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Ball Reports Strong First Quarter 2014 Results

Companies mentioned in this article: Ball Corporation

BROOMFIELD, Colo., May 1, 2014 /PRNewswire/ -- 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.

Conference Call Details
Ball Corporation will announce its first quarter 2014 earnings on Thursday, May 1, 2014, before trading begins on the New York Stock Exchange. At 9 a.m. Mountain Time on that day (11 a.m. Eastern), Ball will hold its regular quarterly conference call on the company's results and performance. The North American toll-free number for the call is 800-667-8757. International callers should dial 303-223-4373. Please use the following URL for a webcast of the live call: http://www.media-server.com/m/acs/4ab86119696d47e9b9805e166e646bf9.

For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain Time on May 1, 2014, until 11 a.m. Mountain Time on May 8, 2014. To access the replay, call 800-633-8284 (North American callers) or 402-977-9140 (international callers) and use reservation number 21711957. A 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 Statements
This release contains "forward-looking" statements concerning future events and financial performance. Words such as "expects," "anticipates," "estimates" and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key risks and uncertainties are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in our Form 10-K, which are available on our website and at www.sec.gov. Factors that might affect: a) our packaging segments include product demand fluctuations; availability/cost of raw materials; competitive packaging, pricing and substitution; changes in climate and weather; crop yields; competitive activity; failure to achieve productivity improvements or cost reductions; mandatory deposit or other restrictive packaging laws; changes in major customer or supplier contracts or loss of a major customer or supplier; political instability and sanctions; and changes in foreign exchange or tax rates; b) our aerospace segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; c) the company as a whole include those listed plus: changes in senior management; successful or unsuccessful acquisitions and divestitures; regulatory action or issues including tax, environmental, health and workplace safety, including U.S. FDA and other actions or public concerns affecting products filled in our containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; litigation; strikes; labor cost changes; rates of return on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding the U.S. government budget, sequestration and debt limit; reduced cash flow; ability to achieve cost-out initiatives; interest rates affecting our debt.

    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
                                           ======            ======


    Non-U.S. GAAP Measures - Non-U.S. GAAP measures should not be
     considered in isolation. They should not be considered superior to, or
     a substitute for, financial measures calculated in accordance with
     U.S. GAAP and may not be comparable to similarly titled measures of
     other companies. Presentations of earnings and cash flows presented in
     accordance with U.S. GAAP are available in this earnings release and
     quarterly and annual regulatory filings.

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SOURCE Ball Corporation