Ball (BLL)

Q1 2011 Earnings Call

April 28, 2011 11:00 am ET

Executives

Raymond Seabrook - Executive Vice President and Chief Operating Officer of Global Packaging Operations

Scott Morrison - Chief Financial Officer and Senior Vice President

John Hayes - Chief Executive Officer, President and Director

Analysts

Peter Ruschmeier - Barclays Capital

Daniel Khoshaba - KSA

Ghansham Panjabi - Robert W. Baird & Co. Incorporated

Albert Kabili - Macquarie Research

Philip Ng - Jefferies & Company, Inc.

Mark Wilde - Deutsche Bank AG

Richard Skidmore - Goldman Sachs Group Inc.

George Staphos

Christopher Manuel - KeyBanc Capital Markets Inc.

Timothy Thein - Citigroup Inc

Presentation

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Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the Ball Corporation First Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, April 28, 2011. I would now like to turn the conference over to John Hayes, President and CEO. Please go ahead.

John Hayes

Thank you, Edison, and good morning, everyone. This is Ball Corporation's conference call regarding the Company's first quarter results. The information provided during this call will contain forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied. Some factors that could cause the results or outcomes to differ are in the company's latest 10-K and in other SEC filings as well as the company's news releases. If you don't already have our earnings release, it's available on our website at ball.com. Information regarding use of non-GAAP financial measures may also be found on our website.

Joining me on the call today are Ray Seabrook, Chief Operating Officer of Global Packaging; and Scott Morrison, Senior Vice President and Chief Financial Officer.

In a moment, Scott will discuss our progress from a financial point of view, and Ray will follow up with details about the progress we are making in our packaging operations. I'll close with comments on Aerospace and the outlook for the balance of the year and beyond.

As mentioned in our press release, Ball reported very strong first quarter results due largely to strong volume growth in our Global Beverage Can businesses and strong operating performance across all of our Packaging businesses; excellent program performance in our Aerospace business; continued double-digit growth in the emerging markets, particularly China and Brazil; benefit from our prior actions to better match our supply with market demand here in North America; and better-than-anticipated performance from our recent M&A activity.

In addition to our strong results in the quarter, we also closed on the Aerocan acquisition. We successfully started up beverage can lines in Tres Rios, Brazil and Belgrade, Serbia, began construction on a new plant in Alagoinhas, Brazil and formed a joint venture in Vietnam.

Our Aerospace business won additional work, ramped up hiring for new programs and increased quarter-end backlog to more than $1 billion. As you can see, it's a busy and exciting time to be at Ball Corporation.

Recall that our strategy revolves around maximizing the value of our existing businesses, broadening our geographic reach, aligning ourselves with winning customers and markets, expanding into new products and capabilities and lastly, leveraging our technology in new product development abilities. And over the past period of time, we've been successfully executing on just that.

Our announcement earlier in the quarter of realigning our 12-ounce in specialty beverage can capacity in the U.S. sets our North American Beverage Can business up well for the balance of the year and beyond. The new capacity in Eastern Europe, Brazil, China and Southeast Asia allows us to participate in strong growth now and in the future. Our slug and extruded aluminum acquisitions position us well for what we believe are good global growth opportunities and have hit the ground running in terms of performance. And our new product development activities continue to pay dividends, with new investments in our Alumi-Tek bottle technology and our specialty can capabilities. In fact, our new products in specialty can growth around the world is up approximately 30% year-over-year, and our expectation is that this will continue.

All of this would not be possible without our talented and dedicated people who take true ownership in all that we do on a daily basis.

So in summary, we have good momentum in our business as we enter the seasonally strong summer season, and our investments in the future, that Ray will discuss, tee us up well in the future.

With that, I'll turn it over to Scott.

Scott Morrison

Thanks, John. Ball's comparable diluted earnings per share in the first quarter were $0.58 versus last year's $0.43. The following factors contributed to improved results: growth in and consolidation of our majority-owned Brazilian joint venture, as the first quarter of Brazil is seasonally strong; volume improvements and excellent operating performance on our Global Metal Packaging businesses; inventory holding gains in our Food and Household segment added a few cents in the quarter; exceptional program performance in our Aerospace business; a lower share count; and 6 additional accounting days in the quarter compared to the first quarter of 2010. Since there are still only 365 days in the year, this means there'll be 6 fewer accounting days in the fourth quarter of 2011.

These positive factors were partially offset by a year-over-year increase in corporate undistributed, primarily due to higher incentive accruals, an increase in the effective tax rate and higher interest expense. The euro had essentially no impact to earnings in the quarter.

Also in the quarter, the company recorded a $6.4 million after-tax charge or $0.04 per diluted share for the closure of our Torrance, California beverage container facility.

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