04 billion, significantly boosted by a $3.61 billion gain from discontinued aerospace operations Consolidated Earnings Summary (in millions, except per share) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $3,082 | $3,111 | $8,915 | $9,159 | | Earnings from continuing operations | $193 | $133 | $431 | $386 | | Discontinued operations, net of tax | $6 | $71 | $3,613 | $171 | | Net earnings attributable to Ball Corporation | $197 | $203 | $4,040 | $553 | | Total diluted earnings per share | $0.65 | $0.64 | $12.96 | $1.74 | Unaudited Condensed Consolidated Statements of Cash Flows For the first nine months of 2024, cash used in operating activities was $385 million, while investing activities generated a $5.18 billion inflow from the aerospace disposition, and financing activities used $4.0 billion primarily for debt repayment and share repurchases Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Category | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $(385) | $1,127 | | Cash provided by (used in) investing activities | $5,181 | $(826) | | Cash provided by (used in) financing activities | $(3,998) | $490 | | Change in cash, cash equivalents and restricted cash | $734 | $791 | Unaudited Condensed Consolidated Balance Sheets As of September 30, 2024, Ball's total assets decreased to $18.82 billion due to the aerospace divestiture, while total debt significantly reduced to $5.81 billion, and total equity substantially increased to $6.76 billion Balance Sheet Summary (in millions) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Total current assets | $5,607 | $5,408 | | Total assets | $18,824 | $19,932 | | Total current liabilities | $5,124 | $6,715 | | Long-term debt | $5,353 | $7,483 | | Total liabilities | $12,069 | $15,924 | | Total equity | $6,755 | $4,008 | Notes to the Condensed Financial Statements Note 1: U.S. GAAP Measures and Business Segment Information This note details the company's three reportable segments post-aerospace business divestiture, which resulted in a pre-tax gain of $4.67 billion from $5.42 billion cash proceeds, and provides a breakdown of segment sales and comparable operating earnings - Following the divestiture of the aerospace business on February 16, 2024, the company reports its financial performance in three segments: beverage packaging for (1) North and Central America, (2) EMEA, and (3) South America[26] - The aerospace business divestiture resulted in a pre-tax gain of $4.67 billion on cash proceeds of $5.42 billion (net of cash disposed)[31] Segment Sales and Comparable Operating Earnings (in millions) | Segment (Q3 2024) | Net Sales | Comparable Operating Earnings | | :--- | :--- | :--- | | Bev. pkg, North & Central America | $1,456 | $203 | | Bev. pkg, EMEA | $950 | $128 | | Bev. pkg, South America | $484 | $78 | | Total Reportable Segments | $2,890 | $409 | Note 2: Non-U.S. GAAP Measures This note provides definitions and reconciliations for non-U.S. GAAP financial measures, detailing how Q3 2024 Comparable Net Earnings of $278 million differ from GAAP Net Earnings of $197 million due to specific adjustments, and includes reconciliations for other key non-GAAP metrics Reconciliation of GAAP to Comparable Net Earnings (Q3 2024, in millions) | Description | Amount | | :--- | :--- | | Net earnings attributable to Ball Corporation (GAAP) | $197 | | Facility closure costs and other items | $85 | | Amortization of acquired Rexam intangibles | $34 | | Non-comparable tax items | $(39) | | Gain on Aerospace disposal | $1 | | Comparable Net Earnings (Non-GAAP) | $278 | Reconciliation of Earnings Before Taxes to Comparable Operating Earnings (Q3 2024, in millions) | Description | Amount | | :--- | :--- | | Earnings before taxes (GAAP) | $227 | | Interest expense | $67 | | Business consolidation and other activities | $85 | | Amortization of acquired Rexam intangibles | $34 | | Comparable Operating Earnings (Non-GAAP) | $413 | Leverage and Coverage Ratios (Year Ended Sep 30, 2024) | Metric | Value | | :--- | :--- | | Comparable EBITDA | $1,961 million | | Net Debt | $4,365 million | | Interest Coverage | 5.8x | | Leverage (Net Debt/Comparable EBITDA) | 2.2x |