YARDLEY, Pa., Feb. 7, 2023 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter ended December 31, 2022.
- Fourth quarter and full year reported diluted earnings per share of $.74 and $5.99
- Fourth quarter and full year adjusted diluted earnings per share of $1.17 and $6.75
- Global beverage can shipments grew 3% for the fourth quarter and full year
- Global beverage can shipments expected to grow mid-single digits in 2023
Fourth Quarter Results
Net sales in the fourth quarter were $3,012 million compared to $3,054 million in the fourth quarter of 2021 reflecting the pass through of higher raw material costs and increased beverage sales unit volumes, offset by lower volumes in the Transit Packaging businesses and unfavorable foreign currency translation of $92 million.
Income from operations was $229 million in the fourth quarter compared to $303 million in the fourth quarter of 2021. Segment income in the fourth quarter of 2022 was $292 million compared to $357 million in the prior year fourth quarter reflecting costs associated with higher inventory levels, lower cost absorption from planned inventory reductions and higher energy prices.
Commenting on the quarter, Timothy J. Donahue, Chairman, President and Chief Executive Officer, stated, "The operating environment remained challenging in the fourth quarter, as the impacts from inflation and higher interest rates adversely affected the Company's income performance. Global beverage can shipments advanced 3% in the quarter with North America up modestly.
"Continued global volume growth across beverage cans coupled with the contractual recovery of raw material and other inflationary costs is expected to meaningfully improve segment income performance in 2023. The Transit business is expected to benefit from a much lower cost structure, the result of a significant overhead reduction program and the non-recurrence of steel cost headwinds that affected 2022 performance.
"Our measured approach to beverage can expansion remains on schedule to meet global customer demand. In the United States, the first line of our new plant in Martinsville, Virginia began shipments to customers in November, and the second line will commence commercial production this month. In Mesquite, Nevada we expect to begin commercial production from line one in June and line two in October. Across Europe the Company is adding much needed capacity to our system with high-speed production lines being added to facilities in Parma, Italy and Agoncillo, Spain with startups expected in March and May, respectively. Additionally, the previously announced relocation of beverage can operations to our new site in Peterborough, United Kingdom is underway with the first line expected to commence production late in the second quarter and the second line in August. In North American Food, our capacity expansion has principally centered on expanding pet food can capacity with the third two-piece steel production line to the Owatonna, Minnesota plant completed in November. Additionally, the Company is installing a pet food can line to the Dubuque, Iowa plant with operations expected to commence in the third quarter."
Interest expense was $90 million in the fourth quarter of 2022 compared to $50 million in 2021 reflecting higher outstanding debt and higher interest rates.
Net income attributable to Crown Holdings in the fourth quarter was $89 million compared to a net loss of $1,001 million in the fourth quarter of 2021. Reported diluted earnings per share were $0.74 in the fourth quarter of 2022 compared to a reported diluted loss per share of $7.95 in 2021. Adjusted diluted earnings per share were $1.17 compared to $1.66 in 2021.
Full Year Results
Net sales for the full year of 2022 were $12,943 million compared to $11,394 million in 2021, primarily due to the pass through of higher raw material costs and increased beverage sales unit volumes, which more than offset unfavorable foreign currency translation of $372 million.
Income from operations was $1,336 million for the full year 2022 compared to $1,363 million in 2021. Segment income for the full year 2022 was $1,443 million versus $1,500 million in the prior year period, primarily due to costs associated with higher inventory levels, higher energy prices and unfavorable foreign currency translation of $29 million.
Interest expense was $284 million for the full year 2022 compared to $253 million in 2021 primarily due to higher interest rates.
Net income attributable to Crown Holdings in 2022 was $727 million compared to a loss of $560 million in 2021. Reported diluted earnings per share were $5.99 compared to a diluted loss per share of $4.30 in 2021 and adjusted diluted earnings per share were $6.75 compared to $7.66 in 2021.
The Company repurchased $722 million, or 6.4 million shares of its common stock. The Company has remaining Board authorization to repurchase an additional $2.3 billion through December 2024. Since reinitiating the share repurchase program in 2021, we have now repurchased 15.3 million or 11% of our shares then outstanding.
The following supplemental information is provided below: a reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share and the impact of foreign currency translation.
With improved results expected in each of our global beverage can businesses as well as in Transit Packaging, adjusted EBITDA is anticipated to grow in the range of 8-12% in 2023.
The Company currently estimates full year 2023 adjusted diluted earnings per share to be in the range of $6.20 to $6.40, including a $0.40 per diluted share year over year impact from additional noncash pension and postretirement. As a result of higher average outstanding borrowings and higher interest rates, net interest expense is expected to be approximately $400 million in 2023, an increase of more than $130 million or $0.80 per diluted share compared to 2022.
The Company expects the adjusted effective income tax rate to be between 24% and 25% compared to 23.6% in 2022 and adjusted free cash flow to be approximately $500 million after $900 million in capital expenditures.
First quarter adjusted diluted earnings per share is expected to be in the range of $1.00 to $1.10 which includes headwinds from higher interest and pension expense as well as the negative year on year impact from steel repricing.
Segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share, net interest expense, EBITDA and adjusted EBITDA 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, interest expense, interest income, 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 adjusted 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. Reconciliations of estimated adjusted diluted earnings per share for the first quarter and full year of 2023 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 and other costs, asset impairment charges, asbestos-related charges, losses from early extinguishment of debt, pension settlement and curtailment charges, the tax and noncontrolling interest impact of the items above, and the impact of tax law changes or other tax matters. We have not provided a reconciliation of the range of anticipated growth of projected adjusted EBITDA to the most comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including restructuring and other charges which are event-driven. 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. The Company believes that adjusted free cash flow and adjusted 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 dividends. Segment income, adjusted free cash flow, adjusted net leverage ratio, the adjusted effective tax rate, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA 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, adjusted diluted earnings per share and adjusted EBITDA can be found within this release.
The Company will hold a conference call tomorrow, February 8, 2023 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 15, 2023. The telephone numbers for the replay are 203-369-3348 or toll free 800-813-5534.
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 the coronavirus pandemic on the Company's operations, including the Company's ability to continue to operate its plants, distribute its products, and maintain its supply chain; the future impact of currency translation; the continuation of performance and market trends in 2023, including consumer preference for beverage cans and increasing global beverage can demand; the future impact of inflation, including the potential for higher interest rates and energy prices and the Company's ability to recover raw material and other inflationary costs; future demand for food cans; the Company's ability to successfully complete its previously announced capacity expansion projects and begin production within expected timelines, including any delays related to the pandemic; and the impact of overhead reduction efforts in the Transit business, 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, 2021 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 worldwide leader in the design, manufacture and sale of packaging products for consumer goods and industrial products. World headquarters are located in Yardley, Pennsylvania.
For more information, contact:
Kevin C. Clothier, Senior Vice President and Chief Financial Officer, (215) 698-5281
Thomas T. Fischer, Vice President, Investor Relations and Corporate Affairs, (215) 552-3720
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.