TAMPA, Fla., Oct. 23, 2023 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2023.
Net sales in the third quarter were $3,069 million compared to $3,259 million in the third quarter of 2022 reflecting higher beverage can volumes in North America and favorable foreign currency translation of $60 million, offset by lower volumes across most other businesses and the pass through of $187 million in lower material costs.
Income from operations was $374 million in the third quarter compared to $297 million in the third quarter of 2022. Segment income in the third quarter of 2023 was $430 million compared to $336 million in the prior year third quarter reflecting the benefits from higher beverage can volumes in North America, the contractual recovery of prior years' inflationary cost increases in Europe and the successful implementation of cost reduction programs in Transit Packaging.
Commenting on the quarter, Timothy J. Donahue, Chairman, President and Chief Executive Officer, stated, "Operating results for the third quarter were solid, and the Company performed in line with expectations despite the cumulative effects of persistent inflation and challenging macroeconomic conditions in certain markets, such as Asia, which continue to adversely impact volumes. Beverage can volumes in North America expanded by 13% and the can continues to be the preferred choice by both customers and consumers alike for new beverage product introductions.
"The benefits of the overhead cost reduction program were clearly visible in strong Transit Packaging results for the quarter, more than offsetting generally sluggish volumes resulting from lackluster production in several industrial markets. Actions taken in 2022 to negotiate more comprehensive raw material and other inflationary pass-through provisions resulted in improved income performance in the European Beverage division. Beverage can volumes in Asia Pacific and aerosol can shipments in North America continued to be weak during the quarter.
"Looking forward, we remain focused on customer satisfaction and executing that which is under our control. We have adjusted production schedules to reduce inventory levels across aerosols, Asia and Transit in response to current demand. Net leverage at 3.5 times is one-half turn lower than only three months ago and we remain on pace to generate approximately $500 million in free cash flow. We anticipate that capital expenditures will be significantly reduced to approximately $500 million in each 2024 and 2025, and the Company expects to use the increased cash flow to pay down debt and return capital to shareholders."
Interest expense was $111 million in the third quarter of 2023 compared to $76 million in the third quarter of 2022 reflecting higher interest rates.
Net income attributable to Crown Holdings in the third quarter was $159 million compared to $127 million in the third quarter of 2022. Reported diluted earnings per share were $1.33 in the third quarter of 2023 compared to $1.06 in 2022 and adjusted diluted earnings per share were $1.73 compared to $1.46 in 2022.
Nine Month Results
Net sales for the first nine months of 2023 were $9,152 million compared to $9,931 million in the first nine months of 2022, primarily due to 6% higher beverage can volumes in North America and favorable foreign currency translation of $35 million, offset by the pass through of $575 million in lower material costs and lower overall net volumes.
Income from operations was $1,010 million in the first nine months of 2023 compared to $1,107 million in the first nine months of 2022, which included a gain of $113 million for the sale of the Transit Packaging segment's Kiwiplan business. Segment income in the first nine months of 2023 was $1,164 million versus $1,151 million in the prior year period, reflecting benefits from higher beverage can volumes in Americas Beverage, the contractual recovery of prior year's inflationary cost increases in European Beverage and cost reduction initiatives in Transit Packaging, partially offset by $60 million of year over year inventory impact of steel repricing in the Other segment and lower volumes in most other businesses, notably in aerosols in North America and beverage cans in Asia.
Interest expense was $323 million for the first nine months of 2023 compared to $194 million in 2022 primarily due to higher interest rates.
Net income attributable to Crown Holdings in the first nine months of 2023 was $418 million compared to $638 million in the first nine months of 2022. Reported diluted earnings per share were $3.49 compared to $5.23 in 2022 and adjusted diluted earnings per share were $4.61 compared to $5.58 in 2022.
Mr. Donahue further commented, "The Company completed the acquisition of Helvetia Packaging in early October and we welcome our new associates to the Crown family."
Fourth quarter adjusted diluted earnings per share are expected to be in the range of $1.40 to $1.50 and full year 2023 adjusted diluted earnings per share in the range of $6.00 to $6.10 reflecting full-year improved operating results in Americas and European Beverage and Transit Packaging, offset by continued weakness in Asia and the North America aerosols business which are traditionally more economically sensitive. Adjusted free cash flow is expected to be approximately $500 million after approximately $900 million of capital expenditures.
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, cash flow, leverage ratio, net income, effective tax rates, diluted earnings per share or interest expense and interest income 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 measures 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 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. 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. 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 derived from the Company's Consolidated Statements of Operations, Cash Flows and Consolidated Balance Sheets, as applicable, and reconciliations to segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share and adjusted EBITDA can be found within this release. Reconciliations of estimated adjusted diluted earnings per share for the 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.
The Company will hold a conference call tomorrow, October 24, 2023 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, 2023. The telephone numbers for the replay are 203-369-0180 or toll free 866-360-8712.
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 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; and the impact of overhead reduction efforts in the Transit Packaging 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, 2022 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 Tampa, Florida.
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.