CROWN HOLDINGS, INC. PHILADELPHIA, Feb. 3, 2016 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter ended December 31, 2015.
2015 Highlights
-- Fourth quarter adjusted earnings per share $0.70, including $0.07 of
unfavorable currency translation, compared to $0.48 in 2014, an increase
of 46%
-- Full year adjusted earnings per share $3.59, including $0.48 of
unfavorable currency translation, compared to $3.41 in 2014, an increase
of 5%
-- Constant currency adjusted earnings grew 60% in the fourth quarter, 19%
for the full year
-- Constant currency segment income up 28% in the fourth quarter, 12% for
the full year
-- Free cash flow over $600 million for the third consecutive year
-- Global beverage can volumes grew 11% in the fourth quarter, 9% for the
full year
Net sales in the fourth quarter were $2,027 million, including $161 million of unfavorable currency translation, compared to $2,127 million in the fourth quarter of 2014.
Segment income (a non-GAAP measure) increased 23% to $234 million in the fourth quarter of 2015 compared to $191 million in the prior year, and included $11 million of unfavorable currency translation in 2015 compared to 2014.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "A strong fourth quarter performance contributed to excellent full-year results for the Company. In 2015, both adjusted earnings per share and segment income increased despite significant currency translation headwinds. On a constant currency basis, 2015 segment income increased 12% and adjusted earnings per share increased 19%. These positive results, combined with free cash flow in excess of $600 million for the third consecutive year, reflect the strong underlying fundamentals of our global businesses as well as the significant contributions from our recent acquisitions of Mivisa and Empaque.
"Global beverage can shipments increased 9% in 2015, including Empaque. Demand increases were notable in Mexico, Europe and Asia. We again benefited from our global beverage can presence, which includes strong regional platforms and a long-standing and diverse customer portfolio.
"Looking to 2016, we are excited about the year ahead. Beverage can growth is expected to continue in many parts of the world, propelled in part by a prevailing shift by customers and consumers away from other packaging types toward cans. To meet our customers' rising demand for specialty beverage cans in North America, the Company will construct a new facility in Nichols, New York, capable of producing multiple sizes, which is expected to be operational during the first quarter of 2017. We are also building new beverage can plants in Phnom Penh, Cambodia, our third in the country, and Monterrey, Mexico. Both of these facilities, scheduled to commence operations during the second and fourth quarters of 2016, respectively, will support increasing consumer demand for beer packaged in cans in those markets. We are also adding a second production line to our beverage can plant in Osmaniye, Turkey with operations commencing during the fourth quarter of 2016."
Interest expense increased to $68 million in the fourth quarter of 2015 over the $65 million in 2014 primarily due to increased borrowings to fund the Company's acquisition of Empaque.
The effective tax rate for the quarter was 33.8%, or 28.2% on adjusted earnings.
Net income attributable to Crown Holdings in the fourth quarter was $66 million compared to $13 million in the fourth quarter of 2014. Earnings per diluted share were $0.47 in the fourth quarter of 2015 compared to $0.09 in the 2014 fourth quarter. Adjusted earnings per diluted share improved 46% to $0.70 compared to $0.48 in 2014.
A reconciliation from net income and earnings per diluted share to adjusted net income and adjusted earnings per diluted share is provided below.
Twelve Month Results
For the full year, net sales were $8,762 million, including $855 million of unfavorable currency translation, compared to $9,097 million in 2014.
Segment income for 2015 increased to $1,026 million, including $98 million of unfavorable currency translation, over the $1,004 million in the same period of 2014.
Interest expense in 2015 was $270 million compared to $253 million in the prior year primarily due to increased borrowings to fund the Mivisa and Empaque acquisitions.
The effective tax rate for the year was 27.9%, or 24.6% on adjusted earnings.
Net income attributable to Crown Holdings for 2015 improved to $393 million over the $387 million in 2014. Earnings per diluted share for 2015 increased to $2.82 over the $2.79 last year. Adjusted earnings per diluted share grew to $3.59 compared to $3.41 in 2014.
Free cash flow (a non-GAAP measure) for the year was $602 million, including $956 million of net cash provided by operating activities.
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 earnings 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, the effective tax rate, 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 adjusted net income, the adjusted effective tax rate, adjusted earnings per diluted 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 earnings per diluted 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 earnings per diluted share and information unadjusted for currency translation can be found within this release.
Conference Call
The Company will hold a conference call tomorrow, February 4, 2016 at 9:00 a.m. (EST) 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 (312) 470-7401 or toll-free (888) 957-9826 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 February 11, 2016. The telephone numbers for the replay are (203) 369-0591 or toll free (866) 403-8737.
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 Company's ability to continue to generate free cash flow; the continued successful integration and performance of Mivisa and Empaque; future beverage can growth in many parts of the world, including future demand for beverage cans in Mexico, Europe, Turkey and Asia (including Cambodia); a continuation of the shift by customers and consumers to beverage cans from other forms of packaging; the continued demand for specialty beverage cans in North America; and the Company's ability to successfully complete beverage can capacity addition projects within expected timelines in New York, Cambodia, Mexico and Turkey 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 Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Net sales $2,027 $2,127 $8,762 $9,097
------ ------ ------ ------
Cost of products sold 1,629 1,785 7,116 7,525
Depreciation and
amortization 63 55 237 190
Selling and
administrative expense 99 96 390 398
Provision for asbestos 26 45 26 45
Restructuring and other 9 38 66 129
--- --- --- ---
Income from operations
(1) 201 108 927 810
Loss from early extinguishment of debt 9 34
Foreign exchange 6 10 20 14
Interest expense 68 65 270 253
Interest income (3) (2) (11) (7)
Income before income
taxes 130 35 639 516
Provision for/(benefit
from) income taxes 44 (1) 178 41
Net income 86 36 461 475
Net income attributable
to noncontrolling
interests (20) (23) (68) (88)
--- --- --- ---
Net income attributable
to Crown Holdings $66 $13 $393 $387
=== === ==== ====
Earnings per share attributable to Crown
Holdings
common shareholders:
Basic $0.48 $0.09 $2.85 $2.82
===== ===== ===== =====
Diluted $0.47 $0.09 $2.82 $2.79
===== ===== ===== =====
Weighted average common shares outstanding:
Basic 138,083,619 137,451,835 137,937,938 137,225,058
Diluted 139,269,286 138,796,080 139,135,104 138,537,590
Actual common shares outstanding 139,441,298 139,000,471 139,441,298 139,000,471
-------------------------------- ----------- ----------- ----------- -----------
(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 Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Income from operations $201 $108 $927 $810
Add back:
Provision for asbestos 26 45 26 45
Provision for restructuring and other 9 38 66 129
Fair value adjustment to inventory (1) 6 19
Impact of hedge ineffectiveness (1) (2) 1 1
--- --- ---
Segment income $234 $191 $1,026 $1,004
==== ==== ====== ======
(1) Included in cost of products sold
Segment Information
-------------------
Three Months Ended December 31, Twelve Months Ended December 31,
------------------------------- --------------------------------
Net Sales 2015 2015 at 2014 2015
Actual 2014 rates (2) Actual Actual
2015 at 2014
2014 rates (2) Actual
--- ------------- ------
Americas Beverage $691 $750 $622 $2,771 $2,977 $2,335
North America Food 150 154 181 680 696 809
European Beverage 331 358 350 1,504 1,686 1,708
European Food 420 469 482 1,984 2,346 2,197
Asia Pacific 282 297 302 1,202 1,240 1,226
--- --- --- ----- ----- -----
Total reportable segments 1,874 2,028 1,937 8,141 8,945 8,275
Non-reportable segments 153 160 190 621 672 822
--- --- --- --- --- ---
Total net sales $2,027 $2,188 $2,127 $8,762 $9,617 $9,097
====== ====== ====== ====== ====== ======
Segment Income
--------------
Americas Beverage $127 $133 $93 $427 $457 $334
North America Food 14 14 20 86 86 127
European Beverage 50 53 42 228 251 265
European Food 38 41 25 246 291 221
Asia Pacific 34 35 34 145 148 142
--- --- --- --- --- ---
Total reportable segments 263 276 214 1,132 1,233 1,089
Non-reportable segments 21 21 20 83 86 92
Corporate and other unallocated items (50) (52) (43) (189) (195) (177)
--- --- --- ---- ---- ----
Total segment income $234 $245 $191 $1,026 $1,124 $1,004
==== ==== ==== ====== ====== ======
(2) Information presented for 2015 at 2014 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 Earnings Per Diluted Share to Adjusted Net Income and Adjusted Earnings Per Diluted Share
The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted net income and adjusted earnings per diluted share, as used elsewhere in this release.
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Net income attributable to Crown Holdings, as reported $66 $13 $393 $387
Fair value adjustment to inventory (1) 6 19
Hedge ineffectiveness (2) (2) 1 1
Provision for asbestos (3) 26 45 26 45
Restructuring and other (4) 9 38 71 129
Loss from early extinguishment of debt (5) 9 34
Income taxes (6) (2) (30) (7) (142)
--- --- --- ----
Adjusted net income $97 $66 $499 $473
=== === ==== ====
Earnings per diluted share as reported $0.47 $0.09 $2.82 $2.79
Adjusted earnings per diluted share $0.70 $0.48 $3.59 $3.41
Effective tax rate as reported 33.8% (2.9%) 27.9% 7.9%
Adjusted effective tax rate 28.2% 24.6% 24.6% 24.6%
Adjusted net income, adjusted earnings per diluted 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, earnings per diluted 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 2014, the Company
recorded a charge of $19 million
related to the sale of inventory
acquired in its acquisition of Mivisa.
(2) In the fourth quarter and full year of
2015, the Company recorded income of $2
million and a charge of $1 million in
cost of products sold related to the
timing impact of hedge ineffectiveness.
In 2014, the Company recorded a charge
of $1 million for hedge
ineffectiveness.
(3) In the fourth quarters of 2015 and 2014,
the Company recorded charges of $26
million and $45 million to increase its
reserves for asbestos related
liabilities.
(4) In the fourth quarter and full year of
2015, the Company recorded
restructuring and other charges of $1
million and $49 million. The full year
charge included $5 million reported in
cost of products sold for inventory
write downs in plants to be closed. In
the fourth quarter and full year of
2014, the Company recorded
restructuring and other charges of $4
million and $42 million.
In the fourth quarter and full year of
2015, the Company recorded charges of
$8 million and $22 million for asset
sales and impairments. In the fourth
quarter and full year of 2014, the
Company recorded charges of $34 million
and $87 million primarily for asset
sales and impairments related to the
divestment of certain operations and
acquisition transaction costs.
(5) 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. In the
third quarter of 2014, the Company
recorded a charge of $34 million in
connection with the redemption of its
EUR500 million notes due 2018.
(6) In the fourth quarter and full year of
2015, the Company recorded income tax
benefits of $6 million and $18 million
related to the items described above, a
charge of $7 million in the first
quarter to record a potential liability
arising from a recent unfavorable tax
court ruling in Spain, and a charge of
$4 million in the fourth quarter to
reduce deferred tax assets due to a tax
rate reduction in the U.K. In the
fourth quarter of 2014, the Company
recorded income tax benefits of $30
million related to the items described
above, and to reduce its deferred tax
liabilities due to a tax rate reduction
in Spain. In the full year of 2014, the
Company recorded income tax benefits of
$42 million related to the items
described above and $100 million in
connection with the rate reduction in
Spain and the reversal of tax valuation
allowances in France.
Consolidated Balance Sheets (Condensed & Unaudited)
(in millions)
December
31, 2015 2014 (1)
-------- ---- -------
Assets
Current
assets
Cash
and
cash
equivalents $717 $965
Receivables,
net 912 1,031
Inventories 1,213 1,324
Prepaid
expenses
and
other
current
assets 207 299
Total
current
assets 3,049 3,619
----- -----
Goodwill
and
intangible
assets 3,580 2,926
Property,
plant
and
equipment,
net 2,699 2,437
Other
non-
current
assets 692 661
--- ---
Total $10,020 $9,643
======= ======
Liabilities
and
equity
Current
liabilities
Short-
term
debt $54 $75
Current
maturities
of
long-
term
debt 209 175
Accounts
payable
and
accrued
liabilities 2,645 2,674
Total
current
liabilities 2,908 2,924
Long-
term
debt,
excluding
current
maturities 5,255 4,944
Other
non-
current
liabilities 1,422 1,388
Noncontrolling
interests 291 268
Crown
Holdings
shareholders'
equity 144 119
--- ---
Total
equity 435 387
--- ---
Total $10,020 $9,643
======= ======
(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)
------------
Twelve months ended
December 31, 2015 2014
---- ----
Cash flows from operating
activities
Net income $461 $475
Depreciation and
amortization 237 190
Provision for restructuring
and other 66 129
Pension expense 48 56
Pension contributions (79) (81)
Stock-based compensation 27 22
Working capital changes 153 202
Deferred tax and other 43 (81)
Net cash provided by
operating activities (A) 956 912
--- ---
Cash flows from investing
activities
Purchase of business (1,207) (733)
Capital expenditures (354) (328)
Proceeds from sale of
assets and divestitures 40 38
Other (27) 2
Net cash used for investing
activities (1,548) (1,021)
------ ------
Cash flows from financing
activities
Net change in debt 528 671
Dividends paid to
noncontrolling interests (48) (77)
Purchase of noncontrolling
interests (93)
Debt issue costs (18) (41)
Other, net (56) (15)
--- ---
Net cash provided by
financing activities 406 445
--- ---
Effect of exchange rate
changes on cash and cash
equivalents (62) (60)
--- ---
Net change in cash and cash
equivalents (248) 276
Cash and cash equivalents
at January 1 965 689
--- ---
Cash and cash equivalents
at December 31 $717 $965
==== ====
(A) Free cash flow is defined by
the Company as net cash from
operating activities less capital
expenditures. A reconciliation of
net cash from operating activities
to free cash flow for the three
and twelve months ended December
31, 2015 and 2014 follows:
Three Months Ended Twelve Months
Ended December 31,
December 31,
------------
2015 2014 2015 2014
---- ---- ---- ----
Net cash from operating
activities $641 $903 $956 $912
Premiums paid to retire
debt early 28
---
Adjusted net cash from
operating activities 641 903 956 940
Capital expenditures (178) (116) (354) (328)
---- ---- ---- ----
Free cash flow $463 $787 $602 $612
==== ==== ==== ====
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SOURCE Crown Holdings, Inc.
