Ball (US:BALL)2023-08-03 21:28Financial Data and Key Metrics Changes - In Q2 2023, comparable diluted earnings per share were $0.61, down from $0.82 in Q2 2022 [10] - Sales decreased due to the sale of the Russian business, lower volumes, currency translation, and the pass-through of lower aluminum prices [10] - Net comparable earnings decreased primarily due to higher interest expense, the headwind from the Russian business sale, and lower volumes [11] - The company ended Q2 with approximately $2.65 billion in cash and committed credit facilities [13] Business Line Data and Key Metrics Changes - Global beverage volumes were down 11%, impacted by the Russian sale and a notable domestic beer brand experiencing demand disruption in North America [5] - North America segment earnings are expected to accelerate in Q3 due to contractual inflation recovery [12] - EMEA is anticipated to improve in Q4 as it laps the last Russian earnings headwind [12] Market Data and Key Metrics Changes - North America volume is projected to be down low single digits, while South America and EMEA volumes are expected to be up mid-single digits [9] - The company estimates flat global volume growth for the full year, excluding Russia [9] Company Strategy and Development Direction - The company is considering options for its aerospace business, indicating a strategic review of its assets [4] - Focus remains on delivering earnings, free cash flow, and high-quality products while managing costs and working capital [6] - The company aims to return value to shareholders through deleveraging and innovative packaging solutions [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment but expressed confidence in the company's ability to manage costs and improve operational efficiencies [5] - The outlook for 2023 includes an anticipated $750 million of free cash flow and a potential low-end achievement of 10% to 15% comparable diluted EPS growth [8] - Management remains optimistic about the second half of 2023, expecting improvements in Brazil and a recovery in mass beer volumes [24][37] Other Important Information - The company declared its quarterly cash dividend and emphasized reducing leverage before resuming share repurchases [14] - The effective tax rate on comparable earnings for 2023 is expected to be around 19% [13] Q&A Session Summary Question: Volume trends in early Q3 across regions - Management noted that there is a notable filled product issue with one customer in the mass beer space, but overall inventory levels are in good shape [17][21] Question: Strategic review of aerospace business - The aerospace business has become much larger and more profitable, prompting the strategic review [31] Question: North American market pressures - No pressure on contracts was reported, and management expects a return to volume momentum in the second half of the year [68][70] Question: Volume outlook for 2024 - Management believes that North America will see improved volumes in 2024, with growth anticipated in both Europe and South America [64] Question: Impact of promotional activity on mass beer market - Increased promotional activity has not yet translated into volume momentum, with expectations for a more significant impact in Q4 [45]