CROWN HOLDINGS, INC. PHILADELPHIA, July 20, 2015 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the second quarter ended June 30, 2015.
Second Quarter Highlights
-- Earnings per share $1.02; Before Certain Items $1.03, including $0.14 of
unfavorable currency translation
-- YTD earnings per share $1.34; Before Certain Items $1.55, including
$0.20 of unfavorable currency translation
-- Income before certain items on a constant currency basis grew 15.8% in
second quarter, 10.8% YTD
-- On a constant currency basis, Q2 revenue grew 5.7%, segment income grew
6.0%
-- Recent acquisitions in Europe and North America made strong
contributions
-- Global beverage can volumes grew 9% in the quarter over 2014
Net sales in the second quarter were $2,278 million compared to $2,383 million in the second quarter of 2014, primarily due to $241 million of unfavorable currency translation partially offset by the impact of the Empaque acquisition.
Segment income (a non-GAAP measure defined by the Company as gross profit excluding the impact of fair value adjustments to inventory acquired in an acquisition and the timing impact of hedge ineffectiveness, less selling and administrative expense) was $272 million in the second quarter compared to $285 million in the second quarter of 2014, and included $30 million of unfavorable currency translation.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We continued the year as expected with very solid second quarter performance. On a currency neutral basis, segment income for the second quarter increased 6% over 2014, reflecting strong underlying fundamentals in the Company's businesses despite challenges in certain of our markets. We are pleased with the integration of the Empaque and Mivisa acquisitions, as our Americas Beverage and European Food businesses both contributed meaningfully to the Company's results. In addition, we experienced notable beverage can growth in North America and Asia Pacific as well as food can growth in Europe during the quarter compared to 2014."
Interest expense increased to $69 million in the second quarter of 2015 over the $66 million in 2014 primarily due to increased borrowings to fund the Empaque acquisition.
Net income attributable to Crown Holdings in the second quarter increased to $142 million over the $106 million in the second quarter of 2014. Reported earnings per diluted share were $1.02 in the second quarter of 2015 compared to $0.76 in the 2014 second quarter. Net income per diluted share before certain items increased to $1.03 over the $1.01 in 2014.
A reconciliation from net income and income per diluted share to net income before certain items and income per diluted share before certain items is provided below.
Six Month Results
Net sales for the first six months of 2015 were $4,275 million compared to $4,376 million in the first six months of 2014, reflecting unfavorable currency translation of $413 million partially offset by the impact of the Mivisa and Empaque acquisitions.
Segment income in the first half of 2015 was $464 million compared to $485 million in the first six months of 2014, including $46 million of unfavorable currency translation.
Interest expense for the first six months of 2015 increased to $134 million compared to $124 million in the same period of 2014 primarily due to increased borrowings to fund the Mivisa and Empaque acquisitions.
Net income attributable to Crown Holdings for the first six months of 2015 increased to $186 million over the $130 million in the first six months of 2014. Income per diluted share for the first six months of 2015 rose to $1.34 compared to $0.94 in the first half of last year. Net income per diluted share before certain items was $1.55 compared to $1.58 in 2014.
Non-GAAP Measures
Segment income and free cash flow are not defined terms under U.S. generally accepted accounting principles (non-GAAP measures). In addition, the information presented excluding the impact of currency translation, regarding net income before certain items and regarding income before certain items per diluted share does not conform to GAAP and includes non-GAAP measures. Non-GAAP measures should not be considered in isolation or as a substitute for net income, income per diluted share or cash flow data prepared in accordance with U.S. GAAP and may not be comparable to calculations of similarly titled measures by other companies.
The Company views segment income and free cash flow as the principal measures of performance of its operations and for the allocation of resources. Free cash flow has certain limitations, however, including that it does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. The Company believes that net income before certain items, income before certain items per diluted share, and information excluding the impact of currency translation are useful in evaluating the Company's operations. Segment income, free cash flow, net income before certain items and income before certain items per diluted share are derived from the Company's Consolidated Statements of Operations and Cash Flows and Consolidated Balance Sheets, as applicable, and reconciliations to segment income, free cash flow, net income before certain items and income before certain items per diluted share can be found within this release.
Conference Call
The Company will hold a conference call tomorrow, July 21, 2015 at 9:00 a.m. (EDT) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are (517) 308-9237 or toll-free (888) 469-0976 and the access password is "packaging." A live webcast of the call will be made available to the public on the internet at the Company's web site, www.crowncork.com. A replay of the conference call will be available for a one-week period ending at midnight on July 28. The telephone numbers for the replay are (402) 998-1595 or toll free (888) 568-0923.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements. These forward-looking statements involve a number of risks, uncertainties and other factors, including the future impact of currency translation, whether the Company can continue to grow segment income and benefit from its recent acquisitions of Empaque and Mivisa, future demand for beverage cans, including in North America and Asia Pacific, and food cans in Europe that may cause actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the statements made in this press release or the actual results of operations or financial condition of the Company to differ are discussed under the caption "Forward Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2014 and in subsequent filings made prior to or after the date hereof. The Company does not intend to review or revise any particular forward-looking statement in light of future events.
Crown Holdings, Inc., through its subsidiaries, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania.
For more information, contact:
Thomas A. Kelly, Senior Vice President and Chief Financial Officer, (215) 698-5341
Thomas T. Fischer, Vice President, Investor Relations and Corporate Affairs, (215) 552-3720
Ed Bisno, Bisno Communications, (212) 717-7578
Unaudited Consolidated Statements of Operations, Balance Sheets, Statements of Cash Flows, Segment Information and Supplemental Data follow.
Consolidated Statements of Operations (Unaudited)
(in millions, except share and per share data)
---------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Net sales $2,278 $2,383 $4,275 $4,376
------ ------ ------ ------
Cost of products sold 1,843 1,960 3,503 3,621
Depreciation and
amortization 62 47 113 82
--- --- --- ---
Gross profit (1) 373 376 659 673
Selling and
administrative expense 99 103 197 207
Restructuring and other (3) 31 17 83
Loss from early
extinguishment of debt 9 9
Foreign exchange (1) 5 6
Interest expense 69 66 134 124
Interest income (2) (1) (4) (3)
Income before income
taxes 202 177 301 256
Provision for income
taxes 49 50 86 83
Net income 153 127 215 173
Net income attributable
to noncontrolling
interests (11) (21) (29) (43)
--- --- --- ---
Net income attributable
to Crown Holdings $142 $106 $186 $130
==== ==== ==== ====
Earnings per share attributable to Crown Holdings
common shareholders:
Basic $1.03 $0.77 $1.35 $0.95
===== ===== ===== =====
Diluted $1.02 $0.76 $1.34 $0.94
===== ===== ===== =====
Weighted average common shares outstanding:
Basic 137,914,062 137,246,172 137,805,980 137,032,786
Diluted 139,319,455 138,599,132 139,175,449 138,398,582
Actual common shares
outstanding 139,400,803 138,888,817 139,400,803 138,888,817
-------------------- ----------- ----------- ----------- -----------
(1) A reconciliation from gross profit to segment income follows.
Consolidated Supplemental Financial Data (Unaudited)
(in millions)
Reconciliation from Gross Profit to Segment Income
The Company views segment income, as defined below, as a principal measure of performance of its operations and for the allocation of resources. Segment income is defined by the Company as gross profit excluding the impact of fair value adjustments to inventory acquired in an acquisition and the timing impact of hedge ineffectiveness, less selling and administrative expense.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Gross profit $373 $376 $659 $673
Fair value adjustment to inventory (1) 15 6 15
Impact of hedge ineffectiveness (1) (2) (3) (4) 4
Selling and administrative expense (99) (103) (197) (207)
--- ---- ---- ----
$272 $285 $464 $485
==== ==== ==== ====
(1) Included in cost of products sold
-----------------------------------------
Segment Information
-------------------
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
Net Sales 2015 2014 2015 2014
--------- ---- ---- ---- ----
Americas Beverage $741 $594 $1,358 $1,143
North America Food 170 213 330 392
European Beverage 422 496 746 884
European Food 492 555 923 928
Asia Pacific 310 316 620 614
--- --- --- ---
Total reportable segments 2,135 2,174 3,977 3,961
Non-reportable segments 143 209 298 415
--- --- --- ---
Total net sales $2,278 $2,383 $4,275 $4,376
====== ====== ====== ======
Segment Income
--------------
Americas Beverage $99 $85 $184 $164
North America Food 23 38 47 67
European Beverage 66 83 104 142
European Food 68 63 110 89
Asia Pacific 39 36 74 70
--- --- --- ---
Total reportable segments 295 305 519 532
Non-reportable segments 20 22 37 46
Corporate and other
unallocated items (43) (42) (92) (93)
--- --- --- ---
Total segment income $272 $285 $464 $485
==== ==== ==== ====
Consolidated Supplemental Data (Unaudited)
(in millions, except per share data)
Reconciliation from Net Income and Income Per Diluted Common Share to Net Income before Certain Items and Income Per Diluted Common Share before Certain Items
The following table reconciles reported net income and diluted earnings per share attributable to the Company to net income before certain items and income per diluted common share before certain items, as used elsewhere in this release.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Net income
attributable to Crown
Holdings, as reported $142 $106 $186 $130
Fair value adjustment
to inventory (1) 15 6 15
Hedge ineffectiveness
(2) (2) (3) (4) 4
Restructuring and
other (3) (3) 31 17 83
Loss from early
extinguishment of
debt (4) 9 9
Income taxes (5) (3) (9) 2 (13)
Net income before the
above items $143 $140 $216 $219
==== ==== ==== ====
Income per diluted
common share as
reported $1.02 $0.76 $1.34 $0.94
Income per diluted
common share before
the above items $1.03 $1.01 $1.55 $1.58
Effective tax rate as
reported 24.3% 28.2% 28.6% 32.4%
Effective tax rate
before the above
items 25.2% 26.8% 25.5% 26.8%
Net income before certain items, income per diluted
common share before certain items and the effective
tax rate before certain items are non-GAAP
measures and are not meant to be considered in
isolation or as a substitute for net income, income
per diluted common share and effective tax rates
determined in accordance with U.S. generally
accepted accounting principles. The Company
believes these non-GAAP measures provide useful
information to evaluate the performance of the
Company's ongoing business.
(1) In the first quarter of 2015, the
Company recorded a charge of $6 million
in cost of products sold for fair value
adjustments related to the sale of
inventory acquired in its acquisition
of Empaque. In the second quarter of
2014, the Company recorded a charge of
$15 million related to the sale of
inventory acquired in its acquisition
of Mivisa.
(2) In the second quarter and first six
months of 2015, the Company recorded
benefits of $2 million and $4 million
in cost of products sold related to
hedge ineffectiveness. In the second
quarter and first six months of 2014,
the Company recorded a benefit of $3
million and a charge of $4 million for
hedge ineffectiveness.
(3) In the second quarter and first six
months of 2015, the Company recorded
restructuring and other charges of $2
million and $17 million primarily for
costs related to its acquisition of
Empaque. In the second quarter and
first six months of 2014, the Company
recorded restructuring and other
charges of $19 million and $27 million.
In the first and second quarters of
2015, the Company recorded a charge of
$5 million and a gain of $5 million for
asset sales and impairments. In the
second quarter and first six months of
2014, the Company recorded charges of
$12 million and $56 million primarily
for asset sales and impairments related
to the divestment of certain operations
and transaction costs incurred in
connection with its acquisition of
Mivisa.
(4) In the second quarter of 2015, the
Company recorded a charge of $9 million
for the write off of deferred financing
fees in connection with the repayment
of its Term Loan B borrowings.
(5) In the second quarter and first six
months of 2015, the Company recorded
income tax benefits of $3 million and
$5 million related to the items
described above, and a charge of $7
million in the first quarter to record
a potential liability arising from a
recent unfavorable tax court ruling in
Spain. In the second quarter and first
six months of 2014, the Company
recorded income tax benefits of $9
million and $13 million related to the
items described above.
Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
June 30, 2015 2014
-------- ---- ----
Assets
Current assets
Cash and cash
equivalents $288 $244
Receivables, net 1,098 1,264
Inventories 1,454 1,615
Prepaid expenses and other current assets 344 364
Total current assets 3,184 3,487
----- -----
Goodwill and
intangible assets 3,790 3,272
Property, plant and
equipment, net 2,672 2,496
Other non-current
assets 713 640
--- ---
Total $10,359 $9,895
======= ======
Liabilities and equity
Current liabilities
Short-term debt $56 $172
Current maturities of
long-term debt 152 90
Accounts payable and accrued liabilities 2,525 2,587
Total current
liabilities 2,733 2,849
Long-term debt, excluding current
maturities 5,677 5,230
Other non-current
liabilities 1,545 1,404
Noncontrolling
interests 278 268
Crown Holdings shareholders' equity 126 144
--- ---
Total equity 404 412
--- ---
Total $10,359 $9,895
======= ======
Consolidated Statements of Cash Flows (Condensed & Unaudited)
(in millions)
------------
Six months ended June 30, 2015 2014
---- ----
Cash flows from operating
activities
Net income $215 $173
Depreciation and
amortization 113 82
Provision for restructuring
and other 17 83
Pension expense 22 31
Pension contributions (34) (42)
Stock-based compensation 17 14
Working capital changes and
other (365) (458)
Net cash used for operating activities (A) (15) (117)
--- ----
Cash flows from investing
activities
Purchase of business (1,207) (733)
Capital expenditures (111) (149)
Proceeds from sale of
assets and divestitures 30 27
Other (14) 1
Net cash used for investing activities (1,302) (854)
------ ----
Cash flows from financing
activities
Net change in debt 765 682
Dividends paid to
noncontrolling interests (17) (34)
Purchase of noncontrolling
interests (93)
Debt issue costs (17) (33)
Other, net (52) 6
--- ---
Net cash provided by
financing activities 679 528
--- ---
Effect of exchange rate changes on cash and cash
equivalents (39) (2)
--- ---
Net change in cash and cash
equivalents (677) (445)
Cash and cash equivalents
at January 1 965 689
--- ---
Cash and cash equivalents
at June 30 $288 $244
==== ====
(A) Free cash flow is defined by
the Company as net cash used for
operating activities less capital
expenditures. A reconciliation
from net cash used for operating
activities to free cash flow for
the three and six months ended
June 30, 2015 and 2014 follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Net cash used for operating
activities $275 $378 ($15) ($117)
Capital expenditures (59) (65) (111) (149)
Free cash flow $216 $313 ($126) ($266)
==== ==== ===== =====
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SOURCE Crown Holdings, Inc.
