Ball Annual Report 2019 | Quarterlytics

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FY2019 Annual Report · Ball

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Ball Corporation

A N N U A L
R E P O R T
2 0 1 9

BALL CORPORATION

supplies innovative, sustainable aluminum packaging solutions for beverage,

personal care and household products, and aerospace and other technologies

and services to commercial and governmental customers. Founded in 1880,

the company employs more than 18,300 people worldwide. Ball Corporation

stock is traded on the New York Stock Exchange under the ticker symbol BLL.

Please visit Ball’s Investor Center at www.ball.com/investors to view the 2019 online annual report. Where you see
this information icon in our report, you can fi nd additional information on that topic at www.ball.com.

DRIVE FOR 10

Drive for 10 is a mindset around perfection, with a greater sense of urgency
around our future success. Drive for 10 has three major areas of focus:

WE KNOW
WE KNOW
WHO W E ARE
WHO WE ARE

WE KNOW
WE KNOW
WHERE WE AR E GOIN G
WHERE WE ARE GOI NG

WE KNOW
WHAT I S IMPORTANT

Proud of our rich history, we recognize
Proud of our rich history, we recognize
the whole of our company is greater
the whole of our company is greater
than the sum of its parts.
than the sum of its parts.

Most importantly, we believe in our
Most importantly, we believe in our
Most importantly, we believe in our
people, our culture and our ability to
people, our culture and our ability to
people, our culture and our ability to
deliver value to all our stakeholders.
deliver value to all our stakeholders.
deliver value to all our stakeholders.

Though we encourage and embrace our
Though we encourage and embrace our
Though we encourage and embrace our
diversity of thought, business, location
diversity of thought, business, location
and language, we are “One Ball,” valuing:
and language, we are “One Ball,” valuing:

UNCOMPROMISING
UNCOMPROMISING
INTEGRITY
INTEGRITY

BEING CLOSE TO
BEING CLOSE TO
OUR CUSTOMERS
OUR CUSTOMERS

BEHAVING LIKE OWNERS
BEHAVING LIKE OWNERS

FOCUSING ON ATTENTION
FOCUSING ON ATTENTION
TO DETAIL
TO DETAIL

BEING INNOVATIVE
BEING INNOVATIVE

We want to be the best at everything
We want to be the best at everything
we do, and will continually strive for
we do, and will continually strive for
perfection at Ball as we pursue our
perfection at Ball as we pursue our
strategy of:
strategy of:

MAXIMIZING value in our
MAXIMIZING
value in our
existing businesses
existing businesses

EXPANDING into new products
EXPANDING into new products
into new products
and capabilities
and capabilities

ALIGNING ourselves with the
ALIGNING ourselves with the
right customers and markets
right customers and markets

BROADENING our geographic reach
BROADENING our geographic reach

LEVERAGING our know-how and
our know-how and
technological expertise to provide
technological expertise to provide
a competitive advantage
a competitive advantage

In order to reach our goals, we must excel
in these areas:

CUSTOMER FOCUS
CUSTOMER FOCUS

We must be viewed as a strategic
We must be viewed as a strategic
partner with each of our key customers.
partner with each of our key customers.

OPERATIONAL EXCELLENCE
OPERATIONAL EXCELLENCE

We must be the most competitive in
We must be the most competitive in
terms of cost, quality and service in all
terms of cost, quality and service in all
the markets in which we compete, by
the markets in which we compete, by
continually driving for efﬁ ciencies in all
continually driving for efﬁ ciencies in all
our processes.
our processes.

INNOVATION AND
INNOVATION AND
BUSINESS DEVELOPMENT
BUSINESS DEVELOPMENT
We must identify and drive
We must identify and drive
proﬁ table growth.
proﬁ table growth.

PEOPLE AND CULTURE FOCUS
PEOPLE AND CULTURE FOCUS

We must have the best people, providing
We must have the best people, providing
them with the right support, rewards and
them with the right support, rewards and
growth opportunities to thrive.
growth opportunities to thrive.

SUSTAINABILITY
SUSTAINABILITY

We must balance our economic,
We must balance our economic,
environmental and social impacts
environmental and social impacts
for greater long-term success.
for greater long-term success.

ANNUAL REPORT 01

DEAR FELLOW
SHAREHOLDERS

We enter this new decade with momentum behind our
Drive for 10 vision and a steadfast commitment to continue
working with our customers and communities toward a
more sustainable world. This year, which marks our 140th
anniversary as a company, also marks our tenth year of
Drive for 10, the framework for how we operate. When we
look back at where we were ten years ago compared to
where we are today, our progress as a team has exceeded
even our own expectations. Since 2010, we have more
than doubled the amount of EVA dollars generated. We
have more than doubled our comparable diluted earnings
per share while increasing sales by more than 50 percent
and operating earnings by 77 percent, despite divesting
businesses representing more than 20 percent of sales and
operating earnings off of the 2010 base. And, during that
same time, our total shareholder return is up more than
445 percent versus an S&P 500 increase of approximately
190 percent. This could not have been done without our
sense of purpose and, most importantly, our more than
18,300 people who believe in “who we are,” our set of
values guiding us each and every day.

Since 2010, our global beverage division signiﬁ cantly
expanded our global footprint and capabilities. Around
the globe, we currently produce more than 40 different
can and bottle sizes versus approximately 15 in 2010;
our South American business has grown signiﬁ cantly, and
despite some concerns that the best was behind us in
North America and Europe, we grew those businesses
meaningfully by maximizing the value of what we do,
broadening our geographic reach, and focusing on new
customers and markets. We also entered a variety of new
geographic markets through greenﬁ eld investments and
our 2016 Rexam acquisition. And in 2019, we launched our
new, inﬁ nitely sustainable aluminum cup, which is expected
to realize signiﬁ cant growth in the foreseeable future.

Just a few years ago, this business primarily served a
handful of large customers in the beer and carbonated
soft drinks categories. Today, as seltzers, energy drinks,
teas, wine, craft beer, carbonated water, still water and
other categories begin to use and/or further their use of

JOHN A. HAYES

Chairman, President
& Chief Executive Offi cer

aluminum beverage containers in their packaging mix,
our global footprint supports these customers, large and
small, from all over the world in categories far beyond beer
and soda, with products far more diverse than standard
aluminum beverage cans.

In aerospace, we grew our business more than 100 percent
over the past 10 years and progressed from a component
supplier to a true mission partner. By leveraging the
long heritage we have had with NASA and other U.S.
governmental agencies, we moved with great agility from
a company that produces exquisite instruments to one
that can also be trusted to “tell it like it is” and excel at full
systems integration.

Lastly, the aluminum aerosol business was just a dream
in 2010. Since then, we have become the world’s largest
aluminum slug supplier and have aluminum aerosol
manufacturing capability on three continents. We look
forward to taking the lessons learned from the creation
of our global beverage can franchise—focusing on
operational excellence, sustainability, innovative products,
new customers, expanded geographies and new
segments—and replicate it here in this business.

BALL CORPORATION

BALL
ALUMINUM CUP

Sturdy, durable and cool to the
touch, the infinitely recyclable Ball
Aluminum Cup launched in 2019 at
leading collegiate and professional
sports venues and events, including
Super Bowl LIV. Ball plans to
introduce additional sizes to round out
its portfolio when the Rome, Georgia,
plant is operational, and intends
to expand adoption of the cups to
drinking establishments, parks and
recreation, colleges and universities,
hospitality, restaurants, retail,
business and industry.

ANNUAL REPORT 03

Getting here was no accident. Our Drive for 10 mindset,
which strives for perfection with a sense of urgency for
success, has propelled us to try to be “the best.” Today,
these principles still ring true, perhaps now more than
ever. We have a rich 140-year history of uncompromising
integrity, attention to detail and innovation. We leverage
our know-how and technological expertise to provide
a competitive advantage, and excel in operational
excellence and sustainability. However, without a constant
focus on our people, our values and “who we are,” we
would be just another company treading water in an
increasingly fractured world.

TRANSFORMING FOR THE FUTURE

When we completed the 2016 Rexam transaction, we laid
out 42-month targets to achieve $2 billion in comparable
EBITDA and $1 billion in free cash ﬂ ow by year-end 2019
versus pro forma 2016 comparable EBITDA and free
cash ﬂ ow of approximately $1.5 billion and $500 million,
respectively. In addition, we saw the ability to grow
comparable diluted earnings per share at, or in excess
of, our long-term goal of 10 to 15 percent per year.

Since that time, much has changed. We were able to divest
our underperforming steel food and aerosol businesses as
well as our Chinese beverage can business, which together
represented approximately $110 million in anticipated
2019 comparable EBITDA. We spent approximately $1.6
billion in growth capital to take advantage of the once
in a generation opportunity to capitalize on our position
in the aluminum packaging and aerospace businesses.
In addition, we returned approximately $2.2 billion to
shareholders after receiving approximately $800 million in
cash from those underperforming businesses we sold and
generating strong free cash ﬂ ow.

In 2019, the momentum continued. We generated
comparable net earnings of $861 million, or $2.53 of
comparable diluted earnings per share, a 15 percent
increase from the $2.20 per diluted share generated
in 2018. We also generated comparable EBITDA after
divestitures of $1.85 billion and delivered free cash ﬂ ow of

more than $950 million after capital expenditures of $600
million, of which $350 million was for growth capital that is
expected to generate meaningful EVA® dollars in 2020 and
beyond. Lastly, we generated $217 million of EVA dollars
and, as a result, we generated total shareholder returns
after dividends of nearly 42 percent in 2019 and, over the
past 1-, 3-, 5- and 10-year horizon, such total shareholders
returns have meaningfully outperformed all major stock
price indices.

ONCE IN A GENERATION OPPORTUNITY

It is no secret that we, as a society, are seeing a growing
outcry for more responsible ways of life. Customers,
consumers, retailers, communities, legislators, non-
governmental organizations (NGOs), and shareholders—
indeed all of our stakeholders—are calling for ways to
meet the needs of today without compromising tomorrow.
Because of the work we have completed over the last
years, we are now strategically positioned to respond
to these demands.

As part of our Drive for 10 vision, we have spent
meaningful time trying to reposition each of our
businesses for long-term success. We truly believe that,
when done correctly, this work could create a “once
in a generation” opportunity to leverage the heritage,
strengths and values of our past, and marry them with
what is important for the world both today and tomorrow.
That time is here and is now.

A key investment thesis of ours during the Rexam
acquisition was that consumers, customers, retailers,
and other stakeholders would increasingly realize that
aluminum beverage and aerosol cans are the most
sustainable package due to their high recycling rates and
the inﬁ nite ability to be recycled over and over again.
Aluminum cans are expressly designed using one material
so they can be recycled easily and inﬁ nitely without losing
quality. This is why 75 percent of aluminum ever produced
is still in use today—with an average global recycling rate
of 69 percent and an average 73 percent recycled content
in the U.S. After use, aluminum containers can be recycled

BALL CORPORATION

and put back on a store shelf in 60 days. Today, aluminum
beverage containers are increasingly perceived as the facts
suggest: with a lower carbon footprint and higher recycling
rates than all other beverage container substrates, the
aluminum beverage can is indeed the most sustainable
beverage package in the world today.

Over the past 18 months, our company and industry have
seen aluminum beverage can growth accelerate at rates
unseen in a long time due in large part to our society’s
increasing realization of aluminum’s sustainability beneﬁ ts.
Global volumes for our company in 2019 increased 5
percent adjusting for the sale of our China aluminum
beverage can segment, with South America up nearly 8
percent, Europe up 5 percent, North and Central America
up 4 percent, and AMEA (most of which will now be
consolidated in our European business going forward)
up 7 percent.

As we look forward, we still have much work to do, but
we continue to see and be encouraged by strong long-
term demand trends from our work in sustainability in
each of our three large regions (North and Central
America, Europe and South America). Our commercial
activities around the globe are bearing meaningful fruit,
with both volume and pricing growth in 2020 and beyond.
For example, in the United States, only 36 percent of
all new beverage SKUs were packaged in aluminum
containers in 2015. However, in 2019, this statistic
nearly doubled, with 67 percent of all new beverage
SKUs packaged in aluminum containers. In addition, our
continued push toward specialty containers continues to
pay off, with global specialty containers now representing
43 percent of our mix versus 30 percent in 2016, and
we believe by 2021 we will make and sell more than 50
percent of our mix from specialty containers.

Similarly, we have spent the past decade positioning
our aerospace business from a component supplier to a
trusted mission partner helping to reimagine and recreate

solutions for our nation in the intelligence, surveillance and
reconnaissance (ISR) segments of national defense and in
inﬂ uencing next-generation architectures in weather and
land imaging in civil space. This hard work is beginning
to yield very favorable results, with our backlog growing
155 percent since 2010, and the opportunity for continued
growth has never been stronger.

In our aerosol business, we are leveraging aluminum
growth opportunities amid the increasing demand for
sustainable products in the personal care and
household products categories. We have added new
products to our aluminum aerosol portfolio, including
leading the market with our ReAL® Gen2 slug, that reduces
the amount of aluminum used in the container by up to
25 percent, and a new impact extruded aluminum bottle
that provides a circular solution to plastic pollution. The
Inﬁ nity™ aluminum bottle is available in various shapes
and sizes, and can be customized for numerous beauty,
personal care, food and beverage products.

THE BEST IS YET TO COME

At Ball, we are proud to have the privilege to work for a
140-year-old iconic company with a foundational focus on
sustainability—whether it be:

economic sustainability by behaving like true owners of
the business, focusing on generating returns on capital
in excess of our cost of capital and investing for long
term success;

social sustainability by being good stewards of the

communities in which we live and operate and focusing
on the retention, engagement and development of our
people; and/or

environmental sustainability by minimizing our impact

on the world in which we live and focusing on the
sustainable attributes of the products we sell.

ANNUAL REPORT 05

GLOBAL
CAN CHALLENGE

In 2019, our plant communities
continued our global recycling
can challenge. Collectively, we
recycled more than 70,000 pounds
of aluminum – doubling the amount
from 2018. With more than 100
projects globally, many plants
demonstrated great results in all
three components of the challenge –
pounds recycled, recycling education
and promotion of their efforts.

BALL CORPORATION

While we have made much progress on our Drive for 10
journey, we believe the best is yet to come. However, we
cannot maintain this position without great execution.
In the coming years, performance will be critical. In
our global beverage business, we must leverage our
operational excellence to both realize the growth in
front of us and make our customers’ experience the best
it can be. In our aerospace business, we must focus on
our people, processes and facilities to ensure ﬂ awless
performance and management of critical missions. In our
aluminum aerosol business, we must push the envelope
to leverage our strengths and open the aperture for new
customers, markets and products while maintaining our
sustainability and cost leadership. Company-wide, we
must make sure we have the resources—including, most
importantly, the right people with the right training and
right career opportunities, to support our strategies.

We look forward to delivering long-term comparable
diluted earnings per share growth of at least 10 to 15
percent, increasing EVA dollars generated on a growing
invested capital base, and returning signiﬁ cant value to
shareholders—by managing the growth in our existing
businesses, leading the way in sustainability, and executing
our disciplined capital allocation strategy.

Our time is now!

JOHN A. HAYES
Chairman, President
& Chief Executive Offi cer

GPIM

In June 2019, Ball Aerospace
officially commissioned NASA’s
Green Propellant Infusion Mission
(GPIM) and began on-orbit testing
of a non-toxic, high-performance
propellant. GPIM is NASA’s first
opportunity to demonstrate the
practical capabilities of a “green”
propellant and propulsion system—
an alternative to conventional
chemical propulsion systems. As
the prime contractor for GPIM, Ball
Aerospace is responsible for system
engineering; ground and flight data
review; spacecraft bus; assembly,
integration and test; and launch and
flight support.

ANNUAL REPORT 07

2019 FIVE-YEAR REVIEW OF SELECTED FINANCIAL DATA

BALL CORPORATION AND SUBSIDIARIES
($ in millions, except per share amounts)

2019

2018

2017

2016

2015

Net Sales

Earnings before interest and taxes (EBIT)

Total interest expense

Earnings before taxes

Net earnings attributable to Ball Corporation (a)

Basic earnings per share (a)

11,474

$ 11,635

$ 10,983

932

935

802

(324 )

(302 )

(288 )

608

566

1.71

633

514

454

1.32

374

1.07

9,061

$ 7,997

463

606

(338 )

(260 )

125

346

263

0.83

281

1.02

Weighted average common shares outstanding (000s)

331,102

344,796

350,269

316,542

274,600

Diluted earnings per share (a)

1.66

1.29

1.05

0.81

1.00

Diluted weighted average common shares outstanding (000s)

340,121

352,321

356,985

322,884

281,968

Total assets

Total interest bearing debt and capital lease obligations

Cash dividends per share

Total cash provided by operating activities (c)

Non-GAAP Measures (b)

17,360

$ 16,554

$ 17,169

$ 16,173

$ 9,697

7,817

6,729

6,971

7,532

$ 5,051

0.55

1,548

0.400

1,566

0.365

1,478

0.26

193

0.26

1,037

Comparable operating earnings

1,331

1,290

1,220

976

801

Comparable net earnings

Diluted earnings per share (comparable basis)

Free cash flow (c)

EVA dollars (d)

861

2.53

950

217

775

2.20

750

242

728

2.04

922

240

563

1.74

(413 )

199

490

1.74

509

181

Total annual return to common shareholders (e)

41.8 %

22.7 %

1.8 %

4.0 %

7.5 %

(a) Includes business consolidation and other activities and other items affecting comparability between years. Additional details regarding the 2019, 2018 and 2017

items are available in Note 6 to the consolidated financial statements within Item 8 of this Annual Report on Form 10-K.

(b) Non-U.S. GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in
accordance with U.S. GAAP. See below for reconciliations of non-U.S. GAAP financial measures to U.S. GAAP measures. Further discussion of non-U.S. GAAP
financial measures is available in Item 7 of this Annual Report on Form 10-K under Management Performance Measurements and Other Liquidity Measures.
(c) Amounts in 2017, 2016 and 2015 have been retrospectively adjusted to reflect the adoption of new accounting guidance for the preparation of the statement
of cash flows that was effective January 1, 2018. Cash provided by operating activities was increased by $30 million in 2015 as a result of adopting the new
accounting guidance.

(d) Net operating earnings after tax less a capital charge of 9% after-tax on average invested capital employed.
(e) Change in stock price plus dividends paid, assuming reinvestment of all dividends paid. Information for this calculation is included in the shareholder return

performance chart in Item 5 of the Annual Report on Form 10-K.

BALL CORPORATION

DIRECTORS

DANIEL J. HEINRICH
Former Executive Vice President
and CFO of The Clorox Company1,3

CYNTHIA A. NIEKAMP
Retired Senior Vice President
of PPG Industries, Inc.2,3

STUART A. TAYLOR II*
CEO of The Taylor
Group, LLC3,4

JOHN A. HAYES
Chairman, President and CEO
of Ball Corporation

CATHY D. ROSS
Former Executive Vice President
and CFO of FedEx Express1,4

GEORGIA R. NELSON
President and CEO
of PTI Resources, LLC3,4

PEDRO HENRIQUE MARIANI
Chairman of the Board
of Banco BBM 2

JOHN BRYANT
Retired Chairman and CEO
of Kellogg Company1,4

TODD PENEGOR
President and CEO of
The Wendy’s Company 1,4

MICHAEL J. CAVE
Retired Senior Vice President
of The Boeing Company1,2

BETTY SAPP
Former Director of the National
Reconnaissance Offi ce (NRO) 2,3

COMMITTEES
1 Audit
4 Nominating/Corporate Governance
* Lead Independent Director

2 Finance

3 Human Resources

ANNUAL REPORT

2019 SHAREHOLDER INFORMATION

CORPORATE & OPERATING MANAGEMENT

COMPANY AND SHAREHOLDER INFORMATION

CHARLES E. BAKER
Vice President, General Counsel
and Corporate Secretary

NATE C. CAREY
Vice President and Controller

DANIEL W. FISHER
Senior Vice President, Ball Corporation;
COO, Global Beverage Packaging

COLIN GILLIS
President, Beverage Packaging
North & Central America

JOHN A. HAYES
Chairman, President and CEO

JEFFREY A. KNOBEL
Vice President and Treasurer

RON LEWIS
President, Beverage Packaging Europe

SCOTT C. MORRISON
Senior Vice President and CFO

LISA A. PAULEY
Senior Vice President, Human Resources
and Administration

CARLOS PIRES
President, Beverage Packaging
South America

STANLEY PLATEK
Vice President and General Manager,
Aerosol Packaging

DANIEL J. RABBITT
Vice President, Corporate Planning
and Development

COURTNEY K. REYNOLDS
Vice President, Communications
and Corporate Affairs

ROBERT D. STRAIN
Senior Vice President, Ball Corporation;
President, Ball Aerospace

Quarterly financial information and company news are posted
on www.ball.com/investors.

For investor relations call (303) 460-3537.

ANNUAL MEETING

The annual meeting of Ball Corporation shareholders will be
held to tabulate the votes cast and to report the results of
voting on the matters listed in the proxy statement sent to all
shareholders. No other business and no presentations are
planned. The meeting to report voting results will be held on
Wednesday, April 29, 2020, at 7:30 a.m. Mountain time at the
Omni Interlocken Hotel in Broomfield, Colorado.

CERTIFICATIONS

The company has filed with the New York Stock Exchange
the chief executive officer’s annual certification regarding
compliance with the NYSE’s corporate governance listing
standards. The company also has filed with the United States
Securities and Exchange Commission all required certifications
by its chief executive officer and its chief financial officer
regarding the quality of the company’s public disclosures.

TRANSFER AGENT AND REGISTRAR

Computershare
C/O: Shareholder Services
P.O. Box 505000
Louisville, KY 40233-5000
(800) 446-2617
www.computershare.com/investor

You can access your Ball Corporation common stock account
information on the Internet 24 hours a day, 7 days a week
through Computershare’s website.

EQUAL OPPORTUNITY

Ball Corporation is an equal opportunity employer.

This Summary Annual Report should be read in conjunction with the audited consolidated financial statements
and other information contained in Ball Corporation’s Annual Report on Form 10-K for 2019, which is being
furnished with the company’s Proxy Statement for the 2020 Annual Meeting of Shareholders. Copyright© Ball
Corporation 2020. Ball and

are trademarks of Ball Corporation Reg. U.S. Pat. & Tm. Office.

10 Longs Peak Drive
Broomfield, CO 80021 USA