Ball Corporation (BALL) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Second Quarter Results: Ball Corporation reported increased global beverage can and extruded aluminum aerosol shipments by 2.8% and 5.6%, respectively.
• Share Repurchase and Dividends: Approximately $925 million returned to shareholders via share repurchases and dividends.
• Aluminum Packaging Performance: Aluminum packaging continues to outperform other substrates globally, with notable volume growth in North America and EMEA.
• FTSE4Good Index Inclusion: Recognition for strong environmental, social, and governance practices.
• Employee Volunteer Contributions: Over 3,100 volunteer hours contributed globally during the month of April.

Pessimistic Highlights

• South America Volume Performance: Softer volume performance in South America, particularly due to exposure to Argentina.
• US Beer Brand Disruption: Faced headwinds in North America due to disruption with a US beer brand.

Company Outlook

• Full Year Global Shipments Growth: Anticipated growth in the low to mid-single digits range.
• 2024 Financial Expectations: Positioned to grow comparable diluted EPS mid-single digits plus of 2023's $2.90 per share, with strong adjusted free cash flow and an expected return of value in excess of $1.6 billion to shareholders.
• Operational Efficiencies and Deleveraging: Key drivers for 2024 performance include benefits from deleveraging, share repurchases, improving operational efficiencies, and leveraging well-capitalized plant assets.

Q & A Highlights

• Q: On the 6.5% growth in the EMEA segment for 2Q, what specifically drove this, and how do you see it evolving into the back half of the year? (Ghansham Panjabi, Baird)

  A: Relief from inflation and aggressive pricing by customers contributed to the growth, along with a favorable mix. The company remains bullish on Europe for the medium and long term. (Dan Fisher)

• Q: For beverage, North America, Central America, how did that break out between US, Canada versus Mexico, and other regions? (Ghansham Panjabi, Baird)

  A: In the US, the company saw a decline in domestic beer but growth in imported beer and favorable CSD. The Mexican business, primarily serving the US market, saw growth with one major brewer. (Dan Fisher)

• Q: On North American capacity compared to 2019, has it changed much? (Jeff Zekauskas, JPMorgan)

  A: Yes, there is more capacity now, and the company is selling more with additional room for growth. (Dan Fisher)

• Q: How did the Americas' volume performance in 2Q break out, especially regarding the beer market and consumer soft drink market? (Jeff Zekauskas, JPMorgan)

  A: The beer market was down, but the consumer soft drink market for Ball was up. (Dan Fisher)

• Q: Regarding short-term growth versus long-term view, do you think you could see high single-digit to 10% plus growth in EPS in the second half? (Josh Spector, UBS)

  A: Excluding a significant R&D tax credit impact in Q3 of last year, the company operates at 10%-plus EPS moving forward. (Dan Fisher and Howard Yu)

• Q: On inventory levels in beer in North America, do you have any visibility around customer levels? (Josh Spector, UBS)

  A: Inventories are going to be a bit stronger moving forward, with historically low levels needing to be managed up in the second half of the year. (Dan Fisher)

• Q: On South America's outlook, especially considering challenging conditions in Argentina, do you still expect a robust second half? (Arun Viswanathan, RBC)

  A: Encouraged by the second half trajectory, especially with strong demand in Brazil and improving conditions in Argentina. (Dan Fisher)

• Q: On the ‘24 EPS guidance, considering strong 2Q results and modest tailwinds, is there upside to the full year guide? (Bryan Burgmeier, Citi)

  A: Leaning to the plus side of the mid-single-digit EPS growth guidance, encouraged by the performance and customer mix. (Dan Fisher)

• Q: Can you comment on European can shipments versus underlying consumption growth? (Bryan Burgmeier, Citi)

  A: Consumption is driving the growth, with no significant destocking expected. Inventory levels are low, indicating actual consumption. (Dan Fisher)

• Q: On the Brazilian market, how do you see the evolving consumer behaviors and market shifts impacting the future? (Chris Parkinson, Wolfe Research)

  A: Positive outlook for Brazil, with GDP growth and moderate inflation. The substrate shift from glass to cans is expected to continue, benefiting the can market. (Dan Fisher)

• Q: On the aluminum cup sightings, what's the latest on its market penetration and future prospects? (Chris Parkinson, Wolfe Research)

  A: The aluminum cup is gaining traction, but not as much as anticipated due to a weakened consumer environment. (Dan Fisher)