YARDLEY, Pa., Oct. 16, 2019 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the third quarter ended September 30, 2019.
Third Quarter Results
- Earnings per share $1.36 versus $1.23 in 2018
- Adjusted earnings per share $1.56 versus $1.71 in 2018
- Beverage can capacity projects on schedule
Net sales in the third quarter were $3,084 million compared to $3,174 million in the third quarter of 2018 reflecting $64 million of unfavorable currency translation.
Income from operations was $352 million in the quarter compared to $365 million in the third quarter of 2018. Segment income was $395 million in the third quarter compared to $415 million in the prior year third quarter.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "Our overall performance during the third quarter was in line with expectations. Strong operating results in the Americas Beverage segment offset a disappointing performance in the European Food business due to unfavorable weather conditions and a weaker than expected harvest. Beverage can volumes were particularly robust in Europe, Mexico and Southeast Asia, as consumers in both emerging and developed markets continue to increasingly prefer cans over other packaging options. Recently installed beverage can capacity additions, including a third line at the Company's existing plant in Phnom Penh, Cambodia, a new one line high-speed plant in Parma, Italy and a new two line high-speed plant in Valencia, Spain, have helped us meet the continuing expansion in demand. In November 2019, we plan to commence operations at a new beverage can facility in Rio Verde in central Brazil.
"To meet the surge in volume requirements in our North American beverage can business, we have begun the construction of a third high-speed line at our Nichols, New York facility which will begin production during the second quarter of 2020. Also to support demand growth and targeted for a first quarter 2020 start-up, we are installing a new aluminum beverage can line at our Weston, Ontario plant. Both the Nichols and Weston lines will be capable of producing multiple sizes. In addition, we have begun construction of a new one line beverage can plant in Nong Khae, Thailand which will commence operations during the third quarter of 2020 and supply the increasing requirements of customers in the region."
Interest expense was $95 million in the third quarter of 2019 compared to $105 million in 2018 primarily due to lower debt levels in the current year.
Net income attributable to Crown Holdings in the third quarter was $183 million compared to $164 million in the third quarter of 2018. Reported diluted earnings per share were $1.36 in the third quarter of 2019 compared to $1.23 in 2018. Adjusted diluted earnings per share were $1.56 compared to $1.71 in 2018.
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 2019 increased to $8,874 million compared to $8,417 million in the first nine months of 2018 primarily due to the impact of the Signode acquisition, partially offset by $244 million of unfavorable currency translation.
Income from operations was $997 million in the first nine months of 2019 compared to $878 million in 2018. Segment income in the first nine months of 2019 increased to $1,096 million over the $1,049 million in the prior year period reflecting the impact of the Signode acquisition offset by $26 million of unfavorable currency translation.
Interest expense was $290 million for the first nine months of 2019 compared to $282 million in 2018 primarily due to higher average outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings in the first nine months of 2019 was $423 million compared to $386 million in the first nine months of 2018. Reported diluted earnings per share were $3.14 compared to $2.88 in 2018. Adjusted diluted earnings per share were $4.07 compared to $4.20 in 2018.
The Company currently expects fourth quarter and full year 2019 adjusted diluted earnings to be in the ranges of $0.93 to $0.98 and $5.00 to $5.05 per share, respectively, compared to the previous full year estimate of $5.05 to $5.20 per share, primarily due to a poor harvest in Europe and the impact of slowing economic activity on the Transit Packaging business.
The adjusted effective income tax rate for the full year of 2019 is expected to be between 25% and 26%.
Adjusted free cash flow, as defined below, is currently expected to be approximately $725 million for 2019 with capital spending of approximately $450 million.
Segment income, adjusted free cash flow, net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share 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, 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 fourth 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 and other 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 and noncontrolling interest 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, 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 17, 2019 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 24. The telephone numbers for the replay are (203) 369-3918 or toll free (888) 568-0403.
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 currency translation; the continuation of performance and market trends in 2019, including consumer preference for beverage cans and increasing global beverage can demand and demand in Europe, Mexico and Southeast Asia; the Company's ability to successfully complete and begin production at capacity expansion projects within expected timelines and budgets in Brazil, the U.S., Canada and Thailand 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, 2018 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
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.