Ball Reports Improved Second Quarter 2017 Operating Results; Reaffirms Goals

BROOMFIELD, Colo., Aug. 3, 2017 /PRNewswire/ -- Ball Corporation (NYSE: BLL) today reported, on a U.S. GAAP basis, second quarter 2017 net earnings attributable to the corporation of $99 million (including the net effect of after-tax charges of $91 million, or 25 cents per diluted share for business consolidation and other non-comparable costs) or 28 cents per diluted share, on sales of $2.86 billion, compared to $307 million attributable to the corporation, or $1.06 per diluted share (including the net effect of after-tax income of $155 million, or 54 cents per diluted share for business consolidation, debt refinancing and other costs and gain on the sale of divested assets), on sales of $2.03 billion in 2016. Results for the first six months of 2017 were net earnings attributable to the corporation of $167 million, or 47 cents per diluted share, on sales of $5.33 billion compared to $180 million, or 62 cents per diluted share, on sales of $3.79 billion for the first six months of 2016.

Ball's second quarter and year-to-date 2017 comparable diluted earnings per share were 53 cents and 91 cents, respectively, versus second quarter and year-to-date 2016 comparable earnings per diluted share of 52 cents and 82 cents, respectively. Earnings per share figures include the impact of shares issued for the recent acquisition and the company's two-for-one stock split effective May 16, 2017.

During the second half of 2016, Ball realigned its operating segments as a result of the Rexam transaction. The company retrospectively adjusted prior period amounts to conform to the current segment presentation. Comparable operating results prior to June 30, 2016, exclude the effects of the Rexam transaction.

Details of comparable segment earnings, business consolidation activities and other non-comparable costs, and catch-up depreciation entries recorded related to the finalization of the fair values for the June 30, 2016, Rexam acquisition can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release. Regional beverage packaging segment volumes referenced in today's news release reflect the pro forma effects of the Rexam transaction and related divestitures.

"Our results from operations were right in line with our expectations despite the disappointing volume and manufacturing performance in our U.S. tinplate business. On a pro forma basis, our global beverage can volumes were up and we continued to make progress on our cost-out initiatives. As we marked the one-year anniversary of the Rexam transaction, the catch-up and additional depreciation expense for the final acquisition accounting was recorded in the quarter and largely affected the reported results of our European beverage segment," said John A. Hayes, chairman, president and chief executive officer. "Moving forward, we reaffirm our financial goals for 2017 and 2019 comparable EBITDA and free cash flow. We are on track to recognize at least $150 million of the targeted $300 million plus synergies in 2017 and are accelerating actions to reap cost savings that will benefit 2018 and beyond."

Beverage Packaging, North and Central America
Beverage packaging, North and Central America, comparable segment operating earnings in the second quarter of 2017 were $156 million on sales of $1.15 billion, compared to $118 million on sales of $844 million in 2016. Segment operating earnings in the first six months of 2017 were $279 million on sales of $2.10 billion, compared to $211 million on sales of $1.58 billion in 2016. Second quarter 2017 comparable segment operating earnings included $2 million of depreciation expense for the referenced first quarter 2017 catch-up of depreciation and additional second quarter 2017 depreciation.

Second quarter and first half results include the benefit of acquired assets, the continued growth in specialty packaging and synergies related to the acquisition. Overall pro forma volumes for the segment were up low-single digits in the quarter. The Reidsville, North Carolina, beverage can facility ceased production at the end of the quarter and volumes have been relocated to other existing U.S. locations.

Beverage Packaging, South America
Beverage packaging, South America, comparable segment operating earnings for the second quarter 2017 were $69 million on sales of $349 million, compared to $22 million on sales of $133 million during the same period in 2016. Segment operating earnings in the first six months of 2017 were $127 million on sales of $720 million compared to $39 million on sales of $258 million in 2016. Second quarter 2017 comparable segment operating earnings included $2 million of depreciation expense for the referenced first quarter 2017 catch-up of depreciation and additional second quarter 2017 depreciation.

Second quarter and first six months' results include the benefit of acquired assets and excellent manufacturing performance. Overall pro forma segment volumes in the quarter were up mid-single digits in South America. Packaging mix shift from two-way glass to beverage cans led to solid demand in the region.

Beverage Packaging, Europe
Beverage packaging, Europe, comparable segment operating earnings for the second quarter 2017 were $63 million on sales of $665 million, compared to $74 million on sales of $479 million during the same period in 2016. Segment operating earnings in the first half of 2017 were $110 million on sales of $1.17 billion, compared to $113 million on sales of $835 million in 2016. Second quarter 2017 comparable segment operating earnings included $16 million of depreciation expense for the referenced first quarter 2017 catch-up of depreciation and additional second quarter 2017 depreciation.

Comparable segment earnings in the second quarter and year-to-date reflect the inclusion of operations from the acquisition. Overall segment demand was up low-single digits led by favorable demand trends across continental Europe. On July 31, 2017, the company ceased beverage can and end production at its Recklinghausen, Germany, facilities. Going forward, the company's remaining European facilities will absorb the Recklinghausen production. Approximately €40 million of annualized net cost savings are expected from the plant network optimization.

Food and Aerosol Packaging
Food and aerosol packaging comparable segment operating earnings for the second quarter 2017 were $25 million on sales of $274 million, compared to $33 million on sales of $298 million during the same period in 2016. Segment operating earnings in the first six months of 2017 were $46 million on sales of $546 million compared to $53 million on sales of $583 million in 2016.

During the second quarter, low double-digit U.S. food can volume declines and manufacturing inefficiencies led to lower absorption and redundant costs across the U.S. tinplate manufacturing business. Year-to-date and second quarter results also reflect the loss of sales and earnings from the Baltimore, Maryland, and Hubbard, Ohio, facilities, which were sold in late 2016 and early 2017, respectively. Metal service center transition projects are complete and second-half cost savings are expected to offset anticipated U.S. steel food can volume declines. Our aluminum aerosol business is sold out, and additional capacity projects in Europe and India are in various stages of completion.

Aerospace
Aerospace comparable segment operating earnings for the second quarter 2017 were $26 million on sales of $257 million, compared to $19 million on sales of $193 million during the same period in 2016. Segment operating earnings in the first half of 2017 were $47 million on sales of $493 million compared to $37 million on sales of $373 million in 2016.

During the quarter, the aerospace business achieved several program milestones. In addition, Kepler, the Ball-built exoplanet-hunting spacecraft for NASA, discovered 219 new planet candidates, 10 of which are near-Earth size. The company continues to be awarded new contracts and is on track to hire 300 additional employees this year. Quarter-end contracted backlog of $1.25 billion is expected to remain at high levels through year-end, and will further support anticipated year-over-year segment earnings improvement in the second half of 2017 and beyond.

Outlook
"Our quarter-end net debt of $7.1 billion is down from $7.5 billion at the end of the first quarter despite our normal seasonal working capital build and $110 million of year-to-date pension funding. Consistent with our prior commentary, 2017 comparable EBITDA is expected to be in the range of $1.75 billion and free cash flow is estimated to be in excess of $850 million after capital spending of at least $500 million," said Scott C. Morrison, senior vice president and chief financial officer.

"Our previously announced facility shut downs were executed on schedule, the next wave of transformational actions will accelerate in the second half of 2017, and our cash generation is well ahead of our plans. We are incredibly proud of our entire team. The company remains on pace to deliver on its near- and long-term goals, and in the second half of 2017, we look forward to returning additional value to our shareholders in the form of share repurchases and dividends," Hayes said.

About Ball Corporation
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 18,450 people worldwide and reported 2016 net sales of $9.1 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.

Conference Call Details
Ball Corporation (NYSE: BLL) will hold its second quarter 2017 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is 800‑681‑1617. International callers should dial 303‑223‑2681. Please use the following URL for a webcast of the live call:

http://edge.media-server.com/m/p/5d4wgy7r

For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on August 3, 2017, until 11 a.m. Mountain time on August 10, 2017. To access the replay, call 800‑633‑8284 (North American callers) or 402‑977‑9140 (international callers) and use reservation number 21854066. 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," "believes," "targets," "likely" and similar expressions typically identify forward-looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon any forward-looking statements and any of such statements should be read in conjunction with, and, qualified in their entirety by, the cautionary statements referenced below. 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 factors, risks and uncertainties that could cause actual outcomes and results to be different 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. Additional 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; competitive activity; failure to achieve synergies, productivity improvements or cost reductions; mandatory deposit or other restrictive packaging laws; customer and supplier consolidation, power and supply chain influence; changes in major customer or supplier contracts or a loss of a major customer or supplier; political instability and sanctions; currency controls; 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; 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 geopolitical events and governmental policies both in the U.S. and in other countries, including the U.S. government elections, budget, sequestration and debt limit; reduced cash flow; ability to achieve cost-out initiatives and synergies; interest rates affecting our debt; and successful or unsuccessful acquisitions and divestitures, including with respect to the Rexam PLC acquisition and its integration, or the associated divestiture; the effect of the acquisition or the divestiture on our business relationships, operating results and business generally.

Condensed Financial Statements (Second Quarter 2017)

Notes to the Condensed Financial Statements (Second Quarter 2017)