PHILADELPHIA, Feb. 2, 2017 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter and year ended December 31, 2016.
- Earnings per share $0.47 for the quarter; $3.56 full year versus $2.82 in 2015
- Adjusted earnings per share $0.71 for the quarter; $3.93 full year versus $3.59 in 2015
- Cash from operations $930 million; adjusted free cash flow $479 million
- Share repurchase authorization for $1 billion in aggregate through the end of 2019
Net sales in the fourth quarter were $1,923 million compared to $2,027 million in the fourth quarter of 2015, reflecting $77 million of unfavorable currency translation in 2016 compared to 2015 and the pass through of lower raw material costs.
Income from operations was $192 million in the quarter compared to $201 million in the fourth quarter of 2015. Segment income improved to $236 million in the quarter compared to $234 million in 2015. The improvement in segment income compared to the prior year's quarter included benefits from lower corporate costs, offset by $9 million of unfavorable currency translation and lower volumes in Saudi Arabia. Corporate and unallocated costs of $156 million for the full year of 2016 are consistent with the Company's expectations for 2017.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "We are pleased to report another solid quarter and strong year for Crown. Fourth quarter operating results were in line with our expectations, and we exceeded our free cash flow projections due to another quarter of excellent working capital performance. Global beverage can volumes increased three percent for the full year, and in the quarter were level to the prior year as strong performances in the U.S., Brazil and Asia offset softness in Saudi Arabia.
"Our new beverage can plant in Monterrey, Mexico and the second production line at the Osmaniye, Turkey facility began commercial production in the fourth quarter of 2016. The first beverage can line at the Nichols, New York can plant was commissioned and began commercial shipments in late January of this year and will be followed by completion of the second line in April. In the second quarter, we will also complete the conversion of our Custines, France beverage can facility from steel to aluminum with the start-up of the second high speed line and expand capacity at our beverage can plant in Colombia. In addition to these previously announced projects, we are also constructing a new beverage can facility in Jakarta, Indonesia, our first in that country, that is scheduled to begin commercial production in the third quarter of this year to serve the growing local market, adding a second line at our beverage can plant in Danang, Vietnam that is also expected to begin production in the third quarter, and constructing a new beverage can plant in Yangon, Myanmar and a new glass bottle facility in Chihuahua, Mexico, both scheduled for start-up in the first half of 2018."
Interest expense decreased to $62 million in the fourth quarter of 2016 compared to $68 million in 2015 primarily due to lower outstanding debt.
Net income attributable to Crown Holdings in the fourth quarter was $65 million compared to $66 million in the fourth quarter of 2015. Reported diluted earnings per share were $0.47 in the fourth quarters of both years. Adjusted diluted earnings per share were $0.71 compared to $0.70 in 2015.
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.
Full Year Results
Net sales for the full year were $8,284 million compared to $8,762 million in 2015, and included $277 million of unfavorable currency translation in 2016 compared to 2015 and the pass through of lower raw material costs.
Income from operations improved to $1,021 million compared to $927 million in 2015. Segment income improved to $1,078 million compared to $1,026 million in 2015, and included $39 million of unfavorable currency translation.
Interest expense decreased to $243 million in 2016 compared to $270 million in 2015 primarily due to lower outstanding debt.
Net income attributable to Crown Holdings increased to $496 million in 2016 over the $393 million in 2015. Reported diluted earnings per share in 2016 were $3.56 compared to $2.82 last year. Adjusted diluted earnings per share were $3.93 compared to $3.59 in 2015.
Share Repurchase Authorization
The Company also announces that its Board of Directors has authorized the repurchase of an aggregate amount of $1 billion of Company common stock through the end of 2019. This new authorization reflects the Company's strong balance sheet and cash flow from operations, allowing investment in the business and return of cash to our shareholders. Share repurchases under this program may be made in the open market, through privately negotiated transactions or other programs, and at times and in such amounts as market conditions allow.
The Company currently expects 2017 adjusted diluted earnings per share to be in the range of $3.80 to $4.00 compared to $3.93 in 2016, including a foreign currency translation headwind of approximately $0.12 per diluted share based on current exchange rate levels. Adjusted diluted earnings per share for the 2017 first quarter are expected to be in the range of $0.65 to $0.75 compared to $0.69 in the prior year. These estimates reflect the impact of expected repurchase activity under the newly authorized share repurchase program described above.
During 2016, the Company repositioned its capital structure by refinancing more than $1 billion of short-term floating rate debt to fixed long-term debt in both euros at 2 ⅝% and U.S. dollars at 4 ¼%. While these fixed rates are near high-yield historical lows they are higher than current short-term rates and as a result the Company expects 2017 interest expense to increase by approximately $13 million, or $.07 per diluted share to approximately $256 million. As reflected in the Company's December 31, 2016 balance sheet, approximately 75% of its debt is in fixed rate instruments.
Additionally, costs incurred prior to start-up of the three large North American projects (Monterrey, Nichols and Chihuahua) are expected to have a $.06 impact on adjusted diluted earnings per share compared to 2016.
The effective income tax rate for 2017 is expected to be approximately 26%, similar to the 2016 rate. Cash provided by operating activities is currently expected to be approximately $875 million and management currently forecasts capital expenditures for 2017 of approximately $450 million.
Mr. Donahue further commented, "Looking back, the last three years have been very productive. We acquired and integrated two exceptional packaging companies, Mivisa and Empaque, and we continued to expand our global beverage platform allowing us to more than offset the currency headwinds faced by many U.S. multinationals. Adjusted diluted earnings per share increased to $3.93 in 2016 from $2.99 in 2013 despite more than $0.70 per share of currency headwinds over the three year period. We generated $1.7 billion of adjusted free cash flow over this period allowing us to delever and begin the process of returning significant cash to our shareholders. As we look forward, it is our past success which gives us confidence that our growth initiatives, underpinned by customer commitments, will continue to enhance the future earnings and cash flow of the Company. At the same time, we remain committed to providing our customers with the highest quality containers and service while controlling costs, improving productivity, increasing operational efficiencies and growing shareholder value."
Segment income, adjusted free cash flow, adjusted net income, the adjusted effective tax rate, adjusted earnings per share, and the information presented excluding the impact of currency translation 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, 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 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, adjusted diluted earnings per share, and information excluding the impact of currency translation are useful in evaluating the Company's operations as these measures are adjusted for items that affect comparability between periods. A reconciliation of estimated adjusted diluted earnings per share for the first quarter and full year of 2017 to estimated 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, adjusted diluted earnings per share and information excluding the impact of currency translation 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, adjusted diluted earnings per share and information unadjusted for currency translation can be found within this release.
The Company will hold a conference call tomorrow, February 3, 2017 at 9:00 a.m. (EST) 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) 395-0227 or toll-free (888) 606-8412 and the access passcode 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 February 10. The telephone numbers for the replay are (203) 369-1126 or toll free (866) 443-8030.
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 and changes in interest rates and tax legislation; the continuation of performance trends in 2017; the Company's ability to generate expected earnings and cash provided by operating activities in 2017 while maintaining capital expenditures at forecasted levels; the future growth in demand for beverage, food and aerosol cans, including in regions where the Company is adding capacity; the Company's ability to successfully complete and begin production at capacity expansion or conversion projects within expected timelines and budgets in Mexico, New York, France, Colombia, Indonesia, Vietnam and Myanmar; its ability to continue to identify and successfully complete and operate additional projects or acquisitions; its ability to successfully execute its share repurchase program; including the amount, timing and price of any repurchases; and its ability to continue to generate cash from operations, including from working capital performance 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, 2015 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.
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SOURCE Crown Holdings, Inc.