Crown Holdings, Inc. Reports Fourth Quarter and Full Year 2023 Results

TAMPA, Fla., Feb. 5, 2024 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter Results

Net sales in the fourth quarter were $2,858 million compared to $3,012 million in the fourth quarter of 2022 reflecting higher beverage can volumes in Americas Beverage and favorable foreign currency translation of $42 million, offset by the pass through of $145 million in lower material costs and lower volumes across most other businesses.

Income from operations was $259 million in the fourth quarter compared to $229 million in the fourth quarter of 2022. Segment income in the fourth quarter of 2023 was $382 million compared to $292 million in the prior year fourth quarter reflecting higher beverage can volumes in Americas Beverage and the contractual recovery of prior years' inflationary cost increases in European Beverage, both more than offsetting the under-absorption of fixed costs.

Timothy J. Donahue, Chairman, President and Chief Executive Officer, stated, "Fourth Quarter segment income improved by more than 30% over the prior year fueled by margin performance in the Americas Beverage business which benefited from 5% volume growth in North America and 2% growth in Brazil.

"Production schedules were further adjusted during the fourth quarter with significant working capital reduction achieved across the businesses. While fixed cost absorption was considerably lower during the fourth quarter, these efforts contributed to free cash flow well above prior expectations, despite a cash flow reduction of approximately $200 million in off-balance sheet financing arrangements."

During the fourth quarter, the Company made the decision to cease operations at its Batesville, Mississippi beverage can plant and Decatur, Illinois aerosol can plant. Additionally, and as part of a manufacturing modernization program, the Company has ceased operations at its beverage can facilities in Ho Chi Minh City, Vietnam and Singapore with capacity relocated to the Company's new high-speed plant in Vung Tau, Vietnam. These actions will improve operational efficiencies, utilization rates and fixed cost absorption.

Interest expense was $113 million in the fourth quarter of 2023 compared to $90 million in the fourth quarter of 2022 reflecting higher interest rates.

Net income attributable to Crown Holdings in the fourth quarter was $32 million compared to $89 million in the fourth quarter of 2022. Reported diluted earnings per share were $0.27 in the fourth quarter of 2023 compared to $0.74 in 2022. Adjusted diluted earnings per share were $1.24 compared to $1.17 in 2022, below our prior estimates owing principally to under-absorption of fixed costs and lower equity earnings.

Full Year Results

Net sales for 2023 were $12,010 million compared to $12,943 million in 2022, reflecting higher beverage can volumes in Americas Beverage and favorable foreign currency translation of $77 million, offset by the pass through of $720 million in lower material costs and lower overall net volumes.

Income from operations was $1,269 million in 2023, which included $114 million of restructuring charges, compared to $1,336 million in 2022, which included a net restructuring gain of $52 million. Segment income for the full year of 2023 was $1,546 million versus $1,443 million in the prior year period, reflecting the benefits from higher beverage can volumes in Americas Beverage, the contractual recovery of prior years' inflationary cost increases in European Beverage and cost reduction initiatives in Transit Packaging, partially offset by lower overall net volumes across most other businesses and a $60 million year over year inventory impact of steel repricing in the Other segment.

Mr. Donahue further commented, "The Company achieved record adjusted EBITDA with an 8% improvement over the prior year, despite challenging macroeconomic conditions in most markets. Operating performance remained strong in 2023, driven by solid results in our three largest businesses: Americas Beverage, European Beverage and Transit Packaging. Both Americas Beverage and Transit Packaging achieved record levels of income in 2023, with each gaining 18% versus prior year. European Beverage significantly improved income performance, despite volume softness, primarily through more comprehensive raw material and other inflationary pass-through provisions within contracts. Beverage can volumes in North America advanced 6% during the year with Brazil up 4% while shipments in both Europe and Asia-Pacific continued to be soft reflecting weak consumer demand.

Interest expense was $436 million for the full year of 2023 compared to $284 million in 2022, primarily due to higher interest rates.

Net income attributable to Crown Holdings in 2023 was $450 million compared to $727 million in 2022. Reported diluted earnings per share were $3.76 compared to $5.99 in 2022 and adjusted diluted earnings per share were $5.86 compared to $6.75 in 2022.

Outlook

"Looking ahead to 2024, our focus will be on cash generation and continuous operational improvement. The Company has established a manufacturing platform which will allow us to service existing and additional market demand with significantly reduced levels of capital investment. The Company expects capital expenditures of no more than $500 million in each of 2024 and 2025, with the resulting increased cash flow being used to further reduce net leverage and return capital to shareholders.", stated Mr. Donahue.

The Company currently estimates full year 2024 adjusted diluted earnings per share to be in the range of $5.80 to $6.20 compared to $5.86 in 2023 reflecting demand softness in the Company's beverage can making equipment and North American aerosol businesses, and a consumer that remains under pressure in most markets. We expect a tax rate of approximately 25% and cash provided by operating activities of approximately $1.23 billion.

First quarter adjusted diluted earnings per share is expected to be in the range of $0.90 to $1.00.

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, net interest expense, EBITDA and adjusted EBITDA 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, cash flow, leverage ratio, net income, effective tax rates, diluted earnings per share or interest expense and interest income 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 and adjusted net leverage ratio as the principal measures 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. 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. The Company believes that adjusted net income, segment 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. Segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share, net interest expense, EBITDA and adjusted EBITDA are derived from the Company's Consolidated Statements of Operations, Cash Flows and Consolidated Balance Sheets, as applicable, and reconciliations to 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 can be found within this release. Reconciliations of estimated adjusted diluted earnings per share for the first quarter and full year of 2024 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.

Conference Call

The Company will hold a conference call tomorrow, February 6, 2024 at 9:00 a.m. (EST) 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 630-395-0194 or toll-free 888-324-8108 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 February 13, 2024. The telephone numbers for the replay are 203-369-0184 or toll free 866-361-4936.

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 Company's ability to continue to operate its plants, distribute its products, and maintain its supply chain; the future impact of currency translation; the continuation of performance and market trends in 2024, including consumer preference for beverage cans and global beverage can demand; the future impact of inflation, including the potential for higher interest rates and energy prices and the Company's ability to recover raw material and other inflationary costs; future demand for food cans; the Company's ability to successfully complete its previously announced capacity expansion projects and begin production within expected timelines; and the Company's ability to decrease capital expenditures and increase cash flow and to further reduce net leverage, 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, 2022 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 worldwide leader in the design, manufacture and sale of packaging products for consumer goods and industrial products. World headquarters are located in Tampa, Florida.

For more information, contact:
Kevin C. Clothier, Senior Vice President and Chief Financial Officer, (215) 698-5281
Thomas T. Fischer, Vice President, Investor Relations and Corporate Affairs, (215) 552-3720

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

 

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment

The Company periodically reviews the useful lives of property, plant and equipment based on the Company's experience with the duration over which equipment and buildings of its aluminum beverage can business can be utilized. The Company recently engaged a third-party appraiser to assist in this review and, upon completion, the Company expects the change in estimated useful lives to result in a net reduction of depreciation expense of approximately $12 million per quarter for 2024, beginning with the quarter ending March 31, 2024, as compared to the amount of depreciation expense that would have been recognized by utilizing the prior depreciable lives.

 

 

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SOURCE Crown Holdings, Inc.