PHILADELPHIA, July 21, 2014 /PRNewswire/ -- Crown
Holdings, Inc. (NYSE: CCK) today announced its financial results
for the second quarter ended June 30,
2014.
Second Quarter Highlights
- Income per diluted share $0.76; Before Certain Items $1.01
- Mivisa acquisition closed April 23
- Global beverage can volumes up 3% in Q2,
4% YTD
- New beverage can plant in Teresina,
Brazil began commercial production
in the quarter
Net sales in the second quarter grew to $2,383 million compared to $2,223 million in the second quarter of 2013,
primarily due to the impact of the Mivisa acquisition and increased
global beverage can unit sales.
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) rose to
$285 million in the second quarter
over the $273 million in the second
quarter of 2013 primarily due to contributions from the Mivisa
acquisition and increased beverage can volumes.
Commenting on the quarter, John W.
Conway, Chairman and Chief Executive Officer, stated, "We
continued our strong performance during the second quarter with
increases in sales, segment income and earnings per share before
certain items. The acquisition of Mivisa closed on
April 23rd, and we are
pleased that this well-performing business is now an integral part
of our strategically important European Food segment.
Underlying food can demand has begun to improve in Europe and remains stable in North America.
"Growth in global beverage can volumes continued with a 3%
year-on-year improvement in the quarter, resulting in a 4% gain
year-to-date. Shipments were particularly robust in
Brazil, Southeast Asia and Turkey, as Crown benefited from our
industry-leading presence in these emerging markets. During
the quarter, we began commercial production at our new facility in
Teresina, Brazil and the start-up
has progressed according to plan."
Interest expense in the second quarter was $66 million compared to $61 million in the second quarter of 2013
primarily due to higher average debt outstanding.
Net income attributable to Crown Holdings in the second quarter
was $106 million compared to
$133 million in the second quarter
last year. Income per diluted share was $0.76 in the second quarter compared to
$0.93 in the second quarter of
2013. Net income per diluted share before certain items
increased to $1.01 over the
$0.96 in the second quarter of
2013.
In addition to closing the Mivisa acquisition during the second
quarter, the Company also completed the sale of certain Crown and
Mivisa operations as required by the European Commission. The
Company recorded pre-tax charges of $12
million ($10 million net of
tax) in the quarter and $56 million
($53 million net of tax) for the
first six months of 2014 primarily related to the divestments and
costs of the acquisition. The Company also recorded pre-tax
charges of $19 million ($16 million net of tax) in the quarter and
$27 million ($23 million net of tax) for the first six months
of 2014 for restructuring and other charges.
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 2014 rose to $4,376 million over the $4,196 million in the first six months of 2013,
reflecting the impact of the Mivisa acquisition and increased
global beverage can volumes.
Segment income in the first half of 2014 grew to $485 million from the $468
million in the first six months of 2013 primarily due to
increased beverage can volumes and contributions from the Mivisa
acquisition.
Interest expense for the first six months of 2014 was
$124 million compared to $121 million in the same period of 2013,
reflecting higher average debt outstanding.
Net income attributable to Crown Holdings for the first six
months of 2014 was $130 million
compared to $174 million in the first
six months of 2013. Income per diluted share for the first
six months of 2014 was $0.94 compared
to $1.21 in the first half of last
year. Net income per diluted share before certain items
increased to $1.58 over the
$1.46 in 2013.
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 regarding
net income before certain items and income per diluted share before
certain items does not conform to U.S. 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 and income per diluted share before certain
items are useful in evaluating the Company's operations.
Segment income, free cash flow, net income before certain items and
income per diluted share before certain items are derived from the
Company's Consolidated Statements of Operations and Cash Flows, as
applicable, and reconciliations to segment income, free cash flow,
net income before certain items and income per diluted share before
certain items can be found within this release.
Conference Call
The Company will hold a conference call tomorrow, July 22, 2014 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 (212)
519-0813 or toll-free (888) 994-8798 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
29. The telephone numbers for the replay are (402) 998-1528
or toll free (888) 568-0627.
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 Company's ability to continue to
successfully integrate its acquisition of Mivisa, the level of
future customer demand for food cans in Europe (including Spain and other markets where Mivisa
participates) and North America
and beverage cans in Brazil,
Southeast Asia, Turkey and other markets in which the Company
participates, and the Company's ability to successfully
commercialize new production capacity in Brazil 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, 2013 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 J. 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
June
30,
|
|
Six Months
Ended
June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net sales
|
$2,383
|
|
$2,223
|
|
$4,376
|
|
$4,196
|
Cost of products
sold
|
1,960
|
|
1,818
|
|
3,621
|
|
3,458
|
Depreciation and
amortization
|
47
|
|
30
|
|
82
|
|
64
|
Gross profit
(1)
|
376
|
|
375
|
|
673
|
|
674
|
Selling and
administrative expense
|
103
|
|
102
|
|
207
|
|
206
|
Restructuring and
other
|
31
|
|
4
|
|
83
|
|
8
|
Foreign
exchange
|
|
|
|
|
6
|
|
2
|
Interest
expense
|
66
|
|
61
|
|
124
|
|
121
|
Interest
income
|
(1)
|
|
(1)
|
|
(3)
|
|
(3)
|
Loss from early
extinguishment of debt
|
|
|
|
|
|
|
38
|
Income before
income taxes
|
177
|
|
209
|
|
256
|
|
302
|
Provision for income
taxes
|
50
|
|
55
|
|
83
|
|
79
|
Equity
earnings
|
|
|
1
|
|
|
|
(1)
|
Net income
|
127
|
|
155
|
|
173
|
|
222
|
Net income
attributable to noncontrolling interests
|
(21)
|
|
(22)
|
|
(43)
|
|
(48)
|
Net income
attributable to Crown Holdings
|
$106
|
|
$133
|
|
$130
|
|
$174
|
Earnings per share
attributable to Crown Holdings
common
shareholders:
|
|
|
|
|
|
|
|
Basic
|
$0.77
|
|
$0.94
|
|
$0.95
|
|
$1.23
|
Diluted
|
$0.76
|
|
$0.93
|
|
$0.94
|
|
$1.21
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
Basic
|
137,246,172
|
141,162,008
|
|
137,032,786
|
141,829,828
|
Diluted
|
138,599,132
|
142,542,010
|
|
138,398,582
|
143,335,468
|
Actual common shares
outstanding
|
138,888,817
|
140,789,829
|
|
138,888,817
|
140,789,829
|
|
|
|
|
|
|
|
(1) A reconciliation from
gross profit to segment income is found on the following page.
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. A reconciliation from gross
profit to segment income for the three and six months ended June
30, 2014 and 2013 follows:
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Gross
profit
|
$
|
376
|
|
$
|
375
|
|
$
|
673
|
|
$
|
674
|
Fair value adjustment
to inventory (1)
|
|
15
|
|
|
|
|
|
15
|
|
|
|
Impact of hedge
ineffectiveness (1)
|
|
(3)
|
|
|
|
|
|
4
|
|
|
|
Selling and
administrative expense
|
|
(103)
|
|
|
(102)
|
|
|
(207)
|
|
|
(206)
|
Segment
income
|
$
|
285
|
|
$
|
273
|
|
$
|
485
|
|
$
|
468
|
(1) Included in cost of products
sold.
|
|
|
|
|
Segment
Information
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
Net
Sales
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
594
|
|
$
|
582
|
|
$
|
1,143
|
|
$
|
1,134
|
North America
Food
|
|
|
213
|
|
|
206
|
|
|
392
|
|
|
403
|
European
Beverage
|
|
|
496
|
|
|
492
|
|
|
884
|
|
|
863
|
European
Food
|
|
|
555
|
|
|
430
|
|
|
928
|
|
|
806
|
Asia
Pacific
|
|
|
316
|
|
|
301
|
|
|
614
|
|
|
577
|
Total reportable
segments
|
|
|
2,174
|
|
|
2,011
|
|
|
3,961
|
|
|
3,783
|
Non-reportable
segments
|
|
|
209
|
|
|
212
|
|
|
415
|
|
|
413
|
Total net
sales
|
|
$
|
2,383
|
|
$
|
2,223
|
|
$
|
4,376
|
|
$
|
4,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
85
|
|
$
|
85
|
|
$
|
164
|
|
$
|
161
|
North America
Food
|
|
|
38
|
|
|
41
|
|
|
67
|
|
|
72
|
European
Beverage
|
|
|
83
|
|
|
78
|
|
|
142
|
|
|
129
|
European
Food
|
|
|
63
|
|
|
39
|
|
|
89
|
|
|
71
|
Asia
Pacific
|
|
|
36
|
|
|
35
|
|
|
70
|
|
|
68
|
Total reportable
segments
|
|
|
305
|
|
|
278
|
|
|
532
|
|
|
501
|
Non-reportable
segments
|
|
|
22
|
|
|
31
|
|
|
46
|
|
|
53
|
Corporate and other
unallocated items
|
|
|
(42)
|
|
|
(36)
|
|
|
(93)
|
|
|
(86)
|
Total segment
income
|
|
$
|
285
|
|
$
|
273
|
|
$
|
485
|
|
$
|
468
|
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
June
30,
|
|
Six Months
Ended
June
30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Crown Holdings, as reported
|
$
|
106
|
|
|
$
|
133
|
|
|
$
|
130
|
|
|
$
|
174
|
Items, net of
tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedge ineffectiveness
(1)
|
|
(2)
|
|
|
|
|
|
|
|
3
|
|
|
|
|
Fair value adjustment to
inventory (2)
|
|
10
|
|
|
|
|
|
|
|
10
|
|
|
|
|
Restructuring and other
(3)
|
|
26
|
|
|
|
4
|
|
|
|
76
|
|
|
|
7
|
Loss from early
extinguishment of debt (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before the
above items
|
$
|
140
|
|
|
$
|
137
|
|
|
$
|
219
|
|
|
$
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per diluted
common share as reported
|
$
|
0.76
|
|
|
$
|
0.93
|
|
|
$
|
0.94
|
|
|
$
|
1.21
|
Income per diluted
common share before the above items
|
$
|
1.01
|
|
|
$
|
0.96
|
|
|
$
|
1.58
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate as
reported
|
|
28.2%
|
|
|
|
26.3%
|
|
|
|
32.4%
|
|
|
|
26.2%
|
Effective tax rate
before the above items
|
|
26.8%
|
|
|
|
25.8%
|
|
|
|
27.4%
|
|
|
|
25.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. GAAP. The Company believes these non-GAAP measures are
useful in evaluating the performance of the Company's ongoing
business.
(1) In the second quarter and first six
months of 2014, the Company recorded income of $3 million ($2
million net of tax) and a charge of $4 million ($3
million net of tax) in cost of products sold related to
hedge ineffectiveness caused primarily by volatility in the metal
premium component of aluminum prices. This ineffectiveness
creates a timing issue whereby the Company is required to recognize
a portion of its unrealized hedging gains or losses immediately in
earnings rather than when the amounts are subsequently realized and
passed through to customers in the form of adjusted selling
prices.
(2) In the second quarter of 2014, the
Company recorded a charge of $15
million ($10 million net of
tax) in cost of products sold for fair value adjustments related to
the sale of inventory acquired in its acquisition of
Mivisa.
(3) In the second quarter and first six
months of 2014, the Company recorded restructuring and other
charges of $19 million ($16 million net of tax) and $27 million ($23
million net of tax) for the closure of a food
plant, incremental costs incurred due to an ongoing labor
dispute in the Company's Americas Beverage segment and other costs.
In the second quarter and first six months of 2013, the
Company recorded restructuring and other charges of $4 million ($4
million net of tax) and $8
million ($7 million net of
tax) for costs related to previously announced restructuring
actions.
In the second quarter and first six months of 2014, the Company
recorded charges of $12 million
($10 million net of tax) and
$56 million ($53 million net of tax) 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 first quarter of 2013, the
Company recorded a charge of $38
million ($28 million net of
tax) for premiums paid and the write off of deferred financing fees
in connection with the redemption of its outstanding $400 million senior secured notes due 2017 and
repayment of $500 million of
indebtedness under its senior secured term loan facilities.
Consolidated
Balance Sheets (Condensed & Unaudited)
(in
millions)
|
June
30,
|
2014
|
|
2013
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
244
|
|
|
$
|
227
|
|
Receivables, net
|
|
|
1,264
|
|
|
|
1,302
|
|
Inventories
|
|
|
1,615
|
|
|
|
1,424
|
|
Prepaid expenses and other current assets
|
|
|
364
|
|
|
|
219
|
|
Total current assets
|
|
|
3,487
|
|
|
|
3,172
|
|
|
|
|
|
|
|
|
|
|
Goodwill and
intangibles
|
|
|
3,272
|
|
|
|
1,944
|
|
Property, plant and
equipment, net
|
|
|
2,496
|
|
|
|
2,028
|
|
Other non-current
assets
|
|
|
640
|
|
|
|
735
|
|
Total
|
|
$
|
9,895
|
|
|
$
|
7,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
172
|
|
|
$
|
286
|
|
Current maturities of long-term debt
|
|
|
90
|
|
|
|
168
|
|
Accounts payable and
accrued liabilities
|
|
|
2,587
|
|
|
|
2,181
|
|
Total current liabilities
|
|
|
2,849
|
|
|
|
2,635
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
|
5,230
|
|
|
|
3,672
|
|
Other non-current
liabilities
|
|
|
1,404
|
|
|
|
1,441
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
268
|
|
|
|
290
|
|
Crown Holdings
shareholders' equity/(deficit)
|
|
|
144
|
|
|
|
(159)
|
|
Total
equity
|
|
|
412
|
|
|
|
131
|
|
Total
|
|
$
|
9,895
|
|
|
$
|
7,879
|
|
|
|
|
|
|
|
|
|
|
Note: In accordance with applicable accounting
standards, prior year amounts have been revised to account for
final purchase accounting adjustments from the acquisition of
Superior Multi-Packaging in the fourth quarter of 2012.
Consolidated
Statements of Cash Flows (Condensed & Unaudited)
(in
millions)
|
Six months ended
June 30,
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
|
$
|
173
|
|
|
$
|
222
|
|
Depreciation and
amortization
|
|
|
82
|
|
|
|
64
|
|
Restructuring
and other
|
|
|
83
|
|
|
|
8
|
|
Pension
expense
|
|
|
31
|
|
|
|
39
|
|
Pension
contributions
|
|
|
(42)
|
|
|
|
(43)
|
|
Stock-based
compensation
|
|
|
14
|
|
|
|
12
|
|
Working capital changes and
other
|
|
|
(458)
|
|
|
|
(553)
|
|
|
|
|
|
|
|
|
|
|
Net cash used for operating activities (A)
|
|
|
(117)
|
|
|
|
(251)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(149)
|
|
|
|
(124)
|
|
Purchase of
business
|
|
|
(733)
|
|
|
|
|
|
Insurance
proceeds
|
|
|
|
|
|
|
8
|
|
Proceeds from sale of
assets and divestitures
|
|
|
27
|
|
|
|
5
|
|
Other
|
|
|
1
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
|
(854)
|
|
|
|
(116)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Net change in
debt
|
|
|
682
|
|
|
|
479
|
|
Purchase of
noncontrolling interests
|
|
|
(93)
|
|
|
|
(10)
|
|
Debt issue costs
|
|
|
(33)
|
|
|
|
(15)
|
|
Dividends paid to
noncontrolling interests
|
|
|
(34)
|
|
|
|
(35)
|
|
Common stock
repurchased
|
|
|
(2)
|
|
|
|
(194)
|
|
Other, net
|
|
|
8
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
528
|
|
|
|
249
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(2)
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
|
(445)
|
|
|
|
(123)
|
|
Cash and cash
equivalents at January 1
|
|
|
689
|
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at June 30
|
|
$
|
244
|
|
|
$
|
227
|
|
|
|
|
|
|
|
|
|
|
(A) Free cash flow is defined by the Company
as net cash provided by/used for operating activities less capital
expenditures.
A reconciliation from net cash provided by/used for operating
activities to free cash flow for the three and six months ended
June 30, 2014 and 2013 follows:
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net cash provided
by/(used for) operating activities
|
$378
|
|
$181
|
|
($117)
|
|
($251)
|
Premiums paid to
retire debt early
|
|
|
|
|
|
|
23
|
Adjusted net cash
provided by/(used for) operating activities
|
378
|
|
181
|
|
(117)
|
|
(228)
|
Capital
expenditures
|
(65)
|
|
(61)
|
|
(149)
|
|
(124)
|
Insurance proceeds
from Thailand flooding
|
|
|
|
|
|
|
8
|
Free cash
flow
|
$313
|
|
$120
|
|
($266)
|
|
($344)
|
|
|
|
|
|
|
|
|
SOURCE Crown Holdings, Inc.