Crown Holdings, Inc. Reports Second Quarter 2017 Results

PHILADELPHIA, July 19, 2017 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the second quarter ended June 30, 2017.

Second Quarter Highlights

• Earnings per share $0.94
• Adjusted earnings per share $1.12
• $144 million of Q2 share repurchases; $277 million Q2 YTD
• Beverage can growth projects on schedule

Net sales in the second quarter were $2,161 million compared to $2,142 million in the second quarter of 2016, reflecting increased global beverage can volumes and the pass through of higher raw material costs, partially offset by $48 million of unfavorable currency translation.

Income from operations was $271 million in the second quarter of 2017.  Segment income increased to $297 million in the quarter over the $288 million in the second quarter of 2016, despite $5 million of unfavorable currency translation. 

Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "Our second quarter performance puts us well on our way to a strong 2017, as all businesses delivered solid results.  Beverage can volume growth was notable in Europe, Latin America and Southeast Asia.

"Importantly, our various global growth projects remain on schedule.  Both lines at our new beverage can facility in Nichols, New York are commercially operational and are progressing through their learning curve.  Our one-line beverage can plant in Monterrey, Mexico, which commenced production in December 2016, is performing well and meeting the rapidly expanding demand for beer in that region.  During June, we began commercial production at our new beverage can plant in Jakarta, Indonesia and completed our capacity expansion project in Colombia.  We are also on track to commence commercial production on the second beverage can line at our Danang, Vietnam facility during 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.

"We are excited about the continued future opportunities for global beverage can growth.  This growth is being fueled by rising per capita incomes, significant investments by our customers in select emerging markets and the increasing preference for cans compared to other packaging substrates by both customers and consumers."     

Interest expense was $61 million in the second quarter of 2017 compared to $58 million in 2016 primarily due to an increase in average borrowing rates.

Net income attributable to Crown Holdings in the second quarter was $128 million compared to $169 million in the second quarter of 2016.  Reported diluted earnings per share were $0.94 in the second quarter of 2017 compared to $1.21 in the 2016 second quarter.  Adjusted diluted earnings per share were $1.12 compared to $1.19 in 2016.

Through June 30, the Company repurchased a total of 5.1 million shares of its common stock for $277 million.  Subsequent to the end of the second quarter, the Company repurchased an additional 0.3 million shares for $19 million.

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 2017 were $4,062 million compared to $4,035 million in the first six months of 2016, primarily due to increased global beverage can volumes and the pass through of higher raw material costs, partially offset by $102 million of unfavorable currency translation.

Income from operations was $508 million in the first half of 2017.  Segment income in the first half of 2017 increased to $525 million over the $509 million in the first six months of 2016, despite $11 million of unfavorable currency translation.

Interest expense was $123 million for the first six months of 2017 compared to $122 million in the same period of 2016 primarily due to an increase in average borrowing rates.                                                               .

Net income attributable to Crown Holdings for the first six months of 2017 was $235 million compared to $248 million in the first six months of 2016.  Reported diluted earnings per share for the first six months of 2017 were $1.71 compared to $1.78 in the first half of last year.  Adjusted diluted earnings per share were $1.83 compared to $1.88 in 2016.

Outlook
The Company currently expects 2017 adjusted diluted earnings per share to be in the range of $3.90 to $4.05, based on current exchange rate levels.  Adjusted diluted earnings per share for the 2017 third quarter are expected to be in the range of $1.35 to $1.45.

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 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, effective tax rates 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 third 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, July 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 passcode 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 27.  The telephone numbers for the replay are (203) 369-1363 or toll free (866) 462-8977.

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 Vietnam, Myanmar and Mexico; continued global beverage can growth; and customer and consumer preference for beverage cans 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
Ed Bisno, Bisno Communications, (212) 717-7578

 

Unaudited Consolidated Statements of Operations, Balance Sheets, Statements of Cash Flows, Segment Information and Supplemental Data follow.

 

 

 

 

 

 

SOURCE Crown Holdings, Inc.