YARDLEY, Pa., Feb. 6, 2019 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter and year ended December 31, 2018.
- Earnings per share $0.40 for the quarter versus a loss of $0.67 in 2017
- Adjusted earnings per share $1.00 for the quarter versus $0.84 in 2017; $5.20 full year versus $4.24 in 2017, an improvement of 23%
- Full year free cash flow of $636 million, or $4.75 per diluted share
- Deleveraging plans on target
- Transit Packaging performance on plan
- Global beverage can volumes grew 5% in the quarter and 4% for the year
- Reaffirm 2019 free cash flow target of $775 million
Net sales in the fourth quarter were $2,734 million compared to $2,168 million in the fourth quarter of 2017 reflecting the impact of the Signode acquisition, increased beverage can volumes and the pass through of higher material costs to customers partially offset by $53 million of unfavorable currency translation.
Income from operations was $218 million in the quarter compared to $212 million in the fourth quarter of 2017. Segment income increased to $279 million in the fourth quarter compared to $244 million in the prior year fourth quarter primarily due to the Signode acquisition.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "The Company's earnings performance was on plan for both the fourth quarter and full year, adjusted free cash flow exceeded our expectations, and we are reaffirming our cash flow guidance for 2019. Strong global beverage can volume growth of 5% during the quarter, led by robust shipments in Asia Pacific and the United States, combined with firm results in Transit Packaging, offset challenges in other operations. As expected, European Beverage results in the quarter had a difficult comparison to the prior year due to pre-production and start-up costs associated with new beverage can plants in Valencia, Spain and Parma, Italy, and volume softness in the Middle East consistent with previous quarters. European Food results in the quarter, compared to the prior year, were affected by currency translation and under-absorption of fixed costs due to lower production following poor harvest yields and higher inventory levels at the end of the third quarter.
"Beverage cans, the world's most sustainable and recycled beverage packaging, are increasingly recognized as the most responsible form of beverage packaging, and as such are gaining preference among brand owners and consumers alike. To meet this expanding demand, in July we commenced production at a new one-line beverage can plant in Yangon, Myanmar. The first line of the Valencia plant began operations in October and the second line will start-up in February 2019. In December, we commenced operations in Parma, initially a one-line beverage can plant, and in January 2019 we commenced operations on the third line at the Company's existing plant in Phnom Penh, Cambodia. During the fourth quarter of 2019, we will begin operations at a new one-line beverage can plant in Rio Verde, central Brazil."
Interest expense was $102 million in the fourth quarter of 2018 compared to $65 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 fourth quarter was $53 million compared to a loss of $89 million in the fourth quarter of 2017. Reported diluted earnings per share were $0.40 in the fourth quarter of 2018 compared to a loss of $0.67 in 2017. Adjusted diluted earnings per share increased to $1.00 over the $0.84 in 2017.
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 of 2018 increased to $11,151 million compared to $8,698 million in 2017 primarily due to the impact of the Signode acquisition, increased beverage can volumes, the pass through of higher material costs to customers and $134 million of favorable currency translation.
Income from operations was $1,096 million in 2018 compared to $1,024 million in the prior year. Segment income increased to $1,328 million over the $1,117 million in 2017, reflecting the Signode acquisition.
Interest expense was $384 million in 2018 compared to $252 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings for 2018 was $439 million compared to $323 million in 2017. Reported diluted earnings per share were $3.28 compared to $2.38 in 2017. Adjusted diluted earnings per share increased to $5.20 over the $4.24 in 2017.
The Company currently expects 2019 adjusted diluted earnings per share to be in the range of $5.20 to $5.40, which includes a non-cash headwind of approximately $53 million ($0.32 per share after tax) in pension expense primarily due to a decline in the market value of pension assets and an increase in discount rates in 2018, and an unfavorable currency translation impact of approximately $0.09 per share based on current exchange rate levels. Adjusted diluted earnings per share for the 2019 first quarter are expected to be in the range of $1.00 to $1.10.
The adjusted effective income tax rate for 2019 is expected to be in the range of approximately 25%-26% compared to 24.7% in 2018.
Adjusted free cash flow, as defined below, is currently expected to be approximately $775 million in 2019 compared to $636 million in 2018. A reconciliation from net cash provided by operating activities to adjusted free cash flow for 2018 is provided below.
Segment income, adjusted free cash flow, net leverage ratio, 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, effective tax rates, cash flow or leverage ratio 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 and net leverage ratio as the principal measure of its liquidity. The Company considers all 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 first quarter and full year of 2019 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, pension settlement and curtailment charges, 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 and net leverage ratio provide meaningful measures 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, net leverage ratio, 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, net leverage ratio, 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, February 7, 2019 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) 395-0194 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 February 14. The telephone numbers for the replay are (203) 369-1865 or toll free (866) 503-3216.
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 continuation of performance and market trends in 2019, including customer and consumer preference for beverage cans and increasing global beverage can demand; the Company's ability to successfully complete and manage capacity expansion and other projects, including in Myanmar, Spain, Italy, Cambodia and Brazil; and the Company's ability to generate expected earnings and cash flow in 2019 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 Yardley, 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.