CROWN HOLDINGS, INC. PHILADELPHIA, April 20, 2016 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the first quarter ended March 31, 2016.
First Quarter Highlights
-- Earnings per share $0.57 versus $0.32 in 2015
-- Adjusted earnings per share $0.69 versus $0.53 in 2015
-- Constant currency adjusted earnings per share up 40% over prior year
-- Constant currency segment income up 20%
-- Global beverage can volumes grew 7%
-- Beverage can growth projects on schedule
Net sales in the first quarter were $1,893 million compared to $1,997 million in the first quarter of 2015, and included $85 million of unfavorable currency translation impact in 2016 compared to 2015.
Segment income (a non-GAAP measure) increased to $221 million in the first quarter compared to $192 million in the first quarter of 2015, and included $10 million of unfavorable currency translation impact.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "We are very pleased with the Company's performance during the first quarter and are on track for an excellent 2016. Adjusted earnings per share rose 30% and segment income increased 15% over the prior year, led by strong results in Americas Beverage, European Beverage and European Food.
"Global beverage can unit volume growth of 7% was driven by notable gains in Mexico, Southeast Asia, Southern Europe and the United States, as consumers in both emerging and developed markets continue to prefer cans over other beverage packaging formats. We are on schedule with our capacity expansion plans to meet this increase in demand. We are building our third Cambodian beverage can plant in Phnom Penh and adding can end capability to our Sihanoukville beverage can plant, with commercial production for both projects slated to begin during the second quarter of this year. Our new beverage can plant in Monterrey, Mexico as well as the second production line at our Osmaniye, Turkey facility will begin production during this year's fourth quarter. In early 2017, we expect to start up our Nichols, New York beverage can plant, which will be focused primarily on bolstering our specialty can presence in North America."
Interest expense was $64 million in the first quarter of 2016 compared to $65 million in 2015 primarily due to lower outstanding debt.
Net income attributable to Crown Holdings in the first quarter was $79 million compared to $44 million in the first quarter of 2015. Reported diluted earnings per share were $0.57 in the first quarter of 2016 compared to $0.32 in 2015. Adjusted diluted earnings per share increased to $0.69 over the $0.53 in 2015 and included $0.05 per share of unfavorable currency translation impact.
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.
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 revenue, segment income, adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per 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, the effective tax rate, diluted earnings per 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 adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share, and information excluding the impact of currency translation are useful in evaluating the Company's operations. Segment income, free cash flow, the adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and information excluding the impact of currency translation 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, the adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and information unadjusted for currency translation can be found within this release.
Conference Call
The Company will hold a conference call tomorrow, April 21, 2016 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 (630) 395-0227 or toll-free (888) 606-8412 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 website, www.crowncork.com. A replay of the conference call will be available for a one-week period ending at midnight on April 28. The telephone numbers for the replay are (203) 369-3804 or toll free (800) 455-0163.
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; the continuation of performance trends in 2016; the Company's ability to successfully complete and begin production at beverage can capacity projects within expected timelines and budgets in New York, Cambodia, Mexico and Turkey; future beverage can growth in Mexico, Southeast Asia, Southern Europe and the United States; and a continuation of the shift by customers and consumers to beverage cans from other forms of packaging 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, 2015 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
Edward 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 March 31,
----------------------------
2016 2015
---- ----
Net sales $1,893 $1,997
------ ------
Cost of
products
sold 1,521 1,660
Depreciation
and
amortization 60 51
Selling and
administrative
expense 91 98
Restructuring
and other 2 20
--- ---
Income from
operations
(1) 219 168
Foreign
exchange (6) 6
Interest
expense 64 65
Interest
income (3) (2)
Loss from
early
extinguishment
of debt 27
Income before
income taxes 137 99
Provision for
income taxes 38 37
Net income 99 62
Net income
attributable
to
noncontrolling
interests (20) (18)
--- ---
Net income
attributable
to Crown
Holdings $79 $44
=== ===
Earnings per share attributable to Crown
Holdings
common shareholders:
Basic $0.57 $0.32
===== =====
Diluted $0.57 $0.32
===== =====
Weighted average common shares outstanding:
Basic 138,105,319 137,697,898
Diluted 138,992,630 138,953,440
Actual common
shares
outstanding 139,430,490 139,194,766
(1) A reconciliation from income from operations to segment income follows.
Consolidated Supplemental Financial Data (Unaudited)
(in millions)
Reconciliation from Income from Operations 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 income from operations adjusted to add back provisions for asbestos and restructuring and other, the impact of fair value adjustments to inventory acquired in an acquisition, and the timing impact of hedge ineffectiveness.
Three Months Ended
March 31,
---------
2016 2015
---- ----
Income from operations $219 $168
Add back:
Restructuring and other 2 20
Fair value adjustment to inventory (1) 6
Impact of hedge ineffectiveness (1) (2)
Segment Income $221 $192
==== ====
(1) Included in cost of products sold
Segment Information
-------------------
Three Months Ended March 31,
----------------------------
Net
Sales 2016 2016 at 2015
-----
Actual 2015 rates
(2) Actual
------ ----------- ------
Americas
Beverage $643 $686 $617
North
America
Food 146 151 160
European
Beverage 315 327 324
European
Food 398 409 431
Asia
Pacific 277 288 310
--- --- ---
Total
reportable
segments 1,779 1,861 1,842
Non-
reportable
segments 114 117 155
--- --- ---
Total
net
sales $1,893 $1,978 $1,997
====== ====== ======
Segment
Income
-------
Americas
Beverage $104 $110 $85
North
America
Food 12 12 24
European
Beverage 46 48 38
European
Food 49 50 42
Asia
Pacific 35 36 35
--- --- ---
Total
reportable
segments 246 256 224
Non-
reportable
segments 13 13 17
Corporate
and
other
unallocated
items (38) (38) (49)
--- --- ---
Total
segment
income $221 $231 $192
==== ==== ====
(2) Information presented for 2016
at 2015 rates represents
financial results assuming
constant foreign currency
exchange rates used for
translation based on the
rates in effect for the
comparable prior year period.
In order to compute constant
currency results, we multiply
or divide, as appropriate,
our current year U.S. dollar
results by the current year
average foreign exchange
rates and then multiply or
divide, as appropriate, those
amounts by the applicable
prior year average foreign
exchange rates.
Consolidated Supplemental Data (Unaudited)
(in millions, except per share data)
Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share
The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted diluted earnings per share, as used elsewhere in this release.
Three Months Ended
March 31,
---------
2016 2015
---- ----
Net income
attributable
to Crown
Holdings, as
reported $79 $44
Fair value
adjustment to
inventory (1) 6
Impact of hedge
ineffectiveness
(2) (2)
Restructuring
and other (3) 2 20
Loss from early
extinguishment
of debt (4) 27
Income taxes
(5) (12) 5
---
Adjusted net
income $96 $73
=== ===
Diluted
earnings per
share as
reported $0.57 $0.32
Adjusted
diluted
earnings per
share $0.69 $0.53
Effective tax
rate as
reported 27.7% 37.4%
Adjusted
effective tax
rate 30.1% 26.0%
Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per 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.
(2) In the first quarter of 2015, the
Company recorded a benefit of $2
million in cost of products sold
related to hedge ineffectiveness
caused primarily by volatility in
the metal premium component of
aluminum prices.
(3) In the first quarter of 2016, the
Company recorded restructuring and
other charges of $4 million
primarily for pension settlement
charges. In the first quarter of
2015, the Company recorded
restructuring and other charges of
$15 million primarily for costs
related to its acquisition of
Empaque.
In the first quarter of 2016, the
Company recorded gains of $2 million
for asset sales and impairments. In
the first quarter of 2015, the
Company recorded charges of $5
million for asset sales and
impairments primarily related to the
sale of four industrial specialty
packaging plants in Europe.
(4) In the first quarter of 2016, the
Company recorded a charge of $27
million for premiums paid and the
write off of deferred financing fees
in connection with the redemption of
its outstanding $700 million notes
due 2021.
(5) In the first quarter of 2016, the
Company recorded income tax benefits
of $12 million related to the items
described above. In the first
quarter of 2015, the Company
recorded income tax benefits of $2
million related to the items
described above, and a charge of $7
million to record a potential
liability arising from an
unfavorable tax court ruling in
Spain.
Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
March
31, 2016 2015 (1)
----- ---- -------
Assets
Current
assets
Cash
and
cash
equivalents $257 $280
Receivables,
net 980 1,039
Inventories 1,413 1,446
Prepaid
expenses
and
other
current
assets 254 307
Total
current
assets 2,904 3,072
----- -----
Goodwill
and
intangible
assets 3,627 3,746
Property,
plant
and
equipment,
net 2,727 2,619
Other
non-
current
assets 682 638
--- ---
Total $9,940 $10,075
====== =======
Liabilities
and
equity
Current
liabilities
Short-
term
debt $67 $72
Current
maturities
of
long-
term
debt 239 171
Accounts
payable
and
accrued
liabilities 2,412 2,369
Total
current
liabilities 2,718 2,612
Long-
term
debt,
excluding
current
maturities 5,293 5,678
Other
non-
current
liabilities 1,376 1,537
Noncontrolling
interests 304 275
Crown
Holdings
shareholders'
equity/
(deficit) 249 (27)
--- ---
Total
equity 553 248
--- ---
Total $9,940 $10,075
====== =======
(1) Certain prior year amounts have
been reclassified in
accordance with new accounting
guidance regarding the
presentation of debt issuance
costs.
Consolidated Statements of Cash Flows (Condensed & Unaudited)
(in millions)
------------
Three months ended March
31, 2016 2015
---- ----
Cash flows from operating
activities
Net income $99 $62
Depreciation and
amortization 60 51
Restructuring and other 2 20
Pension expense 7 11
Pension contributions (25) (17)
Stock-based compensation 6 11
Working capital changes and
other (557) (425)
Net cash used for operating
activities (1) (408) (287)
---- ----
Cash flows from investing
activities
Purchase of business (1,206)
Capital expenditures (51) (52)
Proceeds from sale of
business 4 21
Other (1) (9)
Net cash used for investing
activities (48) (1,246)
--- ------
Cash flows from financing
activities
Net change in debt (23) 943
Dividends paid to
noncontrolling interests (8) (9)
Other, net 27 (48)
--- ---
Net cash provided by/(used
for) financing activities (4) 886
--- ---
Effect of exchange rate
changes on cash and cash
equivalents (38)
---
Net change in cash and cash
equivalents (460) (685)
Cash and cash equivalents
at January 1 717 965
--- ---
Cash and cash equivalents
at March 31 $257 $280
==== ====
(1) Free cash flow is defined by the
Company as net cash used for
operating activities less
capital expenditures and
certain other items. A
reconciliation from net cash
used for operating activities
to free cash flow for the three
months ended March 31, 2016 and
2015 follows:
Three months ended March 31, 2016 2015
---- ----
Net cash used for operating activities ($408) ($287)
Premiums paid to retire debt early 22
---
Adjusted net cash used for operating activities (386) (287)
Capital expenditures (51) (52)
Free cash flow ($437) ($339)
===== =====
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SOURCE Crown Holdings, Inc.
