Ball
Annual Report 2020

Plain-text annual report

A N N U A L R E P O R T Ball Corporation is one of the world’s leading suppliers of aluminum packaging for the beverage, personal care and household products industries. Our sustainable, aluminum packaging products are produced for a variety of end uses and are manufactured in facilities around the world. We also provide aerospace and other technologies and services to the U.S. government through our aerospace segment. Ball Corporation and its subsidiaries employ 21,500 people worldwide and reported 2020 net sales of $11.8 billion. We are headquartered in Westminster, Colorado, and our stock is listed for trading 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 2020 online annual report. Where you see this information icon in our report, you can find additional information on that topic at www.ball.com. 01 DEAR FELLOW SHAREHOLDERS At Ball, we began 2020 with great aspirations and a clear understanding of our company’s plan to navigate the year ahead. As we entered this past year, what we initially perceived to be an unmistakable path forward soon shifted with the onset of the global pandemic. Yet, in the face of many unknowns, 2020 remained a year of certainty and growth for Ball — certainty that our once in a lifetime opportunity had indeed arrived, and together we could overcome obstacles and turn opportunities into reality. Through our “can-do spirit” and the unprecedented global growth for our aluminum packaging and aerospace technologies, we increased comparable diluted earnings per share by 17 percent, and our strong balance sheet and cash flow from operations underpinned $1.1 billion of disciplined capital investments aligned to address our global growth — collectively positioning us to deliver value for our shareholders and all of our stakeholders. All this was made possible by an unwavering ownership mindset — an understanding of “who we are” — demonstrated by each and every one of our 21,500 employees. Our unremitting ability to deliver impressive results, even during the most trying and uncertain times, is no accident, but rather a testament to our unique culture and Drive for 10 vision. We started the year by focusing on our customers and our commitment to operational excellence, while working to increase our leadership and consumers’ awareness around infinitely recyclable aluminum and its role in creating a circular economy. We also continued to innovate and introduce new solutions to address our customers’ greatest challenges and opportunities. All these efforts were, and continue to be, critical components of Drive for 10. With a strong sense of purpose, and momentum behind our vision, our people maintained this focus, adapting to every challenge with the same level of resilience we have witnessed throughout our 140-year journey. And, over the course of the year, we worked tirelessly in pursuit of our goals — oftentimes performing beyond our initial expectations. Today, with great conviction, we realize that our time is now. Never before have we had greater clarity of what we believe in and of how we will achieve our goals. We know we have the right capabilities, people and products to grasp the opportunities in front of us, and we are ready to enhance our benchmark for excellence and lead the way. JOHN A. HAYES Chairman and Chief Executive Officer 2020 ANNUAL REPORT02 2020 $271 EVA DOLLARS 2019 $217 EVA DOLLARS 2018 $242 EVA DOLLARS * Net operating earnings after tax less a capital charge of 9% after-tax on average invested capital employed ($ in millions). INDEED, OUR TIME IS NOW brands’ access to our sustainable Just a decade ago, we embarked upon portfolio. During 2020, as part of our Drive for 10 vision, which is a mindset our commitment to stay close to our of who we are, where we are going customers and remain their strategic and what is important. As part of this, partner of choice, we made several we set our sights on broadening the capital investments designed to start geographic footprint and innovative up new and speed up legacy production portfolio of sustainable solutions in lines in the United States, South our aluminum beverage packaging America and Europe. Growth remained business, which then produced only a consistent theme throughout the 15 can varieties at 39 global locations. year. Beverage packaging shipped Today, with over 40 different can and volumes were up 5 percent, specialty mix bottle sizes in our portfolio, we realize increased to 46 percent, earnings before the opportunity we have is far greater interest and taxes were up 8 percent and than we could have initially imagined we increased EVA segment dollars by in terms of providing our customers 25 percent — despite unit volume with the most sustainable beverage declines in South America and Europe packaging. The momentum behind our during the second quarter of 2020 global beverage packaging business due to the emergence of the continues to accelerate as beverage COVID-19 pandemic. Today, across substrate preferences shift to the most our regional businesses, demand sustainable alternative — aluminum continues to exceed supply and our beverage packaging. Already, we growth capital investments, which are are on track to expand beverage can supported by longer duration contracts, capacity to fulfill long-term contracted will provide much needed capacity for volume growth, enhance the customer our customers to further grow their experience and increase emerging brand and product categories. 2020 ANNUAL REPORTBEVERAGE CAN SHIPMENTS (bu)* 2020 2019 2018 * In billions of units shipped, excluding China. 105.4 100.1 95.4 AEROSPACE BACKLOG ($ in billions) 2020 2019 2018 $2.4 $2.5 $2.2 $5.5 $4.2 $4.7 Contracted Backlog Won Not Booked Backlog 05 EMPLOYEE GROWTH 2020 2019 2018 21,500 18,300 17,500 Throughout the last year, we acted and in doing so, remain very optimistic on several opportunities to leverage about the long-term prospects for our manufacturing expertise and the this business. Not surprisingly, the sustainability credentials of our products unprecedented growth we experienced to deliver real value for customers across our organization in 2020 led to the and support them with their own hiring of thousands of new employees, all sustainability initiatives. Our aluminum of whom join us in the realization that our aerosol business pivoted into exciting opportunity of a lifetime is occurring at new categories, expanded its ability to this very moment. serve our customers on four continents through the acquisition of Tubex in Brazil, and is now equipped to offer refillable and re-closeable solutions — further positioning aluminum as the sustainable packaging solution for personal care products. In our aluminum cups business, following our initial start-up investment and our construction of a dedicated cups manufacturing plant, we continued to prepare for an expansion into retail channels and large entertainment venues. In aerospace, full-year earnings increased by 9 percent — demonstrating the resilience and adaptability of the business given supply chain inefficiencies and costs brought on by the pandemic. Further, we expanded our role as a mission partner to our customers, with contracted backlog of $2.4 billion, and increased our year-over-year unfunded contracts won, but not yet booked into backlog, by 31 percent to $5.5 billion, DELIVERING CERTAINTY THROUGH WHO WE ARE Our Drive for 10 vision — the bedrock of everything we do and everything we stand for — remained both our anchor point and our guiding light during the past year. In the face of a global pandemic and far-reaching social and political upheaval, we maintained our focus on what matters most. We prioritized our people, our communities, and the planet — all of which sustain us. By seeing great opportunity amidst many unknowns, we answered the call — standing by these truths — to do well and to do good. For us, sustainability is not a “nice to do,” rather it is our business strategy: by leveraging environmental, social and economic sustainability, we can change, adapt and create lasting value for all of our stakeholders. It is a strong 2020 ANNUAL REPORT06 07 At our core, we’re While we’ve earned our Whether we’re developing For some, it’s a buzzword, passionate, committed share of accolades, we’re packaging that’s infinitely but for us, it’s an ideal we’ve people who believe more focused on results, not recyclable or aerospace had for more than a century: together we can achieve recognition, solutions, not solutions that give us all a be responsible for what you extraordinary things. That’s spotlights. It’s what makes deeper understanding of make, how you make it, and who we’ve been since we us everyday champions, the universe, our focus is how you treat the people you started and who we continue standing up for what on sustainability. Not just work and live with. to be, 140 years later. we believe in and acting environmental sustainability, accordingly. Even when but social and economic nobody is looking. sustainability too. What we make Who we are ne may change. ver will. We believe the bottom The power of “we, not me” From our meeting rooms to line and the greater good drives us to solve even the our manufacturing plants, both benefit when you stay hardest problems: helping you can feel it: the certainty focused on the long view. people live more sustainably, that what we stand for and Every one of our diverse advancing our understanding who we are is at the core of community of employees of how the world works, and our success, no matter what around the globe acts like improving the health of the rolls off our production lines an owner, and it shows. planet — together. or gets launched into the night sky. WE, NOT ME. 09 growth engine that positions us to deliver working with our customers to address real value for our customers who need the topics of climate change, global air to meet the evolving expectations of quality, weather and environment, and consumers. And, we know aluminum biodiversity, as well as crucial resources is an infinitely recyclable material that and water scarcity. can deliver superior performance while addressing the many sustainability issues our customers care about most. In 2020, we took deliberate action to enhance the sustainability profile of our products and operations, including the approval of ambitious science-based greenhouse gas emission reduction targets and the implementation of renewable energy deals in North America and Europe. As an industry first, we achieved Aluminum Stewardship Initiative (ASI) Certification in all 23 of our beverage can plants in Europe, the Middle East and Africa; and we are committed to realizing the same goal in all other regions where we operate. At Ball, we have maintained a constant focus on what is important, consistently stepping forward to support our communities. Few points in our 140-year history are characterized by as much need as we witnessed in 2020. The impacts of COVID-19 were, and continue to be, felt far and wide. In true Ball style, and with a pressing sense of urgency, we acted by establishing our global COVID-19 Relief Fund — pledging $5 million to help the global communities where we live and work. To maximize our impact, we gave directly to over 365 organizations that addressed matters of food insecurity, small business support, health care and To further drive sustainability at-risk communities. As a community throughout our value chain, we partner, we stepped up to create established ASI Certification as an positive change in areas of real need. expectation for all suppliers with whom we conduct business. To track our own progress toward circularity and advance circular thinking in the beverage packaging industry, we introduced a new peer-reviewed life cycle assessment of the most common beverage packaging materials. And finally, with sustainability as a key factor in how and why we innovate — yet another component of Drive for 10 — we partnered with Kroenke Sports and Entertainment™ to elevate our sustainability commitments in a visible way, while also bringing our game-changing aluminum cup directly to consumers, making recycling and sustainability part of the fan experience. In our aerospace business, as we focus on sustainability through science, we are It is no secret that our ability to generate economic value and create a positive impact through our environmental and social initiatives depends on our people. We also understand that our ability to innovate with the future in mind and devise solutions to real-world challenges means we must attract, develop and retain diverse talent. Doing so requires, first and foremost, a culture where all are welcomed and all have the ability to contribute to our collective success. For this reason, diversity and inclusion remains a priority at Ball. In 2020, we took steps to elevate our commitment in this area, building upon a foundation we first established in 2015. Now, we are focusing on accountability by recruiting, 2020 ANNUAL REPORT10 TOTAL CAPITAL EXPENDITURES 2020 2019 2018 $1.113 billion $598 million $816 million developing and retaining diverse talent; for our communities and planet. Doing we are actively engaging leaders so will allow us to exceed our long-term in diversity- and inclusion-focused diluted earnings per share growth goal conversations; and we are participating of at least 10 to 15 percent and increase in exercises that will allow us to capture EVA dollars generated on a growing the voices of our people and learn more invested capital base, all while returning about what matters most to them. So, significant value to shareholders. while we are proud of what we have achieved, we are equally humbled by what must still be accomplished. Remaining grounded in Drive for 10, we know that our people and culture focus will be the catalyst for achieving our long-term vision for a global workforce that reflects the communities in which we live and operate. Knowing that our ownership mindset positions us to effectively seize this opportune moment and understanding that we are experiencing growth in ways like never before, we see great promise and great potential for Ball. We have made considerable progress on our Drive for 10 journey and now we are prepared to make the most of this MAKING THE MOST OF THIS MOMENT time. Indeed, our initial convictions As we look to make the most of our held true — volume growth is at an leadership position, we continue to all-time high and our technologies and leverage our operational excellence and innovations are sought after, we are disciplined approach to capital allocation building strategic, solutions-oriented to further accelerate our growth. Across relationships with our customers, and all of our businesses, we must continue our commitment to sustainability is to focus on our people by developing backed by real actions and real their talents and providing opportunities outcomes — further confirming that for them to play influential roles in our indeed our time is now. success. Finally, it is critical that we continue to define new possibilities and innovate in ways that make us the obvious solutions partner for our customers and enable us to make a difference not only for them, but also JOHN A. HAYES Chairman and Chief Executive Officer 2020 ANNUAL REPORT11 2020 FIVE-YEAR REVIEW OF SELECTED FINANCIAL DATA BALL CORPORATION AND SUBSIDIARIES ($ in millions, except per share amounts) 2020 2019 2018 2017 2016 Net Sales $ 11,781 $ 11,474 $ 11,635 $ 10,983 $ 9,061 Earnings before interest and taxes (EBIT) $ 1,003 $ 932 $ 935 $ 802 $ 463 Total interest expense Earnings before taxes (a) Net earnings attributable to Ball Corporation (a) Basic earnings per share (a) (316 ) (324 ) (302 ) (288 ) (338 ) $ $ $ 687 $ 608 $ 633 585 1.79 $ $ 566 1.71 $ $ 454 1.32 $ $ $ 514 $ 125 374 $ 263 1.07 $ 0.83 Weighted average common shares outstanding (000s) 326,260 331,102 344,796 350,269 316,542 Diluted earnings per share (a) $ 1.76 $ 1.66 $ 1.29 $ 1.05 $ 0.81 Diluted weighted average common shares outstanding (000s) 332,815 340,121 352,321 356,985 322,884 Total assets $ 18,252 $ 17,360 $ 16,554 $ 17,169 $ 16,173 Total interest bearing debt and finance lease obligations Cash dividends per share Total cash provided by operating activities (c) Selected Financial Data Comparable operating earnings (b) Comparable net earnings (b) Diluted earnings per share (comparable basis) (b) Free cash flow (b,c) EVA dollars (d) $ $ $ $ $ $ $ $ 7,800 $ 7,817 $ 6,729 $ 6,971 $ 7,532 0.60 0.55 0.400 0.365 1,432 1,548 1,566 1,478 0.26 193 1,415 $ 1,331 $ 1,290 $ 1,220 $ 976 987 2.97 319 271 861 2.53 950 217 775 2.20 750 242 728 2.04 922 240 563 1.74 (413 ) 199 Total annual return to common shareholders (e) 45.2 % 41.8 % 22.7 % 1.8 % 4.0 % (a) Includes business consolidation and other activities and other items affecting comparability between years. Additional details regarding the 2020, 2019 and 2018 items are available in Note 6 to the consolidated financial statements within Item 8 of the 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. Further discussion of non-U.S. GAAP financial measures is available in Item 7 of the Annual Report on Form 10-K under Management Performance Measurements and Other Liquidity Measures and the Non-GAAP Measures section of Ball’s website. (c) Amounts in 2017 and 2016 have been retrospectively adjusted to reflect the adoption of new accounting guidance that was effective January 1, 2018. (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 the Proxy Statement. 2020 ANNUAL REPORT 12 1 2 3 4 5 6 7 8 9 10 11 DIRECTORS 1 DANIEL J. HEINRICH Former Executive Vice President and CFO of The Clorox Company 1,3 2 3 4 5 CYNTHIA A. NIEKAMP Former Senior Vice President of PPG Industries, Inc. 2,3 STUART A. TAYLOR II CEO of The Taylor Group, LLC 3,4 JOHN A. HAYES * Chairman and CEO of Ball Corporation CATHY D. ROSS Former Executive Vice President and CFO of FedEx Express 1,4 6 7 8 9 GEORGIA R. NELSON Former President and CEO of PTI Resources, LLC 3,4 PEDRO HENRIQUE MARIANI Chairman of the Board of Bancom BBM 2 JOHN A. BRYANT Former Chairman and CEO of Kellogg Company 1,4 TODD A. PENEGOR President and CEO of The Wendy’s Company 1,4 10 11 12 MICHAEL J. CAVE Former Senior Vice President of The Boeing Company 1,2 BETTY SAPP Former Director of the National Reconnaissance Office (NRO) 2,3 DANIEL W. FISHER * President of Ball Corporation (not pictured above) COMMITTEES 1 Audit 2 Finance 4 Nominating/Corporate Governance * New title effective January 1, 2021. 3 Human Resources CORPORATE & OPERATING MANAGEMENT CHARLES E. BAKER Vice President, General Counsel and Corporate Secretary NATE C. CAREY Vice President and Controller DANIEL W. FISHER * President, Ball Corporation COLIN J. GILLIS President, Beverage Packaging North and Central America JOHN A. HAYES * Chairman and CEO CHARLES S. JOHNSON ** Vice President, Diversity and Inclusion DAVID A. KAUFMAN* Senior Vice President and President, Ball Aerospace JEFFREY A. KNOBEL Vice President and Treasurer RONALD J. LEWIS * Senior Vice President and COO, Global Beverage Packaging SCOTT C. MORRISON * Executive Vice President and CFO CAREY S. CAUSEY * President, Beverage Packaging Europe, Middle East and Africa LISA A. PAULEY * Executive Vice President, Human Resources and Administration CARLOS PIRES President, Beverage Packaging South America STANLEY M. 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 *New title effective January 1, 2021. **New title effective January 12, 2021. 2020 ANNUAL REPORT2020 SHAREHOLDER INFORMATION QUARTERLY STOCK PRICES AND DIVIDENDS Closing quarterly stock prices for the company’s common stock, and quarterly dividends in 2020 and 2019 were: 2020 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter High Low $ 97.91 $ 84.67 $ 75.40 $ 78.56 $ 82.60 $ 69.47 $ 61.17 $ 51.94 Dividends per share $ 0.15 $ 0.15 $ 0.15 $ 0.15 2019 High Low 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter $ 74.11 $ 80.78 $ 69.99 $ 58.84 $ 63.34 $ 68.51 $ 57.05 $ 44.26 Dividends per share $ 0.15 $ 0.15 $ 0.15 $ 0.10 *High and Low stock price represent the highest and lowest daily closing price for the quarter QUARTERLY RESULTS, COMPANY INFORMATION AND INVESTOR RELATIONS Quarterly financial information and company news are posted on www.ball.com/investors. For investor relations call (303) 460-3537. PURCHASE PLAN A dividend reinvestment and voluntary stock purchase plan for Ball Corporation shareholders permits purchase of the company’s common stock without payment of a brokerage commission. Participants in this plan may have cash dividends on their shares automatically reinvested and, if they choose, invest by making optional cash payments. Additional information on the plan is available by writing Computershare, Dividend Reinvestment Service, P.O. Box 505000, Louisville, KY 40233-5000. The toll-free number is (800) 446-2617, and the website is 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. If you need assistance, please call Computershare at (800) 446-2617 between 8 a.m. and 5 p.m. Eastern time. VIRTUAL 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 virtual meeting to report voting results will be held on Wednesday, April 28, 2021, at 7:30 a.m. Mountain time. ANNUAL REPORT ON FORM 10-K The Annual Report on Form 10-K for 2020 filed by the company with the United States Securities and Exchange Commission is enclosed. 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 P.O. Box 505000 Louisville, KY 40233-5000 SUSTAINABILITY Ball Corporation balances economic, environmental and social aspects in its decision making and activities to create value for its stakeholders and to contribute to its Drive for 10 vision. Find out more about our sustainability strategy at www.ball.com/sustainability. 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 2020, which is being furnished with the company’s Proxy Statement for the 2021 Annual Meeting of Shareholders. Copyright© Ball Corporation 2020. Ball and Reg. U.S. Pat. & Tm. Office. are trademarks of Ball Corporation CORPORATE INFORMATION9200 West 108th Circle Westminster, CO 80031 USA www.ball.com 

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