BALL Corp Q3 FY2024 earnings call

• Recognized the resilience of the Tampa team after hurricanes and the Ball Foundation's relief efforts. - Welcomed new colleagues from the acquisition of Alucan Entec. - Delivered strong third quarter results with year-to-date return of ~$1.4 billion to shareholders. - Aluminum packaging outperformed other substrates globally. - Anticipated full year global shipment growth in low single digits. - Expected 2024 comparable diluted EPS mid-single digits plus growth, strong adjusted free cash flow, and return of over $1.6 billion to shareholders. - Year-end 2024 net debt to comparable EBITDA expected below 2.5x, CapEx on track at $650 million, effective tax rate slightly above 21%, interest expense expected ~$300 million. - Focused on operational excellence, efficiency, cost management, and monitoring market volatility. - Anticipated exceeding 10% per annum diluted comparable EPS growth including in 2025.

Third quarter 2024 comparable diluted earnings per share was $0.91, versus $0.83 in the third quarter of 2023. Third quarter comparable net earnings of $278 million were up 6% year-over-year. In North and Central America, segment comparable operating earnings increased 4% despite a softer U.S. mass beer category. In EMEA, overall segment volumes were strong and segment comparable operating earnings increased 24%. In South America, segment comparable operating earnings increased 28% while segment volumes declined due to Argentina's weakness and Brazil's supply-demand tightness. The aerosol business performed well with operating earnings helped by insurance proceeds. The cups business slightly improved operating earnings year-over-year but growth hasn't met initial expectations and the company is evaluating options for it.

• Full year global shipment growth expected in low single digits. - 2024 comparable diluted EPS mid-single digits plus growth. - Year-end 2024 net debt to comparable EBITDA expected below 2.5x, currently 2.2x at end of third quarter. - 2024 CapEx on track at $650 million, a year-over-year reduction of $400 million. - Expected adjusted free cash flow target, share repurchases expected over $1.4 billion by year-end. - Full year 2024 effective tax on comparable earnings expected slightly above 21%, interest expense expected ~$300 million. - Anticipated exceeding 10% per annum diluted comparable EPS growth including in 2025.

• Market volatility including consumer demand and economic changes. - Argentina's economic instability impact on South American segment volumes. - Brazil's supply-demand tightness risk. - Cups business growth not meeting expectations and related evaluation of options. - Potential impact of natural disasters like hurricanes on operations. - Aluminum price fluctuations impact on costs.

Q: George Staphos inquired about the operational excellence work and incremental catalysts.

A: Dan Fisher responded that in the next couple of years, a continuance of 2%-3% cost structure productivity drive is expected, with better planning leading to less conversions, label changes, spoilage, and overtime, having taken out higher-cost less-efficient assets, and expecting incremental standardization and process improvements moving forward.

Q: George Staphos asked about managing capacity constraints in Brazil and the mass beer portfolio.

A: Dan Fisher said capacity lines were uncurtailed now, it was a Q3 phenomenon, and on the mass beer portfolio, they are with the right strategic partners, focusing on innovative brands and portfolios, with the end consumer's relief needed for top line results to be more visible.

Q: Ghansham Panjabi built on previous comments about beverage North America.

A: Dan Fisher said 2025 is encouraged with rate cuts and savings, beer category will get better with discretionary spending, premium subsegments' performance and new business winning were discussed, and 2025 base volumes expected in line with Analyst Day expectations.

Q: Jeffrey Zekauskas asked about restructuring charges and the aluminum cups initiative.

A: Howard Yu said most was related to closures and IT related to aerospace sale, Dan Fisher said it was due to inflation, weakened consumer, unsustainable price point, and downstream recycling infrastructure barriers.

Q: Arun Viswanathan asked about closure charge, volume progression, and footprint.

A: Howard Yu said most was related to closures and IT, Dan Fisher said they feel good about the footprint, and 2025 expected to be a nice year with growth drivers including rate cuts, share buyback, etc.

Q: Anthony Pettinari asked about EMEA operating rate, debottlenecking, and consumer weakness in North America.

A: Dan Fisher said no need for greenfield in Europe for 2-3 years, will maximize existing facilities, and consumer weakness in North America was due to specific category and consumer factors.

Q: Stefan Diaz asked about South America volume, profitability, and Tampa storm impact.

A: Dan Fisher said nearly double-digit growth in South America, capacity issues in Q3, no impact of Tampa storm on North American volume.

Q: Michael Leithead asked about Argentina's impact on segment volumes and Alucan acquisition.

A: Dan Fisher said Argentina had volume decrements, they are eyes wide open but with strategic partners, and Alucan acquisition brings incremental capacity and fits well with capital allocation.

Q: Joshua Spector asked about 4Q EPS expectations.

A: Howard Yu said Q3 had insurance proceeds which may affect Q4, but Q4 expected to continue incremental EPS growth.

Q: Edlain Rodriguez asked about Argentina volume decline and EMEA strength.

A: Dan Fisher said less spending power in Argentina, EMEA strength due to customer pricing efforts and energy relief.

Q: John Dunigan asked about cups business alternatives and South America capacity.

A: Howard Yu said various options for cups business are in play, Dan Fisher said South America capacity can be managed better next year.

Q: Michael Roxland asked about North America shipment cadence and strategic customer realignment.

A: Dan Fisher said North America shipment cadence had slowdown, and they are with winning alcohol brands, focusing on innovative portfolios.