# BALL Corp (BALL) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from BALL Corp's 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/9389/000155837022001251/bll-20211231x10k.htm
Accession: 0001558370-22-001251
Filing date: 2022-02-16
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/BALL/
All MD&A years: /company/BALL/mda/
Next year: /company/BALL/mda/fy2022/ (FY 2022)

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Management’s discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8 of this Annual Report on Form 10-K (annual report), which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and the accompanying notes, including various claims and contingencies related to lawsuits, taxes, environmental and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and actions that we may undertake in the future in determining the estimates that affect our consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates. Ball Corporation and its subsidiaries are referred to collectively as “Ball Corporation,” “Ball,” “the company,” “we” or “our” in the following discussion and analysis.

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OVERVIEW

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Business Overview and Industry Trends

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Ball Corporation is one of the world’s leading aluminum packaging suppliers. Our packaging products are produced for a variety of end uses, are manufactured in facilities around the world and are competitive with other substrates, such as plastics and glass. In the aluminum packaging industry, sales and earnings can be increased by reducing costs, increasing prices, developing new products, expanding volumes and making strategic acquisitions. We also provide aerospace and other technologies and services to governmental and commercial customers, including national defense hardware, antenna and video tactical solutions, civil and operational space hardware and system engineering services.

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We sell our aluminum packaging products mainly to large, multinational beverage, personal care and household products companies with which we have developed long-term relationships. This is evidenced by our high customer retention and our large number of long-term supply contracts. While we have a diversified customer base, we sell a significant portion of our packaging products to major companies and brands, as well as to numerous regional customers. The overall global aluminum beverage and aerosol container industries are growing and are expected to continue to grow in the medium to long term. The primary customers for the products and services provided by our aerospace segment are U.S. government agencies or their prime contractors.

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We purchase our raw materials from relatively few suppliers. We also have exposure to inflation, in particular the rising costs of raw materials, as well as other direct cost inputs. We mitigate our exposure to the changes in the costs of aluminum through the inclusion of provisions in contracts covering the majority of our volumes to pass through aluminum price changes, as well as through the use of derivative instruments. The pass-through provisions generally result in proportional increases or decreases in sales and costs with a greatly reduced impact, if any, on net earnings. Because of our customer and supplier concentration, our business, financial condition and results of operations could be adversely affected by the loss, insolvency or bankruptcy of a major customer or supplier or a change in a supply agreement with a major customer or supplier, although our contract provisions generally mitigate the risk of customer loss, and our long-term relationships represent a known, stable customer base.

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The majority of our aerospace business involves work under contracts, generally from one to five years in duration, as a prime contractor or subcontractor for various U.S. government agencies. Intense competition and long operating cycles are key characteristics of the company’s aerospace and defense industry where it is common for work on major programs to be shared among a number of companies. A company competing to be a prime contractor may, upon ultimate award of the contract to a competitor, become a subcontractor for the ultimate prime contracting company.

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Corporate Strategy

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Our Drive for 10 vision encompasses five strategic levers that are key to growing our business and achieving long-term success. Since launching Drive for 10 in 2011, we have made progress on each of the levers as follows:

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[[GREPCENT_TABLE]]
[["","\u25cf","Maximizing value in our existing businesses by expanding specialty container production across our global plant network to meet current demand, improving efficiencies and amplifying our sustainability credentials through Aluminum Stewardship Initiative certification in our global aluminum container and end facilities in North America, South America and Europe; leveraging plant floor and integrated planning systems to reduce costs and manage contractual provisions across our diverse customer base; successfully acquiring and integrating a large global aluminum beverage business and regional aluminum aerosol facility while also divesting underperforming assets; and in the aluminum aerosol business, installing new extruded aluminum aerosol lines in our European, Mexican and Indian facilities while also implementing cost-out and value-in initiatives across all of our businesses;"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u25cf","Expanding further into new products and capabilities through commercializing our new lightweight, infinitely recyclable aluminum cup and providing next-generation extruded aluminum aerosol packaging that utilizes proprietary technology to significantly lightweight the can; and successfully introducing new specialty beverage cans and aluminum bottle-shaping technology;"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u25cf","Aligning ourselves with the right customers and markets by investing capital to meet continued growth for specialty beverage containers throughout our global network, which represent approximately 50 percent of our global beverage packaging mix; aligning with growing beverage categories and other new beverage producers who continue to use aluminum beverage containers to grow their business; and in our aluminum cup business, establishing partnerships with restaurants and event venues and utilizing online platforms and North American retailers to provide infinitely recyclable aluminum cups directly to consumers."]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u25cf","Broadening our geographic reach with our acquisition of Rexam and our new investments in beverage manufacturing facilities in the United States, Brazil, Paraguay, Spain, Mexico, Myanmar and Panama, as well as extruded aluminum aerosol manufacturing facilities in India and Brazil, and the successful start-up of our aluminum cups business in the U.S.; and"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u25cf","Leveraging our technological expertise in packaging innovation, including the introduction of our new proprietary, brandable lightweight aluminum cup and providing next-generation aluminum bottle-shaping technologies and the increased production of lightweight ReAl\u00ae containers, which utilize technology that increases the strength of aluminum used in the manufacturing process while lightweighting the can by up to 30 percent over a standard aluminum aerosol can, as well as our investment in cyber, data analytics methane monitoring, 5G and LIDAR capabilities to further enhance our aerospace technical expertise across a broader customer portfolio."]]
[[/GREPCENT_TABLE]]

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These ongoing business developments help us stay close to our customers while expanding and/or sustaining our industry positions and global reach with major beverage, personal care, household products and aerospace customers. In order to successfully execute our strategy and reach our goals, we realize the importance of excelling in the following areas: customer focus, operational excellence, innovation and business development, people and culture focus and sustainability.

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RESULTS OF OPERATIONS

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Management’s discussion and analysis for our results of operations on a consolidated and segment basis include a quantification of factors that had a material impact. Other factors that did not have a material impact, but that are significant to understand the results, are qualitatively described.

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Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of the company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed on February 17, 2021, for a comparison of our 2020 results of operations to the 2019 results.

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Novel Coronavirus (COVID-19)

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The ongoing novel coronavirus (COVID-19) had a significant effect upon the global business environment during the year ended December 31, 2021. Ball provides key products and services to the consumer beverage and household markets and the U.S. aerospace markets and, consequently, the operations of Ball and of its principal customers and suppliers have been designated as essential across our key markets. This designation allowed Ball to operate its manufacturing facilities throughout 2021, and it is expected that Ball will continue to operate its facilities without disruption in the foreseeable future. However, jurisdictions around the globe have issued stay-at-home orders and mandated operational closures of non-essential businesses and other restrictions, which have impacted certain of our customers by constraining some supply of products to certain consumers. The risks that COVID-19 and its related variants continue to present to Ball’s business have been outlined in Item 1. Risk Factors and Note 1 to the consolidated financial statements within Item 8 of this annual report.

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Consolidated Sales and Earnings

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["($ in millions)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","13,811","\u200b","$","11,781","\u200b","$","11,474","\u200b"],["Net earnings attributable to Ball Corporation","\u200b","\u200b","878","\u200b","\u200b","585","\u200b","\u200b","566","\u200b"],["Net earnings attributable to Ball Corporation as a % of net sales","\u200b","\u200b","6","%","\u200b","5","%","\u200b","5","%"]]
[[/GREPCENT_TABLE]]

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Sales in 2021 were $2,030 million higher compared to 2020 primarily as a result of increased sales volumes, pass through of higher aluminum prices, improved price/mix and favorable exchange rates.

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Net earnings attributable to Ball Corporation in 2021 were $293 million higher than 2020 primarily due to increased sales volumes and favorable price/mix in our beverage packaging, North and Central America, segment, lower business consolidation and other activities, lower total interest expense, and higher earnings from equity in results of affiliates, partially offset by the tax effect of higher earnings and higher personnel, startup, and other costs to support growth investments, and the timing of contractual non-aluminum input cost recovery.

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Cost of Sales (Excluding Depreciation and Amortization)

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Cost of sales, excluding depreciation and amortization, was $11,085 million in 2021 compared to $9,323 million in 2020. These amounts represented 80 percent and 79 percent of consolidated net sales for the years ended 2021 and 2020, respectively. The increase year-over-year is primarily due to general inflationary cost pressures from limited supply of raw materials and global supply chain transportation disruptions. To mitigate these recent cost trends, we have established a commercial cost recovery program that is designed to help us recover a significant portion of those cost increases that fall outside our normal customer contracts.

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Depreciation and Amortization

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Depreciation and amortization expense was $700 million in 2021 compared to $668 million in 2020. These amounts represented 5 percent and 6 percent of consolidated net sales for the years ended 2021 and 2020, respectively. Amortization expense in 2021 and 2020 included $152 million and $150 million, respectively, for the amortization of acquired Rexam intangibles.

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Selling, General and Administrative

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Selling, general and administrative (SG&A) expenses were $593 million in 2021 compared to $525 million in 2020. These amounts represented 4 percent of consolidated net sales for 2021 and 2020, respectively. The increase in SG&A expenses was primarily due to higher personnel and other costs to support growth investments.

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Business Consolidation Costs and Other Activities

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Business consolidation costs and other activities were $142 million in 2021 compared to $262 million in 2020. These amounts represented 1 percent and 2 percent of consolidated net sales for 2021 and 2020, respectively. The amounts in 2021 included a non-cash pension settlement charge of $135 million and gains resulting from Brazilian indirect tax rulings of $22 million. The charges in 2020 included a non-cash pension settlement charge of $120 million, a non-cash impairment charge of $62 million related to the goodwill of our beverage packaging, other, reporting unit, an adjustment of $15 million to the selling price of the company’s former steel food and steel aerosol business and a $23 million write-off of the potential future consideration related to the 2019 sale of the company’s former China beverage packaging business.

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Interest Expense

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Total interest expense was $283 million in 2021 compared to $316 million in 2020. Interest expense, excluding the effect of debt refinancing and other costs, as a percentage of average borrowings decreased by approximately 10 basis points from 3.5 percent 2020 to 3.4 percent in 2021 due to the drop in global interest rates.

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Tax Provision

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The company’s effective tax rate is affected by recurring items such as income earned in non-U.S. jurisdictions with tax rates that differ from the U.S. tax rate and by discrete items that may occur in any given year but are not consistent from year to year.

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The 2021 effective income tax rate was 15.5 percent compared to 14.4 percent for 2020. As compared with the statutory U.S. federal income tax rate of 21 percent, the 2021 effective rate was reduced by 3.2 percent for the impact of non-U.S. rate differences including tax holidays, by 5.0 percent for the impact of the U.S. R&D credit, and by 1.9 percent for the change in uncertain tax positions including interest and penalties. These reductions were partially offset by an increase of 1.8 percent for the GILTI inclusion. While these items are expected to recur, the potential magnitude of each item is uncertain.

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The 2021 effective income tax rate was also increased by 4.3 percent for enacted changes in tax laws and rates. Similar impacts may occur in future periods, but given their inherent uncertainty, the company is unable to reasonably estimate their potential future impacts.

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Further details of taxes on income, including impacts of the U.S. tax reform, are provided in Note 16 to the consolidated financial statements within Item 8 of this annual report.

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RESULTS OF BUSINESS SEGMENTS

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Segment Results

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Ball’s operations are organized and reviewed by management along its product lines and geographical areas, and its operating results are presented in the four reportable segments discussed below.

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Beverage Packaging, North and Central America

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["($ in millions)","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","5,856","\u200b","$","5,076","\u200b","$","4,758","\u200b"],["Comparable operating earnings","\u200b","\u200b","681","\u200b","\u200b","683","\u200b","\u200b","555","\u200b"],["Comparable operating earnings as a % of segment net sales","\u200b","\u200b","12","%","\u200b","13","%","\u200b","12","%"]]
[[/GREPCENT_TABLE]]

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Segment sales in 2021 were $780 million higher compared to 2020 primarily due to 4 percent volume growth, the pass through of higher aluminum prices and improved price/mix.

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Comparable operating earnings in 2021 were $2 million lower compared to 2020 primarily due to the timing of contractual non-aluminum input cost recovery, startup costs associated with three new multi-line manufacturing plants and operational inefficiencies from persistent supply chain disruptions, partially offset by higher specialty volumes and improved customer contractual terms.

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Beverage Packaging, EMEA

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["($ in millions)","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","3,509","\u200b","$","2,945","\u200b","$","2,857","\u200b"],["Comparable operating earnings","\u200b","\u200b","452","\u200b","\u200b","354","\u200b","\u200b","351","\u200b"],["Comparable operating earnings as a % of segment net sales","\u200b","\u200b","13","%","\u200b","12","%","\u200b","12","%"]]
[[/GREPCENT_TABLE]]

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Segment sales in 2021 were $564 million higher compared to 2020 primarily due to 8 percent volume growth, the pass through of higher aluminum prices and favorable exchange rates.

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Comparable operating earnings in 2021 were $98 million higher compared to 2020 primarily due to higher sales volumes and favorable mix.

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Beverage Packaging, South America

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["($ in millions)","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","2,016","\u200b","$","1,695","\u200b","$","1,670","\u200b"],["Comparable operating earnings","\u200b","\u200b","348","\u200b","\u200b","280","\u200b","\u200b","288","\u200b"],["Comparable operating earnings as a % of segment net sales","\u200b","\u200b","17","%","\u200b","17","%","\u200b","17","%"]]
[[/GREPCENT_TABLE]]

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Segment sales in 2021 were $321 million higher compared to 2020 primarily due to 3 percent volume growth and the pass through of higher aluminum prices.

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Comparable operating earnings in 2021 were $68 million higher compared to 2020 primarily related to higher sales volumes and favorable mix.

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Aerospace

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["($ in millions)","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","1,911","\u200b","$","1,741","\u200b","$","1,479","\u200b"],["Comparable operating earnings","\u200b","\u200b","169","\u200b","\u200b","153","\u200b","\u200b","140","\u200b"],["Comparable operating earnings as a % of segment net sales","\u200b","\u200b","9","%","\u200b","9","%","\u200b","9","%"]]
[[/GREPCENT_TABLE]]

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Segment sales in 2021 were $170 million higher compared to 2020, and comparable operating earnings were $16 million higher, primarily due to the company’s new program wins, backlog growth and related backlog liquidation through contract performance.

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Sales to the U.S. government, either directly as a prime contractor or indirectly as a subcontractor, represented 97 percent of segment sales in both 2021 and 2020. The aerospace contract mix in 2021 consisted of 47 percent cost-type contracts, which are billed at our costs plus an agreed-upon and/or earned profit component, and 50 percent fixed-price contracts. The remaining sales were for time and materials contracts.

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Backlog for the aerospace segment at December 31, 2021 and 2020, was $2.5 billion and $2.4 billion, respectively. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value. The segment has numerous outstanding bids for future contract awards. The backlog at December 31, 2021, consisted of 40 percent cost-type contracts. Comparisons of backlog are not necessarily indicative of the trend of future operations due to the nature of varying delivery and milestone schedules on contracts, funding of programs and the uncertainty of timing of future contract awards.

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Management Performance Measures

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Management internally uses various measures to evaluate company performance, including comparable operating earnings (earnings before interest, taxes and business consolidation and other non-comparable costs); comparable net earnings (earnings before business consolidation costs and other non-comparable costs after tax); comparable diluted earnings per share (comparable net earnings divided by diluted weighted average shares outstanding); return on average invested capital (net operating earnings after tax over the relevant performance period divided by average invested capital over the same period); economic value added (EVA®) dollars (net operating earnings after tax less a capital charge on average invested capital employed); earnings before interest and taxes (EBIT); earnings before interest, taxes, depreciation and amortization (EBITDA); and diluted earnings per share. In addition, management uses operating cash flows as a measure to evaluate the company’s liquidity. We believe this information is also useful to investors as it provides insight into the earnings and cash flow criteria that management uses to make strategic decisions. These financial measures may be adjusted at times for items that affect comparability between periods such as business consolidation costs and gains or losses on acquisitions and dispositions.

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Nonfinancial measures in the packaging businesses include production efficiency and spoilage rates; quality control figures; environmental, health and safety statistics; production and sales volume data; asset utilization rates; and measures of sustainability. Additional measures used to evaluate financial performance in the aerospace segment include contract revenue realization, award and incentive fees realized, proposal win rates and backlog. References to volume data represent units shipped.

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Many of the above noted financial measurements are presented on a non-U.S. GAAP basis and should be considered in connection with the consolidated financial statements within Item 8 of this annual report. Non-U.S. GAAP measures should not be considered in isolation, nor should they not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP. A presentation of earnings in accordance with U.S. GAAP is available in Item 8 of this annual report.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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For information regarding the company’s critical and significant accounting policies, as well as recent accounting pronouncements, see Note 1 and Note 2 to the consolidated financial statements within Item 8 of this annual report.

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The company considers certain accounting estimates to be critical, as their application is made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on the financial condition or results of operations. Detailed below is a discussion of why, to the extent the estimate is material, these estimates are subject to uncertainty and the sensitivity of the reported amounts to the methods, assumptions, and estimates underlying the estimate’s calculation.

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Revenue Recognition in the Aerospace Segment

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Sales under fixed-price long-term contracts in the aerospace segment are primarily recognized using percentage-of-completion accounting under the cost-to-cost method. The company believes the accounting estimates related to revenue recognition in its aerospace segment are critical accounting estimates because they are highly reliant upon estimation throughout the segment’s contracts with its customers. The recognition of revenue requires significant estimation on the part of management, including estimating techniques to project revenues and costs at completion and various assumptions and projections related to the outcome of future events, and evaluation of estimates of total contract revenue, total contract cost, and extent of progress toward completion. Aside from estimation of total contract cost and progress towards completion, total revenues in our aerospace segment are subject to uncertainty due to the total amount that will be paid by the customer giving rise to variable consideration. The primary types of variable consideration present in the company’s contracts are cost reimbursements, performance award fees, incremental funding and finalization of government rates. The company’s accounting policy around revenue recognition in its aerospace segment and further details of estimates used in revenue recognition in its aerospace segment can be found in Note 1 and Note 5, respectively, to the consolidated financial statements within Item 8 of this annual report.

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Defined Benefit Pension Plans

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The company has defined benefit plans which require management to make assumptions relating to the long-term rate of return on plan assets, discount rates used to determine the present value of future obligations and expenses, salary inflation rates, mortality rates and other assumptions. The company believes the accounting estimates related to its pension plans are critical accounting estimates because several of the company’s defined benefit plans have significant asset and liability balances, and because the assumptions used are highly susceptible to change from period to period based on the performance of plan assets, actuarial valuations, market conditions and contracted benefit changes. These assumptions do not change during the company’s fiscal year unless a remeasurement event occurs in one of the plans, such as a significant settlement. The assumptions used in accounting for the company’s defined benefit plans and how they have changed over time, as well as the sensitivity of the plans to changes in their related assumptions, can be found in Note 17 to the consolidated financial statements within Item 8 of this annual report.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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Cash Flows and Capital Expenditures

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Our primary sources of liquidity are cash provided by operating activities and external borrowings. We believe that cash flows from operating activities and cash provided by short-term, long-term and committed revolver borrowings, when necessary, will be sufficient to meet our ongoing operating requirements, scheduled principal and interest payments on debt, dividend payments, anticipated share repurchases and anticipated capital expenditures. The following table summarizes our cash flows:

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,"],["($ in millions)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Cash flows provided by (used in) operating activities","\u200b","$","1,760","\u200b","$","1,432","\u200b","$","1,548"],["Cash flows provided by (used in) investing activities","\u200b","\u200b","(1,639)","\u200b","\u200b","(1,181)","\u200b","\u200b","(422)"],["Cash flows provided by (used in) financing activities","\u200b","\u200b","(894)","\u200b","\u200b","(602)","\u200b","\u200b","(46)"]]
[[/GREPCENT_TABLE]]

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Cash flows provided by operating activities were $1,760 million in 2021, primarily driven by net earnings, depreciation and amortization of $700 million, business consolidation and other costs of $142 million and working capital inflows of $120 million, partially offset by pension contributions of $207 million. In comparison to the same period in 2020, and after adjusting for the impact of capital expenditures, our working capital movements reflect an increase in days sales outstanding of 11 days in 2021, an increase in inventory days on hand of 5 days in 2021 and an increase in days payable outstanding of 19 days in 2021, all of which reflect increased aluminum prices during 2021.

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Cash outflows from investing activities were $1,639 million in 2021 predominantly driven by $1.7 billion in capital expenditures, partially offset by $110 million received for the sale of our minority-owned investment in South Korea.

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Cash outflows from financing activities were $894 million in 2021, primarily driven by net share purchases of $719 million, the repayment of $748 million of 5% senior notes and common stock dividends of $229 million, partially offset by the issuance of $850 million of 3.125% senior notes.

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We have entered into several regional committed and uncommitted accounts receivable factoring programs with various financial institutions for certain of our accounts receivable. Programs accounted for as true sales of the receivables, without recourse to Ball, had combined limits of approximately $1.7 billion and $1.6 billion at December 31, 2021, and December 31, 2020, respectively. A total of $308 million and $232 million were available for sale under these programs at December 31, 2021 and 2020, respectively.

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As of December 31, 2021, approximately $499 million of our cash was held outside of the U.S. In the event we need to utilize any of the cash held outside of the U.S. for purposes within the U.S., there are no material legal or other economic restrictions regarding the repatriation of cash from any of the countries outside the U.S. where we have cash. The company believes its U.S. operating cash flows, cash on hand, as well as availability under its long-term, revolving credit facilities, uncommitted short-term credit facilities and committed and uncommitted accounts receivable factoring programs will be sufficient to meet the cash requirements of the U.S. portion of our ongoing operations, scheduled principal and interest payments on U.S. debt, dividend payments, capital expenditures and other U.S. cash requirements. If non-U.S. funds are needed for our U.S. cash requirements and we are unable to provide the funds through intercompany financing arrangements, we would be required to repatriate funds from non-U.S. locations where the company has previously asserted indefinite reinvestment of funds outside the U.S.

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Based on its indefinite reinvestment assertion, the company has not provided deferred taxes on earnings in certain non-U.S. subsidiaries because such earnings are intended to be indefinitely reinvested in its international operations. It is not practical to estimate the additional taxes that might become payable if these earnings were remitted to the U.S.

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Share Repurchases

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The company’s share repurchases, net of issuances, totaled $719 million in 2021 and $75 million in 2020. The repurchases were completed using cash on hand, cash provided by operating activities, proceeds from the sale of businesses and available borrowings.

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Debt Facilities and Refinancing

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Given our cash flow projections and unused credit facilities that are available until March 2024, our liquidity is strong and is expected to meet our ongoing cash and debt service requirements. Total interest-bearing debt was $7.8 billion at both December 31, 2021 and 2020.

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During 2021, Ball issued $850 million of 3.125% senior notes due in 2031 and redeemed the outstanding 5% senior notes due in March 2022 in the amount of $748 million.

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At December 31, 2021, taking into account outstanding letters of credit, approximately $1.7 billion was available under the company’s long-term, multi-currency committed revolving credit facilities, which are available until March 2024. In addition to these facilities, the company had $1 billion of short-term uncommitted credit facilities available at December 31, 2021, of which $12 million was outstanding and due on demand.

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While ongoing financial and economic conditions in certain areas may raise concerns about credit risk with counterparties to derivative transactions, the company mitigates its exposure by allocating the risk among various counterparties and limiting exposure to any one party. We also monitor the credit ratings of our suppliers, customers, lenders and counterparties on a regular basis.

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Some of Ball’s loan agreements use the London Inter-Bank Offered Rate (LIBOR) in determining interest rates. The company is currently evaluating the impact that the transition from its LIBOR-based interest rate loan agreements to Secured Overnight Financing Rate (SOFR) based interest rate agreements will have on its consolidated financial statements. Based on our most current understanding, the LIBOR to SOFR transition is not expected to have a material impact on our financial condition, results of operations or cash flows.

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We were in compliance with all loan agreements at December 31, 2021, and for all prior years presented, and we have met all debt payment obligations. The U.S. note agreements and bank credit agreement contain certain restrictions relating to dividends, investments, financial ratios, guarantees and the incurrence of additional indebtedness. The most restrictive of our debt covenants requires us to maintain a leverage ratio (as defined) of no greater than 5.0 times, which will change to 4.5 times as of December 31, 2022. As of December 31, 2021, the company could borrow up to the limits available under its long-term multi-currency committed revolving facilities and short-term uncommitted credit facilities without violating any of its existing debt covenants. Additional details about our debt are available in Note 15 to the consolidated financial statements within Item 8 of this annual report.

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Defined Benefit Pension Plans

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The company closed its pension plans to all non-unionized new entrants in the United States effective for anyone hired after December 31, 2021. New employees will instead receive a non-elective 401(k) company contribution that is expected to approximate the legacy pension benefit. Anyone employed by Ball prior to that date is unaffected by this change.

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Other Liquidity Measures

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Given the on-going growth projects in our businesses being undertaken to support EVA-enchancing contacted volumes, in 2022, we expect capital expenditures to exceed $2 billion and we intend to return approximately $1.75 billion to shareholders in the form of stock repurchases and dividends. We further intend to utilize our operating cash flows to service debt requirements and, to the extent available, acquisitions that meet our rate of return criteria.

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We have committed contracts to purchase raw materials and we align these purchase commitments with long-term sales contracts with our customers such that any commitment to purchase aluminum and other direct materials corresponds to a contractual sale. These aluminum purchase commitments include pass-through provisions which generally result in proportional changes in both sales and costs of sales.

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The company’s growth plans will require significant capital expenditures over the next years. These capital expenditures will be funded by operating cash flows and external borrowings. Approximately $1.2 billion of capital expenditures were contractually committed as of December 31, 2021. Maturities for Ball’s long-term debt are disclosed in Note 15 to the consolidated financial statements within Item 8 of this annual report. Repayments of debt and other operational cash requirements will also be funded by operating cash flows and external borrowings. The company has no material off-balance sheet arrangements.

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CONTINGENCIES, INDEMNIFICATIONS AND GUARANTEES

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Details of the company’s contingencies, legal proceedings, indemnifications and guarantees are available in Note 22 and Note 23 to the consolidated financial statements within Item 8 of this annual report. The company is routinely subject to litigation incident to operating its businesses and has been designated by various federal and state environmental agencies as a potentially responsible party, along with numerous other companies, for the clean-up of several hazardous waste sites, including in respect of sites related to alleged activities of certain former Rexam subsidiaries. The company believes the matters identified will not have a material adverse effect upon its liquidity, results of operations or financial condition.

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Guaranteed Securities

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The company’s senior notes are guaranteed on a full and unconditional, joint and several basis by the issuer of the company’s senior notes and the subsidiaries that guarantee the notes (the obligor group). The entities that comprise the obligor group are 100 percent owned by the company. As described in the supplemental indentures governing the company’s existing senior notes, the senior notes are guaranteed by any of the company’s domestic subsidiaries that guarantee any other indebtedness of the company.

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The following summarized financial information relates to the obligor group as of and for the years ended December 31, 2021 and 2020. Intercompany transactions, equity investments and other intercompany activity between obligor group subsidiaries have been eliminated from the summarized financial information. Investments in subsidiaries not forming part of the obligor group have also been eliminated.

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,"],["($ in millions)","\u200b","2021","","2020"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net sales","\u200b","$","8,083","\u200b","$","7,115"],["Gross profit (a)","\u200b","\u200b","910","\u200b","\u200b","935"],["Net earnings (loss)","\u200b","\u200b","432","\u200b","\u200b","528"],["Net earnings (loss) attributable to Ball Corporation","\u200b","\u200b","432","\u200b","\u200b","528"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(a)","Gross profit is shown after depreciation and amortization related to cost of sales of $210 million and $167 million for the years ended December 31, 2021 and 2020, respectively."]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","December 31,"],["($ in millions)","","2021","","2020"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Current assets","\u200b","$","2,575","\u200b","$","2,211"],["Noncurrent assets","\u200b","\u200b","14,818","\u200b","\u200b","13,701"],["Current liabilities","\u200b","\u200b","5,067","\u200b","\u200b","3,704"],["Noncurrent liabilities","\u200b","\u200b","10,989","\u200b","\u200b","10,854"]]
[[/GREPCENT_TABLE]]

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Included in the amounts disclosed in the tables above, at December 31, 2021 and 2020, the obligor group held receivables due from other subsidiary companies of $436 million and $221 million, respectively, long-term notes receivable due from other subsidiary companies of $9.2 billion in both years, payables due to other subsidiary companies of $2.0 billion and $1.7 billion, respectively, and long-term notes payable due to other subsidiary companies of $2.0 billion and $1.5 billion, respectively.

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For the years ended December 31, 2021 and 2020, the obligor group recorded the following transactions with other subsidiary companies: sales to them of $803 million and $804 million, respectively, net credits from them of $18 million and $24 million, respectively, and net interest income from them of $337 million and $393 million, respectively. During the years ended December 31, 2021 and 2020, the obligor group received dividends from other subsidiary companies of $269 million and $56 million, respectively.

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A description of the terms and conditions of the company’s debt guarantees is located in Note 23 to the consolidated financial statements within Item 8 of this annual report.

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FORWARD-LOOKING STATEMENTS

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This report contains "forward-looking" statements concerning future events and financial performance. Words such as "expects," "anticipates," "estimates," "believes," and similar expressions typically identify forward-looking 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 they 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 capacity, supply, and demand constraints and fluctuations and changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; political instability and sanctions; currency controls; changes in currency exchange or non-U.S. tax rates; and tariffs, trade actions, or other governmental actions, including business restrictions and shelter-in-place orders in any country or jurisdiction affecting goods produced by us or in our supply chain, including imported raw materials; 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 above plus: the extent to which sustainability-related opportunities arise and can be capitalized upon; changes in senior management, succession, and the ability to attract and retain skilled labor; regulatory actions or issues including those related to tax, ESG reporting, competition, 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; the ability to manage cyber threats; litigation; strikes; disease; pandemic; labor cost changes; inflation; rates of return on assets of the company's defined benefit retirement plans; pension changes; uncertainties surrounding geopolitical events and governmental policies, including policies, orders, and actions related to COVID-19; reduced cash flow; interest rates affecting our debt; and successful or unsuccessful joint ventures, acquisitions and divestitures, and their effects on our operating results and business generally.

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