2016 BALL CORPORATION MANAGEMENT BRIEFING
DECEMBER 13, 2016
NEW YORK, NY
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
DRIVE FOR 10: DRIVING AND ACCELERATING VALUE CREATION
JOHN HAYES
CHAIRMAN, PRESIDENT AND CEO
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
1
FORWARD-LOOKING STATEMENTS
This presentation contains "forward-looking" statements concerning future events and financial performance. Words such
as "expects," "anticipates," "estimates," “believes,” “targets,” “likely” and similar expressions typically identify forwardlooking statements, which are generally any statements other than statements of historical fact. Such statements are
based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual
results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon
any forward-looking statements and any of such statements should be read in conjunction with, and, qualified in their
entirety by, the cautionary statements referenced below. The company undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key factors,
risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the
Securities and Exchange Commission, including Exhibit 99 in our Form 10-K, which are available on our website and at
www.sec.gov. Additional factors that might affect: a) our packaging segments include product demand fluctuations;
availability/cost of raw materials; competitive packaging, pricing and substitution; changes in climate and weather;
competitive activity; failure to achieve synergies, productivity improvements or cost reductions; mandatory deposit or other
restrictive packaging laws; customer and supplier consolidation, power and supply chain influence; changes in major
customer or supplier contracts or a loss of a major customer or supplier; political instability and sanctions; currency
controls; and changes in foreign exchange or tax rates; b) our aerospace segment include funding, authorization,
availability and returns of government and commercial contracts; and delays, extensions and technical uncertainties
affecting segment contracts; c) the company as a whole include those listed plus: changes in senior management;
regulatory action or issues including tax, environmental, health and workplace safety, including U.S. FDA and other actions
or public concerns affecting products filled in our containers, or chemicals or substances used in raw materials or in the
manufacturing process; technological developments and innovations; litigation; strikes; labor cost changes; rates of return
on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical
events and governmental policies both in the U.S. and in other countries, including the U.S. government elections, budget,
sequestration and debt limit; reduced cash flow; ability to achieve cost-out initiatives and synergies; interest rates affecting
our debt; and successful or unsuccessful acquisitions and divestitures, including with respect to the Rexam PLC
acquisition and its integration, or the associated divestiture; the effect of the acquisition or the divestiture on our business
relationships, operating results and business generally.
Reconciliation of certain non-GAAP measures are set forth on www.ball.com/investors.
3
PARTICIPATING MANAGEMENT
Executive Management
John Hayes
Chairman, President and CEO
Scott Morrison
SVP and CFO
Rob Strain
SVP and President, Ball Aerospace
Jim Peterson
SVP and COO, Food and Aerosol Packaging
Dan Fisher
SVP and COO, Global Beverage Packaging
Q & A Session Global Packaging Panel
Gihan Atapattu
President, Beverage Packaging Asia Pacific
Tony Barnett
President, Beverage Packaging AMEA
Colin Gillis
President, Beverage Packaging Europe
Carlos Medeiros
President, Beverage Packaging South America
4
2
AGENDA
1:00 p.m.
Driving and Accelerating Value Creation – John Hayes
1:30 p.m.
The Path to Financial Growth – Scott Morrison
1:50 p.m.
Our Growing Backlog – Rob Strain
2:10 p.m.
Growing Aerosol; Maximizing Tinplate – Jim Peterson
2:30 p.m.
Value Capture and Growth Initiatives – Dan Fisher
2:50 p.m.
Break
3:00 – 4:00 p.m.
Q & A Session
5
DRIVING THE STOCK PRICE – EVA® WORKS!
Proven track record of successfully integrating acquisitions, capturing synergies
$20
1998
Reynolds
Acquisition
$120
2002
Schmalbach
Acquisition
2009
AB-InBev
Acquisition
$25
$250
$20
$200
$100
$15
$80
$400
$70
$350
$60
$300
$50
$250
$40
$200
$30
$150
$20
$100
$10
$50
$80
$15
$150
$10
$100
$5
$50
$60
$10
$40
$5
$20
$0
$0
1999 2000 2001 2002
= Share Price
$0
$0
2002 2003 2004 2005
$0
$0
2009 2010 2011 2012
= $ EVA® in excess of our cost of capital
*Historical 94% correlation between EVA$ increase and stock price appreciation; may differ in the future.
6
3
DRIVE FOR 10
Drive for 10 is a mindset around perfection, with a greater sense of urgency around
our future success.
7
OUR OUTSIDE WORLD
Muted Growth
Intense Competition
and Transparency
Changing Consumer
Preferences
Economic
Realignment
Government Bureaucracy
and Taxes
8
4
OUR INSIDE WORLD – 2013 – 2015 HEADWINDS
•
China pricing pressure
•
Food volume loss
•
FX / earnings translation
•
Operational headwinds (start-up costs)
•
Food and aerosol manufacturing inefficiencies
9
TRANSFORMATION OF A LIFETIME
10
5
LEVERAGING PACKAGING STRENGTHS TO CAPTURE VALUE
Strategic Partner
Anywhere
Anytime
11
MANAGING THROUGH THE EVOLVING LANDSCAPE
12
6
ENSURING THE CAN IS THE PACKAGE OF CHOICE
Innovative Packaging
With Large
Brand Billboard
Infinitely Recyclable;
Inherent Sustainability
Advantages
Global Growth Investments
for Aluminum Beverage and
Aerosol Containers
13
EMBRACING COMPLEXITY; ENSURING VALUE PROPOSITION
14
7
VALUE CREATION LEVERS
General and
Administrative
Sourcing
Commercial
Best Practices
Freight,
Logistics &
Warehousing
Footprint
15
LOOKING FORWARD – ONCE IN A LIFETIME OPPORTUNITY
16
8
THE PATH TO FINANCIAL GROWTH
SCOTT MORRISON
SENIOR VICE PRESIDENT AND CFO
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
OUR LONG-STANDING FINANCIAL STRATEGY – WHO WE ARE
18
9
GOAL OF DOUBLING FREE CASH FLOW
+$1
BILLION
~$750 $850
MILLION*
MILLION
2010
MILLION*
+$558
+$506
2011
2012
2013
2014
2015
2016E 2017E 2018E
2019
GOAL
Financial estimates may be impacted by fluctuating global currency rates, actual capital spending, actual pension funding and other factors such as
underlying customer demand.
*2015 and 2017E free cash flow figures exclude cash costs related to the Rexam acquisition.
19
GOAL OF DOUBLING COMPARABLE EBITDA
$125 M China price
$100 M FX earnings translation
$ 35 M Food volume loss
$ 30 M Start-up costs
$ 15 M F&A manufacturing inefficiencies
~$2
BILLION
~$1.75 –
1.85
+$1.5
BILLION*
BILLION*
+$1
BILLION
2010
2011
2012
2013
2014 2015PF 2016E 2017E 2018E
2019
GOAL
Financial estimates may be impacted by fluctuating global currency rates, actual capital spending, actual pension funding and other factors such as
underlying customer demand.
*2015 represents pro forma full-year 2015 condensed combined financial information as filed on Form 8-K dated July 6, 2016. Non-GAAP measures for
2015 and 2017E reconciled on www.ball.com/investors.
20
10
GOAL OF DOUBLING EVA® DOLLARS
~$255
MILLION
~$200
$181
MILLION
MILLION
$109
MILLION
2010
2011
2012
2013
2014
2015
2016E 2017E 2018E
2019
GOAL
Financial estimates may be impacted by fluctuating global currency rates, actual capital spending, actual pension funding and other factors such as
underlying customer demand. EVA dollars calculation defined as net operating profit after-tax less a 9 percent capital charge on annual average invested
capital employed.
21
DISCIPLINED CAPITAL ALLOCATORS
BALANCE SHEET
OPTIMIZATION
VALUE-CREATING
ACQUISITIONS
NEW
PRODUCTS
SUPPLY / DEMAND
BALANCE
NEW
GEOGRAPHIES
22
11
COST SAVINGS AND BALANCE SHEET MANAGERS
$150 million synergies expected in 2017; additional $150+ million by end of 2019
BALANCE SHEET
OPTIMIZATION
COST SAVINGS
SYNERGIES
 Days Payable
 Days Sales Outstanding
 Supply Chain Finance
 Inventory / Fixed Assets
 Borrowing Costs
 SG &A
 Sourcing
 Freight & Logistics
 Best Practices
The “plus” relative to initial $300 million cost savings target
COMMERCIAL
FOOTPRINT
23
*Estimated $300+ million of annual run-rate synergies by the end of 2019.
GROWTH CAPEX YIELDING 9% AFTER-TAX RETURNS ($ MILLIONS)
Maintenance CAPEX
($175-$200 million 2010 - 2016; $225 -$250 million 2017E annually)
Extruded Aluminum Aerosol Plant
Ahmedabad, India
Late 2015
Aluminum Beverage Can Plant
Monterrey, Mexico
2016
Aluminum Beverage Can Plant
Yangon, Myanmar
2016
Extruded Aluminum Plant Expansion
Velim, Czech Republic
Aluminum Beverage Can Plant
Madrid, Spain
Aerospace Facility Expansions
Westminster / Boulder, Colorado
*Capital expenditures listed may not include all projects to be completed in future years.
Late 2016
2017
2017 - 2018
24
12
2017E KEY FINANCIAL METRICS
Reiterating 2017E
Comparable EBITDA*
~$1.75 - $1.85 billion
D & A* (excluding amortization of customer-related intangibles)
~$430 - $440 million
Comparable earnings*
~$1.3 - $1.4 billion
Interest expense
~$280 million
Effective tax rate
~28%
Capital expenditures
~$500 million
Amortization of customer intangibles
~$140 million
Free cash flow
~$750 - $850 million
Net debt*
~$6.2 - $6.3 billion
*Non-GAAP measures reconciled on www.ball.com/investors.
2017E figures may be impacted by fluctuating global currency rates, actual capital spending, actual pension
funding and other factors such as underlying customer demand.
2017E figures include the full-year impact of the Rexam acquisition, the benefit of ~$150 million of synergies
and ~$100 million of working capital benefit. Free cash flow figures exclude cash costs related to the Rexam
acquisition.
Capital expenditures include new Madrid, Spain beverage can plant, certain capital required to achieve 2017
synergies and a portion of required capital for aerospace facilities expansion.
25
LEVERAGE, DEBT MATURITIES AND RETURN OF CAPITAL
Low-cost debt structure with limited near-term debt maturities
Share repurchase program increases when leverage is in the range of 3.0x – 3.5x
$1,872
$1,787
$ in Millions
$1,745
$1,000
$750
$395
$18
2016
$85
2017
$198
2018
2019
2020
2021
2022
2023
2024
2025
*Long-term debt excluding debt issuance costs as of September 30, 2016. Excludes short-term debt of approximately $294 million. (€ @1.1238)
26
13
WHERE WE ARE GOING – GOALS BY 2019*
EBITDA
EVA® DOLLARS
~$12
~$2
~$255
BILLION
BILLION
MILLION
REVENUE
FREE CASH
FLOW
COMPARABLE
DILUTED EPS
+$1
~20-30%
BILLION
PER ANNUM
in 2017-2019
ACHIEVE COST SAVINGS, REDUCE DEBT, FUND PROFITABLE GROWTH,
REWARD SHAREHOLDERS
Financial estimates and goals may be impacted by fluctuating global currency rates, actual capital spending, actual pension funding and other factors such
as underlying customer demand.
*2019E goals include an estimated $300+ million of annual run-rate synergies by the end of 2019. EVA dollars calculation defined as net operating profit
after-tax less a 9 percent capital charge on annual average invested capital employed.
27
OUR GROWING BACKLOG
ROB STRAIN
SENIOR VICE PRESIDENT, BALL CORPORATION; PRESIDENT, BALL AEROSPACE
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
14
GO BEYOND WITH BALL
Ball Aerospace pioneers discoveries that enable our customers to
perform beyond expectation and protect what matters most.
We create innovative space solutions, enable more accurate weather forecasts,
drive insightful observations of our planet, deliver actionable data and
intelligence, and ensure those who defend our freedom
go forward bravely and return home safely.
29
DYNAMIC MARKET ENVIRONMENT
• Global events, defense threats, and
cyber attacks driving the need for
new investments and resilience
• Data demands are insatiable
• Commercial investments and activity
driving innovation and changing
customer mindsets
• Greater competition for fewer
opportunities
• President-elect’s administration likely
to focus on U.S. defense capabilities
and possibly de-emphasize earth
science
30
15
LEVERAGING OUR CAPABILITIES FOR FUTURE GROWTH
• Growing traditional U.S.
contracts
• Collaborating
cross-enterprise
• Leveraging existing
capabilities
• Creating new market
opportunities
31
SIZEABLE CONTRACTED BACKLOG ($ MILLIONS)
Record backlog fueling future earnings growth
$120
$1,600
$1,420
$1,400
$100
$1,200
$80
$1,000
$1,020
$989
$800
$938
$897
$886
$774
$60
$765
$600
$617
$597
$40
$518
$400
$20
$200
$0
$0
2006
2007
2008
2009
2010
Contracted Backlog
2011
2012
2013
2014
2015
Comparable Operating Earnings
Sept.
2016
2017E
32
16
AEROSPACE CONTRACT AND CUSTOMER MIX
60%
40%
Cost Plus
Fixed Price
2016E
Contract Mix
65%
35%
Defense and Other USG
Civil and Other non-USG
2016E
Customer Mix
33
2017 AND BEYOND – AEROSPACE
• Execute on current backlog
• Secure more contracts and study programs
• Invest in Colorado infrastructure
• Grow earnings in excess of $100 million
34
17
GROWING AEROSOL; MAXIMIZING TINPLATE
JIM PETERSON
SENIOR VICE PRESIDENT, BALL CORPORATION; COO, FOOD AND AEROSOL PACKAGING
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
FOOD AND AEROSOL VISION
Accelerate Profitable Aerosol Growth and
Maximize Value in Food and General Line
Greater
Sense of
Urgency
Attention
to Detail
Closer to
Customers
Economic
Value
Added
Growth
36
18
FOOD AND AEROSOL: OUR GLOBAL BUSINESS
• 20 manufacturing
plants in 8 countries
• Well-positioned
aluminum and
tinplate aerosol
business serving blue
chip, multi-national
customers
• Highly cash
generative U.S.
tinplate food can
business
47%
53%
Food
Aerosol
2016E
Product Mix
(5.3 billion units)
20%
Food
80%
Aerosol
2016E
Share of Profit*
*Internal estimates based on allocations of shared costs across operating segment.
37
MAXIMIZING VALUE OF OUR TINPLATE OPERATIONS
Upgrading metal coating and lithography assets
improves capabilities and operational performance
throughout U.S. tinplate plant network
~$15 million of cost improvements in 2017
38
19
DRIVING EVA® THROUGH MULTIPLE LEVERS
Supply Chain and Invested Capital Management
Freight,
Warehousing and
Slow Moving
Inventory
Steel and
Other Direct
Materials
Slugs for
Aluminum
Aerosol
BPA Conversion
Complete
39
GROWING GLOBAL AEROSOL MARKET: ~4% CAGR
Most Dynamic Aerosol Prospects for Beauty Lie in Emerging Regions
Serve growth from existing plants in North America, Argentina, Europe and India
40
20
GROWING ALUMINUM AEROSOL
Velim, Czech Republic Expansion
Operational year-end 2016; Incremental ~50 million units for 2017
41
GROWING ALUMINUM AEROSOL
Additional Indian Commercial Opportunities
New plant supported by experienced European team; expanding with
our growing, multi-national customers in India and the Middle East
42
21
MANAGING FOR EVA® AND EARNINGS GROWTH
Food & Aerosol Packaging
Invested Capital ($ millions)
$1,304
$1,000
2010
2011
$1,267
2012
$1,325
2013
$1,234
$1,181
2014
2015
2016E
2017E
Food & Aerosol Packaging
Comparable Earnings ($ millions)
$169
$129
$134
2010
2011
$177
$154
$108
2012
2013
2014
2015
2016E
2017E
Reduce invested capital, lower costs and improve earnings
43
LOOKING TO 2017 AND BEYOND
• Maximize value in food
– Aggressive cost out programs
– Improve free cash flow
– CAPEX below depreciation
– Expand EVA dollars
• Accelerate aerosol growth
– Monetize the industry’s broadest aerosol product portfolio with the
only global manufacturing footprint
– Leverage the best customer portfolio in the industry
– Further differentiate Ball through innovation and our sustainability
efforts
44
22
VALUE CAPTURE AND GROWTH INITIATIVES
DAN FISHER
SENIOR VICE PRESIDENT, BALL CORPORATION; COO, GLOBAL BEVERAGE PACKAGING
© BALL CORPORATION | 10 LONGS PEAK DRIVE | BROOMFIELD, COLORADO 80021 | 303-469-3131 | WWW. BALL.COM
A 320BN GLOBAL CAN INDUSTRY GROWING AT 3% ANNUALLY
About 320 billion beverage cans were filled in 2015, an industry growing at 3% p.a. over the last 3 years
US-Canada
93.2bn /
~0.5%
North &
Central
America
~107bn
~1%
54 plants
160 lines
Central America
11.9bn / 5%
Europe
~61bn*
~2%
46 plants
114 lines
UK-Ire
9.6bn / -1.9%
Nordics
5.1bn / 0.5%
CIS
5.3bn / -3.4%
RWE
24.3bn
2.7%
CEE
9.5bn
0.5%
Iberia
7.5bn / 4.1%
Rest of SA
4.5bn
10%
South
America
~28bn
4%
24 plants
46 lines
AMEA
120-125bn / 8%
155 plants
288 lines
Japan
~33bn / 1%
Middle East
~22bn / 6%
North Africa
~5bn / 8%
Brazil
23.6bn
~1%
China
~36bn / >10%
India + South East Asia
~24bn / 8%
Sub-Saharan
Africa
~5bn / 10%
Australasia
~4bn / 0.5%
Can per capita consumption:
Filling volumes in 2015. Growth in 2015 vs. 2014 *~5bn filled cans exported outside Europe
Can fillings include aluminum /steel and soft/alcohol drinks. Number of plants and lines per Belvac 2015 report
Sources: BCME, CMI, Abralatas, industry literature, internal estimates, Belvac
46
23
OUR STRONG GLOBAL INDUSTRY POSITIONS
About 320 billion beverage cans were filled in 2015, an industry growing at 3% p.a. over the last 3 years
Europe
~61bn*
~2%
North &
Central
America
~107bn
~1%
43%
South
America
~28bn
4%
65%
38%
AMEA
120-125bn / 8%
18%
60%
19%
Can per capita consumption:
Filling volumes in 2015. Growth in 2015 vs. 2014 *~5bn filled cans exported outside Europe
Can fillings include aluminum/steel and soft/alcohol drinks.
Sources: BCME, CMI, Abralatas, industry literature, internal estimates, Belvac
Pro forma 2015 Ball industry positions include the full-year effect of the Rexam acquisition.
47
GLOBAL BEVERAGE STRATEGY
VALUE CAPTURE
Lowering Costs; Improving Margins
1.
2.
3.
4.
5.
Integrating acquisition
Leveraging scale
Managing footprint
Sharing best practices
Pursuing value over volume
PROFITABLE GROWTH
1.
2.
3.
4.
Winning in the can industry
Creating new markets
Lead with innovation
Broadening and leveraging
geographic footprint
48
24
VALUE CAPTURE INITIATIVES
General and
Administrative
Sourcing
Millbank
Direct (metal
and ODMs)
Charlotte
Indirect
Operations
(Best Practices, Freight
& Warehousing)
Footprint
Lightweighting
North & Central
America
Commercial
New Commercial
Policy
New Category
Development
Automation
South America
Innovation
Efficiency
Improvements
Europe
Unit Cost
Reduction
Asia
*Estimated $300+ million of annual run-rate
synergies by the end of 2019.
Logistics
Customer Mix
Optimization
Product Mix
Optimization
49
EMBRACING COMPLEXITY; ENSURING VALUE PROPOSITION
50
25
WINNING IN THE CAN INDUSTRY; WINNING IN THE PACKAGING MARKET
Developing Metal Beverage
Innovations
Creating New Product
Categories
51
Q & A SESSION: EXECUTIVE MANAGEMENT AND GLOBAL PACKAGING PANEL
Executive Management
John Hayes
Chairman, President and CEO
Scott Morrison
SVP and CFO
Rob Strain
SVP and President, Ball Aerospace
Jim Peterson
SVP and COO, Food and Aerosol Packaging
Dan Fisher
SVP and COO, Global Beverage Packaging
Q & A Session Global Packaging Panel
Gihan Atapattu
President, Beverage Packaging Asia Pacific
Tony Barnett
President, Beverage Packaging AMEA
Colin Gillis
President, Beverage Packaging Europe
Carlos Medeiros
President, Beverage Packaging South America
52
26
THANK YOU FOR INVESTING WITH US
Q & A Session
Webcast participants can submit questions to
[email protected] or [email protected].
ADDITIONAL REFERENCE MATERIALS
APPENDIX
54
27
GLOBAL BEVERAGE CAN INDUSTRY POSITIONS*
Global Beverage Can Industry
~320 Billion Units
North & Central America
~107 Billion Units
South America
~26 Billion Units
*includes U.S., Canada & Mexico
*includes Brazil, Chile and Argentina
Ball
30%
Ball
43%
Other
57%
Other
70%
Europe
~66 Billion Units
*includes Russia
Ball
60%
Other
40%
AMEA
~26 Billion Units
China
~36 Billion Units
*includes Turkey, Egypt, India
and Saudi Arabia
Ball
40%
Ball
18%
Ball
19%
Other
60%
Other
81%
Other
82%
*Pro forma management estimates for year-end 2015. Industry positions do not include competition from other substrates or imports.
55
FOOD AND AEROSOL INDUSTRY POSITIONS*
U.S. Tinplate Food
~26.5 Billion Units
Ball
11%
Other
89%
U.S. Tinplate Aerosol
~2.9 Billion Units
N.A. Monobloc Aluminum Slugs
60,400 Metric Tons
Ball
92%
European Aluminum Aerosol
~3.8 Billion Units
Ball
21%
Other
79%
Other
8%
Ball
35%
Other
65%
N.A. Aluminum Aerosol
~1.0 Billion Units
Ball
19%
Other
81%
*Management estimates for year-end 2015. Industry figures do not include competition from other substrates or imports.
56
28