PHILADELPHIA, July 20, 2015 /PRNewswire/ -- Crown
Holdings, Inc. (NYSE: CCK) today announced its financial results
for the second quarter ended June 30,
2015.
Second Quarter Highlights
- Earnings per share $1.02;
Before Certain Items $1.03, including
$0.14 of unfavorable currency
translation
- YTD earnings per share $1.34;
Before Certain Items $1.55, including
$0.20 of unfavorable currency
translation
- Income before certain items on a constant currency basis
grew 15.8% in second quarter, 10.8% YTD
- On a constant currency basis, Q2 revenue grew 5.7%, segment
income grew 6.0%
- Recent acquisitions in Europe and North
America made strong contributions
- Global beverage can volumes grew 9% in the quarter over
2014
Net sales in the second quarter were $2,278 million compared to $2,383 million in the second quarter of 2014,
primarily due to $241 million of
unfavorable currency translation partially offset by the impact of
the Empaque acquisition.
Segment income (a non-GAAP measure defined by the Company as
gross profit excluding the impact of fair value adjustments to
inventory acquired in an acquisition and the timing impact of hedge
ineffectiveness, less selling and administrative expense) was
$272 million in the second quarter
compared to $285 million in the
second quarter of 2014, and included $30
million of unfavorable currency translation.
Commenting on the quarter, John W.
Conway, Chairman and Chief Executive Officer, stated, "We
continued the year as expected with very solid second quarter
performance. On a currency neutral basis, segment income for
the second quarter increased 6% over 2014, reflecting strong
underlying fundamentals in the Company's businesses despite
challenges in certain of our markets. We are pleased with the
integration of the Empaque and Mivisa acquisitions, as our Americas
Beverage and European Food businesses both contributed meaningfully
to the Company's results. In addition, we experienced notable
beverage can growth in North
America and Asia Pacific as
well as food can growth in Europe
during the quarter compared to 2014."
Interest expense increased to $69
million in the second quarter of 2015 over the $66 million in 2014 primarily due to increased
borrowings to fund the Empaque acquisition.
Net income attributable to Crown Holdings in the second quarter
increased to $142 million over the
$106 million in the second quarter of
2014. Reported earnings per diluted share were $1.02 in the second quarter of 2015 compared to
$0.76 in the 2014 second
quarter. Net income per diluted share before certain items
increased to $1.03 over the
$1.01 in 2014.
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.
Six Month Results
Net sales for the first six months
of 2015 were $4,275 million compared
to $4,376 million in the first six
months of 2014, reflecting unfavorable currency translation of
$413 million partially offset by the
impact of the Mivisa and Empaque acquisitions.
Segment income in the first half of 2015 was $464 million compared to $485 million in the first six months of 2014,
including $46 million of unfavorable
currency translation.
Interest expense for the first six months of 2015 increased to
$134 million compared to $124 million in the same period of 2014 primarily
due to increased borrowings to fund the Mivisa and Empaque
acquisitions.
Net income attributable to Crown Holdings for the first six
months of 2015 increased to $186
million over the $130 million
in the first six months of 2014. Income per diluted share for
the first six months of 2015 rose to $1.34 compared to $0.94 in the first half of last year. Net
income per diluted share before certain items was $1.55 compared to $1.58 in 2014.
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
net income before certain items and regarding 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, income before certain items per diluted
share, and information excluding the impact of currency translation
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, July 21, 2015 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 (517) 308-9237 or toll-free (888) 469-0976
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 July 28. The
telephone numbers for the replay are (402) 998-1595 or toll free
(888) 568-0923.
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, whether the Company can continue to
grow segment income and benefit from its recent acquisitions of
Empaque and Mivisa, future demand for beverage cans, including in
North America and Asia Pacific, and food cans in Europe 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, 2014 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
Ed 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
June
30,
|
|
Six Months
Ended
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net
sales
|
$2,278
|
|
$2,383
|
|
$4,275
|
|
$4,376
|
Cost of products
sold
|
1,843
|
|
1,960
|
|
3,503
|
|
3,621
|
Depreciation and
amortization
|
62
|
|
47
|
|
113
|
|
82
|
Gross profit
(1)
|
373
|
|
376
|
|
659
|
|
673
|
Selling and
administrative expense
|
99
|
|
103
|
|
197
|
|
207
|
Restructuring and
other
|
(3)
|
|
31
|
|
17
|
|
83
|
Loss from early
extinguishment of debt
|
9
|
|
|
|
9
|
|
|
Foreign
exchange
|
(1)
|
|
|
|
5
|
|
6
|
Interest
expense
|
69
|
|
66
|
|
134
|
|
124
|
Interest
income
|
(2)
|
|
(1)
|
|
(4)
|
|
(3)
|
Income before
income taxes
|
202
|
|
177
|
|
301
|
|
256
|
Provision for income
taxes
|
49
|
|
50
|
|
86
|
|
83
|
Net
income
|
153
|
|
127
|
|
215
|
|
173
|
Net income
attributable to noncontrolling interests
|
(11)
|
|
(21)
|
|
(29)
|
|
(43)
|
Net income
attributable to Crown Holdings
|
$142
|
|
$106
|
|
$186
|
|
$130
|
Earnings per share
attributable to Crown Holdings
common shareholders:
|
|
|
|
|
|
|
|
Basic
|
$1.03
|
|
$0.77
|
|
$1.35
|
|
$0.95
|
Diluted
|
$1.02
|
|
$0.76
|
|
$1.34
|
|
$0.94
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
137,914,062
|
|
137,246,172
|
|
137,805,980
|
|
137,032,786
|
Diluted
|
139,319,455
|
|
138,599,132
|
|
139,175,449
|
|
138,398,582
|
Actual common shares
outstanding
|
139,400,803
|
|
138,888,817
|
|
139,400,803
|
|
138,888,817
|
|
|
|
|
|
|
|
|
(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 impact of fair value adjustments to inventory
acquired in an acquisition and the timing impact of hedge
ineffectiveness, less selling and administrative expense.
|
Three Months
Ended
June 30,
|
|
Six Months
Ended June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Gross
profit
|
$
|
373
|
|
$
|
376
|
|
$
|
659
|
|
$
|
673
|
Fair value adjustment
to inventory (1)
|
|
|
|
|
15
|
|
|
6
|
|
|
15
|
Impact of hedge
ineffectiveness (1)
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
4
|
Selling and
administrative expense
|
|
(99)
|
|
|
(103)
|
|
|
(197)
|
|
|
(207)
|
|
$
|
272
|
|
$
|
285
|
|
$
|
464
|
|
$
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Included in cost of
products sold
|
Segment
Information
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
Net
Sales
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
741
|
|
$
|
594
|
|
$
|
1,358
|
|
$
|
1,143
|
North America
Food
|
|
|
170
|
|
|
213
|
|
|
330
|
|
|
392
|
European
Beverage
|
|
|
422
|
|
|
496
|
|
|
746
|
|
|
884
|
European
Food
|
|
|
492
|
|
|
555
|
|
|
923
|
|
|
928
|
Asia
Pacific
|
|
|
310
|
|
|
316
|
|
|
620
|
|
|
614
|
Total reportable
segments
|
|
2,135
|
|
|
2,174
|
|
|
3,977
|
|
|
3,961
|
Non-reportable
segments
|
|
|
143
|
|
|
209
|
|
|
298
|
|
|
415
|
Total net
sales
|
|
$
|
2,278
|
|
$
|
2,383
|
|
$
|
4,275
|
|
$
|
4,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Beverage
|
|
$
|
99
|
|
$
|
85
|
|
$
|
184
|
|
$
|
164
|
North America
Food
|
|
|
23
|
|
|
38
|
|
|
47
|
|
|
67
|
European
Beverage
|
|
|
66
|
|
|
83
|
|
|
104
|
|
|
142
|
European
Food
|
|
|
68
|
|
|
63
|
|
|
110
|
|
|
89
|
Asia
Pacific
|
|
|
39
|
|
|
36
|
|
|
74
|
|
|
70
|
Total reportable
segments
|
|
|
295
|
|
|
305
|
|
|
519
|
|
|
532
|
Non-reportable
segments
|
|
|
20
|
|
|
22
|
|
|
37
|
|
|
46
|
Corporate and other
unallocated items
|
|
(43)
|
|
|
(42)
|
|
|
(92)
|
|
|
(93)
|
Total segment
income
|
|
$
|
272
|
|
$
|
285
|
|
$
|
464
|
|
$
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
June
30,
|
|
Six Months
Ended
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Crown Holdings, as reported
|
$
|
142
|
|
$
|
106
|
|
$
|
186
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment
to inventory (1)
|
|
|
|
|
15
|
|
|
6
|
|
|
15
|
Hedge ineffectiveness
(2)
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
4
|
Restructuring and
other (3)
|
|
(3)
|
|
|
31
|
|
|
17
|
|
|
83
|
Loss from early
extinguishment of debt (4)
|
|
9
|
|
|
|
|
|
9
|
|
|
|
Income taxes
(5)
|
|
(3)
|
|
|
(9)
|
|
|
2
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before the
above items
|
$
|
143
|
|
$
|
140
|
|
$
|
216
|
|
$
|
219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per diluted
common share as reported
|
$
|
1.02
|
|
$
|
0.76
|
|
$
|
1.34
|
|
$
|
0.94
|
Income per diluted
common share before the above items
|
$
|
1.03
|
|
$
|
1.01
|
|
$
|
1.55
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate as
reported
|
|
24.3%
|
|
|
28.2%
|
|
|
28.6%
|
|
|
32.4%
|
Effective tax rate
before the above items
|
|
25.2%
|
|
|
26.8%
|
|
|
25.5%
|
|
|
26.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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. In the
second quarter of 2014, the Company recorded a charge of $15
million related to the sale of inventory acquired in its
acquisition of Mivisa.
|
|
|
(2)
|
In the second quarter
and first six months of 2015, the Company recorded benefits of $2
million and $4 million in cost of products sold related to hedge
ineffectiveness. In the second quarter and first six months
of 2014, the Company recorded a benefit of $3 million and a charge
of $4 million for hedge ineffectiveness.
|
|
|
(3)
|
In the second quarter
and first six months of 2015, the Company recorded restructuring
and other charges of $2 million and $17 million primarily for costs
related to its acquisition of Empaque. In the second quarter
and first six months of 2014, the Company recorded restructuring
and other charges of $19 million and $27 million.
|
|
|
|
In the first and
second quarters of 2015, the Company recorded a charge of $5
million and a gain of $5 million for asset sales and
impairments. In the second quarter and first six months of
2014, the Company recorded charges of $12 million and $56 million
primarily for asset sales and impairments related to the divestment
of certain operations and transaction costs incurred in connection
with its acquisition of Mivisa.
|
|
|
(4)
|
In the second quarter
of 2015, the Company recorded a charge of $9 million for the write
off of deferred financing fees in connection with the repayment of
its Term Loan B borrowings.
|
|
|
(5)
|
In the second quarter
and first six months of 2015, the Company recorded income tax
benefits of $3 million and $5 million related to the items
described above, and a charge of $7 million in the first quarter to
record a potential liability arising from a recent unfavorable tax
court ruling in Spain. In the second quarter and first six
months of 2014, the Company recorded income tax benefits of $9
million and $13 million related to the items described
above.
|
Consolidated
Balance Sheets (Condensed & Unaudited)
(in
millions)
|
|
June
30,
|
|
2015
|
|
2014
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
288
|
|
$
|
244
|
Receivables, net
|
|
|
1,098
|
|
|
1,264
|
Inventories
|
|
|
1,454
|
|
|
1,615
|
Prepaid expenses and other current assets
|
|
344
|
|
|
364
|
Total current assets
|
|
|
3,184
|
|
|
3,487
|
|
|
|
|
|
|
|
Goodwill and
intangible assets
|
|
|
3,790
|
|
|
3,272
|
Property, plant and
equipment, net
|
|
|
2,672
|
|
|
2,496
|
Other non-current
assets
|
|
|
713
|
|
|
640
|
Total
|
|
$
|
10,359
|
|
$
|
9,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
56
|
|
$
|
172
|
Current maturities of long-term debt
|
|
|
152
|
|
|
90
|
Accounts payable and
accrued liabilities
|
|
2,525
|
|
|
2,587
|
Total current liabilities
|
|
|
2,733
|
|
|
2,849
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
5,677
|
|
|
5,230
|
Other non-current
liabilities
|
|
|
1,545
|
|
|
1,404
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
|
|
278
|
|
|
268
|
Crown Holdings
shareholders' equity
|
|
126
|
|
|
144
|
Total
equity
|
|
|
404
|
|
|
412
|
Total
|
|
$
|
10,359
|
|
$
|
9,895
|
|
Consolidated
Statements of Cash Flows (Condensed & Unaudited)
(in
millions)
|
|
Six months ended
June 30,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
215
|
|
$
|
173
|
Depreciation and
amortization
|
|
|
|
113
|
|
|
82
|
Provision for
restructuring and other
|
|
|
|
17
|
|
|
83
|
Pension
expense
|
|
|
|
22
|
|
|
31
|
Pension
contributions
|
|
|
|
(34)
|
|
|
(42)
|
Stock-based
compensation
|
|
|
|
17
|
|
|
14
|
Working capital
changes and other
|
|
|
|
(365)
|
|
|
(458)
|
|
|
|
|
|
|
|
|
Net
cash used for operating activities (A)
|
|
(15)
|
|
|
(117)
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Purchase of
business
|
|
|
|
(1,207)
|
|
|
(733)
|
Capital
expenditures
|
|
|
|
(111)
|
|
|
(149)
|
Proceeds from sale of
assets and divestitures
|
|
|
|
30
|
|
|
27
|
Other
|
|
|
|
(14)
|
|
|
1
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
(1,302)
|
|
|
(854)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Net change in
debt
|
|
|
|
765
|
|
|
682
|
Dividends paid to
noncontrolling interests
|
|
|
|
(17)
|
|
|
(34)
|
Purchase of
noncontrolling interests
|
|
|
|
|
|
|
(93)
|
Debt issue
costs
|
|
|
|
(17)
|
|
|
(33)
|
Other, net
|
|
|
|
(52)
|
|
|
6
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
|
679
|
|
|
528
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(39)
|
|
|
(2)
|
|
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
|
|
(677)
|
|
|
(445)
|
Cash and cash
equivalents at January 1
|
|
|
|
965
|
|
|
689
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at June 30
|
|
|
$
|
288
|
|
$
|
244
|
|
|
|
|
|
|
|
|
(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 and six months ended June 30, 2015 and
2014 follows:
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net cash used for
operating activities
|
$275
|
|
$378
|
|
($15)
|
|
($117)
|
Capital
expenditures
|
(59)
|
|
(65)
|
|
(111)
|
|
(149)
|
Free cash
flow
|
$216
|
|
$313
|
|
($126)
|
|
($266)
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/crown-holdings-inc-reports-second-quarter-2015-results-300115842.html
SOURCE Crown Holdings, Inc.