Management's discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q, which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future in determining the estimates that affect our consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates. Ball Corporation and its subsidiaries are referred to collectively as "Ball Corporation," "Ball," "the company," "we" or "our" in the following discussion and analysis.





OVERVIEW

Business Overview and Industry Trends

Ball Corporation is one of the world's leading aluminum packaging suppliers. Our packaging products are produced for a variety of end uses, are manufactured in facilities around the world and are competitive with other substrates, such as plastics and glass. In the aluminum packaging industry, sales and earnings can be increased by reducing costs, increasing prices, developing new products, expanding volumes and making strategic acquisitions. We also provide aerospace and other technologies and services to governmental and commercial customers, including national defense hardware, antenna and video tactical solutions, civil and operational space hardware and system engineering services.

We sell our aluminum packaging products mainly to large, multinational beverage, personal care and household products companies with which we have developed long-term relationships. This is evidenced by our high customer retention and our large number of long-term supply contracts. While we have a diversified customer base, we sell a significant portion of our packaging products to major companies and brands, as well as to numerous regional customers. The overall global aluminum beverage and aerosol container industries are growing and are expected to continue to grow in the medium to long term. The primary customers for the products and services provided by our aerospace segment are U.S. government agencies or their prime contractors.

We purchase our raw materials from relatively few suppliers. We also have exposure to inflation, in particular the rising costs of raw materials, as well as other direct cost inputs. We mitigate our exposure to the changes in the costs of aluminum through the inclusion of provisions in contracts covering the majority of our volumes to pass through aluminum price changes, as well as through the use of derivative instruments. The pass-through provisions generally result in proportional increases or decreases in sales and costs with a greatly reduced impact, if any, on net earnings. Because of our customer and supplier concentration, our business, financial condition and results of operations could be adversely affected by the loss, insolvency or bankruptcy of a major customer or supplier or a change in a supply agreement with a major customer or supplier, although our contract provisions generally mitigate the risk of customer loss, and our long-term relationships represent a known, stable customer base.

The majority of the aerospace business involves work under contracts, generally from one to five years in duration, as a prime contractor or subcontractor for various U.S. government agencies. Intense competition and long operating cycles are key characteristics of the company's aerospace and defense industry where it is common for work on major programs to be shared among a number of companies. A company competing to be a prime contractor may, upon ultimate award of the contract to a competitor, become a subcontractor for the ultimate prime contracting company.





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Corporate Strategy

Our Drive for 10 vision encompasses five strategic levers that are key to growing our business and achieving long-term success. Since launching Drive for 10 in 2011, we have made progress on each of the levers as follows:

Maximizing value in our existing businesses by improving efficiencies in our

beverage container and end facilities in North America, South America and

Europe, and expanding specialty container production across our global plant

network to meet current demand; leveraging plant floor systems in our beverage

facilities to reduce costs and manage contractual provisions across our diverse

? customer base; successfully acquiring and integrating a large global aluminum

beverage business while also divesting underperforming steel food and steel

aerosol packaging assets in North and South America and four beverage packaging

facilities in China; and in the remaining aluminum aerosol business, installing

new extruded aluminum aerosol lines in our European, Mexican and Indian

facilities while also implementing cost-out and value-in initiatives across all


   of our businesses;

Expanding further into new products and capabilities through commercializing

our new lightweight, infinitely recyclable aluminum cup and providing

? next-generation extruded aluminum aerosol packaging that utilizes proprietary

technology to significantly lightweight the can; and successfully introducing

new specialty beverage cans and aluminum bottle-shaping technology;

Aligning ourselves with the right customers and markets by investing capital to

meet continued growth for specialty beverage containers throughout our global

? network, which represent approximately 43 percent of our global beverage

packaging mix; aligning with spiked seltzer and craft brewers, sparkling and

still water fillers, wine producers and other new beverage producers who

continue to use aluminum beverage containers to grow their business;

Broadening our geographic reach with our acquisition of Rexam and our new

investments in beverage manufacturing facilities in the United States,

? Paraguay, Spain, Mexico, Myanmar and Panama, as well as an extruded aluminum

aerosol manufacturing facility in India and construction of a dedicated

aluminum cup manufacturing facility in the U.S.; and

Leveraging our technological expertise in packaging innovation, including the

introduction of our new proprietary, brandable lightweight aluminum cup and

providing next-generation aluminum bottle-shaping technologies and the

increased production of lightweight ReAl® containers, which utilize technology

? that increases the strength of aluminum used in the manufacturing process while

lightweighting the can by up to 20 percent over a standard aluminum aerosol

can, as well as our investment in cyber, data analytics methane monitoring, 5G

and LIDAR capabilities to further enhance our aerospace technical expertise

across a broader customer portfolio.

These ongoing business developments help us stay close to our customers while expanding and/or sustaining our industry positions and global reach with major beverage, personal care, household products and aerospace customers. In order to successfully execute our strategy and reach our goals, we realize the importance of excelling in the following areas: customer focus, operational excellence, innovation and business development, people and culture focus and sustainability.

RESULTS OF CONSOLIDATED OPERATIONS

Management's discussion and analysis for our results of operations on a consolidated and segment basis include a quantification of factors that had a material impact. Other factors that did not have a material impact, but that are significant to understand the results, are qualitatively described.





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Novel Coronavirus (COVID-19)

The novel coronavirus (COVID-19) has had a material effect upon the global business environment in the first quarter of 2020. Countries across the globe have issued stay-at-home orders and instructed non-essential businesses to temporarily close. Ball provides key products and services to the consumer beverage, household and aerospace markets and, consequently, the operations of Ball and of its principal customers and suppliers have been designated as essential across our key markets. This designation has allowed Ball to continue to operate its manufacturing facilities without significant disruption throughout the first quarter of 2020. For this reason, we do not believe that Ball has been significantly impacted, in the first quarter of 2020 by COVID-19. The risks that COVID-19 presents to Ball's business have been outlined in Item 1a. Risk Factors and Note 1 of these condensed consolidated financial statements. During the second quarter of 2020, we do expect to see a temporary decline in demand in our beverage packaging, South America, operating segment as a result of temporary government closures of smaller grocery stores, gas stations and convenience stores in Brazil and our beverage packaging, EMEA, operating segment as a result of country specific travel restrictions. These respective closures, restrictions and their duration are expected to constrain some of the supply of products to consumers.

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