WESTMINSTER, Colo.- Ball Corporation (NYSE: BALL) today reported, on a U.S. GAAP basis, first quarter 2023 net earnings attributable to the corporation of $177 million (including a net after-tax loss of $40 million, or 13 cents per diluted share for business consolidation and other non-comparable items) or diluted earnings per share of 56 cents, on sales of $3.49 billion, compared to $446 million net earnings attributable to the corporation, or $1.37 per diluted share (including a net after-tax gain of $194 million, or 60 cents per diluted share for business consolidation and other non-comparable items, including the sale of Ball's former equity method investment in Metalpack) on sales of $3.72 billion in 2022. Ball's first quarter 2023 comparable net earnings were $217 million, or 69 cents per diluted share compared to $252 million, or 77 cents per diluted share in 2022. Year-over-year financial results reflect the impact of the Russian aluminum beverage can business sale completed in the third quarter of 2022.
Highlights
* U.S. GAAP diluted earnings per share of 56 cents vs. $1.37 in 2022; results include impact of 2022 business divestments
* Comparable diluted earnings per share of 69 cents vs. 77 cents in 2022; results include impact of 2022 business divestments
* Global beverage can shipments down 6.7%, including impact of 2022 Russian business divestment
* Global beverage can shipments down 1.4%, excluding impact of 2022 Russian business divestment
* Aerospace backlog $2.8 billion; contracts won-not-booked $5.0 billion
* Positioned to generate in the range of $750 million of free cash flow, grow EVA, reduce leverage and return value to shareholders in 2023
* Reiterate ability to achieve $200 million of net inflation recovery and at least $150 million of cost savings in 2023
* In 2023, positioned business to achieve long-term diluted earnings per share growth goal of 10 to 15 percent, inclusive of divested Russian operating earnings headwind
Details of segment comparable operating earnings, business consolidation and other 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. References to volume data represent units shipped. Year-over-year global and EMEA segment volume data exclude the impact of the Russian beverage can business sale completed in third quarter of 2022, unless specifically noted otherwise.
'We delivered strong first quarter results amid tough year-over-year comparisons driven largely by 2022 business divestments. Notable inflationary cost recovery, benefits of cost-out actions as well as improved operational efficiencies and aerospace program execution will significantly improve full-year results and more than offset higher interest expense and tepid first-half volume trends driven by varying global macroeconomic conditions impacting consumer demand,' said Daniel W. Fisher, chairman and chief executive officer.
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, segment comparable operating earnings for first quarter 2023 were $183 million on sales of $1.5 billion compared to $174 million on sales of $1.6 billion during the same period in 2022. First quarter sales reflect lower shipments and the contractual pass through of lower aluminum costs favorably offset by incremental inflation recovery.
First quarter segment comparable operating earnings increased year-over-year largely due to a $28 million net benefit associated with an anticipated U.S. virtual power agreement settlement during the quarter, incremental inflation recovery and improved operational performance offset by 4.9 percent lower volumes driven by customer mix and challenging year-over-year volume comparisons. Aluminum beverage cans continue to outperform other substrates in the current retail pricing and macroeconomic environment.
To maximize profitability and optimize low-cost production across our North American plant system during the current macroeconomic environment, the company will continue to prudently manage production output to serve our customers with innovative aluminum packaging. Given recent volume trends, inventory levels of coil aluminum and finished cans are expected to normalize as we enter the busy summer selling season. Fixed cost savings from executed plant closures, SG&A cost-out initiatives and the contractual recovery of prior year inflationary costs are expected to improve year-over-year results, largely in the second half of 2023.
Beverage Packaging, EMEA
Beverage packaging, EMEA, segment comparable operating earnings for first quarter 2023 were $73 million on sales of $834 million compared to $100 million on sales of $942 million during the same period in 2022. First quarter sales reflect lower year-over-year shipments due to the sale of the Russian operations during the third quarter of 2022, the contractual pass through of lower aluminum costs and unfavorable foreign exchange translation. Historical results for the Russian operations will continue to be reflected in beverage packaging, EMEA segment results. See Note 1 'Business Segment Information' for additional information about the sale agreement and historical results.
First quarter operating earnings reflect the year-over-year $32 million earnings headwind due to the sale of the Russian operations during the third quarter of 2022, start-up costs for two new facilities and unfavorable currency translation, partially offset by inflationary cost recovery. Packaging mix shift to aluminum cans supported by ongoing packaging legislation in certain countries continues to be a driver of aluminum beverage packaging growth. Year-over-year first quarter segment volumes increased 5.0 percent, excluding Russia, and were down 11.0 percent, including Russia. In addition, volumes in Turkey moderated following significant earthquakes impacting the region during the first quarter. The company's employees and plant assets in Turkey are safe and are not located in or near the recent earthquake area. Through our global employee giving and assistance programs, The Ball Foundation and local employees continue to support rebuilding needs in the region.
The recently constructed Kettering, U.K., and Pilsen, Czech Republic, facilities began initial line start-up activities late in the first quarter that will enable further growth for sustainable aluminum packaging across the region. During 2023, contractual recovery of 2022 inflation and cost savings are anticipated to offset the earnings headwind associated with the Russian business sale. See Note 1 'Business Segment Information' for additional information about the Russian historical results.
Beverage Packaging, South America
Beverage packaging, South America, segment comparable operating earnings for first quarter 2023 were $50 million on sales of $450 million compared to $78 million on sales of $494 million during the same period in 2022. Year-over-year sales reflect lower volumes and the contractual pass through of lower aluminum costs. First quarter segment comparable operating earnings decreased year-over-year due to lower volumes and unfavorable regional customer/product mix in Brazil.
Demand trends across the company's South American operations were challenging during the quarter due to the previously disclosed 2022 customer contract breach and unfavorable comparative retail pricing for certain beverages packaged in aluminum cans versus other substrates. Segment volumes decreased 4.1 percent in the first quarter. To maximize profitability and optimize low-cost production across our South American plant system, the company continues to temporarily modify production output across certain facilities in its Brazilian footprint. Across South America, multi-year customer initiatives to increase the use of sustainable aluminum packaging are expected to continue, and in Brazil, package mix shift to aluminum is expected to improve later in 2023 due to more favorable aluminum price trends relative to 2022 levels.
Aerospace
Aerospace segment comparable operating earnings for first quarter 2023 were $60 million on sales of $508 million compared to $43 million on sales of $504 million during the same period in 2022. Backlog remained strong at $2.8 billion, and contracts won, but not yet booked into backlog, finished the quarter at $5.0 billion.
Strong first quarter segment comparable operating earnings reflect new program wins, favorable operational performance and improving supply chain dynamics. The segment continues to leverage its talent, manufacturing and test capabilities, and its engineering and support workspace, to secure additional defense, climate change and Earth-monitoring contracts to provide mission-critical programs and technologies to U.S. government defense, intelligence, reconnaissance and surveillance customers.
During the first quarter, Ball Aerospace was selected to support the National Scientific and Technical Intelligence Mission for the next decade. As part of this contract, Ball Aerospace's team located on Wright-Patterson Air Force Base near Dayton, Ohio, will provide technical expertise in several areas, including electro-optical and spectral research and data analysis, systems and software development and other support services. Also, during the quarter, Ball Aerospace successfully powered and launched a prototype payload on Loft Orbital's YAM-5 mission. The payload is equipped with Ball-built Linux-based software which features containerized applications that can be changed on-orbit, as well as real-time data processing functions. With this demonstration payload, the modular technology combines proven expertise with advanced tools and processes, allowing for accelerated development timelines and future mission operations.
Complementing the team's success year-to-date, the Ball-built TEMPO (Tropospheric Emissions: Monitoring of Pollution) instrument launched successfully in April as part of NASA's first Earth Venture instrument mission. TEMPO will provide critical data on air pollution across North America including high-resolution daytime measurements of key air pollutants hourly as it scans across the continent - coast-to-coast from Mexico City to the Canadian Arctic - giving the scientific community a new tool to improve the detail and accuracy of air quality forecasts and make a meaningful difference in the everyday lives of people who are sensitive to air pollutants.
Looking ahead, bids for Ball Aerospace's services and technologies are accelerating and, over the next several quarters, will transition into the company's total backlog.
Non-reportable
In addition to undistributed corporate expenses, the results for the company's global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and the company's aluminum cup business continue to be reported in other non-reportable.
First quarter 2023 results reflect lower year-over-year undistributed corporate expenses and higher demand across all aluminum packaging businesses in other non-reportable. Volume across the company's global extruded aluminum bottles and aerosol containers increased 12.8 percent during the quarter. Volume also increased in the other non-reportable beverage can manufacturing facilities for the first quarter by 12.3 percent. During the quarter, the company's global aluminum aerosol customers and regional water and personal care brands continued to pursue next generation lightweight sustainable packaging solutions and expand usage of refillable aluminum bottles for certain venues. The company will execute incremental extruded aluminum bottle investments throughout the year to provide increased production capabilities to meet contracted growing customer demand.
Outlook
'Following our typical seasonal working capital build, we ended the first quarter with cash and available liquidity in excess of $1.5 billion. Leveraging our second half 2022 cost-out actions, contractual inflationary cost recovery and reduced capital expenditures, we remain well-positioned in 2023 to deliver our long-term diluted earnings per share goal and free cash flow in the range of $750 million in addition to returning value to shareholders,' said Scott C. Morrison, executive vice president and chief financial officer.
'We continue to actively manage our businesses through the lens of Drive for 10 and EVA. Our team remains focused on maximizing returns, improving free cash conversion, driving organic growth by leveraging sustainability and innovation tailwinds and being good stewards of our capital. We look forward to driving a circular economy through the broader use of sustainable aluminum packaging and exquisite environmental, aerospace and defense technologies to preserve our planet and achieving our recently disclosed Climate Transition Plan through collaboration with our supply chain partners. Including or excluding the Russian business divestment headwind and year-to-date demand trends, we remain positioned in 2023 to achieve our long-term diluted earnings per share growth goal of 10 to 15 percent, improve EVA generation, and increase cash flow to deleverage and return value to shareholders in 2023 and beyond,' Fisher 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 21,000 people worldwide and reported 2022 net sales of $15.35 billion. For more information, visit www.ball.com, or connect with us on Facebook or Twitter.
Conference Call Details
Ball Corporation (NYSE: BALL) will hold its first quarter 2023 earnings call today at 9 a.m. Mountain time (11 a.m. Eastern). The North American toll-free number for the call is +1 800-768-9711. International callers should dial +1 212-231-2937. Please use the following URL for a webcast of the live call:
https://edge.media-server.com/mmc/p/h6ipu84x
For those unable to listen to the live call, a taped replay will be available from 11 a.m. Mountain time on May 4, 2023, until 11 a.m. Mountain time on May 11, 2023. To access the replay, call 800-633-8284 (North American callers) or +1 402-977-9140 (international callers) and use reservation number 22026528. 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,' 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 they should be read in conjunction with, and qualified in their entirety by, the cautionary statements referenced below. Ball 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 Ball's Form 10-K, which are available on Ball's website and at www.sec.gov. Additional factors that might affect: a) Ball's packaging segments include product capacity, supply, and demand constraints and fluctuations and changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather and related events such as drought, wildfires, storms, hurricanes, tornadoes and floods; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; war, political instability and sanctions, including relating to the situation in Russia and Ukraine and its impact on Ball's supply chain and its ability to operate in Europe, the Middle East and Africa regions generally; changes in foreign exchange or tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and orders affecting goods produced by Ball or in its supply chain, including imported raw materials; b) Ball's aerospace segment include funding, authorization, availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties affecting segment contracts; c) Ball 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 actions or issues including those related to tax, environmental, social and governance reporting, competition, environmental, health and workplace safety, including U.S. Federal Drug Administration and other actions or public concerns affecting products filled in Ball's containers, or chemicals or substances used in raw materials or in the manufacturing process; technological developments and innovations; the ability to manage cyber threats; litigation; strikes; disease; pandemic; labor cost changes; inflation; rates of return on assets of Ball's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies, including policies, orders, and actions related to COVID-19; reduced cash flow; interest rates affecting Ball's debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on Ball's operating results and business generally.
Condensed Financial Statements (First Quarter 2023): See full results at:
https://www.ball.com/newswire/article/124175/ball-reports-first-quarter-2023-results
BALL CORPORATION 
