Crown Holdings, Inc. Reports Third Quarter 2022 Results
Highlights
- Earnings per share of
$1.06 versus$0.79 in 2021 - Global beverage can volumes grew 6%
- Repurchased
$722 million in Company shares year to date
Net sales in the third quarter were
Income from operations was
Commenting on the quarter,
"While the short-term environment is expected to remain challenging, we continue to focus on activities that will enhance our long-term success and remain confident in our outlook for 2023. Our global beverage can expansion projects remain on schedule, including both new two-line plants in
"Understanding we cannot control inflation or interest rates, we have focused on actions to lower costs for the current environment by reducing headcount and lowering capital spending. Additionally, in August, we extended our existing credit facility to
Interest expense was
Net income attributable to
Nine Month Results
Net sales for the first nine months of 2022 were
Income from operations was
Interest expense was
Net income attributable to
The Company has repurchased
The following supplemental information is provided below: a reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share and the impact of foreign currency translation.
Outlook
The Company currently expects fourth quarter adjusted earnings to be in the range of
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, adjusted EBITDA and impacts of foreign currency translation 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 fourth 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, adjusted diluted earnings per share and the impact of foreign currency translation 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 continuation of performance and market trends in 2022, including consumer preference for beverage cans and increasing global beverage can demand; the future impact of inflation, including the potential for higher interest rates and energy prices; future demand for food cans; and the Company's ability to successfully complete its previously announced capacity expansion projects and begin production within expected timelines, including any delays related to the pandemic, 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
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) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
2022 |
2021 |
2022 |
2021 |
||||
Net sales |
|
|
|
|
|||
Cost of products sold |
2,726 |
2,322 |
8,134 |
6,548 |
|||
Depreciation and amortization |
115 |
113 |
346 |
336 |
|||
Selling and administrative expense |
122 |
148 |
419 |
438 |
|||
Restructuring and other |
(1) |
(11) |
(75) |
(42) |
|||
Income from operations (1) |
297 |
348 |
1,107 |
1,060 |
|||
Loss on debt extinguishment |
11 |
11 |
|||||
Other pension and postretirement |
(5) |
(1) |
(13) |
(4) |
|||
Foreign exchange |
15 |
12 |
(1) |
||||
Earnings before interest and taxes |
276 |
349 |
1,097 |
1,065 |
|||
Interest expense |
76 |
66 |
194 |
203 |
|||
Interest income |
(3) |
(2) |
(9) |
(5) |
|||
Income from continuing operations before income taxes |
203 |
285 |
912 |
867 |
|||
Provision for income taxes |
55 |
74 |
218 |
285 |
|||
Equity earnings |
10 |
5 |
39 |
10 |
|||
Income from continuing operations |
158 |
216 |
733 |
592 |
|||
Income from discontinued operations |
38 |
156 |
|||||
Loss from disposal |
(123) |
(199) |
|||||
Loss from discontinued operations |
(85) |
(43) |
|||||
Net income |
158 |
131 |
733 |
549 |
|||
Net income from continuing operations attributable to noncontrolling interests |
31 |
29 |
95 |
107 |
|||
Net income from discontinued operations attributable to noncontrolling interests |
1 |
||||||
Net income attributable to |
|
|
|
|
(1) |
Reconciliation from income from operations to segment income follows. |
Earnings Per Share (Unaudited) |
|||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Net income attributable to |
|||||||||||||
From continuing operations |
$ |
127 |
$ |
187 |
$ |
638 |
$ |
485 |
|||||
From discontinued operations (1) |
(85) |
(44) |
|||||||||||
Total |
$ |
127 |
$ |
102 |
$ |
638 |
$ |
441 |
|||||
Earnings per share attributable to |
|||||||||||||
Basic earnings per share from continuing operations |
$ |
1.06 |
$ |
1.45 |
$ |
5.26 |
$ |
3.68 |
|||||
Basic earnings per share from discontinued operations |
(0.66) |
(0.34) |
|||||||||||
Basic earnings per common share |
$ |
1.06 |
$ |
0.79 |
$ |
5.26 |
$ |
3.34 |
|||||
Diluted earnings per common share from continuing operations |
$ |
1.06 |
$ |
1.44 |
$ |
5.23 |
$ |
3.65 |
|||||
Diluted earnings per common share from discontinued operations |
(0.65) |
(0.33) |
|||||||||||
Diluted earnings per common share |
$ |
1.06 |
$ |
0.79 |
$ |
5.23 |
$ |
3.32 |
|||||
Weighted average common shares outstanding: |
|||||||||||||
Basic |
119,698,219 |
128,725,626 |
121,426,827 |
131,854,039 |
|||||||||
Diluted |
120,198,847 |
129,707,246 |
122,053,031 |
132,861,714 |
|||||||||
Actual common shares outstanding at quarter end |
119,946,169 |
128,009,299 |
119,946,169 |
128,009,299 |
|||||||||
(1) |
Discontinued operations does not include any allocation of interest expense or indirect costs. |
Consolidated Supplemental Financial Data (Unaudited) |
|||||||||||||
Reconciliation from Income from Operations to Segment Income |
|||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Income from operations |
$ |
297 |
$ |
348 |
$ |
1,107 |
$ |
1,060 |
|||||
Intangibles amortization |
40 |
42 |
119 |
125 |
|||||||||
Restructuring and other |
(1) |
(11) |
(75) |
(42) |
|||||||||
Segment income |
$ |
336 |
$ |
379 |
$ |
1,151 |
$ |
1,143 |
Segment Information |
|||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||
Americas Beverage |
$ |
1,312 |
$ |
1,151 |
$ |
3,916 |
$ |
3,240 |
|||||
European Beverage |
552 |
513 |
1,661 |
1,381 |
|||||||||
|
375 |
280 |
1,220 |
941 |
|||||||||
|
609 |
644 |
1,957 |
1,838 |
|||||||||
Other (1) |
411 |
332 |
1,177 |
940 |
|||||||||
Total net sales |
$ |
3,259 |
$ |
2,920 |
$ |
9,931 |
$ |
8,340 |
|||||
Segment Income |
|||||||||||||
Americas Beverage |
$ |
185 |
$ |
190 |
$ |
565 |
$ |
575 |
|||||
European Beverage |
20 |
76 |
129 |
216 |
|||||||||
|
35 |
32 |
143 |
131 |
|||||||||
|
75 |
83 |
210 |
235 |
|||||||||
Other (1) |
50 |
39 |
206 |
111 |
|||||||||
Corporate and other unallocated items |
(29) |
(41) |
(102) |
(125) |
|||||||||
Total segment income |
$ |
336 |
$ |
379 |
$ |
1,151 |
$ |
1,143 |
(1) |
Includes the Company's food can, aerosol can and closures businesses in |
Consolidated Supplemental Data (Unaudited) |
|||||||||||||||||||||||
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 |
|||||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||||||
2022 |
2021 |
2022 |
2021 |
||||||||||||||||||||
Net income/diluted earnings per share attributable to |
|
|
|
|
|
|
|
|
|||||||||||||||
Intangibles amortization (1) |
40 |
0.33 |
42 |
0.32 |
119 |
0.97 |
130 |
0.98 |
|||||||||||||||
Restructuring and other (2) |
(1) |
(0.01) |
(9) |
(0.07) |
(75) |
(0.61) |
(40) |
(0.30) |
|||||||||||||||
Loss on debt extinguishment (3) |
11 |
0.09 |
11 |
0.09 |
|||||||||||||||||||
Pension settlements/curtailments |
1 |
0.01 |
1 |
0.01 |
|||||||||||||||||||
Loss from discontinued operations (4) |
123 |
0.95 |
199 |
1.49 |
|||||||||||||||||||
Income taxes (5) |
(5) |
(0.04) |
5 |
0.04 |
(20) |
(0.16) |
56 |
0.42 |
|||||||||||||||
Equity earnings (6) |
2 |
0.02 |
6 |
0.05 |
|||||||||||||||||||
Noncontrolling interests (7) |
10 |
0.08 |
|||||||||||||||||||||
Adjusted net income/diluted earnings per share (8) |
|
|
|
|
|
|
|
|
|||||||||||||||
Effective tax rate as reported (9) |
27.1 % |
56.8 % |
23.9 % |
42.9 % |
|||||||||||||||||||
Adjusted effective tax rate (9) |
23.6 % |
22.4 % |
24.6 % |
23.6 % |
Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and |
|
(1) |
In the third quarter and first nine months of 2022, the Company recorded charges of |
(2) |
In the third quarter and first nine months of 2022, the Company recorded net restructuring and other gains of |
(3) |
In the third quarter and first nine months of 2022, the Company recorded loss on debt extinguishment of |
(4) |
In the third quarter and first nine months of 2021, the Company recorded after-tax charges of |
(5) |
The Company recorded income tax benefits of |
(6) |
In the third quarter and first nine months of 2022, the Company recorded its proportional share of intangible |
(7) |
In the second quarter of 2021, the Company recorded noncontrolling interest charges of |
(8) |
The third quarter and first nine months of 2021 includes |
(9) |
The reported and adjusted effective tax rates include income from discontinued operations, which is reported net of |
Consolidated Balance Sheets (Condensed & Unaudited) |
||||||||
|
2022 |
2021 |
||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
368 |
$ |
2,261 |
||||
Receivables, net |
2,124 |
1,840 |
||||||
Inventories |
2,184 |
1,670 |
||||||
Prepaid expenses and other current assets |
274 |
304 |
||||||
Current assets held for sale |
17 |
30 |
||||||
Total current assets |
4,967 |
6,105 |
||||||
|
4,186 |
4,671 |
||||||
Property, plant and equipment, net |
4,265 |
3,838 |
||||||
Other non-current assets |
806 |
1,392 |
||||||
Total assets |
$ |
14,224 |
$ |
16,006 |
||||
Liabilities and equity |
||||||||
Current liabilities |
||||||||
Short-term debt |
$ |
83 |
$ |
79 |
||||
Current maturities of long-term debt |
94 |
1,862 |
||||||
Accounts payable and accrued liabilities |
3,833 |
3,594 |
||||||
Total current liabilities |
4,010 |
5,535 |
||||||
Long-term debt, excluding current maturities |
6,709 |
6,034 |
||||||
Other non-current liabilities |
1,370 |
1,550 |
||||||
Noncontrolling interests |
469 |
443 |
||||||
|
1,666 |
2,444 |
||||||
Total equity |
2,135 |
2,887 |
||||||
Total liabilities and equity |
$ |
14,224 |
$ |
16,006 |
||||
Consolidated Statements of Cash Flows (Condensed & Unaudited) |
||||||||||
Nine months ended |
2022 |
2021 |
||||||||
Cash flows from operating activities |
||||||||||
Net income |
$ |
733 |
$ |
549 |
||||||
Depreciation and amortization |
346 |
352 |
||||||||
Restructuring and other |
(75) |
(40) |
||||||||
Loss from disposal of discontinued operations |
89 |
|||||||||
Pension expense |
21 |
36 |
||||||||
Pension contributions |
55 |
(287) |
||||||||
Stock-based compensation |
23 |
27 |
||||||||
Working capital changes and other |
(969) |
(481) |
||||||||
Net cash provided by operating activities (1) |
134 |
245 |
||||||||
Cash flows from investing activities |
||||||||||
Capital expenditures |
(607) |
(512) |
||||||||
Acquisitions and divestitures |
166 |
2,279 |
||||||||
Other |
29 |
24 |
||||||||
Net cash (used for)\provided by investing activities |
(412) |
1,791 |
||||||||
Cash flows from financing activities |
||||||||||
Net change in debt |
1,106 |
(19) |
||||||||
Debt issue costs |
(25) |
|||||||||
Dividends paid to shareholders |
(80) |
(79) |
||||||||
Common stock repurchased |
(722) |
(745) |
||||||||
Dividends paid to noncontrolling interests |
(34) |
(56) |
||||||||
Other, net |
(13) |
(14) |
||||||||
Net cash provided by\(used for) financing activities |
232 |
(913) |
||||||||
Effect of exchange rate changes on cash and cash equivalents |
(95) |
(34) |
||||||||
Net change in cash and cash equivalents |
(141) |
1,089 |
||||||||
Cash and cash equivalents at |
593 |
1,238 |
||||||||
Cash and cash equivalents at |
$ |
452 |
$ |
2,327 |
||||||
(1) |
Adjusted free cash flow is defined by the Company as net cash from operating activities less capital expenditures and |
(2) |
Cash and cash equivalents include |
Three Months Ended |
Nine Months Ended |
|||||||||
2022 |
2021 |
2022 |
2021 |
|||||||
Net cash from operating activities |
$ |
(62) |
$ |
76 |
$ |
134 |
$ |
245 |
||
|
(28) |
271 |
(69) |
271 |
||||||
Interest included in investing activities (4) |
13 |
12 |
26 |
25 |
||||||
Capital expenditures |
(297) |
(187) |
(607) |
(512) |
||||||
Transaction fees (5) |
37 |
47 |
||||||||
Insurance receivable (6) |
15 |
40 |
||||||||
Adjusted free cash flow |
$ |
(359) |
$ |
209 |
$ |
(476) |
$ 76 |
(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. |
(6) |
As of |
Consolidated Supplemental Data (Unaudited) |
|||||||||||||||
Impact of Foreign Currency Translation – Favorable/(Unfavorable) (1) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
|
Segment |
|
Segment |
||||||||||||
Americas Beverage |
$ |
$ |
$ |
1 |
$ |
||||||||||
European Beverage |
(65) |
(2) |
(136) |
(8) |
|||||||||||
|
(12) |
(29) |
(3) |
||||||||||||
|
(44) |
(6) |
(104) |
(14) |
|||||||||||
Corporate and other |
(6) |
(12) |
(2) |
||||||||||||
$ |
(127) |
$ |
(8) |
$ |
(280) |
$ |
(27) |
(1) |
The impact of foreign currency translation represents the difference between actual current year |
|
||||||||||||
September YTD |
September YTD |
Full Year |
Twelve Months Ended |
|||||||||
Income from operations |
$ |
1,107 |
$ |
1,060 |
$ |
1,363 |
$ |
1,410 |
||||
Add: |
||||||||||||
Intangibles amortization |
119 |
125 |
165 |
159 |
||||||||
Restructuring and other |
(75) |
(42) |
(28) |
(61) |
||||||||
Segment income |
1,151 |
1,143 |
1,500 |
1,508 |
||||||||
Depreciation |
227 |
211 |
282 |
298 |
||||||||
Adjusted EBITDA |
$ |
1,378 |
$ |
1,354 |
$ |
1,782 |
$ |
1,806 |
||||
Total debt |
$ |
6,262 |
$ |
6,886 |
||||||||
Less cash |
531 |
368 |
||||||||||
Net debt |
$ |
5,731 |
$ |
6,518 |
||||||||
Adjusted net leverage ratio |
3.2x |
3.6x |
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