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Ball Corp (BALL) Q3 Earnings Beat, Sales Miss Estimates
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Ball Corporation (BALL - Free Report) has reported third-quarter 2023 adjusted earnings of 83 cents per share, beating the Zacks Consensus Estimate of adjusted earnings of 82 cents per share. The bottom line increased 11% year over year. On a reported basis, the company posted earnings per share of 64 cents compared with the prior-year quarter’s $1.24 (which included the gain on the Russia business disposal).
Total sales were $3,571 million in the reported quarter, down 10% from the year-ago quarter’s levels and missing the Zacks Consensus Estimate of $3,880 million.
Global beverage can shipments were down 3%, excluding the impacts of the 2022 Russia business divestment. This, however, was an improvement from the 5% decline witnessed in the second quarter of 2023.
Ball Corporation Price, Consensus and EPS Surprise
Cost of sales amounted to $2,894 million in third-quarter 2023, down 11.6% from the year-ago quarter. The gross profit totaled $677 million, marginally up from the year-ago quarter’s $676 million. The gross margin was 19%, up from the prior-year quarter’s 17.1%.
Selling, general and administrative expenses decreased 17% year over year to $132 million. Adjusted operating profit was $406 million compared with the prior-year quarter’s $393 million. The adjusted operating margin was 11.4%, up from the prior-year quarter’s 9.9%.
Segmental Performance
The Beverage packaging, North and Central America segment’s revenues decreased 14% year over year to $1,541 million in the third quarter. Results reflected lower shipments and the contractual pass through of lower aluminum costs, favorably offset by incremental inflation recovery. We predicted sales to be $1,738 million.
Operating earnings amounted to $196 million, down 4% year over year. Our estimate for the segment's operating earnings was $193 million. We had expected the segment’s volume to fall 0.5% in the quarter.
Sales at the Beverage packaging, EMEA segment were $902 million in the quarter, down 12.5% year over year. The decline was due to lower shipments as a result of the sale of the Russian operations during the third quarter of 2022 and the contractual pass through of lower aluminum costs. The reported figure missed our estimated sales of $989 million.
Operating earnings were $103 million, which marked a 26% improvement year over year. We had projected operating earnings to be $108 million. Volume growth was expected to be 6.1% for this segment.
The Beverage packaging, South America segment’s revenues were $489 million in the reported quarter, up 0.6% year over year. The segment witnessed improvement in volume levels but was offset by the contractual pass through of lower aluminum costs. Our projection for the segment’s sales was $466 million.
Operating earnings declined 9% to $61 million. The reported figure surpassed our estimate of $42 million. Our model had predicted a volume increase of 9% for the segment.
The Aerospace segment’s sales were down 4% year over year to $460 million. We projected sales of $496 million for the segment. Operating earnings decreased 2% to $46 million as the segment continued to witnessed the impacts of supply-chain inefficiencies. Our estimate for its operating earnings was $53 million.
At the end of the quarter, the segment’s contracted backlog was $2.9 billion. Contracts already won but not yet booked into the current contracted backlog were $6.2 billion.
Financial Condition
The company reported cash and cash equivalents of $1,335 million at the end of third-quarter 2023, higher than $473 million at the end of the prior-year comparable quarter. Cash generated from operating activities amounted to $1,127 million in the first nine-month period of 2023 against a cash utilization of $224 million in the last-year’s comparable period.
The company’s long-term debt decreased to $7.5 billion at the end of the third quarter from $8.4 billion at the end of the year-ago quarter.
On Aug 17, 2023, BALL had announced the sale of the aerospace business to BAE Systems for gross proceeds of $5.6 billion in cash. The transaction remains subject to regulatory approvals and certain closing conditions and adjustments. The company intends to use the proceeds to lower debt levels.
Outlook
In 2023, Ball Corp expects to achieve low to mid-single digit comparable earnings per share growth. The company has also targeted at least $150 million of cost savings in 2023.
Price Performance
The company’s shares have lost 0.6% over the past year against the industry’s 4% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Ball Corp currently carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 14% in the last year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares have gained 24% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR’s shares have gained 5% in the last year.
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Ball Corp (BALL) Q3 Earnings Beat, Sales Miss Estimates
Ball Corporation (BALL - Free Report) has reported third-quarter 2023 adjusted earnings of 83 cents per share, beating the Zacks Consensus Estimate of adjusted earnings of 82 cents per share. The bottom line increased 11% year over year.
On a reported basis, the company posted earnings per share of 64 cents compared with the prior-year quarter’s $1.24 (which included the gain on the Russia business disposal).
Total sales were $3,571 million in the reported quarter, down 10% from the year-ago quarter’s levels and missing the Zacks Consensus Estimate of $3,880 million.
Global beverage can shipments were down 3%, excluding the impacts of the 2022 Russia business divestment. This, however, was an improvement from the 5% decline witnessed in the second quarter of 2023.
Ball Corporation Price, Consensus and EPS Surprise
Ball Corporation price-consensus-eps-surprise-chart | Ball Corporation Quote
Operational Update
Cost of sales amounted to $2,894 million in third-quarter 2023, down 11.6% from the year-ago quarter. The gross profit totaled $677 million, marginally up from the year-ago quarter’s $676 million. The gross margin was 19%, up from the prior-year quarter’s 17.1%.
Selling, general and administrative expenses decreased 17% year over year to $132 million. Adjusted operating profit was $406 million compared with the prior-year quarter’s $393 million. The adjusted operating margin was 11.4%, up from the prior-year quarter’s 9.9%.
Segmental Performance
The Beverage packaging, North and Central America segment’s revenues decreased 14% year over year to $1,541 million in the third quarter. Results reflected lower shipments and the contractual pass through of lower aluminum costs, favorably offset by incremental inflation recovery. We predicted sales to be $1,738 million.
Operating earnings amounted to $196 million, down 4% year over year. Our estimate for the segment's operating earnings was $193 million. We had expected the segment’s volume to fall 0.5% in the quarter.
Sales at the Beverage packaging, EMEA segment were $902 million in the quarter, down 12.5% year over year. The decline was due to lower shipments as a result of the sale of the Russian operations during the third quarter of 2022 and the contractual pass through of lower aluminum costs. The reported figure missed our estimated sales of $989 million.
Operating earnings were $103 million, which marked a 26% improvement year over year. We had projected operating earnings to be $108 million. Volume growth was expected to be 6.1% for this segment.
The Beverage packaging, South America segment’s revenues were $489 million in the reported quarter, up 0.6% year over year. The segment witnessed improvement in volume levels but was offset by the contractual pass through of lower aluminum costs. Our projection for the segment’s sales was $466 million.
Operating earnings declined 9% to $61 million. The reported figure surpassed our estimate of $42 million. Our model had predicted a volume increase of 9% for the segment.
The Aerospace segment’s sales were down 4% year over year to $460 million. We projected sales of $496 million for the segment. Operating earnings decreased 2% to $46 million as the segment continued to witnessed the impacts of supply-chain inefficiencies. Our estimate for its operating earnings was $53 million.
At the end of the quarter, the segment’s contracted backlog was $2.9 billion. Contracts already won but not yet booked into the current contracted backlog were $6.2 billion.
Financial Condition
The company reported cash and cash equivalents of $1,335 million at the end of third-quarter 2023, higher than $473 million at the end of the prior-year comparable quarter. Cash generated from operating activities amounted to $1,127 million in the first nine-month period of 2023 against a cash utilization of $224 million in the last-year’s comparable period.
The company’s long-term debt decreased to $7.5 billion at the end of the third quarter from $8.4 billion at the end of the year-ago quarter.
On Aug 17, 2023, BALL had announced the sale of the aerospace business to BAE Systems for gross proceeds of $5.6 billion in cash. The transaction remains subject to regulatory approvals and certain closing conditions and adjustments. The company intends to use the proceeds to lower debt levels.
Outlook
In 2023, Ball Corp expects to achieve low to mid-single digit comparable earnings per share growth. The company has also targeted at least $150 million of cost savings in 2023.
Price Performance
The company’s shares have lost 0.6% over the past year against the industry’s 4% growth.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
Ball Corp currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Brady (BRC - Free Report) , Applied Industrial Technologies (AIT - Free Report) and Emerson Electric Co. (EMR - Free Report) . BRC currently sports a Zacks Rank #1 (Strong Buy), and AIT and EMR have a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC have rallied 14% in the last year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares have gained 24% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR’s shares have gained 5% in the last year.