Crown Holdings, Inc. Reports Fourth Quarter 2021 Results
Highlights
- Fourth quarter loss of
$7.95 per share, including the impact of fullUK pension settlement - Adjusted earnings of
$1.66 per share in the fourth quarter - Global beverage can volumes grew 9% in the fourth quarter and for the full year
- Returned over
$1 billion to shareholders in 2021 - Fully settled
UK pension plan, significantly reducing future risk - Net leverage ratio 3.2x at year-end 2021
- 2022 adjusted earnings guidance expected to be in a range of
$8.00 to$8.20 per share
Fourth Quarter Results
Net sales in the fourth quarter were
Income from operations was
Commenting on the quarter,
"The Crown team performed well during 2021, successfully navigating numerous challenges and meeting the needs of our customers. In addition to delivering strong financial results, the team commercialized significant new capacity positioning the Company for continued long-term growth. Unfortunately, in early December our newest beverage can plant in
"During 2021 the Company commercialized significant beverage can capacity at new plants in
"As we look forward in 2022, the Company expects to have another outstanding year, with EBITDA estimated to grow more than 12% to approximately
"Segment income in our global beverage can businesses is expected to improve as a result of 9% anticipated volume increase, contractual pass through of inflation and more efficient operating performance. Demand remains strong in all regions and, while results in our European beverage business are expected to decline year over year, we are taking required actions to fully recover commodity and other cost increases.
"Following a strong performance in 2021, segment income in
In connection with the sale of its European Tinplate business, the Company entered into a previously announced transaction to irrevocably transfer its
Interest expense was
Net loss 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.
Full Year Results
Net sales for the full year of 2021 increased to
Income from operations was
Interest expense was
Net loss attributable to
Outlook
The Company currently expects first quarter 2022 adjusted earnings in the range of
The adjusted effective income tax rate for 2022 is expected to be between 24% and 25%.
Adjusted free cash flow, as defined below, is currently expected to be approximately
Non-GAAP Measures
Segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share and adjusted EBITDA are not defined terms under
The Company views segment income as the principal measure of the performance of its operations and adjusted free cash flow and adjusted net leverage ratio as the principal measure of its liquidity. The Company considers all 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. Reconciliations of estimated adjusted diluted earnings per share for the first quarter and full year of 2022 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 and other costs, asset impairment charges, asbestos-related charges, losses from early extinguishment of debt, pension settlement and curtailment charges, the tax and noncontrolling interest impact of the items above, and the impact of tax law changes or other tax matters. The Company believes that adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per share are useful in evaluating the Company's operations as these measures are adjusted for items that affect comparability between periods. The Company believes that adjusted free cash flow and adjusted net leverage ratio provide meaningful measures 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 dividends. Segment income, adjusted free cash flow, adjusted net leverage ratio, the adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA 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, net leverage ratio, the adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA 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 the coronavirus pandemic on the Company's operations, including the Company's ability to continue to operate its plants, distribute its products, and maintain its supply chain; the impact of the coronavirus pandemic on demand for the Company's products; the future impact of currency translation; the Company's ability to successfully recover commodity and other cost increases and improve operating efficiencies; the continuation of performance and market trends in 2022, including consumer preference for beverage cans, increasing global beverage can demand, and volume growth 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 |
Year Ended December 31, |
||||||
2021 |
2020 |
2021 |
2020 |
||||
Net sales |
|
|
|
|
|||
Cost of products sold |
2,481 |
1,897 |
9,029 |
7,359 |
|||
Depreciation and amortization |
111 |
107 |
447 |
422 |
|||
Selling and administrative expense |
145 |
139 |
583 |
533 |
|||
Restructuring and other |
14 |
10 |
(28) |
30 |
|||
Income from operations (1) |
303 |
307 |
1,363 |
1,048 |
|||
Pension settlements and curtailments |
1,520 |
5 |
1,520 |
66 |
|||
Other pension and postretirement |
(1) |
(4) |
(5) |
(23) |
|||
Foreign exchange |
(44) |
14 |
(45) |
(2) |
|||
Earnings (loss) before interest and taxes |
(1,172) |
292 |
(107) |
1,007 |
|||
Interest expense |
50 |
70 |
253 |
290 |
|||
Interest income |
(4) |
(1) |
(9) |
(8) |
|||
Loss from early extinguishment of debt |
68 |
68 |
|||||
Income (loss) from continuing operations before income taxes |
(1,286) |
223 |
(419) |
725 |
|||
Provision for (benefit from) income taxes |
(342) |
56 |
(57) |
199 |
|||
Equity earnings |
(7) |
2 |
3 |
6 |
|||
Income (loss) from continuing operations |
(951) |
169 |
(359) |
532 |
|||
Income from discontinued operations, net of tax |
19 |
156 |
156 |
||||
Loss from disposal |
(9) |
(208) |
|||||
Income (loss) from discontinued operations |
(9) |
19 |
(52) |
156 |
|||
Net income (loss) |
(960) |
188 |
(411) |
688 |
|||
Net income from continuing operations attributable to noncontrolling interests |
41 |
36 |
148 |
108 |
|||
Net income from discontinued operations attributable to noncontrolling interests |
1 |
1 |
1 |
||||
Net income (loss) attributable to |
|
|
|
|
|||
(1) Reconciliation from income from operations to segment income follows. |
Earnings Per Share |
|||||||||
Three Months Ended |
Year Ended |
||||||||
2021 |
2020 |
2021 |
2020 |
||||||
Net income (loss) attributable to |
|||||||||
From continuing operations |
|
|
|
|
|||||
From discontinued operations (1) |
(9) |
18 |
(53) |
155 |
|||||
Total |
|
|
|
|
|||||
Earnings (loss) per share attributable to |
|||||||||
Basic earnings (loss) per share from continuing operations |
|
|
|
|
|||||
Basic earnings (loss) per share from discontinued operations |
(0.08) |
0.13 |
(0.41) |
1.16 |
|||||
Basic earnings (loss) per common share |
|
|
|
|
|||||
Diluted earnings (loss) per common share from continuing operations |
|
|
|
|
|||||
Diluted earnings (loss) per common share from discontinued operations |
(0.08) |
0.13 |
(0.41) |
1.15 |
|||||
Diluted earnings (loss) per common share |
|
|
|
|
|||||
Weighted average common shares outstanding: |
|||||||||
Basic |
125,990,933 |
133,462,348 |
130,376,215 |
133,525,186 |
|||||
Diluted |
126,762,186 |
134,713,968 |
131,348,050 |
134,560,915 |
|||||
Actual common shares outstanding at quarter end |
126,131,799 |
134,801,030 |
126,131,799 |
134,801,030 |
|||||
(1) Discontinued operations does not include any allocation of interest expense or indirect costs. |
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 exclude intangibles amortization charges and provisions for restructuring and other. |
|||||||||||||
Three Months Ended |
Year Ended |
||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Income from operations |
$ |
303 |
$ |
307 |
$ |
1,363 |
$ |
1,048 |
|||||
Intangibles amortization |
40 |
41 |
165 |
162 |
|||||||||
Restructuring and other |
14 |
10 |
(28) |
30 |
|||||||||
Segment income |
$ |
357 |
$ |
358 |
$ |
1,500 |
$ |
1,240 |
|||||
Segment Information |
|||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Americas Beverage |
$ |
1,201 |
$ |
957 |
$ |
4,441 |
$ |
3,565 |
|||||
European Beverage |
462 |
379 |
1,843 |
1,473 |
|||||||||
|
381 |
316 |
1,322 |
1,168 |
|||||||||
|
692 |
523 |
2,530 |
2,018 |
|||||||||
Total reportable segments |
2,736 |
2,175 |
10,136 |
8,224 |
|||||||||
Other segments (1) |
318 |
285 |
1,258 |
1,168 |
|||||||||
Total net sales |
$ |
3,054 |
$ |
2,460 |
$ |
11,394 |
$ |
9,392 |
|||||
Segment Income |
|||||||||||||
Americas Beverage |
$ |
181 |
$ |
196 |
$ |
756 |
$ |
652 |
|||||
European Beverage |
43 |
63 |
259 |
215 |
|||||||||
|
51 |
50 |
182 |
175 |
|||||||||
|
83 |
65 |
318 |
254 |
|||||||||
Total reportable segments |
358 |
374 |
1,515 |
1,296 |
|||||||||
Other segments (1) |
33 |
33 |
144 |
114 |
|||||||||
Corporate and other unallocated items |
(34) |
(49) |
(159) |
(170) |
|||||||||
Total segment income |
$ |
357 |
$ |
358 |
$ |
1,500 |
$ |
1,240 |
|||||
(1) Includes the Company's food can, aerosol can and closures businesses in |
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. Some or all of each reconciling item is reported within discontinued operations in the Consolidated Statement of Operations. |
|||||||||||||||||
Three Months Ended |
Year Ended |
||||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Net income (loss)/diluted earnings per share attributable to |
|
|
|
|
|
|
|
|
|||||||||
Intangibles amortization (1) |
40 |
0.32 |
46 |
0.34 |
170 |
1.29 |
180 |
1.34 |
|||||||||
Restructuring and other (2) |
14 |
0.11 |
14 |
0.10 |
(26) |
(0.20) |
34 |
0.25 |
|||||||||
Loss from debt extinguishment (3) |
68 |
0.54 |
68 |
0.52 |
|||||||||||||
Foreign exchange gain (4) |
(47) |
(0.37) |
(47) |
(0.36) |
|||||||||||||
Pension settlements and curtailments (5) |
1,520 |
12.04 |
5 |
0.04 |
1,520 |
11.61 |
66 |
0.49 |
|||||||||
Income taxes (6) |
(399) |
(3.15) |
(14) |
(0.10) |
(343) |
(2.61) |
(62) |
(0.46) |
|||||||||
Loss from discontinued operations(7) |
9 |
0.07 |
208 |
1.58 |
|||||||||||||
Equity earnings (8) |
6 |
0.05 |
6 |
0.05 |
|||||||||||||
Noncontrolling interests (9) |
10 |
0.08 |
|||||||||||||||
Adjusted net income/diluted earnings per share |
|
|
|
|
|
|
|
|
|||||||||
Effective tax rate as reported (10) |
26.6% |
25.0% |
(16.9)% |
26.3% |
|||||||||||||
Adjusted effective tax rate (10) |
18.5% |
24.3% |
22.5% |
25.4% |
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 |
|
(1) |
In the fourth quarter and full year of 2021, the Company recorded charges of |
(2) |
In the fourth quarter and full year of 2021, the Company recorded net restructuring charges and other of |
(3) |
In the fourth quarter of 2021, the Company recorded a charge of |
(4) |
In the fourth quarter of 2021, the Company recorded foreign exchange gains of |
(5) |
In the fourth quarter of 2021, the Company recorded charges of |
(6) |
In the fourth quarter and full year of 2021, the Company recorded income tax benefits of |
(7) |
In the fourth quarter and full year of 2021, the Company recorded after-tax charges of |
(8) |
In the fourth quarter of 2021, the Company recorded its proportional share of intangible amortization and inventory step-up charges recorded by its equity method affiliate, Eviosys. These charges were recorded net of tax by the Company in the line Equity earnings. |
(9) |
In the second quarter of 2021, the Company recorded noncontrolling interest charges of |
(10) |
The reported and adjusted effective tax rates include income from discontinued operations, which is reported net of tax in the statement of operations. Income tax effects on adjusted net income were calculated using the applicable tax rates of the underlying jurisdiction. |
Consolidated Balance Sheets (Condensed & Unaudited) (in millions) |
||||||||
|
2021 |
2020 |
||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
531 |
$ |
1,173 |
||||
Receivables, net |
1,889 |
1,522 |
||||||
Inventories |
1,735 |
1,263 |
||||||
Prepaid expenses and other current assets |
265 |
202 |
||||||
Current assets held for sale |
97 |
743 |
||||||
Total current assets |
4,517 |
4,903 |
||||||
|
4,532 |
4,901 |
||||||
Property, plant and equipment, net |
4,036 |
3,652 |
||||||
Other non-current assets |
795 |
1,056 |
||||||
Non-current assets held for sale |
2,179 |
|||||||
Total |
$ |
13,880 |
$ |
16,691 |
||||
Liabilities and equity |
||||||||
Current liabilities |
||||||||
Short-term debt |
$ |
75 |
$ |
104 |
||||
Current maturities of long-term debt |
135 |
67 |
||||||
Accounts payable and accrued liabilities |
3,931 |
3,130 |
||||||
Current liabilities held for sale |
14 |
981 |
||||||
Total current liabilities |
4,155 |
4,282 |
||||||
Long-term debt, excluding current maturities |
6,052 |
8,023 |
||||||
Other non-current liabilities |
1,343 |
1,583 |
||||||
Non-current liabilities held for sale |
199 |
|||||||
Noncontrolling interests |
418 |
406 |
||||||
|
1,912 |
2,198 |
||||||
Total equity |
2,330 |
2,604 |
||||||
Total |
$ |
13,880 |
$ |
16,691 |
||||
Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions) |
||||||||||
Year ended |
2021 |
2020 |
||||||||
Cash flows from operating activities |
||||||||||
Net income (loss) |
$ |
(411) |
$ |
688 |
||||||
Depreciation and amortization |
463 |
481 |
||||||||
Restructuring and other |
(26) |
34 |
||||||||
Loss from disposal of discontinued operations |
101 |
|||||||||
Pension expense |
1,567 |
92 |
||||||||
Pension contributions |
(236) |
(27) |
||||||||
Stock-based compensation |
33 |
32 |
||||||||
Working capital changes and other |
(586) |
15 |
||||||||
Net cash provided by operating activities (1) |
905 |
1,315 |
||||||||
Cash flows from investing activities |
||||||||||
Capital expenditures |
(816) |
(587) |
||||||||
Proceeds from sale of business, net of cash |
2,255 |
|||||||||
Proceeds from sale of assets |
44 |
16 |
||||||||
Other |
24 |
36 |
||||||||
Net cash provided by (used for) investing activities |
1,507 |
(535) |
||||||||
Cash flows from financing activities |
||||||||||
Net change in debt |
(1,742) |
(130) |
||||||||
Dividends paid to stockholders |
(105) |
|||||||||
Common stock repurchased |
(950) |
(66) |
||||||||
Dividends paid to noncontrolling interests |
(122) |
(87) |
||||||||
Other, net |
(25) |
44 |
||||||||
Net cash used for financing activities |
(2,944) |
(239) |
||||||||
Effect of exchange rate changes on cash and cash equivalents |
(113) |
34 |
||||||||
Net change in cash and cash equivalents |
(645) |
575 |
||||||||
Cash and cash equivalents at |
1,238 |
663 |
||||||||
Cash and cash equivalents at |
$ |
593 |
$ |
1,238 |
||||||
(1) Adjusted free cash flow is defined by the Company as net cash provided by operating activities less capital expenditures |
||||||||||
(2) Cash and cash equivalents includes |
Adjusted Free Cash Flow |
|||||||||||||
Three Months Ended |
Year Ended |
||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Net cash from operating activities |
|
|
|
|
|||||||||
|
(55) |
216 |
|||||||||||
Interest included in investing activities (4) |
25 |
28 |
|||||||||||
Transaction fees (5) |
47 |
||||||||||||
Capital expenditures |
(304) |
(254) |
(816) |
(587) |
|||||||||
Adjusted free cash flow |
|
|
|
|
|||||||||
(3) In |
|||||||||||||
(4) Interest benefit of cross currency swaps included in investing activities. |
|||||||||||||
(5) Transaction fees and costs related to the sale of the Company's European Tinplate business. |
Reconciliation of Adjusted EBITDA and Net Leverage Ratio |
|||||
2021 |
2020 |
||||
Income from operations |
|
|
|||
Add: |
|||||
Intangibles amortization |
165 |
162 |
|||
Restructuring and other |
(28) |
30 |
|||
Segment income |
1,500 |
1,240 |
|||
Depreciation |
282 |
260 |
|||
Adjusted EBITDA |
|
|
|||
Total debt |
|
||||
Less cash |
531 |
||||
Net debt at |
|
||||
Adjusted net leverage ratio |
3.2x |
||||
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