Ball Reports Strong Third Quarter Results
WESTMINSTER, Colo., Nov. 5, 2020 /PRNewswire/ -- Ball Corporation (NYSE: BLL) today reported, on a U.S. GAAP basis, third quarter 2020 net earnings attributable to the corporation of $241 million (including net after-tax charges of $56 million, or 17 cents per diluted share for business consolidation and other non-comparable items), or 72 cents per diluted share, on sales of $3.1 billion, compared to $92 million net earnings attributable to the corporation, or 27 cents per diluted share (including net after-tax charges of $145 million, or 43 cents per diluted share for business consolidation and other non-comparable items), on sales of $3.0 billion in 2019. Results for the first nine months of 2020 were net earnings attributable to the corporation of $358 million, or $1.08 per diluted share, on sales of $8.7 billion, compared to $406 million net earnings attributable to the corporation, or $1.19 per diluted share on sales of $8.8 billion for the first nine months of 2019.
Ball's third quarter and year-to-date 2020 comparable earnings per diluted share were 89 cents and $2.15, respectively, versus third quarter and year-to-date 2019 comparable earnings per diluted share of 70 cents and $1.82, respectively.
Third quarter and year-to-date results reflect the 2019 sale of the company's Argentine steel aerosol business and Chinese beverage can assets, and new segment reporting for the company's beverage packaging, EMEA business and other non-reportable results. References to volume data represent units shipped, and year-over-year global beverage volumes referenced exclude the impact of the 2019 sale of the Chinese beverage can assets. Details of comparable segment earnings, business consolidation activities, business segment descriptions and other non-comparable items can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release.
"Our team continues to operate safely while responding to significant growth across our businesses. Capital investments are being executed to support sustained growth for our global aluminum packaging portfolio and aerospace technologies. Our company is well-positioned in the current environment, and our focus remains on our employees' safety and our customers' success, as well as the efficient and effective startup of our various capital projects in order to deliver significant value to our shareholders," said John A. Hayes, chairman, president and chief executive officer.
"During the quarter, our company posted 27 percent comparable earnings per diluted share growth on 9 percent global beverage volume growth and 14 percent aerospace contracted backlog growth. In addition, we recently completed our aluminum aerosol acquisition in Brazil, announced new beverage can manufacturing plants in Pittston, Pennsylvania, as well as Frutal, Brazil, and commenced production at our new aluminum cup manufacturing facility in Rome, Georgia. With demand continuing to increase for our sustainable aluminum packaging solutions and critical aerospace technologies, Ball remains well positioned to invest in EVA-enhancing capital projects, grow diluted earnings per share, increase cash from operations, and deliver shareholder returns now and into the future," Hayes said.
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, comparable segment operating earnings for third quarter 2020 were $209 million on sales of $1.3 billion compared to $157 million on sales of $1.2 billion during the same period in 2019. For the first nine months, comparable segment operating earnings were $544 million on sales of $3.8 billion compared to $416 million on sales of $3.6 billion during the same period in 2019.
Quarterly segment earnings increased supported by mid-single-digit volume growth, benefits from new contractual terms and improved operational performance. Higher at-home consumption and tight supply/demand conditions are expected to outpace domestically produced volume through 2021. In advance of the start-up of multi-line can manufacturing facilities in Glendale, Arizona, and Pittston, Pennsylvania in mid-2021, SKU rationalization with certain customers, production from recently commissioned can manufacturing lines in Rome, Georgia, and Fort Worth, Texas, and the short-term benefit of imported cans from our global network will continue to address consumers' significant demand for soft drinks, sparkling water, spiked seltzers and beer throughout the remainder of 2020 and into 2021.
To further support our customers' can-filling investments, additional can manufacturing investments in excess of the previously announced 6 billion units of capacity are anticipated to deliver contracted volumes beyond 2021.
Beverage Packaging, EMEA
Beverage packaging, EMEA, comparable segment operating earnings for the third quarter 2020 were $117 million on sales of $809 million compared to $105 million on sales of $763 million during the same period in 2019. For the first nine months, comparable segment operating earnings were $248 million on sales of $2.2 billion compared to $277 million on sales of $2.2 billion during the same period in 2019. Beginning in 2020, current and historical quarterly results for the company's existing facilities in Cairo, Egypt, and Manisa, Turkey, have been consolidated into the segment.
Strong at-home consumption trends in the U.K., Nordics and Russia resulted in mid-single-digit volume growth for the segment during the quarter. Early in the quarter, seasonal demand patterns improved across Southern Europe, and, exiting the quarter, strength remained in this region as well as the U.K. and Russia. Packaging mix shift to sustainable aluminum cans for traditional and non-traditional beverages continues to accelerate.
Multiple beverage can line additions in the U.K. and Eastern Europe began production mid-year and, due to the strong recovery in regional demand, the European plant network provided minimal support for increased North American beverage can demand during the quarter.
Beverage Packaging, South America
Beverage packaging, South America, comparable segment operating earnings for the third quarter 2020, were $64 million on sales of $432 million compared to $60 million on sales of $392 million during the same period in 2019. For the first nine months, comparable segment operating earnings were $173 million on sales of $1.2 billion compared to $193 million on sales of $1.2 billion for the same period in 2019.
Segment volume ended the quarter up strong double digits. Throughout the seasonally slow third quarter, Brazilian demand remained strong as small grocery stores and gas stations continued to emphasize recyclable aluminum beverage packaging over returnable glass and customers prepared for the busy summer season.
As we look forward, with customer packaging mix continuing to favor aluminum beverage packaging and supply/demand tightening dramatically, the new multi-line facility in Frutal, Brazil, will begin production in mid-2021, and additional projects in Brazil and surrounding countries are forthcoming to support contracted volume.
Aerospace
Aerospace comparable segment operating earnings for third quarter 2020 were $44 million on sales of $451 million compared to $35 million on sales of $374 million during the same period in 2019. For the first nine months, comparable segment operating earnings were $114 million on sales of $1.3 billion compared to $103 million on sales of $1.1 billion. Contracted backlog increased 14 percent to $2.4 billion and contracts already won, but not yet booked into current contracted backlog, remains strong at $4.9 billion.
Segment results were very strong in the quarter despite inefficiencies created from tighter safety protocols due to COVID-19, and the business is on track to hire 1,000 employees in 2020. The company continues to win and provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers. Multiple projects to expand manufacturing capacity, test capabilities engineering and support workspace remain on track.
During the quarter, Ball was chosen by NASA for three studies to explore next-generation technologies for the Landsat Program, a series of Earth-observing satellite missions jointly managed by NASA and the U.S. Geological Survey that is entering its fifth decade of existence. In addition, Ball recently shipped the OMPS instrument for integration onto NOAA's next polar-orbiting operational weather satellite, the Joint Polar Satellite System-2 (JPSS-2). The OMPS instrument provides critical ozone measurements used by forecasters at the National Weather Service to produce ultraviolet (UV) radiation forecasts, by researchers to track the health of the ozone layer and by policy makers to help improve life on Earth. Ball has successfully built and delivered the two prior OMPS instruments currently in orbit providing critical ozone data.
Non-reportable
Third quarter results in non-reportable reflect higher year-over-year undistributed corporate expenses, the impact of the 2019 sale of the Chinese beverage can assets and Argentine steel aerosol business, lower operating results in the remaining non-reportable beverage and aluminum aerosol businesses, and start-up costs in the recently launched aluminum cup business. The current and historical results from the existing facilities in Cairo, Egypt, and Manisa, Turkey, have been consolidated into the beverage packaging, EMEA segment beginning in 2020.
The results for the company's global aluminum aerosol business and beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and investments in the company's new aluminum cup business continue to be reported as non-reportable segments. During the quarter, the company's global aluminum aerosol volumes declined low-teens with growth in India for sanitizing sprays offset by double-digit volume declines for personal care products in North America and Europe. In the third quarter, the company completed the acquisition of an aluminum aerosol manufacturing facility in Brazil and completed construction of its first dedicated aluminum cup manufacturing facility in Rome, Georgia. Multi-channel, retail shipments of aluminum cups are expected to commence in the first half of 2021.
Outlook
"Our company generates significant cash from operations, and we have the flexibility and opportunity to allocate significant capital to organic growth investments while continuing to return value to shareholders. We continue to foresee 2020 capital expenditures exceeding $900 million, and given additional EVA-enhancing opportunities supported by contracted volumes and backlog, growth investments are expected to be in excess of $1 billion in 2021 and beyond," said Scott C. Morrison, senior vice president and chief financial officer.
"The resiliency of our team and the strength in our businesses has never been more evident. We continue to be on-track to execute multiple growth projects as efficiently and safely as possible with our employees, customers and supply chains. The momentum in our businesses is accelerating and we are well positioned to further broaden our scale to serve future growth with an even higher level of customer service. In 2020 and beyond, we look forward to continuing to grow our cash from operations and EVA dollars on an even larger capital base while returning capital to our shareholders and achieving our long-term diluted earnings per share growth goal of at least 10 to 15 percent," Hayes said.
About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care 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 18,300 people worldwide and reported 2019 net sales of $11.5 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 third quarter 2020 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is 800-584-0405. International callers should dial 212-231-2902. Please use the following URL for a webcast of the live call:
https://edge.media-server.com/mmc/p/4od33iit
For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on November 5, 2020, until 11 a.m. Mountain time on November 12, 2020. To access the replay, call 800-633-8284 (North American callers) or 402-977-9140 (international callers) and use reservation number 21970523. 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," "positions" 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 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 capacity, supply, and demand constraints and fluctuations, including due to virus and disease outbreaks and responses thereto; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; mandatory deposit or other restrictive packaging laws; customer and supplier consolidation; power and supply chain interruptions; potential delays and tariffs related to the U.K's departure from the EU; changes in major customer or supplier contracts or a loss of a major customer or supplier; political instability and sanctions; currency controls; changes in foreign exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and shelter-in-place orders in any country or jurisdiction affecting goods produced by us or in our supply chain, including imported raw materials, such as those related to COVID-19 and those pursuant to Section 232 of the U.S. Trade Expansion Act of 1962 or Section 301 of Trade Act of 1974; 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 above plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; 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; the ability to manage cyber threats and the success of information technology initiatives; litigation; strikes; disease; pandemic; 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 policies, orders and actions related to COVID-19, the U.S. government elections, stimulus package(s), budget, sequestration and debt limit; reduced cash flow; interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on our operating results and business generally.
Condensed Financial Statements (Third Quarter 2020)
---
Unaudited Condensed Consolidated Statements of Earnings
Three Months Ended Nine Months Ended
September 30,
September 30,
($ in millions, except per
share amounts) 2020 2019 2020 2019
Net sales $
3,093 $
2,953 $
8,679 $
8,755
---
Costs and expenses
Cost of sales (excluding
depreciation and
amortization) (2,430) (2,363) (6,875) (7,044)
Depreciation and amortization (160) (169) (499) (510)
Selling, general and
administrative (121) (90) (363) (328)
Business consolidation and
other activities (8) (133) (235) (147)
(2,719) (2,755) (7,972) (8,029)
Earnings before interest and
taxes 374 198 707 726
---
Interest expense (68) (79) (206) (237)
Debt refinancing and other
costs (1) (41) (4)
Total interest expense (69) (79) (247) (241)
Earnings before taxes 305 119 460 485
Tax (provision) benefit (73) (32) (92) (73)
Equity in results of
affiliates, net of tax 8 5 (13) (6)
Net earnings 240 92 355 406
---
Net loss attributable to
noncontrolling interests, net
of tax 1 3
Net earnings attributable to
Ball Corporation $
241 $
92 $
358 $
406
---
Earnings per share:
Basic $
0.74 $
0.28 $
1.10 $
1.22
Diluted $
0.72 $
0.27 $
1.08 $
1.19
Weighted average shares
outstanding (000s):
Basic 326,549 331,148 325,965 332,726
Diluted 332,654 340,632 332,152 341,702
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended
September 30,
($ in millions) 2020 2019
Cash Flows from Operating Activities:
Net earnings $
355 $
406
Depreciation and amortization 499 510
Business consolidation and other activities 235 147
Deferred tax provision (benefit) (23) (16)
Other, net 7 32
Changes in working capital (728) (423)
Cash provided by (used in) operating activities 345 656
---
Cash Flows from Investing Activities:
Capital expenditures (683) (425)
Business acquisitions (69)
Business dispositions (17) (50)
Other, net 18 26
Cash provided by (used in) investing activities (751) (449)
---
Cash Flows from Financing Activities:
Changes in borrowings, net (243) 323
Net issuances (purchases) of common stock (69) (598)
Dividends (149) (133)
Other, net (60) (10)
Cash provided by (used in) financing activities (521) (418)
---
Effect of currency exchange rate changes on cash, cash
equivalents and restricted cash (96) (20)
Change in cash, cash equivalents and restricted cash (1,023) (231)
Cash, cash equivalents and restricted cash -beginning of
period 1,806 728
Cash, cash equivalents and restricted cash -end of period $
783 $
497
---
Unaudited Condensed Consolidated Balance Sheets
September 30,
($ in millions) 2020 2019
Assets
Current assets
Cash and cash equivalents $
771 $
483
Receivables, net 1,772 1,957
Inventories, net 1,309 1,180
Other current assets 173 209
Total current assets 4,025 3,829
Property, plant and equipment, net 4,895 4,320
Goodwill 4,401 4,371
Intangible assets, net 1,897 2,027
Other assets 1,754 1,690
Total assets $
16,972 $
16,237
---
Liabilities and Equity
Current liabilities
Short-term debt and current portion of long-term debt $
31 $
361
Payables and other accrued liabilities 3,733 3,412
Total current liabilities 3,764 3,773
Long-term debt 7,679 6,623
Other long-term liabilities 2,576 2,376
Equity 2,953 3,465
Total liabilities and equity $
16,972 $
16,237
---
Notes to the Condensed
Financial Statements
(Third Quarter 2020)
---
1. Business Segment
Information
Ball's operations are
organized and reviewed
by management along its
product lines and
geographical areas and
presented in the four
reportable segments
outlined below.
Effective January 1,
2020, the company
implemented changes to
its management and
internal reporting
structure for cost
reduction and
operational efficiency
purposes. As a result of
these changes, the
company's plants in
Cairo, Egypt, and
Manisa, Turkey, are now
included in the beverage
packaging, Europe,
Middle East and Africa
(beverage packaging,
EMEA), segment. The
company's operations in
India and Saudi Arabia
are now combined with
the former non-
reportable beverage
packaging, Asia Pacific,
operating segment as a
new non-reportable
beverage packaging,
other, operating
segment. The company's
segment results and
disclosures for the
three and nine months
ended September 30,
2019, have been
retrospectively adjusted
to conform to the
current year
presentation.
Beverage packaging, North
and Central America
:
Consists of operations
in the U.S., Canada and
Mexico that manufacture
and sell metal beverage
containers.
---
Beverage packaging, EMEA
: Consists of operations
in numerous countries
throughout Europe,
including Russia, as
well as Egypt and Turkey
that manufacture and
sell metal beverage
containers throughout
those regions.
---
Beverage packaging, South
America
: Consists of
operations in Brazil,
Argentina, Paraguay and
Chile that manufacture
and sell metal beverage
containers throughout
most of South America.
---
Aerospace
: Consists of
operations that
manufacture and sell
aerospace and other
related products and the
provision of services
used in the defense,
civil space and
commercial space
industries.
---
Other consists of a non-
reportable operating
segment (beverage
packaging, other),
discussed above, that
manufactures and sells
aluminum beverage
containers; a non-
reportable segment that
manufactures and sells
extruded aluminum
aerosol containers and
aluminum slugs (aerosol
packaging); a non-
reportable operating
segment that
manufactures and sells
aluminum cups (aluminum
cups); undistributed
corporate expenses;
intercompany
eliminations and other
business activities.
The company also has
investments in
operations in Guatemala,
Panama, South Korea, the
U.S. and Vietnam that
are accounted for under
the equity method of
accounting and,
accordingly, those
results are not included
in segment sales or
earnings.
Three Months Ended Nine Months Ended
September 30, September 30,
($ in millions) 2020 2019 2020 2019
Net sales
Beverage
packaging, North
and Central
America $
1,327 $
1,230 $
3,775 $
3,647
Beverage
packaging, EMEA 809 763 2,177 2,215
Beverage
packaging, South
America 432 392 1,166 1,210
Aerospace 451 374 1,321 1,081
Reportable segment
sales 3,019 2,759 8,439 8,153
Other 74 194 240 602
Net sales $
3,093 $
2,953 $
8,679 $
8,755
Comparable
operating
earnings
Beverage
packaging, North
and Central
America $
209 $
157 $
544 $
416
Beverage
packaging, EMEA 117 105 248 277
Beverage
packaging, South
America 64 60 173 193
Aerospace 44 35 114 103
Reportable segment
comparable
operating
earnings 434 357 1,079 989
Other (a) (15) 12 (26) 2
Comparable
operating
earnings 419 369 1,053 991
Reconciling items
Business
consolidation and
other activities (8) (133) (235) (147)
Amortization of
acquired Rexam
intangibles (37) (38) (111) (118)
Earnings before
interest and
taxes $
374 $
198 $
707 $
726
_____________________
(a) Includes undistributed corporate expenses, net,
of $13 million and $4 million for the three
months ended September 30, 2020 and 2019,
respectively, and $33 million and $42 million
for the nine months ended September 30, 2020
and 2019, respectively.
2. Non-U.S. GAAP Measures
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 the company's earnings
releases and quarterly and annual regulatory filings.
Information reconciling forward-looking U.S. GAAP
measures to non-U.S. GAAP measures is not available
without unreasonable effort. We have not provided
guidance for the most directly comparable U.S. GAAP
financial measures, as they are not available without
unreasonable effort due to the high variability,
complexity and low visibility with respect to certain
special items, including restructuring charges,
business consolidation and other costs, gains and
losses related to acquisition and divestiture of
businesses, the ultimate outcome of certain legal or
tax proceedings and other non-comparable items.
These items are uncertain, depend on various factors
and could be material to our results computed in
accordance with U.S. GAAP.
Comparable Earnings Before Interest, Taxes,
Depreciation and Amortization (Comparable EBITDA),
Comparable Operating Earnings, Comparable Net
Earnings, Comparable Diluted Earnings Per Share and
Net Debt - Comparable EBITDA is earnings before
interest, taxes, depreciation and amortization,
business consolidation and other non-comparable
costs. Comparable Operating Earnings is earnings
before interest, taxes, business consolidation and
other non-comparable costs. Comparable Net Earnings
is net earnings attributable to Ball Corporation
before business consolidation and other non-
comparable costs after tax. Comparable Diluted
Earnings Per Share is Comparable Net Earnings divided
by diluted weighted average shares outstanding. We
use Comparable EBITDA, Comparable Operating Earnings,
Comparable Net Earnings, and Comparable Diluted
Earnings Per Share internally to evaluate the
company's operating performance. Net Debt is total
debt less cash and cash equivalents, which are
derived directly from the company's financial
statements. Ball management uses Net Debt to
Comparable EBITDA and Comparable EBITDA to interest
expense as metrics to monitor the credit quality of
Ball Corporation.
Please see the company's website for further details
of the company's non-U.S. GAAP financial measures at
www.ball.com/investors under the "FINANCIALS" tab.
A summary of the effects of the above transactions on after tax earnings is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
---
($ in millions, except
per share amounts) 2020 2019 2020 2019
---
Net earnings
attributable to Ball
Corporation $
241 $
92 $
358 $
406
Add: Business consolidation and
other activities 8 133 235 147
Add: Amortization of acquired
Rexam intangibles 37 38 111 118
Add: Share of equity method
affiliate non-comparable costs 1 31 16
Add: Debt refinancing and other
costs 1 41 4
Less: Noncontrolling interest
share of non-comparable costs 1
Less: Non-comparable tax items 9 (26) (62) (68)
Net earnings
attributable to Ball
Corporation before
above transactions
(Comparable Net
Earnings) $
297 $
237 $
715 $
623
===
Comparable diluted
earnings per share $
0.89 $
0.70 $
2.15 $
1.82
===
A summary of the effects of the above transactions on earnings before interest and taxes is as follows:
Three Months Ended
Nine Months Ended
September 30, September 30,
---
($ in millions) 2020 2019 2020 2019
Net earnings attributable to Ball Corporation $
241 $
92 $
358 $
406
Add: Net loss attributable to noncontrolling interests (1) (3)
Net earnings 240 92 355 406
Less: Equity in results of affiliates, net of tax (8) (5) 13 6
Add: Tax provision (benefit) 73 32 92 73
Earnings before taxes 305 119 460 485
Add: Total interest expense 69 79 247 241
Earnings before interest and taxes 374 198 707 726
Add: Business consolidation and other activities 8 133 235 147
Add: Amortization of acquired Rexam intangibles 37 38 111 118
Comparable Operating Earnings $
419 $
369 $
1,053 $
991
===
A summary of Comparable EBITDA and Net Debt is as follows:
Twelve Less: Nine Add: Nine Twelve
Months Ended Months Ended Months Ended Months Ended
December 31, September 30, September 30, September 30,
($ in millions, except ratios) 2019 2019 2020 2020
Net earnings attributable to Ball
Corporation $
566 $
406 $
358 $
518
Add: Net loss attributable to
noncontrolling interests (30) (3) (33)
Net earnings 536 406 355 485
Less: Equity in results of
affiliates, net of tax 1 6 13 8
Add: Tax provision (benefit) 71 73 92 90
Earnings before taxes 608 485 460 583
Add: Total interest expense 324 241 247 330
Earnings before interest and taxes
(EBIT) 932 726 707 913
Add: Business consolidation and other
activities (a) 244 147 235 332
Add: Amortization of acquired Rexam
intangibles (a) 155 118 111 148
Comparable Operating Earnings 1,331 991 1,053 1,393
Add: Depreciation and amortization 678 510 499 667
Less: Amortization of acquired Rexam
intangibles (a) (155) (118) (111) (148)
Comparable EBITDA $
1,854 $
1,383 $
1,441 $
1,912
Total interest expense $
(324) $
(241) $
(247) $
(330)
Less: Debt refinancing and other
costs 7 4 41 44
Interest expense $
(317) $
(237) $
(206) $
(286)
Total debt at period end $
7,710
Less: Cash and cash equivalents (771)
Net Debt $
6,939
Comparable EBITDA/Interest Expense
(Interest Coverage) 6.7 x
Net Debt/Comparable EBITDA 3.6 x
_____________________
(a) For detailed information on these items, please
see the respective quarterly filings and/or
earnings releases, which can be found on our
website at www.ball.com.
3. Non-Comparable Items
Three Months Ended September 30, Nine Months Ended September 30,
---
($ in millions) 2020 2019 2020 2019
Non-comparable items - income (expense)
Beverage packaging, North and Central America
Business consolidation and other activities
Facility closure costs (1)
$ $
(1) $
(2) $
(7)
Individually insignificant items (1) (2) (1)
Other non-comparable items
Amortization of acquired Rexam intangibles (7) (7) (20) (22)
Total beverage packaging, North and Central
America (7) (9) (24) (30)
Beverage packaging, EMEA
Business consolidation and other activities
Facility closure and restructuring costs (2) (2) (6) (7) (17)
Individually insignificant items (3) (1) (7)
Other non-comparable items
Amortization of acquired Rexam intangibles (16) (16) (47) (51)
Total beverage packaging, EMEA (18) (25) (55) (75)
Beverage packaging, South America
Business consolidation and other activities
Brazilian indirect taxes (3) 4 4 56
Facility closure costs (13) (29)
Individually insignificant items (1) (1) (5) (5)
Other non-comparable items
Amortization of acquired Rexam intangibles (14) (14) (42) (42)
Total beverage packaging, South America (11) (28) (43) (20)
Other
Business consolidation and other activities
Pension settlements (4) (5) (8) (102) (8)
Rexam acquisition related compensation
arrangements 2 (6) (5)
Goodwill impairment charges in beverage
packaging, other segment (5) (62)
Reversal of certain provisions in beverage
packaging, other segment (6) 11
Loss from sale of and subsequent adjustment to
selling price of steel food and steel aerosol
business (7) (52) (15) (52)
Loss on sale of China business and related
costs (8) (45) (23) (61)
Individually insignificant items (4) (5) (25) (11)
Other non-comparable items
Share of equity method affiliate non-
comparable costs (9) (1) (31) (16)
Noncontrolling interest's share of non-
comparable costs, net of tax (1)
Amortization of acquired Rexam intangibles (1) (2) (3)
Debt extinguishment and refinance costs (10) (1) (41) (4)
Total other (11) (109) (297) (160)
Total business consolidation and other
activities (8) (133) (235) (147)
Total other non-comparable items (39) (38) (184) (138)
Total non-comparable items (47) (171) (419) (285)
Discrete non-comparable tax items (11) (21) 2 (30) 12
Tax effect on business consolidation and other
activities 1 14 45 19
Tax effect on other non-comparable items 11 10 47 37
Total non-comparable tax items (9) 26 62 68
Total non-comparable items, net
of tax $
(56) $
(145) $
(357) $
(217)
===
(1) In 2018, the company closed its
beverage packaging facilities in
Chatsworth, California, Longview,
Texas, and Birmingham, Alabama.
Charges were the result of updated
estimates for the costs of employee
severance and benefits and facility
shutdown costs.
(2) The company recorded charges for
asset impairments, accelerated
depreciation and inventory
impairments related to plant
closures and restructuring
activities.
(3) The company recorded gains related to
indirect tax contingencies in
Brazil. Our Brazilian subsidiaries
filed lawsuits to challenge the
Brazilian tax authorities regarding
the computation of certain indirect
taxes, claiming amounts were
overpaid to the tax authorities. The
amounts recorded in business
consolidation and other activities
related to prior periods.
(4) The company completed the purchase of
non-participating group annuity
contracts for benefit obligations
related to certain of the company's
pension plans. These purchases of
annuity contracts triggered
settlement accounting in both years.
Charges in the third quarter of 2020
relate to regular lump sums paid
subsequent to the triggering of
settlement accounting.
(5) In the first quarter of 2020, the
company recorded a non-cash
impairment charge for the goodwill
of the new beverage packaging,
other, reporting unit as the
carrying amount of the reporting
unit exceeded its fair value.
(6) In the first quarter of 2020, the
company reversed provisions recorded
in the fourth quarter of 2019
against working capital in the new
beverage packaging, other, segment
as balances due have been collected.
(7) In the first quarter of 2020, the
company recorded charges related to
the sale of its U.S. steel food and
aerosol business resulting from the
adjustment to the selling price.
(8) The company, noting a deterioration
in the real estate market in China,
reduced the expected value of the
contingent consideration due as part
of the sale in 2019 of the company's
China beverage packaging business.
(9) In 2020, the company recorded its
share of equity method non-
comparable costs, principally
related to the provision of
additional equity contributions and
loans to Ball Metalpack by its
shareholders. Ball's share was $30
million, resulting in the
recognition of previously unrecorded
equity method losses associated with
prior periods.
(10) The company recorded debt
extinguishment costs, principally
related to the redemption of
outstanding euro-denominated 3.50%
senior notes due in 2020 in the
amount of EUR400 million and the
outstanding 4.375% senior notes due
in 2020 in the amount of $1 billion.
(11) In the third quarter of 2020, the
company revalued its U.K. deferred
tax balances as a result of an
increase in the U.K. tax rate. In
the first nine months of 2020, the
company also incurred foreign
exchange losses on its deferred tax
balances in Brazil following
depreciation of the Brazilian real
against the U.S. dollar and recorded
excess tax benefits from the vesting
of Rexam acquisition related
compensation arrangements.
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SOURCE Ball Corporation
