Crown Holdings, Inc. Reports First Quarter 2016 Results
First Quarter Highlights
- Earnings per share
$0.57 versus$0.32 in 2015 - Adjusted earnings per share
$0.69 versus$0.53 in 2015 - Constant currency adjusted earnings per share up 40% over prior year
- Constant currency segment income up 20%
- Global beverage can volumes grew 7%
- Beverage can growth projects on schedule
Net sales in the first quarter were
Segment income (a non-GAAP measure) increased to
Commenting on the quarter,
"Global beverage can unit volume growth of 7% was driven by notable gains in
Interest expense was
Net income attributable to
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share 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 revenue, segment income, adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per 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, 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 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 diluted earnings per 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 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, 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,
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 2016; the Company's ability to successfully complete and begin production at beverage can capacity projects within expected timelines and budgets in
For more information, contact:
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, |
||||
2016 |
2015 |
|||
Net sales |
$1,893 |
$1,997 |
||
Cost of products sold |
1,521 |
1,660 |
||
Depreciation and amortization |
60 |
51 |
||
Selling and administrative expense |
91 |
98 |
||
Restructuring and other |
2 |
20 |
||
Income from operations (1) |
219 |
168 |
||
Foreign exchange |
(6) |
6 |
||
Interest expense |
64 |
65 |
||
Interest income |
(3) |
(2) |
||
Loss from early extinguishment of debt |
27 |
|||
Income before income taxes |
137 |
99 |
||
Provision for income taxes |
38 |
37 |
||
Net income |
99 |
62 |
||
Net income attributable to noncontrolling interests |
(20) |
(18) |
||
Net income attributable to Crown Holdings |
$79 |
$44 |
||
Earnings per share attributable to Crown Holdings common shareholders: |
||||
Basic |
$0.57 |
$0.32 |
||
Diluted |
$0.57 |
$0.32 |
||
Weighted average common shares outstanding: |
||||
Basic |
138,105,319 |
137,697,898 |
||
Diluted |
138,992,630 |
138,953,440 |
||
Actual common shares outstanding |
139,430,490 |
139,194,766 |
||
(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 |
||||||
2016 |
2015 |
|||||
Income from operations |
$ |
219 |
$ |
168 |
||
Add back: |
||||||
Restructuring and other |
2 |
20 |
||||
Fair value adjustment to inventory (1) |
6 |
|||||
Impact of hedge ineffectiveness (1) |
(2) |
|||||
Segment Income |
$ |
221 |
$ |
192 |
||
(1) Included in cost of products sold |
Segment Information |
||||||||||
Three Months Ended March 31, |
||||||||||
Net Sales |
2016 |
2016 at |
2015 |
|||||||
Actual |
2015 rates (2) |
Actual |
||||||||
Americas Beverage |
$ |
643 |
$ |
686 |
$ |
617 |
||||
North America Food |
146 |
151 |
160 |
|||||||
European Beverage |
315 |
327 |
324 |
|||||||
European Food |
398 |
409 |
431 |
|||||||
Asia Pacific |
277 |
288 |
310 |
|||||||
Total reportable segments |
1,779 |
1,861 |
1,842 |
|||||||
Non-reportable segments |
114 |
117 |
155 |
|||||||
Total net sales |
$ |
1,893 |
$ |
1,978 |
$ |
1,997 |
||||
Segment Income |
||||||||||
Americas Beverage |
$ |
104 |
$ |
110 |
$ |
85 |
||||
North America Food |
12 |
12 |
24 |
|||||||
European Beverage |
46 |
48 |
38 |
|||||||
European Food |
49 |
50 |
42 |
|||||||
Asia Pacific |
35 |
36 |
35 |
|||||||
Total reportable segments |
246 |
256 |
224 |
|||||||
Non-reportable segments |
13 |
13 |
17 |
|||||||
Corporate and other unallocated items |
(38) |
(38) |
(49) |
|||||||
Total segment income |
$ |
221 |
$ |
231 |
$ |
192 |
(2) |
Information presented for 2016 at 2015 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 |
||||||||||||
2016 |
2015 |
|||||||||||
Net income attributable to Crown Holdings, as reported |
$79 |
$44 |
||||||||||
Fair value adjustment to inventory (1) |
6 |
|||||||||||
Impact of hedge ineffectiveness (2) |
(2) |
|||||||||||
Restructuring and other (3) |
2 |
20 |
||||||||||
Loss from early extinguishment of debt (4) |
27 |
|||||||||||
Income taxes (5) |
(12) |
5 |
||||||||||
Adjusted net income |
$96 |
$73 |
||||||||||
Diluted earnings per share as reported |
$0.57 |
$0.32 |
||||||||||
Adjusted diluted earnings per share |
$0.69 |
$0.53 |
||||||||||
Effective tax rate as reported |
27.7% |
37.4% |
||||||||||
Adjusted effective tax rate |
30.1% |
26.0% |
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 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. |
(3) |
In the first quarter of 2016, the Company recorded restructuring and other charges of $4 million primarily for pension settlement charges. 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 2016, the Company recorded gains of $2 million for asset sales and impairments. In the first quarter of 2015, the Company recorded charges of $5 million for asset sales and impairments primarily related to the sale of four industrial specialty packaging plants in Europe. |
|
(4) |
In the first quarter of 2016, the Company recorded a charge of $27 million for premiums paid and the write off of deferred financing fees in connection with the redemption of its outstanding $700 million notes due 2021. |
(5) |
In the first quarter of 2016, the Company recorded income tax benefits of $12 million related to the items described above. 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 an unfavorable tax court ruling in Spain. |
Consolidated Balance Sheets (Condensed & Unaudited) (in millions) |
||||||||
March 31, |
2016 |
2015 (1) |
||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
257 |
$ |
280 |
||||
Receivables, net |
980 |
1,039 |
||||||
Inventories |
1,413 |
1,446 |
||||||
Prepaid expenses and other current assets |
254 |
307 |
||||||
Total current assets |
2,904 |
3,072 |
||||||
Goodwill and intangible assets |
3,627 |
3,746 |
||||||
Property, plant and equipment, net |
2,727 |
2,619 |
||||||
Other non-current assets |
682 |
638 |
||||||
Total |
$ |
9,940 |
$ |
10,075 |
||||
Liabilities and equity |
||||||||
Current liabilities |
||||||||
Short-term debt |
$ |
67 |
$ |
72 |
||||
Current maturities of long-term debt |
239 |
171 |
||||||
Accounts payable and accrued liabilities |
2,412 |
2,369 |
||||||
Total current liabilities |
2,718 |
2,612 |
||||||
Long-term debt, excluding current maturities |
5,293 |
5,678 |
||||||
Other non-current liabilities |
1,376 |
1,537 |
||||||
Noncontrolling interests |
304 |
275 |
||||||
Crown Holdings shareholders' equity/(deficit) |
249 |
(27) |
||||||
Total equity |
553 |
248 |
||||||
Total |
$ |
9,940 |
$ |
10,075 |
||||
(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) |
||||||||||
Three months ended March 31, |
2016 |
2015 |
||||||||
Cash flows from operating activities |
||||||||||
Net income |
$ |
99 |
$ |
62 |
||||||
Depreciation and amortization |
60 |
51 |
||||||||
Restructuring and other |
2 |
20 |
||||||||
Pension expense |
7 |
11 |
||||||||
Pension contributions |
(25) |
(17) |
||||||||
Stock-based compensation |
6 |
11 |
||||||||
Working capital changes and other |
(557) |
(425) |
||||||||
Net cash used for operating activities (1) |
(408) |
(287) |
||||||||
Cash flows from investing activities |
||||||||||
Purchase of business |
(1,206) |
|||||||||
Capital expenditures |
(51) |
(52) |
||||||||
Proceeds from sale of business |
4 |
21 |
||||||||
Other |
(1) |
(9) |
||||||||
Net cash used for investing activities |
(48) |
(1,246) |
||||||||
Cash flows from financing activities |
||||||||||
Net change in debt |
(23) |
943 |
||||||||
Dividends paid to noncontrolling interests |
(8) |
(9) |
||||||||
Other, net |
27 |
(48) |
||||||||
Net cash provided by/(used for) financing activities |
(4) |
886 |
||||||||
Effect of exchange rate changes on cash and cash equivalents |
(38) |
|||||||||
Net change in cash and cash equivalents |
(460) |
(685) |
||||||||
Cash and cash equivalents at January 1 |
717 |
965 |
||||||||
Cash and cash equivalents at March 31 |
$ |
257 |
$ |
280 |
||||||
(1) |
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 free cash flow for the three months ended March 31, 2016 and 2015 follows: |
Three months ended March 31, |
2016 |
2015 |
|
Net cash used for operating activities |
($408) |
($287) |
|
Premiums paid to retire debt early |
22 |
||
Adjusted net cash used for operating activities |
(386) |
(287) |
|
Capital expenditures |
(51) |
(52) |
|
Free cash flow |
($437) |
($339) |
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/crown-holdings-inc-reports-first-quarter-2016-results-300254967.html
SOURCE