PHILADELPHIA, April 16, 2015 /PRNewswire/ -- Crown
Holdings, Inc. (NYSE: CCK) today announced its financial results
for the first quarter ended March 31,
2015.
First Quarter Highlights
- Income per diluted share $0.32; Before Certain Items $0.53, including $0.06 of unfavorable currency translation
impact
- Global beverage can volumes grew 4% versus 2014; food can
volumes grew 17%
- Empaque acquisition completed on February 18, 2015
- Mivisa and Empaque integrations progressing as
planned
Net sales in the first quarter grew to $1,997 million over the $1,993 million in the first quarter of 2014,
primarily due to the impact of the Mivisa and Empaque acquisitions
offset by $172 million of unfavorable
currency translation impact.
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 timing impact of hedge
ineffectiveness, less selling and administrative expense) was
$192 million in the first quarter
compared to $200 million in the first
quarter of 2014, and included $16
million of unfavorable currency translation impact primarily
due to the strength of the U.S. dollar against the euro.
Commenting on the quarter, John W.
Conway, Chairman and Chief Executive Officer, stated, "We
started off the year as expected, and the fundamentals underlying
our businesses remain strong. On a currency neutral basis,
the Company's segment income for the first quarter increased by 4%
over 2014, despite significantly elevated aluminum premiums in
Europe and political conflict in
parts of the Middle East, which
resulted in lower regional sales volumes.
"On February 18, we completed our
acquisition of Empaque, a leading Mexican manufacturer of aluminum
cans and ends, bottle caps and glass bottles for the beverage
industry. We are pleased that Empaque's excellent management
team and highly efficient manufacturing facilities are integrating
smoothly into the Crown organization. Also on February 18, we announced the construction of a
new beverage can plant in Monterrey,
Mexico to meet the growing demand for both beer and
non-alcoholic beverages in the market surrounding this metropolitan
area of more than four million people.
"The integration of Mivisa, a leading Spanish producer of two-
and three-piece food cans and ends which we acquired during the
second quarter of 2014, is proceeding as planned, as demonstrated
in our first quarter European Food results."
Interest expense increased to $65
million in the first quarter of 2015 over the $58 million in 2014 primarily due to increased
borrowings to fund the Empaque and Mivisa acquisitions.
Net income attributable to Crown Holdings in the first quarter
was $44 million compared to
$24 million in the first quarter of
2014. Reported earnings per diluted share were $0.32 in the first quarter of 2015 compared to
$0.17 in the 2014 first
quarter. Net income per diluted share before certain items
was $0.53 compared to $0.57 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.
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 and income before certain items per diluted
share 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, April 17, 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 April 24. The telephone numbers for the replay
are (203) 369-1026 or toll free (866) 435-5406.
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, aluminum premiums in Europe and political conflicts in the
Middle East on the Company's
operations, the level of demand for the Company's products in 2015
and beyond, the Company's ability to successfully integrate the
operations of Mivisa and Empaque, the ability of Empaque's
management team to continue to operate its operations efficiently
and to successfully complete the construction of a new plant in
Monterrey, and the level of future
demand for beverage cans in Monterrey 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
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,
|
|
|
2015
|
|
2014
|
|
Net
sales
|
$1,997
|
|
$1,993
|
|
Cost of products
sold
|
1,660
|
|
1,661
|
|
Depreciation and
amortization
|
51
|
|
35
|
|
Gross profit
(1)
|
286
|
|
297
|
|
Selling and
administrative expense
|
98
|
|
104
|
|
Restructuring and
other
|
20
|
|
52
|
|
Foreign
exchange
|
6
|
|
6
|
|
Interest
expense
|
65
|
|
58
|
|
Interest
income
|
(2)
|
|
(2)
|
|
Income before
income taxes
|
99
|
|
79
|
|
Provision for income
taxes
|
37
|
|
33
|
|
Net
income
|
62
|
|
46
|
|
Net income
attributable to noncontrolling interests
|
(18)
|
|
(22)
|
|
Net income
attributable to Crown Holdings
|
$44
|
|
$24
|
|
Earnings per share
attributable to Crown Holdings
common
shareholders:
|
|
|
|
|
Basic
|
$0.32
|
|
$0.18
|
|
Diluted
|
$0.32
|
|
$0.17
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
137,697,898
|
|
136,819,400
|
|
Diluted
|
138,953,440
|
|
137,910,635
|
|
Actual common shares
outstanding
|
139,194,766
|
|
138,431,312
|
|
|
(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 timing impact of hedge
ineffectiveness, less selling and administrative expense.
|
Three Months
Ended
March
31,
|
|
2015
|
|
|
2014
|
Gross
profit
|
$
|
286
|
|
$
|
297
|
Fair value adjustment
to inventory (1)
|
|
6
|
|
|
|
Impact of hedge
ineffectiveness (1)
|
|
(2)
|
|
|
7
|
Selling and
administrative expense
|
|
(98)
|
|
|
(104)
|
|
$
|
192
|
|
$
|
200
|
|
|
|
|
|
|
(1) Included in cost of products
sold
|
Segment
Information
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Net
Sales
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
617
|
|
$
|
549
|
|
North America
Food
|
|
|
160
|
|
|
179
|
|
European
Beverage
|
|
|
324
|
|
|
388
|
|
European
Food
|
|
|
431
|
|
|
373
|
|
Asia
Pacific
|
|
|
310
|
|
|
298
|
|
Total reportable
segments
|
|
|
1,842
|
|
|
1,787
|
|
Non-reportable
segments
|
|
|
155
|
|
|
206
|
|
Total net
sales
|
|
$
|
1,997
|
|
$
|
1,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
85
|
|
$
|
79
|
|
North America
Food
|
|
|
24
|
|
|
29
|
|
European
Beverage
|
|
|
38
|
|
|
59
|
|
European
Food
|
|
|
42
|
|
|
26
|
|
Asia
Pacific
|
|
|
35
|
|
|
34
|
|
Total reportable
segments
|
|
|
224
|
|
|
227
|
|
Non-reportable
segments
|
|
|
17
|
|
|
24
|
|
Corporate and other
unallocated items
|
|
|
(49)
|
|
|
(51)
|
|
Total segment
income
|
|
$
|
192
|
|
$
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
March 31,
|
|
|
|
2015
|
|
2014
|
|
Net income
attributable to Crown Holdings, as reported
|
|
$44
|
|
$24
|
|
Items:
|
|
|
|
|
|
Fair value adjustment to
inventory (1)
|
|
6
|
|
|
|
Hedge ineffectiveness
(2)
|
|
(2)
|
|
7
|
|
Provision for restructuring
and other (3)
|
|
20
|
|
52
|
|
Income taxes
(4)
|
|
5
|
|
(4)
|
|
|
|
|
|
|
|
Net income before the
above items
|
|
$73
|
|
$79
|
|
|
|
|
|
|
|
Income per diluted
common share as reported
|
|
$0.32
|
|
$0.17
|
|
Income per diluted
common share before the above items
|
|
$0.53
|
|
$0.57
|
|
Effective tax rate as
reported
|
|
37.4%
|
|
41.8%
|
|
Effective tax rate
before the above items
|
|
26.0%
|
|
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.
(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. In the first quarter of 2014,
the Company recorded a charge of $7
million for hedge ineffectiveness.
(3) 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 2014, the
Company recorded restructuring and other charges of $8 million.
In the first quarter of 2015, the Company recorded charges of
$5 million primarily for asset sales
and impairments related to the sale of four industrial specialty
packaging plants in Europe. In the first quarter of 2014, the
Company recorded charges of $44
million primarily for asset sales and impairments related to
the planned divestment of the industrial specialty packaging
operations and transaction costs incurred in connection with its
acquisition of Mivisa.
(4) 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 a recent unfavorable tax court ruling in
Spain. In the first quarter of 2014, the Company recorded
income tax benefits of $4 million
related to the items described above.
Consolidated
Balance Sheets (Condensed & Unaudited)
(in
millions)
|
March
31,
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
280
|
|
|
$
|
267
|
|
Receivables, net
|
|
|
1,039
|
|
|
|
1,199
|
|
Inventories
|
|
|
1,446
|
|
|
|
1,334
|
|
Prepaid expenses and other current assets
|
|
|
312
|
|
|
|
279
|
|
Total current assets
|
|
|
3,077
|
|
|
|
3,079
|
|
|
|
|
|
|
|
|
|
|
Goodwill and
intangible assets
|
|
|
3,746
|
|
|
|
2,016
|
|
Property, plant and
equipment, net
|
|
|
2,619
|
|
|
|
2,160
|
|
Other non-current
assets
|
|
|
702
|
|
|
|
630
|
|
Total
|
|
$
|
10,144
|
|
|
$
|
7,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
72
|
|
|
$
|
252
|
|
Current maturities of long-term debt
|
|
|
172
|
|
|
|
87
|
|
Accounts payable and
accrued liabilities
|
|
|
2,369
|
|
|
|
2,222
|
|
Total current liabilities
|
|
|
2,613
|
|
|
|
2,561
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
|
5,746
|
|
|
|
3,765
|
|
Other non-current
liabilities
|
|
|
1,537
|
|
|
|
1,301
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
275
|
|
|
|
255
|
|
Crown Holdings
shareholders' equity/(deficit)
|
|
|
(27)
|
|
|
|
3
|
|
Total
equity
|
|
|
248
|
|
|
|
258
|
|
Total
|
|
$
|
10,144
|
|
|
$
|
7,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows (Condensed & Unaudited)
(in
millions)
|
Three months ended
March 31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
62
|
|
|
$
|
46
|
|
Depreciation and
amortization
|
|
|
|
51
|
|
|
|
35
|
|
Provision for
restructuring and other
|
|
|
|
20
|
|
|
|
52
|
|
Pension
expense
|
|
|
|
11
|
|
|
|
16
|
|
Pension
contributions
|
|
|
|
(17)
|
|
|
|
(22)
|
|
Stock-based
compensation
|
|
|
|
11
|
|
|
|
9
|
|
Working capital
changes and other
|
|
|
|
(428)
|
|
|
|
(631)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for
operating activities (A)
|
|
|
|
(290)
|
|
|
|
(495)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
|
Purchase of
business
|
|
|
|
(1,206)
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
(52)
|
|
|
|
(84)
|
|
Proceeds from sale of
business
|
|
|
|
21
|
|
|
|
|
|
Other
|
|
|
|
(9)
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for
investing activities
|
|
|
|
(1,246)
|
|
|
|
(73)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
|
Net change in
debt
|
|
|
|
943
|
|
|
|
259
|
|
Dividends paid to
noncontrolling interests
|
|
|
|
(9)
|
|
|
|
(23)
|
|
Purchase of
noncontrolling interests
|
|
|
|
|
|
|
|
(93)
|
|
Other, net
|
|
|
|
(45)
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
by financing activities
|
|
|
|
889
|
|
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
|
(38)
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
|
|
(685)
|
|
|
|
(422)
|
|
Cash and cash
equivalents at January 1
|
|
|
|
965
|
|
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at March 31
|
|
|
$
|
280
|
|
|
$
|
267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 months ended
March 31, 2015 and 2014
follows:
Three months ended
March 31,
|
2015
|
|
2014
|
Net cash used for
operating activities
|
($290)
|
|
($495)
|
Capital
expenditures
|
( 52)
|
|
( 84)
|
Free cash
flow
|
($342)
|
|
($579)
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/crown-holdings-inc-reports-first-quarter-2015-results-300067562.html
SOURCE Crown Holdings, Inc.