PHILADELPHIA, April 19, 2017 /PRNewswire/ -- Crown Holdings,
Inc. (NYSE: CCK) today announced its financial results for the
first quarter ended March 31,
2017.
First Quarter Highlights
- Earnings per share $0.77
versus $0.57 in 2016
- Adjusted earnings per share $0.72 versus $0.69
in 2016
- $133 million of Q1 share
repurchase; $60 million additional in
April
- Beverage can growth projects on schedule
Net sales in the first quarter were $1,901 million compared to $1,893 million in the first quarter of 2016
reflecting increased beverage, food and aerosol can volumes and the
pass through of higher material costs to customers, partially
offset by $54 million of unfavorable
currency translation impact.
Income from operations was $237
million in the quarter compared to $219 million in the first quarter of 2016.
Segment income increased to $228
million in the first quarter compared to $221 million in the prior year first quarter and
included $6 million of unfavorable
currency translation impact.
Commenting on the quarter, Timothy J.
Donahue, President and Chief Executive Officer, stated, "We
are off to a solid start in 2017 with adjusted earnings per share
increasing 4% over the prior year, led by firm results across most
operations.
"At the same time, our capital projects remain on track.
The first production line at our beverage can facility in
Nichols, New York began commercial
shipments in late January and the second line was completed this
month. We have also completed the conversion of our beverage can
plant in Custines, France from
steel to aluminum with the start-up of the second high speed line
this month. In Colombia, we
are on schedule to expand beverage can capacity in June. Our
new beverage can plant in Jakarta,
Indonesia is expected to begin commercial production
at the end of the second quarter of this year, followed by the
second line at our plant in Danang, Vietnam in the third quarter. A new
beverage can plant in Yangon,
Myanmar and a glass bottle facility in Chihuahua, Mexico are both scheduled for
start-up in the first half of 2018."
Interest expense was $62 million
in the first quarter of 2017 compared to $64
million in 2016 primarily due to lower outstanding
debt.
Net income attributable to Crown Holdings in the first quarter
was $107 million compared to
$79 million in the first quarter of
2016. Reported diluted earnings per share were $0.77 in the first quarter of 2017 compared to
$0.57 in 2016. Adjusted diluted
earnings per share increased to $0.72
over the $0.69 in 2016 and included
$0.04 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.
Through April 18, 2017, the
Company repurchased a total of 3.6 million of its common shares for
$193 million, including 2.5 million
shares for $133 million in the first
quarter of 2017 and an additional 1.1 million shares for
$60 million subsequent to the end of
the quarter.
Outlook
The Company currently expects 2017 adjusted
diluted earnings per share to be in the range of $3.80 to $4.00, consistent with its previous
guidance and based on current exchange rate levels. Adjusted
diluted earnings per share for the 2017 second quarter are expected
to be in the range of $1.05 to
$1.15.
The effective income tax rate for the full year of 2017 is
expected to be approximately 26%, although it may vary from quarter
to quarter. Cash provided by operating activities is
currently expected to be approximately $875
million and management currently forecasts 2017 capital
expenditures of approximately $450
million.
Non-GAAP Measures
Segment income, adjusted free cash
flow, adjusted net income, the adjusted effective tax rate,
adjusted diluted 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 income from operations, net
income, 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 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.
Reconciliations of estimated adjusted diluted earnings per share
for the second quarter and full year of 2017 to estimated diluted
earnings per share on a GAAP basis are not provided in this release
due to the unavailability of estimates of the following, the timing
and magnitude of which the Company is unable to reliably forecast
without unreasonable efforts, which are excluded from estimated
adjusted diluted earnings per share and could have a significant
impact on earnings per share on a GAAP basis: gains or losses on
the sale of businesses or other assets, restructuring costs, asset
impairment charges, acquisition related costs including fair value
adjustments to inventory, asbestos-related charges, losses from
early extinguishment of debt, the tax impact of the items above,
and the impact of tax law changes or other tax matters. 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, April 20, 2017 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 27. The telephone numbers for the replay
are (203) 369-1490 or toll free (866) 470-8790.
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 2017; the Company's ability to successfully complete and
begin production at capacity expansion projects within expected
timelines and budgets in New York,
France, Colombia, Indonesia, Vietnam, Myanmar and Mexico 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, 2016 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,
|
|
2017
|
|
2016
|
Net
sales
|
$1,901
|
|
$1,893
|
Cost of products
sold
|
1,519
|
|
1,521
|
Depreciation and
amortization
|
59
|
|
60
|
Selling and
administrative expense
|
90
|
|
91
|
Restructuring and
other
|
(4)
|
|
2
|
Income from
operations (1)
|
237
|
|
219
|
Foreign
exchange
|
(1)
|
|
(6)
|
Interest
expense
|
62
|
|
64
|
Interest
income
|
(3)
|
|
(3)
|
Loss from early
extinguishment of debt
|
|
|
27
|
Income before
income taxes
|
179
|
|
137
|
Provision for income
taxes
|
46
|
|
38
|
Net
income
|
133
|
|
99
|
Net income
attributable to noncontrolling interests
|
(26)
|
|
(20)
|
Net income
attributable to Crown Holdings
|
$107
|
|
$79
|
Earnings per share
attributable to Crown Holdings
common
shareholders:
|
|
|
|
Basic
|
$0.77
|
|
$0.57
|
Diluted
|
$0.77
|
|
$0.57
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
138,475,013
|
|
138,105,319
|
Diluted
|
138,956,825
|
|
138,992,630
|
Actual common shares
outstanding at quarter end
|
137,758,282
|
|
139,430,490
|
|
|
(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,
|
|
2017
|
|
2016
|
Income from
operations
|
$
|
237
|
|
$
|
219
|
Provision for
restructuring and other
|
|
(4)
|
|
|
2
|
Impact of hedge
ineffectiveness (1)
|
|
(5)
|
|
|
|
Segment
Income
|
|
228
|
|
|
221
|
Foreign currency
translation (2)
|
|
6
|
|
|
|
Constant currency
segment income
|
$
|
234
|
|
$
|
221
|
|
|
|
|
|
|
(1) Included in cost of
products sold
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Information
|
|
|
|
|
|
Three Months Ended
March 31,
|
Net
Sales
|
|
|
2017
|
|
2017
at
|
|
|
2016
|
|
|
|
Actual
|
|
2016 rates
(2)
|
|
|
Actual
|
Americas
Beverage
|
|
$
|
674
|
|
$
|
688
|
|
$
|
643
|
North America
Food
|
|
|
153
|
|
|
154
|
|
|
146
|
European
Beverage
|
|
|
303
|
|
|
316
|
|
|
315
|
European
Food
|
|
|
379
|
|
|
397
|
|
|
398
|
Asia
Pacific
|
|
|
278
|
|
|
281
|
|
|
277
|
Total reportable
segments
|
|
|
1,787
|
|
|
1,836
|
|
|
1,779
|
Non-reportable
segments
|
|
|
114
|
|
|
119
|
|
|
114
|
Total net
sales
|
|
$
|
1,901
|
|
$
|
1,955
|
|
$
|
1,893
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
105
|
|
$
|
107
|
|
$
|
104
|
North America
Food
|
|
|
16
|
|
|
16
|
|
|
12
|
European
Beverage
|
|
|
51
|
|
|
52
|
|
|
46
|
European
Food
|
|
|
47
|
|
|
49
|
|
|
49
|
Asia
Pacific
|
|
|
39
|
|
|
39
|
|
|
35
|
Total reportable
segments
|
|
|
258
|
|
|
263
|
|
|
246
|
Non-reportable
segments
|
|
|
15
|
|
|
16
|
|
|
13
|
Corporate and other
unallocated items
|
|
(45)
|
|
|
(45)
|
|
|
(38)
|
Total segment
income
|
|
$
|
228
|
|
$
|
234
|
|
$
|
221
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Information presented
for 2017 at 2016 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,
|
|
2017
|
|
2016
|
Net income/diluted
earnings per share attributable
to Crown
Holdings, as reported
|
$107
|
|
$0.77
|
|
$79
|
|
$0.57
|
Impact of hedge
ineffectiveness (1)
|
(5)
|
|
(.04)
|
|
|
|
|
Restructuring and other
(2)
|
(4)
|
|
(.03)
|
|
2
|
|
.01
|
Loss from early
extinguishment of debt (3)
|
|
|
|
|
27
|
|
.19
|
Income taxes
(4)
|
2
|
|
.02
|
|
(12)
|
|
(.08)
|
|
|
|
|
|
|
|
|
Adjusted net
income/diluted earnings per share
|
$100
|
|
$0.72
|
|
$96
|
|
$0.69
|
|
|
|
|
|
|
|
|
Effective tax rate as
reported
|
25.7%
|
|
|
|
27.7%
|
|
|
Adjusted effective
tax rate
|
25.9%
|
|
|
|
30.1%
|
|
|
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 2017, the
Company recorded a benefit of $5
million ($4 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.
(2) In the first quarter of 2017, the
Company recorded restructuring and other charges of $2 million ($2
million net of tax) related to previously announced
restructuring projects. In the first quarter of 2016, the
Company recorded restructuring and other charges of $4 million ($2
million net of tax) primarily for pension settlement
charges.
In the first quarter of 2017, the Company recorded net gains of
$6 million ($5
million net of tax) for asset sales and impairments.
In the first quarter of 2016, the Company recorded gains of
$2 million ($2
million net of tax) for asset sales and impairments.
(3) 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.
(4) In the first quarter of 2017, the
Company recorded income tax charges of $2
million related to the items described above. In the
first quarter of 2016, the Company recorded income tax benefits of
$12 million related to the items
described above.
Consolidated
Balance Sheets (Condensed & Unaudited)
(in
millions)
|
March
31,
|
2017
|
|
2016
(1)
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
338
|
|
|
$
|
257
|
Receivables, net
|
|
|
899
|
|
|
|
980
|
Inventories
|
|
|
1,417
|
|
|
|
1,413
|
Prepaid expenses and other current assets
|
|
|
234
|
|
|
|
254
|
Total
current assets
|
|
|
2,888
|
|
|
|
2,904
|
|
|
|
|
|
|
|
|
Goodwill and
intangible assets
|
|
|
3,357
|
|
|
|
3,627
|
Property, plant and
equipment, net
|
|
|
2,898
|
|
|
|
2,727
|
Other non-current
assets
|
|
|
727
|
|
|
|
712
|
Total
|
|
$
|
9,870
|
|
|
$
|
9,970
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
37
|
|
|
$
|
67
|
Current maturities of long-term debt
|
|
|
57
|
|
|
|
239
|
Accounts payable and
accrued liabilities
|
|
|
2,402
|
|
|
|
2,412
|
Total current liabilities
|
|
|
2,496
|
|
|
|
2,718
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
|
5,206
|
|
|
|
5,293
|
Other non-current
liabilities
|
|
|
1,309
|
|
|
|
1,456
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
316
|
|
|
|
304
|
Crown Holdings
shareholders' equity
|
|
|
543
|
|
|
|
199
|
Total
equity
|
|
|
859
|
|
|
|
503
|
Total
|
|
$
|
9,870
|
|
|
$
|
9,970
|
|
|
|
|
|
|
|
|
(1)
|
At December 31, 2016,
prior period balance sheets were revised from previously reported
amounts to correct how the Company calculates its estimated
asbestos liability.
|
Consolidated
Statements of Cash Flows (Condensed & Unaudited)
(in
millions)
|
Three months ended
March 31,
|
2017
|
|
2016
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Net income
|
$
|
133
|
|
$
|
99
|
Depreciation and
amortization
|
|
59
|
|
|
60
|
Restructuring and
other
|
|
(4)
|
|
|
2
|
Pension
expense
|
|
|
|
5
|
|
|
7
|
Pension
contributions
|
|
|
|
(13)
|
|
|
(25)
|
Stock-based
compensation
|
|
|
|
4
|
|
|
6
|
Working capital
changes and other
|
|
|
|
(504)
|
|
|
(557)
|
|
|
|
|
|
|
|
|
Net cash used for operating activities
(1)
|
|
(320)
|
|
|
(408)
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
(107)
|
|
|
(51)
|
Proceeds from sale of
assets
|
|
|
|
3
|
|
|
4
|
Other
|
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
Net cash used for investing
activities
|
|
|
|
(104)
|
|
|
(48)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Net change in
debt
|
|
|
|
343
|
|
|
(23)
|
Dividends paid to
noncontrolling interests
|
|
|
|
(13)
|
|
|
(8)
|
Common stock
repurchased
|
|
|
|
(133)
|
|
|
(4)
|
Other, net
|
|
|
|
2
|
|
|
31
|
|
|
|
|
|
|
|
|
Net cash provided by/(used for)
financing activities
|
|
199
|
|
|
(4)
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
|
|
(221)
|
|
|
(460)
|
Cash and cash
equivalents at January 1
|
|
|
|
559
|
|
|
717
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at March 31
|
|
|
$
|
338
|
|
$
|
257
|
|
|
|
|
|
|
|
(1) Adjusted
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
adjusted free cash flow
for the three months ended
March 31, 2017 and 2016 follows:
|
|
Three months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
Net cash used for
operating activities
|
|
|
|
($320)
|
|
|
($408)
|
Capital
expenditures
|
|
|
|
(107)
|
|
|
(51)
|
Free cash
flow
|
|
|
|
(427)
|
|
|
(459)
|
Premiums paid to
retire debt early
|
|
|
|
|
|
|
22
|
Adjusted free cash
flow
|
|
|
|
($427)
|
|
|
($437)
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/crown-holdings-inc-reports-first-quarter-2017-results-300442249.html
SOURCE Crown Holdings, Inc.