Ball Corporation (NYSE:BLL) reported third-quarter 2016 adjusted earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 92 cents. Earnings decreased 4% on a year-over-year basis. Earnings per share figure for the third quarter of 2016 reflects the impact of higher shares issued for the acquisitions of Rexam and Latapack-Ball.
On a reported basis, the company posted break-even results compared to earnings of 32 cents per share in the prior-year quarter.
Operational Update
Total revenue increased 34% year over year to $2,815 million in the reported quarter. Revenues lagged the Zacks Consensus Estimate of $2,845 million.
Cost of sales increased 38% year over year to $2,338 million. Gross profit surged 17% year over year to $477 million. Gross margin contracted 250 basis points (bps) to 16.9%.
Selling, general and administrative expenses climbed 26% year over year to $135 million. Adjusted operating income jumped 36% to $311 million from $228 million in the year-ago quarter. The company reported operating margin of 11%, up 10 bps year over year.
Segment Performance
The Beverage packaging’s North and Central America segment’s revenues increased 32% year over year to $1,076 million in the reported quarter. Operating earnings of $145 million increased 33% year over year.
Sales at the Beverage packaging, Europe segment were $687 million in the reported quarter, advancing 52% year over year. Operating earnings increased 18% year over year to $72 million.
The Beverage packaging, South America segment’s revenues soared 137% year over year to $318 million in the reported quarter. Operating earnings of $60 million were a substantial improvement from $14 million in the prior-year quarter.
The Food and Aerosol Packaging segment’s sales were $329 million, declining 12% year over year. Operating earnings remained flat at $31 million.
In the Aerospace and Technologies segment, sales remained flat at $204 million. Operating earnings increased 14% year over year to $24 million. The segment’s backlog was at around $1.4 billion at the end of third quarter, more than double the year-end 2015 level.
Financial Condition
Ball Corporation had cash and cash equivalents of $645 million at the end of third quarter 2016 compared with $244 million at third quarter 2015 end. As of quarter end, Ball Corporation’s long-term debt increased to $7,724 million from $2,879 million as of Sep 30, 2015.
Outlook
Ball Corporation stated that the Rexam integration is progressing smoothly. Its long-term financial goals are well on track and the company remains optimistic that it will deliver approximately $150 million of synergies in 2017 with the full amount of at least $300 million expected by the end of 2019.
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