PHILADELPHIA, April 16, 2014 /PRNewswire/ -- Crown
Holdings, Inc. (NYSE: CCK) today announced its financial results
for the first quarter ended March 31,
2014.
First Quarter Highlights
- Mivisa acquisition approved by European Commission
- Income per diluted share $0.17; Before Certain Items $0.57, an increase of 14%
- Global beverage can volumes grew 6%, driven by strong growth
in Brazil and Asia Pacific
Net sales in the first quarter grew to $1,993 million over the $1,973 million in the first quarter of 2013,
primarily driven by increased global beverage can sales unit
volumes.
Segment income (a non-GAAP measure defined by the Company as
gross profit excluding the timing impact of hedge ineffectiveness,
less selling and administrative expense) increased to $200 million in the first quarter compared to
$195 million in the first quarter of
2013 primarily due to the increase in beverage can sales.
Commenting on the quarter, John W.
Conway, Chairman and Chief Executive Officer, stated, "We
started off the year well and on target and look forward to a
promising 2014. Global beverage can volumes were up 6%, which
follows first quarter volume growth of 6% and 7% in 2013 and 2012,
respectively. The gains were driven primarily by strong
shipments in Asia Pacific and
Brazil. In order to meet continuing market growth and an
increasing consumer preference for beverage cans in Brazil, we will begin commercial production
this month at our new plant in Teresina. In the European
Beverage segment, first quarter year-on-year shipments rose 5% in
continental Europe and the United
Kingdom. Global food can shipments were 3% lower in the
quarter compared to the first quarter of 2013.
"Earlier this week, the European Commission formally approved
our pending acquisition of Mivisa Envases, SAU. We anticipate
that the transaction will close on April
23, 2014. The acquisition of Mivisa will significantly
build upon our existing position in the strategically important
European food can segment by substantially increasing our presence
in Spain, one of Europe's leading agricultural economies.
We believe that adding this well-performing business to our broad
network of food can operations in Europe will result in compelling benefits to
both customers and shareholders."
Following the Mivisa acquisition closing, the Company will
divest certain Crown and Mivisa operations as required by the
Commission. In connection with the planned divestment of the Crown
operations, the Company recorded charges in the first quarter to
write down the value of the net assets to be sold. The total
impairment charge for the quarter was $42
million ($42 million, net of
tax, or $0.30 per diluted share).
Net income attributable to Crown Holdings in the first quarter
was $24 million, compared to
$41 million in the first quarter of
2013. Reported earnings per diluted share were $0.17 in the first quarter of 2014 compared to
$0.28 in the 2013 first
quarter. Net income per diluted share before certain items
was $0.57 compared to $0.50 in 2013.
A reconciliation from net income and income per diluted share to
net income before certain items and income per diluted share before
certain items 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 regarding net income before certain items and income
before certain items per diluted 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, income
per diluted 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 net income
before certain items and income before certain items per diluted
share are useful in evaluating the Company's operations.
Segment income, free cash flow, net income before certain items and
income before certain items per diluted share 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, net income before certain items and
income before certain items per diluted share can be found within
this release.
Conference Call
The Company will hold a conference
call tomorrow, April 17, 2014 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 (212) 519-0813 or toll-free (888) 994-8798
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 web site, www.crowncork.com. A replay of the
conference call will be available for a one-week period ending at
midnight on April 24. The telephone numbers for the replay
are (203) 369-1843 or toll free (866) 501-7040.
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 extent of
future demand for the Company's products in Asia Pacific and Brazil, the future performance of the Mivisa
business, the Company's ability to successfully commercialize new
production capacity in Brazil and
to meet any growth in demand, to successfully close the Mivisa
acquisition on April 23, 2014 or at
all and to successfully close any related divestitures, and to
successfully integrate the Mivisa business into the Company's
existing operations 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, 2013 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
Edward Bisno, Bisno Communications,
(212) 717-7578
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,
|
|
2014
|
|
2013
|
Net
sales
|
$1,993
|
|
$1,973
|
Cost of products
sold
|
$1,661
|
|
1,640
|
Depreciation and
amortization
|
35
|
|
34
|
Gross profit
(1)
|
297
|
|
299
|
Selling and
administrative expense
|
104
|
|
104
|
Restructuring and
other
|
52
|
|
4
|
Foreign
exchange
|
6
|
|
2
|
Interest
expense
|
58
|
|
60
|
Interest
income
|
(2)
|
|
(2)
|
Loss from early
extinguishment of debt
|
|
|
38
|
Income before income
taxes
|
79
|
|
93
|
Provision for income
taxes
|
33
|
|
24
|
Equity
earnings/(loss)
|
|
|
(2)
|
Net
income
|
46
|
|
67
|
Net income
attributable to noncontrolling interests
|
(22)
|
|
(26)
|
Net income
attributable to Crown Holdings
|
$24
|
|
$41
|
Earnings per share
attributable to Crown Holdings
common
shareholders:
|
|
|
|
Basic
|
$0.18
|
|
$0.29
|
Diluted
|
$0.17
|
|
$0.28
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
136,819,400
|
|
142,496,422
|
Diluted
|
137,910,635
|
|
144,026,054
|
Actual common shares
outstanding
|
138,431,312
|
|
143,774,872
|
|
(1) A reconciliation
from gross profit to segment income follows.
|
Consolidated Supplemental Financial Data
(Unaudited)
(in millions)
Reconciliation from Gross Profit 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 gross
profit excluding the timing impact of hedge ineffectiveness, less
selling and administrative expense.
|
Three Months
Ended March
31,
|
|
2014
|
|
2013
|
Gross
profit
|
$
|
297
|
|
$
|
299
|
Impact of hedge
ineffectiveness (1)
|
|
7
|
|
|
|
Selling and
administrative expense
|
|
(104)
|
|
|
(104)
|
|
$
|
200
|
|
$
|
195
|
|
|
|
|
|
|
(1) Included in cost
of products sold
|
Segment
Information
|
|
|
|
Three Months Ended
March 31,
|
Net
Sales
|
2014
|
|
2013
|
|
|
|
|
|
|
Americas
Beverage
|
$
|
549
|
|
$
|
552
|
North America
Food
|
|
179
|
|
|
197
|
European
Beverage
|
|
388
|
|
|
371
|
European
Food
|
|
373
|
|
|
376
|
Asia
Pacific
|
|
298
|
|
|
276
|
Total reportable
segments
|
|
1,787
|
|
|
1,772
|
Non-reportable
segments
|
|
206
|
|
|
201
|
Total net
sales
|
$
|
1,993
|
|
$
|
1,973
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
$
|
79
|
|
$
|
76
|
North America
Food
|
|
29
|
|
|
31
|
European
Beverage
|
|
59
|
|
|
51
|
European
Food
|
|
26
|
|
|
32
|
Asia
Pacific
|
|
34
|
|
|
33
|
Total reportable
segments
|
|
227
|
|
|
223
|
Non-reportable
segments
|
|
24
|
|
|
22
|
Corporate and other
unallocated items
|
|
(51)
|
|
|
(50)
|
Total segment
income
|
$
|
200
|
|
$
|
195
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Supplemental Data
(Unaudited)
(in millions, except per share data)
Reconciliation from Net Income and Income Per Diluted Common
Share to Net Income before Certain Items and Income Per Diluted
Common Share before Certain Items
The following table
reconciles reported net income and diluted earnings per share
attributable to the Company to net income before certain items and
income per diluted common share before certain items, as used
elsewhere in this release.
|
Three Months
Ended
March 31,
|
|
2014
|
|
2013
|
Net income
attributable to Crown Holdings, as reported
|
$24
|
|
$41
|
Items, net of
tax:
|
|
|
|
Hedge ineffectiveness (1)
|
5
|
|
|
Provision for restructuring and other (2)
|
50
|
|
3
|
Loss from early extinguishment of debt (3)
|
|
|
28
|
|
|
|
|
Net income before the
above items
|
$79
|
|
$72
|
|
|
|
|
Income per diluted
common share as reported
|
$0.17
|
|
$0.28
|
Income per diluted
common share before the above items
|
$0.57
|
|
$0.50
|
Effective tax rate as
reported
|
41.8%
|
|
25.8%
|
Effective tax rate
before the above items
|
26.8%
|
|
25.9%
|
|
|
|
|
Net income before certain items, income per diluted common share
before certain items and the effective tax rate before certain
items are non-GAAP measures and are not meant to be considered in
isolation or as a substitute for net income, income per diluted
common 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 2014, the
Company recorded a charge of $7
million ($5 million net of
tax) in cost of products sold related to hedge ineffectiveness
caused primarily by volatility in the metal premium component of
aluminum prices. This ineffectiveness creates a timing issue
whereby the Company is required to recognize a portion of its
unrealized hedging losses immediately in earnings rather than when
the amounts are subsequently realized and recovered from customers
in the form of increased selling prices.
(2) In the first quarter of 2014, the
Company recorded restructuring and other charges of $8 million ($7
million net of tax) including incremental costs incurred due
to an ongoing labor dispute. In the first quarter of 2013,
the Company recorded charges of $4
million ($3 million net of
tax) for costs related to restructuring actions.
In the first quarter of 2014, the Company recorded charges of
$44 million ($43 million net of tax) primarily for asset sales
and impairments related to the planned divestment of certain
operations and transaction costs incurred in connection with its
acquisition of Mivisa.
(3) In the first quarter of 2013, the
Company recorded a charge of $38
million ($28 million net of
tax) for premiums paid and the write off of deferred financing fees
in connection with the redemption of its outstanding $400 million senior notes due 2017 and repayment
of $500 million of indebtedness under
its senior secured term loan facilities.
Consolidated
Balance Sheets (Condensed & Unaudited)
(in
millions)
|
March
31,
|
2014
|
|
2013
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
267
|
|
$
|
304
|
Receivables, net
|
|
1,199
|
|
|
1,175
|
Inventories
|
|
1,334
|
|
|
1,352
|
Prepaid expenses and other current assets
|
|
279
|
|
|
193
|
Total current assets
|
|
3,079
|
|
|
3,024
|
|
|
|
|
|
|
Goodwill
|
|
2,016
|
|
|
1,937
|
Property, plant and
equipment, net
|
|
2,160
|
|
|
1,998
|
Other non-current
assets
|
|
630
|
|
|
752
|
Total
|
$
|
7,885
|
|
$
|
7,711
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Short-term debt
|
$
|
252
|
|
$
|
267
|
Current maturities of long-term debt
|
|
87
|
|
|
129
|
Accounts payable and
accrued liabilities
|
|
2,222
|
|
|
1,934
|
Total current liabilities
|
|
2,561
|
|
|
2,330
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
3,765
|
|
|
3,708
|
Other non-current
liabilities
|
|
1,301
|
|
|
1,503
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
255
|
|
|
296
|
Crown Holdings
shareholders' equity/(deficit)
|
|
3
|
|
|
(126)
|
Total
equity
|
|
258
|
|
|
170
|
Total
|
$
|
7,885
|
|
$
|
7,711
|
|
|
|
|
|
|
Note: In accordance
with applicable accounting standards, prior year amounts have been
revised to account for final purchase accounting adjustments
from the acquisition of Superior Multi-Packaging, Ltd. in the
fourth quarter of 2012.
|
|
|
Consolidated
Statements of Cash Flows (Condensed & Unaudited)
(in
millions)
|
Three months ended
March 31,
|
2014
|
|
2013
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Net income
|
$
|
46
|
|
$
|
67
|
Depreciation and amortization
|
|
35
|
|
|
34
|
Provision for restructuring and other
|
|
52
|
|
|
4
|
Pension expense
|
|
16
|
|
|
19
|
Pension contributions
|
|
(22)
|
|
|
(20)
|
Stock-based compensation
|
|
9
|
|
|
10
|
Working capital changes and other
|
|
(631)
|
|
|
(546)
|
|
|
|
|
|
|
Net cash used for operating activities (A)
|
|
(495)
|
|
|
(432)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Capital expenditures
|
|
(84)
|
|
|
(63)
|
Insurance proceeds
|
|
|
|
|
8
|
Other
|
|
11
|
|
|
3
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
(73)
|
|
|
(52)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Net change in debt
|
|
259
|
|
|
460
|
Common stock repurchased
|
|
(2)
|
|
|
(6)
|
Dividends paid to noncontrolling interests
|
|
(23)
|
|
|
(8)
|
Purchase of noncontrolling interests
|
|
(93)
|
|
|
|
Other, net
|
|
6
|
|
|
(7)
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
147
|
|
|
439
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1)
|
|
|
(1)
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(422)
|
|
|
(46)
|
Cash and cash
equivalents at January 1
|
|
689
|
|
|
350
|
|
|
|
|
|
|
Cash and cash
equivalents at March 31
|
$
|
267
|
|
$
|
304
|
|
|
|
|
|
|
(A) Free cash flow is
defined by the Company as net cash used for operating activities
less capital expenditures.
A reconciliation from net cash
used for operating activities to free cash flow for the three
months ended
March 31, 2014 and 2013
follows:
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
2014
|
|
|
2013
|
Net cash used for
operating activities
|
|
($495)
|
|
|
($432)
|
Premiums paid to
retire debt early
|
|
|
|
|
23
|
Adjusted net cash
used for operating activities
|
|
(495)
|
|
|
(409)
|
Capital
expenditures
|
|
(84)
|
|
|
(63)
|
Insurance proceeds
from Thailand flooding
|
|
|
|
|
8
|
Free cash
flow
|
|
($579)
|
|
|
($464)
|
|
|
|
|
|
|
SOURCE Crown Holdings, Inc.