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Ball Corp (BLL) Tops Q1 Earnings & Sales, Reaffirms View

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Ball Corporation reported first-quarter 2017 adjusted earnings of 76 cents per share, beating the Zacks Consensus Estimate of 69 cents. Earnings climbed around 29% year over year.

On a reported basis, the company posted earnings of 38 cents per share compared to a loss of 90 cents per share recorded in the prior-year quarter.

Ball Corporation Price, Consensus and EPS Surprise

 

Ball Corporation Price, Consensus and EPS Surprise | Ball Corporation Quote

Operational Update

Total revenue jumped 40.8% year over year to $2.473 billion in the reported quarter. Revenues marginally surpassed the Zacks Consensus Estimate of $2.445 billion.

Cost of sales increased 39.5% year over year to $2.0 billion. Gross profit surged 46.5% year over year to $498 million. Gross margin contracted 60 basis points (bps) to 20%.

Selling, general and administrative expenses climbed 32% year over year to $143 million. Adjusted operating income increased 31.8% to $207 million from $157 million in the year-ago quarter. The company reported operating margin of 8.4%, down 50 bps year over year.

Segment Performance

The Beverage packaging’s North and Central America segment’s revenues increased 29% year over year to $949 million in the reported quarter. Operating earnings of $123 million increased 32% year over year.

Sales at the Beverage packaging, Europe segment came in at $508 million in the reported quarter, advancing 42.7% year over year. Operating earnings increased 20.5% year over year to $47 million.

The Beverage packaging, South America segment’s revenues soared 194% year over year to $371 million in the reported quarter. Operating earnings of $58 million recorded a substantial improvement from $18 million in the prior-year quarter.

The Food and Aerosol Packaging segment’s sales came in at $272 million, declining 4.2% year over year. Operating earnings increased 5% year over year to $21 million.

In the Aerospace and Technologies segment, sales went up 31% year over year to $236 million. Operating earnings increased 16.7% year over year to $21 million. The segment’s backlog came in at around $1.4 billion at the end of the first quarter.

Financial Condition

Ball Corporation had cash and cash equivalents of $458 million at the end of first-quarter 2017 compared with $205 million at the end of first-quarter 2016. The company recorded cash used for operating activities of $398 million in the reported quarter compared with cash usage of $386 million recorded in the year-ago quarter. As of Mar 31, 2017, Ball Corporation’s long-term debt increased to $7,476 million from $5,408 million as of Mar 31, 2016.

On Apr 26, Ball Corporation announced a two-for-one split of its shares, effective May 16 to shareholders of record on May 8. The company also declared a 54% hike in the quarterly cash dividend, payable Jun 15, 2017, to shareholders of record as of Jun 1. Ball Corporation's existing share repurchase authorization exceeds 20 million of the company's post-split shares.

Outlook

Ball Corporation reaffirmed its long-term financial goals. The company expects 2017 free cash flow to be in the range of $750–$850 million and capital spending of approximately $500 million. It also remains on track to deliver on its free cash flow, EVA dollar growth, diluted earnings per share growth and cost savings targets for 2017 and beyond. Further, the company remains optimistic to deliver at least $150 million of synergies in the second half of 2017.

Share Price Performance

Ball Corporation’s share price has underperformed the Zacks categorized Containers- Metal/ Glass sub-industry over the past one year. Ball Corporation’s share price has dipped 6.1% in contrast with 13.5% growth recorded by the sub-industry over the said time frame.



Zacks Rank & Key Picks

Currently, Ball Corporation carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the same sector are AGCO Corporation (AGCO - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Graco Inc. (GGG - Free Report) . All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an average positive earnings surprise of 40.39% for the trailing four quarters Applied Industrial Technologies generated an average positive earnings surprise of 9.78% in the past four quarters, while Graco has an average positive earnings surprise of 13.88% for the last four quarters.

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