Crown Holdings Reports Third Quarter 2013 Results

PHILADELPHIA, Oct. 16, 2013 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2013.

Third Quarter Highlights

• Income per diluted share $0.81; Before Certain Items $1.13, a 13% increase
• $300 million in YTD share repurchases
• Q3 global beverage can volumes up 6%

Net sales in the third quarter grew to $2,389 million over the $2,302 million in the third quarter of 2012, primarily due to increased global beverage can volumes and $26 million from the impact of foreign currency translation, partially offset by the pass-through of lower raw material costs.

Third quarter gross profit improved to $394 million over the $369 million in the 2012 third quarter, primarily due to increased beverage can volumes, lower depreciation expense and $5 million of favorable foreign currency translation.

Selling and administrative expense increased to $95 million in the third quarter over the $92 million in the prior year third quarter, including $2 million of increase due to foreign currency translation.

Segment income (a non-GAAP measure defined by the Company as gross profit less selling and administrative expense) rose to $299 million in the third quarter over the $277 million in the third quarter of 2012, including $3 million of improvement due to foreign currency translation.

Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "Sales, segment income and earnings per share all increased over 2012 levels. Crown's global beverage can sales continued to increase well ahead of global market growth because of our strong presence in the world's leading growth markets. Our new beverage can plants and capacity in Turkey, Brazil, China and Southeast Asia increased sales significantly over third quarter 2012.

"Our food, aerosol and specialty businesses performed well relative to the industry, however demand for food cans in Europe was below expectation principally due to end user cyclical demand weakness. As the European economies recover from recession, we expect food can demand to rebound.

"Looking ahead, we are confident that Crown's uniquely balanced product portfolio and geographic presence of high quality metal packaging provides a strong foundation for future unit volume, free cash flow and profit growth."

Interest expense in the third quarter was $58 million compared to $57 million in the third quarter of 2012 primarily due to higher average debt outstanding.

In the third quarter of 2013, the Company recorded restructuring charges of $33 million ($28 million, net of tax, or $0.20 per diluted share) primarily in connection with an initiative to reduce headcount across its European operations. The Company also recorded tax charges of $18 million ($0.13 per diluted share) related to new tax legislation enacted during the quarter.

Net income attributable to Crown Holdings in the third quarter was $113 million compared to $325 million in the third quarter last year. Income per diluted share was $0.81 in the third quarter compared to $2.20 in the third quarter of 2012. Net income per diluted share before certain items increased to $1.13 over the $1.00 in the third quarter of 2012.

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.

During the third quarter, the Company repurchased 2.5 million shares of its outstanding common stock for $106 million through open market purchases and has now purchased 6.9 million shares for $300 million in the first nine months of 2013.

Nine Month Results
Net sales for the first nine months of 2013 grew to $6,585 million over the $6,433 million in the first nine months of 2012, reflecting increased global beverage can volumes and $39 million from foreign currency translation, partially offset by the pass-through of lower raw material costs.

Gross profit for the nine month period rose to $1,068 million over the $996 million in the first nine months of 2012. The increase in gross profit primarily reflects increased beverage can sales, lower depreciation expense and $8 million of favorable foreign currency translation.

Selling and administrative expense for the nine month period was $301 million compared to $288 million for the same 2012 period and included a 2013 second quarter charge of $11 million to record a reserve against a portion of the outstanding receivable balance due from a European food can customer.

Segment income in the first nine months of 2013 grew to $767 million over the $708 million in the first nine months of 2012, including $5 million of improvement due to foreign currency translation.

Interest expense for the first nine months of 2013 was $179 million compared to $170 million in the same period of 2012, reflecting higher average debt outstanding.

Net income attributable to Crown Holdings for the first nine months of 2013 was $287 million compared to $528 million in the first nine months of 2012. Income per diluted share for the first nine months of 2013 was $2.02 compared to $3.53 in the first nine months of last year. Net income per diluted share before certain items increased to $2.58 over the $2.30 in 2012.

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 per diluted share before certain items does not conform to U.S. 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 per diluted share before certain items can be used to evaluate the Company's operations. Segment income, free cash flow, net income before certain items and income per diluted share before certain items are derived from the Company's Consolidated Statements of Operations and Cash Flows, as applicable, and reconciliations to segment income, free cash flow, net income before certain items and income per diluted share before certain items can be found within this release.

Conference Call
The Company will hold a conference call tomorrow, October 17, 2013 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 October 24. The telephone numbers for the replay are (203) 369-0593 or toll free (866) 403-8762.

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 increase global beverage can sales in excess of global market growth, continue to increase sales in Turkey, Brazil, China and Southeast Asia, grow future unit volumes, free cash flow and profit, and whether demand for food cans in Europe will increase as the European economies recover from recession 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, 2012 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, (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.

 

 

 

 

 

 

 

 

SOURCE Crown Holdings, Inc.