PHILADELPHIA, April 18, 2018 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the first quarter ended March 31, 2018.
- Earnings per share $0.67 versus $0.77 in 2017
- Adjusted earnings per share $0.94 versus $0.77 in 2017; excludes intangibles amortization and certain other items in both periods
- Global beverage can volumes grew 3% over prior year
- Completed acquisition of Signode Industrial Group on April 3
Net sales in the first quarter were $2,197 million compared to $1,901 million in the first quarter of 2017 reflecting increased beverage can volumes, the pass through of higher material costs to customers, and $121 million of favorable currency translation impact.
Income from operations was $221 million in the quarter compared to $225 million in the first quarter of 2017. Segment income increased to $245 million in the first quarter compared to $226 million in the prior year first quarter and included $12 million of favorable currency translation impact. Segment income for 2017 has been restated to reflect new accounting guidance on the presentation of pension and postretirement expense and the Company's revised policy to exclude intangibles amortization charges from segment income.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "We are very pleased with the Company's performance during the first quarter and we are on track for an excellent 2018. Adjusted earnings per share rose 22% and segment income gained 8% over the prior year, led by strong results across most operations.
"Global beverage can volume growth of 3% was fueled by notable gains in Brazil, Southeast Asia and the United States, as consumers in both emerging and developed markets continue to show a preference for cans over other packaging formats. To meet this expanding demand, our global beverage can projects remain on schedule. We expect to begin production at the new one-line beverage can plant in Yangon, Myanmar during the second quarter and the new two-line beverage can plant in Valencia, Spain during the fourth quarter. The Valencia plant will begin our conversion from steel to aluminum for beverage cans in the growing Spanish market. We will also construct a third beverage can line at the Company's existing plant in Phnom Penh, Cambodia to start production during the fourth quarter. Additionally, in January 2018, ahead of schedule, the new glass facility in Chihuahua, Mexico commenced operations to serve the growing beer market in the northern part of the country.
"On April 3, 2018, Crown completed the acquisition of Signode Industrial Group for cash consideration of $3.9 billion. Signode's products supply critical in-transit protection to high value, high volume goods across a number of end-markets, including food and beverage, agriculture, corrugated, metals and construction among others. Combined with a highly engineered equipment and service offering, Signode's geographic and product mix will provide a strong platform for value creation. Signode adds a portfolio of premier transit and protective packaging franchises to Crown's growing metal packaging businesses, further broadening and diversifying the customer base and substantially increasing cash flow. We welcome the 7,000 Signode employees to the Crown organization."
Interest expense was $74 million in the first quarter of 2018 compared to $62 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings in the first quarter was $90 million compared to $107 million in the first quarter of 2017. Reported diluted earnings per share were $0.67 in the first quarter of 2018 compared to $0.77 in 2017. Adjusted diluted earnings per share increased to $0.94 over the $0.77 in 2017. As noted below, the Company has revised its policy regarding the treatment of intangibles amortization charges in calculating adjusted net income and adjusted earnings per share.
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.
The Company currently expects second quarter and full year 2018 adjusted diluted earnings to be in the ranges of $1.55 to $1.65 and $5.35 to $5.55 per share, respectively. Consistent with the Company's revised policy, adopted with the closing of the Signode acquisition, intangibles amortization charges are excluded when calculating adjusted net income and adjusted earnings per share. Accordingly, these adjusted earnings estimates exclude amortization arising from the Signode acquisition as well as from the Company's prior acquisitions of Mivisa in 2014 and Empaque in 2015. The pre-tax, after-tax and earnings per share impact of the new policy are summarized in the reconciliation tables below.
The adjusted effective income tax rate for the full year of 2018 is expected to be between 25% and 26%, although it may vary from quarter to quarter. Adjusted free cash flow, as defined below, is currently expected to be approximately $625 million for 2018 and $775 million for 2019.
Segment income, adjusted free cash flow, adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per share 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, net income, diluted earnings per 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 as the principal measure of the performance of its operations and adjusted free cash flow as the principal measure of its liquidity. The Company considers both 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 net 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. Reconciliations of estimated adjusted diluted earnings per share for the second quarter and full year of 2018 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 costs, asset impairment charges, acquisition related costs including fair value adjustments to inventory, asbestos-related charges, losses from early extinguishment of debt, the tax impact of the items above, and the impact of tax law changes or other tax matters. The Company believes that adjusted free cash flow provides a meaningful measure 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 possible future dividends. Segment income, adjusted free cash flow, the adjusted effective tax rate, adjusted net income and adjusted diluted earnings per 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, adjusted free cash flow, the adjusted effective tax rate, adjusted net income and adjusted diluted earnings per share can be found within this release.
The Company will hold a conference call tomorrow, April 19, 2018 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 (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 April 26. The telephone numbers for the replay are (203) 369-3175 or toll free (888) 562-4201.
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; the continuation of performance and market trends in 2018, including consumer preference for beverage cans and increasing global beverage can demand; the Company's ability to successfully complete and begin production at capacity expansion projects within expected timelines and budgets in Cambodia, Myanmar and Spain; the Company's ability to generate expected earnings and cash flow in 2018 and 2019; and the successful integration of Signode 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, 2017 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 global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets. 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.
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SOURCE Crown Holdings, Inc.