Ball Corporation (NYSE:BLL) Q3 2017 Earnings Conference Call Transcript
Nov 02, 2017 • 11:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Ball Corporation Third Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded, Thursday, November 2, 2017. I would now like to turn the conference over to John Hayes, CEO. Please go ahead.
Great. Thank you, Jennifer, and good morning, everyone. This is Ball Corporation's conference call regarding the Company's third quarter 2017 results.
(Forward-Looking Cautionary Statements) If you don't already have our third quarter earnings release, it's available on our website at ball.com. Information regarding the use of non-GAAP financial measures may also be found in the Note section of today's earnings release. The release also includes a table summarizing business consolidation and other activities as well as a reconciliation of comparable operating earnings and diluted earnings per share calculations.
Now joining me on the call today are Scott Morrison, SVP and CFO; and Dan Fisher, SVP and COO, Global Beverage. I'll provide some brief introductory remarks. Dan will discuss the global beverage packaging performance. Scott will discuss key financial metrics, and then I'll finish up with comments on our food and aerospace businesses and the outlook.
We achieved improved third quarter comparable operating earnings particularly, in South America, and despite lower performance in our North American Metal Beverage business in the latter part of the quarter. First, given the devastation caused by the hurricanes, earthquakes and recent fires that raged near our Fairfield, California facility, we're thankful that all our fellow co-workers, their families and our physical assets in Florida, Texas, California and Mexico are safe. Thank you, everyone, at Ball and beyond, who lent a helping hand to their colleagues, families and communities who are personally impacted by these natural disasters.
Now candidly, the hurricanes were a perfect storm that ripped through Ball's supply chain late in the quarter and then two of Ball's largest North American regions. To put the hurricanes into perspective, while our Conroe, Texas and Tampa, Florida plant suffered some downtime, they recovered in relatively good shape. However, the downtime at our key customers' filling locations continued well beyond the aftermath of the storms and resulted in a combined seven days of lost production due to lack of orders for us in the regions and meaningfully lower can sales.
For example, industry sales in the alcoholic category were down 12% in September, with much of that happening in Texas in the Southeast filler locations. In addition, significant spikes in freight rates and out-of-pattern freight across our Southern and lower Atlantic plant network accelerated after the hurricane events and negatively impacted our results. We understand that FEMA, for example, consumed nearly 10% of the available freight hauling capacity after the water subsided, and freight surcharges increased materially during this time.
Freight and fuel rates continue to be higher than before the hurricanes, and we're attempting to offset this high-cost freight expenses with existing pass-throughs and additional surcharges where contracts allow. To state the obvious, this has been a challenging