) reported second-quarter 2014 adjusted earnings of $1.13 per
share, which beat the Zacks Consensus Estimate of $1.02. Moreover,
the reported figure surged 33% from the year-ago quarter, aided by
brilliant result in its global beverage operations and solid
program execution in the aerospace business.
On a reported basis, earnings came in at $1.07 per share, compared
with 63 cents in the prior-year quarter.
Total revenue rose 4% year over year to $2.29 billion from $2.2
billion in the year-ago quarter on improving demand for beverage
cans. Revenues also surpassed the Zacks Consensus Estimate of $2.25
Cost of sales increased 2.6% year over year to $1.85 billion. Gross
profit grew 10.4% year over year to $445.5 million and gross margin
expanded 110 basis points (bps) to r
Selling, general and administrative expenses went up 8.3% year over
year to $111 million. Adjusted operating income improved 17% to
$264.5 million from $226 million in the year-ago quarter.
Consequently, operating margin grew 120 bps to 11.5%.
Ball Corporation - Earnings Surprise |
Metal Beverage Packaging, Americas & Asia
segment revenues went up 4% to $1.13 billion from $1.09 billion in
the year-ago quarter. Operating earnings grew 13% year over year to
$142 million. Strong demand for metal beverage packaging in North
America aided results. Double digits year-over-year increase in
volume recorded in Brazil and China, driven by increasing can
penetration in beer packaging, also facilitated sales growth.
Sales from the
Metal Beverage Packaging, Europe
segment increased 9.8% year over year to $558 million. Operating
earnings also surged 42.3% year over year to $73.7 million, led by
mid-single digits volume growth for beverage cans across Europe as
well as excellent cost control initiatives.
Metal Food & Household Products Packaging
segment sales fell 3.9% year over year to $367.7 million. Operating
earnings also decreased 16% year over year to $39.8 million due to
low single-digit volume declines for steel containers and
manufacturing inefficiencies in the U.S., partly offset by strong
demand for aluminum aerosol containers in Europe and Mexico and
improved manufacturing performance in Mexico.
Aerospace and Technologies
segment, sales grew 6.6% year over year to $241 million. Operating
earnings, on the other hand, increased 29.8% year over year to
$24.8 million driven by successful program execution and solid
As of Jun 30, 2014, Ball Corporation reported cash and cash
equivalents of $155 million versus $169.5 million as of Jun 30,
2013. The company's total debt decreased to $3.54 billion as of Jun
30, 2014 from $3.86 billion as of Jun 30, 2013.
Cash flow from operating activities was $210 million for the period
of six months ended Jun 30, 2014 compared with cash usage of $86.6
million in the year-ago period.
Ball Corporation expects free cash flow to exceed $550 million for
full-year 2014. The company has maintained its long-term earnings
per share growth goal of 10%-15%.
Ball Corporation will continue to benefit from product launches and
expansion in the emerging markets. Metal beverage packaging,
Americas & Asia will benefit from the expansion of its
Southeast Asia operations with the construction of a one-line plant
in Myanmar, which will start up in mid-2015. Ball Corporation has
also started construction at existing Oss, Netherlands, facility to
increase capacity through the addition of a new line, which will
start up in the second quarter of 2015.
Moreover, the company believes that there is growth potential in
its Aerospace and Technologies segment. Ball Aerospace began work
on a fixed-price contract for the Stalker long-range,
electro-optical laser sensor system (SLREOSS) under a contract to
the NATO Seasparrow Project Office during the reported quarter.
However, uncertainty in the global economic scenario remains a
headwind. Moreover, manufacturing challenges and tough volume
comparisons will remain areas of concern in the second half of
Broomfield, CO-based Ball Corporation is the largest manufacturer
of beverage cans in North America. It also supplies aerospace as
well as other technologies and services to the government and
Currently, Ball Corporation has a Zacks Rank #2 (Buy). Some
better-ranked stocks in the sector include Graphic Packaging
Holding Co. (
), MeadWestvaco Corporation (
) and Sealed Air Corporation (
). All these stocks carry a Zacks Rank #2.
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