CROWN HOLDINGS, INC. PHILADELPHIA, July 20, 2016 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the second quarter ended June 30, 2016.
Second Quarter Highlights
-- Earnings per share $1.21 versus $1.02 in 2015, increase of 19%
-- Adjusted earnings per share $1.19 versus $1.03 in 2015, increase of 16%
-- Income from operations up 6% from $277 million to $295 million
-- Segment income up 6% from $272 million to $288 million
-- Beverage can growth projects on schedule to meet increasing demand
Net sales in the second quarter were $2,142 million compared to $2,278 million in the second quarter of 2015, primarily due to $60 million of unfavorable currency translation in 2016 compared to 2015 and the pass through of lower material costs.
Income from operations was $295 million in the second quarter of 2016. Segment income was $288 million in the quarter compared to $272 million in the second quarter of 2015, and included $11 million of unfavorable currency translation.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "Our second quarter results, fueled by solid performances across all businesses, particularly European Beverage, put us well on our way to a very strong 2016. Underlying beverage can volume growth was also notable in Brazil, Canada, Colombia, Southeast Asia and the United States.
"We also continue to focus on laying the groundwork to meet the growth opportunities that lie ahead. Last month, we began commercial production at our third Cambodian beverage can plant in Phnom Penh, a market that continues to experience strong demand. 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 expanding our specialty can presence in North America. In Colombia, we will begin a major capacity expansion later this year with the added production available for shipment in the second quarter of 2017. Additionally, we will begin installation of the second high speed aluminum production line at our beverage can plant in Custines, France, completing that plant's conversion from steel to aluminum. Commercial start-up of the second line is scheduled for April 2017. With its many inherent benefits, including being infinitely recyclable, the beverage can continues to become the increasingly preferred package for marketers and consumers around the world."
Interest expense was $58 million in the second quarter of 2016 compared to $69 million in 2015 primarily due to lower outstanding debt and interest rates.
Net income attributable to Crown Holdings in the second quarter increased to $169 million over the $142 million in the second quarter of 2015. Reported diluted earnings per share were $1.21 in the second quarter of 2016 compared to $1.02 in the 2015 second quarter. Adjusted diluted earnings per share increased to $1.19 over the $1.03 in 2015.
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.
Six Month Results
Net sales for the first six months of 2016 were $4,035 million compared to $4,275 million in the first six months of 2015, primarily due to $145 million of unfavorable currency translation in 2016 compared to 2015 and the pass through of lower material costs.
Income from operations was $514 million in the first half of 2016. Segment income in the first half of 2016 was $509 million compared to $464 million in the first six months of 2015, and included $21 million of unfavorable currency translation.
Interest expense was $122 million for the first six months of 2016 compared to $134 million in the same period of 2015 primarily due to lower outstanding debt. .
Net income attributable to Crown Holdings for the first six months of 2016 increased to $248 million over the $186 million in the first six months of 2015. Reported diluted earnings per share for the first six months of 2016 were $1.78 compared to $1.34 in the first half of last year. Adjusted diluted earnings per share were $1.88 compared to $1.55 in 2015.
Non-GAAP Measures
Segment income, adjusted free cash flow, adjusted net income, the adjusted effective tax rate, adjusted earnings per share, and the information presented excluding the impact of currency translation are not defined terms under U.S. generally accepted accounting principles (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 as the principal measure of the performance of its operations and adjusted free cash flow as the principal measure of its liquidity. The Company considers both of these measures in the allocation of resources. Adjusted 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 as these measures are adjusted for items that affect comparability between periods. The Company believes that adjusted free cash flow provides a meaningful measure of liquidity and a useful basis for assessing the Company's ability to fund its activities, including the financing of acquisitions, debt repayments, share repurchases or possible future dividends. Segment income, adjusted 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, adjusted 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, July 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 passcode is 3799330. 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 (203) 369-0506 or toll free (866) 396-4180.
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 future growth in demand for beverage, food and aerosol cans, including in regions where the Company is adding capacity; the Company's ability to successfully complete and begin production at beverage can capacity projects within expected timelines and budgets in Colombia, Mexico, Turkey, New York and France; 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
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,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Net sales $2,142 $2,278 $4,035 $4,275
------ ------ ------ ------
Cost of products sold 1,691 1,843 3,212 3,503
Depreciation and
amortization 65 62 125 113
Selling and
administrative expense 94 99 185 197
Restructuring and other (3) (3) (1) 17
--- --- --- ---
Income from operations
(1) 295 277 514 445
Foreign exchange (11) (1) (17) 5
Interest expense 58 69 122 134
Interest income (2) (2) (5) (4)
Loss from early extinguishment of debt 9 27 9
Income before income
taxes 250 202 387 301
Provision for income
taxes 65 49 103 86
Net income 185 153 284 215
Net income attributable
to noncontrolling
interests (16) (11) (36) (29)
--- --- --- ---
Net income attributable
to Crown Holdings $169 $142 $248 $186
==== ==== ==== ====
Earnings per share attributable to Crown Holdings
common shareholders:
Basic $1.22 $1.03 $1.79 $1.35
===== ===== ===== =====
Diluted $1.21 $1.02 $1.78 $1.34
===== ===== ===== =====
Weighted average common shares outstanding:
Basic 138,452,944 137,914,062 138,325,203 137,805,980
Diluted 139,338,412 139,319,455 139,214,555 139,175,449
Actual common shares
outstanding 139,669,710 139,400,803 139,669,710 139,400,803
-------------------- ----------- ----------- ----------- -----------
(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 and Constant Currency 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Income from operations $295 $277 $514 $445
Provision for restructuring and other (3) (3) (1) 17
Fair value adjustment to inventory (1) 6
Impact of hedge ineffectiveness (1) (4) (2) (4) (4)
--- --- --- ---
Segment income 288 272 509 464
Foreign currency translation (2) 11 21
--- ---
Constant currency segment income $299 $272 $530 $464
==== ==== ==== ====
(1) Included in cost of
products sold
Segment Information
-------------------
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
Net Sales 2016 2016 at 2015 2016 2016 at 2015
Actual 2015 rates (2) Actual Actual 2015 rates (2) Actual
--- ------ ------------- ------ ------ ------------- ------
Americas
Beverage $706 $746 $741 $1,349 $1,432 $1,358
North America
Food 168 172 170 314 323 330
European
Beverage 401 409 422 716 736 746
European Food 462 460 492 860 869 923
Asia Pacific 281 289 310 558 577 620
--- --- --- --- --- ---
Total
reportable
segments 2,018 2,076 2,135 3,797 3,937 3,977
Non-reportable
segments 124 126 143 238 243 298
--- --- --- --- --- ---
Total net sales $2,142 $2,202 $2,278 $4,035 $4,180 $4,275
====== ====== ====== ====== ====== ======
Segment Income
--------------
Americas
Beverage $106 $112 $99 $210 $222 $184
North America
Food 20 21 23 32 33 47
European
Beverage 75 78 66 121 126 104
European Food 67 67 68 116 117 110
Asia Pacific 39 40 39 74 76 74
--- --- --- --- --- ---
Total
reportable
segments 307 318 295 553 574 519
Non-reportable
segments 20 21 20 33 34 37
Corporate and
other
unallocated
items (39) (40) (43) (77) (78) (92)
--- --- --- --- --- ---
Total segment
income $288 $299 $272 $509 $530 $464
==== ==== ==== ==== ==== ====
(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, the Company
multiplies or divides, as
appropriate, the current year
U.S. dollar results by the
current year average foreign
exchange rates and then
multiplies or divides, 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
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net income/diluted earnings per
share attributable to Crown
Holdings, as reported $169 $1.21 $142 $1.02 $248 $1.78 $186 $1.34
Fair value adjustment to inventory
(1) 6 .04
Impact of hedge ineffectiveness (2) (4) (.03) (2) (.01) (4) (.03) (4) (.03)
Restructuring and other (3) (3) (.02) (3) (.02) (1) (.01) 17 .13
Loss from early extinguishment of
debt (4) 9 .06 27 .19 9 .06
Income taxes (5) 4 .03 (3) (.02) (8) (.05) 2 .01
--- --- --- ---- --- ---- --- ---
Adjusted net income/diluted
earnings per share $166 $1.19 $143 $1.03 $262 $1.88 $216 $1.55
Effective tax rate as reported 26.0% 24.3% 26.6% 28.6%
Adjusted effective tax rate (6) 25.1% 25.2% 27.1% 25.5%
(1) In the first quarter of 2015, the
Company recorded a charge of $6 million
($4 million net of tax) in cost of
products sold for fair value
adjustments related to the sale of
inventory acquired in its acquisition
of Empaque.
(2) In the second quarter of 2016, the
Company recorded benefits of $4 million
($3 million net of tax) in cost of
products sold related to the timing
impact of hedge ineffectiveness. In
the second quarter and first six months
of 2015, the Company recorded benefits
of $2 million ($2 million net of tax)
and $4 million ($3 million net of tax).
(3) In the second quarter and first six
months of 2016, the Company recorded
restructuring and other charges of $2
million ($3 million net of tax) and $6
million ($5 million net of tax)
including pension settlement charges.
In the second quarter and first six
months of 2015, the Company recorded
restructuring and other charges of $2
million ($2 million net of tax) and $17
million ($14 million net of tax)
primarily for costs related to its
acquisition of Empaque.
In the second quarter and first six
months of 2016, the Company recorded
gains of $5 million ($3 million net of
tax) and $7 million ($5 million net of
tax) for asset sales and impairments.
In the first and second quarters of
2015, the Company recorded a charge of
$5 million ($5 million net of tax) and
a gain of $5 million ($6 million net of
tax) 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 ($17 million net of tax) for
premiums paid and the write off of
deferred financing fees in connection
with the redemption of its outstanding
$700 million notes due 2021. In the
second quarter of 2015, the Company
recorded a charge of $9 million ($6
million net of tax) 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 2016, the Company recorded
income tax charges of $4 million and
benefits of $8 million related to the
items described above. In the second
quarter and first six months of 2015,
the Company recorded income tax
benefits of $6 million and $8 million
related to the items described above,
and charges of $3 million and $10
million to record the impact of an
unfavorable tax court ruling and tax
rate change in Spain.
(6) Income tax effects on adjusted net
income were calculated using the
applicable tax rates of the underlying
jurisdictions.
Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
June
30, 2016 2015 (1)
---- ---- -------
Assets
Current
assets
Cash
and
cash
equivalents $370 $288
Receivables,
net 929 1,098
Inventories 1,419 1,454
Prepaid
expenses
and
other
current
assets 240 338
Total
current
assets 2,958 3,178
----- -----
Goodwill
and
intangible
assets 3,472 3,790
Property,
plant
and
equipment,
net 2,700 2,672
Other
non-
current
assets 646 653
--- ---
Total $9,776 $10,293
====== =======
Liabilities
and
equity
Current
liabilities
Short-
term
debt $37 $56
Current
maturities
of
long-
term
debt 236 152
Accounts
payable
and
accrued
liabilities 2,554 2,525
Total
current
liabilities 2,827 2,733
Long-
term
debt,
excluding
current
maturities 5,011 5,611
Other
non-
current
liabilities 1,315 1,545
Noncontrolling
interests 305 278
Crown
Holdings
shareholders'
equity 318 126
--- ---
Total
equity 623 404
--- ---
Total $9,776 $10,293
====== =======
(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)
------------
Six months ended June 30, 2016 2015
---- ----
Cash flows from operating
activities
Net income $284 $215
Depreciation and
amortization 125 113
Provision for restructuring
and other (1) 17
Pension expense 14 22
Pension contributions (41) (34)
Stock-based compensation 10 17
Working capital changes and
other (328) (365)
Net cash provided by (used
for) operating activities
(A) 63 (15)
--- ---
Cash flows from investing
activities
Purchase of business (1,207)
Capital expenditures (143) (111)
Proceeds from sale of
business 30
Other 18 (14)
Net cash used for investing
activities (125) (1,302)
---- ------
Cash flows from financing
activities
Net change in debt (283) 765
Dividends paid to
noncontrolling interests (26) (17)
Debt issue costs (2) (17)
Other, net 30 (52)
--- ---
Net cash provided by (used
for) financing activities (281) 679
---- ---
Effect of exchange rate
changes on cash and cash
equivalents (4) (39)
--- ---
Net change in cash and cash
equivalents (347) (677)
Cash and cash equivalents
at January 1 717 965
--- ---
Cash and cash equivalents
at June 30 $370 $288
==== ====
(A) Adjusted free cash flow is
defined by the Company as net
cash from operating activities
less capital expenditures and
certain other items. A
reconciliation from net cash
from operating activities to
adjusted free cash flow for the
three and six months ended June
30, 2016 and 2015 follows:
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Net cash from operating activities $471 $275 $63 ($15)
Capital expenditures (92) (59) (143) (111)
--- --- ---- ----
Free cash flow 379 216 (80) (126)
Premiums paid to retire debt early 22
---
Adjusted free cash flow $379 $216 ($58) ($126)
==== ==== ==== =====
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SOURCE Crown Holdings, Inc.
