Increased Packaging Volumes, Strategic Actions Propel
Ball’s Strong Second Quarter Results
Highlights ●2Q comparable earnings per diluted share from continuing operations of $1.38, exceeding prior year’s comparable earnings from continuing operations of $1.14 ●Sale of plastic packaging business announced in June; segment results reported in discontinued operations ●Global demand for Ball’s metal containers increasing across the company’s packaging businesses ●Cash flow still expected to be approximately $500 million, excluding change in accounting for securitization ●Company’s full-year 2010 share repurchase program expected to exceed $400 million | |
| Summary* | | | | | | |
| | | Second Quarter | | | | |
| $ in millions, except per share data | | 2010 | | | 2009 | | | Change | |
| Total net sales - Reported | | $ | 2,007.5 | | | $ | 1,744.6 | | | $ | 262.9 | |
| Net earnings from continuing operations - Reported | | | 144.6 | | | | 134.9 | | | | 9.7 | |
| Diluted EPS – Reported | | | 1.55 | | | | 1.42 | | | | 0.13 | |
| Comparable net earnings | | | 128.8 | | | | 108.6 | | | | 20.2 | |
| Comparable diluted EPS | | | 1.38 | | | | 1.14 | | | | 0.24 | |
| * Ball Corporation’s financial results for 2010 and 2009 are presented on both a GAAP and a non-GAAP (comparable) basis. Reported results were prepared in accordance with generally accepted U.S. accounting principles (GAAP). Non-GAAP (comparable) net earnings exclude items described in more detail in the accompanying notes to the unaudited condensed consolidated financial statements. | |
Ball Corporation • 10 Longs Peak Drive · P.O. Box 5000 · Broomfield, CO 80021 · www.ball.com Page 1
“On a comparable basis, our strong diluted earnings per share from continuing operations of $1.38 in the second quarter improved more than 20 percent over the same period in 2009 due to increasing volumes in all of our packaging businesses, the impact of the acquisition late last year of four U.S. metal beverage packaging plants and solid performance from our aerospace segment,” said R. David Hoover, chairman and chief executive officer. “The strategic actions we have taken during the past several months – acquiring the remaining interest in our former joint venture plant in China, exiting the plastic packaging business, the acquisition this week of Neuman Aluminum and increasing the size of our stock buyback program – are consistent with our primary goal of generating value for our shareholders an d are expected to continue to contribute to improved results.”
Second quarter 2010 results from continuing operations include equity earnings and a gain of $22.1 million, or 24 cents per diluted share, on the company’s previous ownership interest in the former joint venture beverage can plant in China that Ball acquired during the quarter, and after-tax charges totaling $6.3 million, or 7 cents per diluted share, associated with business consolidation activities and debt extinguishment of senior notes that were due in 2012.
Details of comparable segment earnings and business consolidation activities can be found in Notes 2 and 3 to the unaudited consolidated financial statements that accompany this news release.
The company announced on June 15 an agreement to sell its plastic packaging business, and the related earnings from this business are reported in discontinued operations in the financial information included with this news release. For the second quarter and first six months of 2010, diluted earnings per share from discontinued operations were a loss of $75.6 million, or 81 cents per diluted share, and a loss of $78.7 million, or 84 cents per diluted share, respectively, primarily the result of a goodwill impairment due to the announcement in June of the sale of the company’s plastic packaging business. The sale is anticipated to be complete during the third quarter.
“Executing on our strategic initiatives has enabled us to refine our company’s product portfolio, improve operating performance and meet the growing worldwide demand for metal packaging by our customers,” said John A. Hayes, president and chief operating officer for the corporation. “Double-digit volume growth continues in China and Brazil, and as overall metal packaging trends improve we continue to monitor global opportunities for disciplined growth.”
Metal Beverage Packaging, Americas & Asia
Metal beverage packaging, Americas and Asia, comparable segment operating earnings were $114.5 million in the second quarter on sales of $1 billion, compared to $74.8 million on sales of $749.1 million in the second quarter of 2009. For the first six months, comparable segment operating earnings were $188.5 million on sales of $1.8 billion, compared to $121 million on sales of $1.4 billion during the same period in 2009.
The addition of the four U.S. metal beverage packaging plants acquired in October 2009, increased retail promotion of carbonated soft drinks and strong demand for specialty can sizes drove volume improvement. Double-digit volume growth in China and Brazil also contributed to better segment results and equity earnings in the quarter.
Ball Corporation • 10 Longs Peak Drive · P.O. Box 5000 · Broomfield, CO 80021 · www.ball.com Page 2
Metal Beverage Packaging, Europe
Metal beverage packaging, Europe, segment results in the quarter were operating earnings of $72.5 million on sales of $479.3 million, compared to $64.8 million on sales of $490.6 million in 2009. Results for the first six months were operating earnings of $107.5 million on sales of $846.8 million, compared to $95.7 million on sales of $834.4 million in 2009. Segment results improved due primarily to increased volumes, growth in specialty cans and exceptional operating performance, which were offset slightly by unfavorable currency exchange rates.
During the second quarter, several discounters in Germany began relisting beverage cans in their stores, helping to increase year-to-date can sales in that country by more than 30 percent. While this increase came on a small base, the development is an encouraging sign for the return of the German can market.
Metal Food & Household Products Packaging, Americas
Metal food and household products packaging, Americas, segment results in the quarter were operating earnings of $33.4 million on sales of $312 million, compared to $35.1 million in 2009 on sales of $323.4 million. Year-to-date results were operating earnings of $55.1 million on sales of $597.4 million, compared to $84.7 million in 2009 on sales of $607 million in 2009.
Increased demand year-over-year, particularly for aerosol packaging, and a better price/cost mix nearly offset the absence of inventory holding gains that occurred in the second quarter of 2009. After the quarter ended, Ball acquired Neuman Aluminum, the leading North American manufacturer of aluminum slugs used to make extruded aerosol cans, beverage bottles, aluminum collapsible tubes and technical impact extrusions.
Aerospace and Technologies
Aerospace and technologies segment results were operating earnings of $18.6 million on sales of $180.2 million in the second quarter, compared to $14.8 million on sales of $181.5 million in 2009. For the first six months, operating earnings were $32.1 million on sales of $345.2 million compared to $29.4 million on sales of $359.6 million during the same period last year. Backlog at the end of the quarter was $539 million.
Segment results were stronger than expected and the contract award environment continued to improve. Full-year results, however, are expected to be slightly less than those in 2009.
Ball Corporation • 10 Longs Peak Drive · P.O. Box 5000 · Broomfield, CO 80021 · www.ball.com Page 3
Outlook
“Proceeds from the sale of Ball’s plastic packaging business and the company’s continued strong free cash flow will facilitate our expanded share repurchase program,” said Scott C. Morrison, senior vice president and chief financial officer. “Excluding the change in accounting for securitization, we currently expect full-year free cash flow to be approximately $500 million, and plan to repurchase in excess of $400 million of our stock in 2010.”
“The company’s strong performance during the first half of the year reflects our disciplined financial strategy to grow earnings per share over time, to improve returns on invested capital and to generate significant free cash flow,” Hoover said. “As demand for our packaging products increases and we benefit from our previous strategic actions, we expect the momentum in our business to continue and our second half performance from continuing operations should exceed that of 2009.”
Ball Corporation is a supplier of high-quality packaging for beverage, food and household products customers, and of aerospace and other technologies and services, primarily for the U.S. government. Ball Corporation and its subsidiaries employ more than 14,000 people worldwide and reported 2009 sales of more than $7.3 billion including discontinued operations. For the latest Ball news and for other company information, please visit www.ball.com.
Ball Corporation will hold its regular quarterly conference call on the company’s results and performance on Thursday, July 29, 2010, at 9 a.m. Mountain Time (11 a.m. Eastern). The North American toll-free number for the call is 800-732-5617. International callers should dial 212-231-2900. Please use the following URL for a webcast of the live call:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=115234&eventID=3183780
For those unable to listen to the live call, a taped replay will be available after the call’s conclusion until 11 a.m. Mountain Time (1 p.m. Eastern) on Aug. 5, 2010. To access the replay, call 800-633-8284 (North American callers) or 402-977-9140 (international callers) and use reservation number 21474804. A written transcript of the call will be posted within 48 hours of the call’s conclusion to Ball’s Web site at www.ball.com in the investors section under “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 are intended to 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 99.2 in our Form 10-K, which are available at our Web site and at www.sec.gov. Factors that might affect our packaging segments include fluctuation in product demand and preferences; availability and cost of raw materials; competitive packaging availability, pricing and substitution; changes in climate and weather; crop yields; competitive activity; failure to achieve anticipated productivity improvements or production cost reductions; mandatory deposit or other restrictive packaging laws; changes in major customer or supplier contracts or loss of a major customer or supplier; and changes in foreign exchange rates or tax rates. Factors that might affect our aerospace segment include: funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts. Factors that might affect the company as a whole include those listed plus: accounting changes; changes in senior management; the current global recession and its effects on liquidity, credit risk, asset values and the economy; successf ul or unsuccessful acquisitions, joint ventures or divestitures; integration of recently acquired businesses; regulatory action or laws including tax, environmental, health and workplace safety, including in respect of climate change, or chemicals or substances used in raw materials or in the manufacturing process; governmental investigations; technological developments and innovations; goodwill impairment; antitrust, patent and other litigation; strikes; labor cost changes; rates of return projected and earned on assets of the company’s defined benefit retirement plans; pension changes; reduced cash flow; interest rates affecting our debt; and changes to unaudited results due to statutory audits or other effects.
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Ball Corporation • 10 Longs Peak Drive · P.O. Box 5000 · Broomfield, CO 80021 · www.ball.com Page 4
