YARDLEY, Pa., Oct. 17, 2018 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2018.
Third Quarter Highlights
- Earnings per share $1.23 versus $1.32 in 2017
- Adjusted earnings per share $1.71 for the quarter versus $1.46 in 2017; $4.20 YTD versus $3.39 in 2017
- Global beverage can volumes grew 3% in the quarter and 4% year-to-date
- Free cash flow guidance affirmed
- Transit Packaging integration and performance on plan
Net sales in the third quarter were $3,174 million compared to $2,468 million in the third quarter of 2017 reflecting the impact of the Signode acquisition, an increase in beverage can volumes and the pass through of higher material costs to customers.
Income from operations was $365 million in the quarter compared to $328 million in the third quarter of 2017. Segment income increased to $415 million in the third quarter compared to $352 million in the prior year third quarter primarily due to the Signode acquisition.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "The Company's performance was solid, and we remain on plan for the remainder of the year. Growth in our global beverage can businesses continued to be robust, offsetting soft European food can volumes reflecting the extremely challenging weather conditions which resulted in poor harvest yields. Growth in beverage cans is underpinned by the can's increasing popularity among customers and consumers due to its many inherent benefits, including being the world's most sustainable form of beverage packaging.
"Equally important, our global growth projects remain on schedule. We commenced production in July at a new one-line beverage can plant in Yangon, Myanmar. The first line of the beverage can plant in Valencia, Spain began operations in October, with the second line to begin in December. We will also start up a third beverage can line at the Company's existing plant in Phnom Penh, Cambodia in November.
"We continue to expect the combined results of our business portfolio will generate significant cash this year and next which will be used, as planned, to reduce the floating rate portion of our debt."
Interest expense was $105 million in the third quarter of 2018 compared to $64 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 third quarter was $164 million compared to $177 million in the third quarter of 2017. Reported diluted earnings per share were $1.23 in the third quarter of 2018 compared to $1.32 in 2017. Adjusted diluted earnings per share increased to $1.71 over the $1.46 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.
Nine Month Results
Net sales for the first nine months of 2018 increased to $8,417 million compared to $6,530 million in the first nine months of 2017 primarily due to the impact of the Signode acquisition, increased beverage can volumes, the pass through of higher material costs to customers and $187 million of favorable currency translation.
Income from operations was $878 million in the first nine months of 2018 compared to $812 million in the prior year period. Segment income for the nine months increased to $1,049 million over the $873 million in 2017 reflecting the Signode acquisition.
Interest expense was $282 million for the first nine months of 2018 compared to $187 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 nine months of 2018 was $386 million compared to $412 million in the first nine months of 2017. Reported diluted earnings per share were $2.88 compared to $3.02 in 2017. Adjusted diluted earnings per share increased to $4.20 over the $3.39 in 2017.
The Company currently expects fourth quarter adjusted diluted earnings to be in the range of $0.97 to $1.02 per share.
The adjusted effective income tax rate for the full year of 2018 is expected to be between 25% and 26%. Adjusted free cash flow, as defined below, is currently expected to be approximately $625 million for 2018 and $775 million for 2019, unchanged from prior guidance.
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 fourth 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, October 18, 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 October 25. The telephone numbers for the replay are (203) 369-1045 or toll free (866) 439-3740.
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 2018, including customer and 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 and Spain; the Company's ability to successfully manage other projects; 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 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.