YARDLEY, Pa., Oct. 24, 2022 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2022.
- Earnings per share of $1.06 versus $0.79 in 2021
- Global beverage can volumes grew 6%
- Repurchased $722 million in Company shares year to date
Net sales in the third quarter were $3,259 million compared to $2,920 million in the third quarter of 2021 reflecting increased beverage can unit volumes and the pass through of higher raw material costs partially offset by unfavorable foreign currency translation of $127 million.
Income from operations was $297 million in the third quarter compared to $348 million in the third quarter of 2021. Segment income in the third quarter of 2022 was $336 million compared to $379 million in the prior year third quarter reflecting higher energy prices, costs associated with higher inventory levels and unfavorable foreign currency translation of $8 million.
Commenting on the quarter, Timothy J. Donahue, Chairman, President and Chief Executive Officer, stated, "Third quarter global beverage can shipments outpaced the prior year third quarter by 6% led by robust shipments in Brazil, Mexico and Vietnam. While shipments advanced versus the prior year, they were short of our earlier expectations leading to more inventory on hand throughout and at the end of the quarter. Since our last earnings release in mid-July, the impacts from inflation, European energy prices, interest rates and currency have become more challenging. With input costs expected to remain elevated prior to our contractual inflationary resets in 2023, and many customers adjusting their order patterns in response to lower consumer spending, we expect the operating environment and margins to remain under pressure for the balance of 2022.
"While the short-term environment is expected to remain challenging, we continue to focus on activities that will enhance our long-term success and remain confident in our outlook for 2023. Our global beverage can expansion projects remain on schedule, including both new two-line plants in the United States, with Martinsville, Virginia expecting to commence operations in November 2022 and Mesquite, Nevada in June 2023. The first line of our new facility in Uberaba, Brazil began commercial production in May and the second line earlier this month. The Company has begun construction on a multi-line facility in Peterborough, United Kingdom, with the first line scheduled to start up in June 2023. Additional production lines are being added to existing plants in Phnom Penh, Cambodia; Agoncillo, Spain; and Parma, Italy.
"Understanding we cannot control inflation or interest rates, we have focused on actions to lower costs for the current environment by reducing headcount and lowering capital spending. Additionally, in August, we extended our existing credit facility to August 2027, and raised an incremental $1.0 billion with the additional proceeds used to retire euro notes originally due in 2023. The balance sheet remains strong with no significant maturities until September 2024.ˮ
Interest expense was $76 million in the third quarter of 2022 compared to $66 million in 2021 reflecting higher interest rates. The Company recorded a charge of $11 in the third quarter of 2022 for the write-off of deferred financing fees and premium payments in connection with the early repayment of notes and the refinancing of the credit facility and term loans.
Net income attributable to Crown Holdings in the third quarter was $127 million compared to $102 million in the third quarter of 2021. Reported diluted earnings per share were $1.06 in the third quarter of 2022 compared to $0.79 in 2021. Adjusted diluted earnings per share was $1.46 compared to $2.03 in 2021.
Nine Month Results
Net sales for the first nine months of 2022 were $9,931 million compared to $8,340 million in the first nine months of 2021, primarily due to increased sales unit volumes and the pass through of higher raw material costs, which more than offset unfavorable foreign currency translation of $280 million.
Income from operations was $1,107 million in the first nine months of 2022 compared to $1,060 million in the first nine months of 2021. Segment income in the first nine months of 2022 was $1,151 million versus $1,143 million in the prior year period, primarily due to improved profitability in the North American tinplate and can-making equipment businesses and higher global beverage can sales unit volumes, offsetting higher energy prices and unfavorable foreign currency translation of $27 million.
Interest expense was $194 million for the first nine months of 2022 compared to $203 million in 2021 primarily due to lower outstanding debt balances partially offset by higher interest rates.
Net income attributable to Crown Holdings in the first nine months of 2022 was $638 million compared to $441 million in the first nine months of 2021. Reported diluted earnings per share were $5.23 compared to $3.32 in 2021 and adjusted diluted earnings per share were $5.58 compared to $5.99 in 2021.
The Company has repurchased $722 million, or 6.4 million shares of its common stock to date in 2022, including 1.2 million shares during the third quarter. 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 then shares 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.
The Company currently expects fourth quarter adjusted earnings to be in the range of $1.00 to $1.10 per share, and full year adjusted earnings in the range of $6.60 to $6.70 per share. Compared to our initial guidance of $8.00 to $8.20 per share, our current guidance assumes approximately a $1.00 headwind due to the stronger U.S. dollar, higher energy cost in Europe, and increased interest expense.
Segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share, adjusted EBITDA and impacts of foreign 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, 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 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 fourth quarter and full year of 2022 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. The Company believes that adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share and the impact of foreign currency translation 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, October 25, 2022 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 November 1. The telephone numbers for the replay are 203-369-3827 or toll free 800-814-6746.
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 impact of the coronavirus pandemic on demand for the Company's products; the future impact of currency translation; the continuation of performance and market trends in 2022, 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; future demand for food cans; and 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, 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.