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Ball Corporation reported first-quarter 2018 adjusted earnings of 50 cents per share, beating the Zacks Consensus Estimate of 45 cents. Earnings also jumped 32% year over year, mainly driven by improved performance in all product lines, along with lower corporate costs.
On a reported basis, the company posted earnings of 35 cents per share compared to 19 cents per share recorded in the prior-year quarter.
Total revenues increased 12.6% year over year to $2,785 million in the reported quarter. The revenue figure also surpassed the Zacks Consensus Estimate of $2,603 million. In Ball Corporation’s global beverage can business, overall volumes were up in low single-digits in the quarter, driven largely by continued strong performance in South America and Europe.
Ball Corporation Price, Consensus and EPS Surprise
Cost of sales went up 13.3% year over year to $2,237 million. Gross profit improved 10% year over year to $548 million. Gross margin contracted 30 basis points (bps) to 19.7%.
Selling, general and administrative expenses dropped 21.7% year over year to $112 million. Adjusted operating income increased 22.8% to $436 million from the $355 million reported in the year-ago quarter. The company reported operating margin of 15.7%, up 130 bps year over year.
Segment Performance
The Beverage packaging’s North and Central America segment’s revenues went up 9% year over year to $1,035 million in the first quarter. Operating earnings of $113 million decreased 8% year over year.
Sales at the Beverage packaging, Europe segment came in at $609 million in the quarter, advancing 20% year over year. Operating earnings surged 27.7% year over year to $60 million.
The Beverage packaging South America segment’s revenues jumped 23.7% year over year to $459 million in the reported quarter. Operating earnings of $98 million recorded a substantial improvement from $58 million recorded in the prior-year quarter.
The Food and Aerosol Packaging segment’s sales came in at $275 million, inching up 1.1% year over year. Operating earnings rose 9.5% year over year to $23 million.
In the Aerospace and Technologies segment, sales went up 11.9% year over year to $264 million. Operating earnings increased 19% year over year to $25 million. The segment’s backlog came in at around $1.7 billion at the end of the first quarter.
Financial Condition
Ball Corporation reported cash and cash equivalents of $477 million at the end of the first quarter, up from $458 million at the end of the year-ago quarter. The company used $74 million of cash in operating activities during the quarter compared with the cash usage of $401 million recorded in the prior-year period. Ball Corporation’s long-term debt decreased to $7,131 million as of Mar 31, 2018, from $7,476 million as of Mar 31, 2017.
The company initiated a share-repurchase program during the first quarter and increased share repurchase authorization to 25 million shares, which will help return significant value to shareholders in 2018.
Outlook
Ball Corporation reaffirmed its financial goals for 2018. The company expects its free cash flow to be around $900 million and capital spending will be at least $600 million. Notably, Ball Corporation reaffirms that its comparable EBITDA will be $2 billion and free cash flow will be in excess of $1 billion in 2019. The company's recent $750 million senior notes offering also bodes well for the long term.
Ball Corporation remains focused on several growth capital and network-optimization projects to align its beverage can portfolio. Further, its aerospace infrastructure expansion projects are ahead of schedule. The company also stated that the Colorado facility expansions in Westminster and Boulder, CO, are on track for completion in fourth-quarter 2018.
Moreover, Ball Corporation remains optimistic about consumers’ preference for beverage cans compared with less environmentally friendly packages. Thus, the company will focus more on promoting aluminum packaging throughout 2018 and beyond. In addition, execution of growth-capital projects, including North American network optimization, will drive growth.
Share Price Performance
Year to date, Ball Corporation’s shares have outperformed the industry it belongs to. The stock has gained around 1.8%, while the industry lost around 3.1% during the said time frame.
Zacks Rank & Stocks to Consider
Ball Corporation currently carries a Zacks Rank #4 (Sell).
Axon Enterprise has a long-term earnings growth rate of 25%. The stock has appreciated around 70% in a year’s time.
Ashtead has a long-term earnings growth rate of 15%. The company’s shares have been up 38% during the same time frame.
DMC Global has a long-term earnings growth rate of 20%. Its shares have surged 200% over the past year.
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Image: Bigstock
Ball Corp (BLL) Beats on Q1 Earnings & Sales, Keeps View
Ball Corporation reported first-quarter 2018 adjusted earnings of 50 cents per share, beating the Zacks Consensus Estimate of 45 cents. Earnings also jumped 32% year over year, mainly driven by improved performance in all product lines, along with lower corporate costs.
On a reported basis, the company posted earnings of 35 cents per share compared to 19 cents per share recorded in the prior-year quarter.
Total revenues increased 12.6% year over year to $2,785 million in the reported quarter. The revenue figure also surpassed the Zacks Consensus Estimate of $2,603 million. In Ball Corporation’s global beverage can business, overall volumes were up in low single-digits in the quarter, driven largely by continued strong performance in South America and Europe.
Ball Corporation Price, Consensus and EPS Surprise
Ball Corporation Price, Consensus and EPS Surprise | Ball Corporation Quote
Operational Update
Cost of sales went up 13.3% year over year to $2,237 million. Gross profit improved 10% year over year to $548 million. Gross margin contracted 30 basis points (bps) to 19.7%.
Selling, general and administrative expenses dropped 21.7% year over year to $112 million. Adjusted operating income increased 22.8% to $436 million from the $355 million reported in the year-ago quarter. The company reported operating margin of 15.7%, up 130 bps year over year.
Segment Performance
The Beverage packaging’s North and Central America segment’s revenues went up 9% year over year to $1,035 million in the first quarter. Operating earnings of $113 million decreased 8% year over year.
Sales at the Beverage packaging, Europe segment came in at $609 million in the quarter, advancing 20% year over year. Operating earnings surged 27.7% year over year to $60 million.
The Beverage packaging South America segment’s revenues jumped 23.7% year over year to $459 million in the reported quarter. Operating earnings of $98 million recorded a substantial improvement from $58 million recorded in the prior-year quarter.
The Food and Aerosol Packaging segment’s sales came in at $275 million, inching up 1.1% year over year. Operating earnings rose 9.5% year over year to $23 million.
In the Aerospace and Technologies segment, sales went up 11.9% year over year to $264 million. Operating earnings increased 19% year over year to $25 million. The segment’s backlog came in at around $1.7 billion at the end of the first quarter.
Financial Condition
Ball Corporation reported cash and cash equivalents of $477 million at the end of the first quarter, up from $458 million at the end of the year-ago quarter. The company used $74 million of cash in operating activities during the quarter compared with the cash usage of $401 million recorded in the prior-year period. Ball Corporation’s long-term debt decreased to $7,131 million as of Mar 31, 2018, from $7,476 million as of Mar 31, 2017.
The company initiated a share-repurchase program during the first quarter and increased share repurchase authorization to 25 million shares, which will help return significant value to shareholders in 2018.
Outlook
Ball Corporation reaffirmed its financial goals for 2018. The company expects its free cash flow to be around $900 million and capital spending will be at least $600 million. Notably, Ball Corporation reaffirms that its comparable EBITDA will be $2 billion and free cash flow will be in excess of $1 billion in 2019. The company's recent $750 million senior notes offering also bodes well for the long term.
Ball Corporation remains focused on several growth capital and network-optimization projects to align its beverage can portfolio. Further, its aerospace infrastructure expansion projects are ahead of schedule. The company also stated that the Colorado facility expansions in Westminster and Boulder, CO, are on track for completion in fourth-quarter 2018.
Moreover, Ball Corporation remains optimistic about consumers’ preference for beverage cans compared with less environmentally friendly packages. Thus, the company will focus more on promoting aluminum packaging throughout 2018 and beyond. In addition, execution of growth-capital projects, including North American network optimization, will drive growth.
Share Price Performance
Year to date, Ball Corporation’s shares have outperformed the industry it belongs to. The stock has gained around 1.8%, while the industry lost around 3.1% during the said time frame.
Zacks Rank & Stocks to Consider
Ball Corporation currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the same sector include Axon Enterprise, Inc , Ashtead Group PLC (ASHTY - Free Report) and DMC Global Inc. (BOOM - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise has a long-term earnings growth rate of 25%. The stock has appreciated around 70% in a year’s time.
Ashtead has a long-term earnings growth rate of 15%. The company’s shares have been up 38% during the same time frame.
DMC Global has a long-term earnings growth rate of 20%. Its shares have surged 200% over the past year.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>