YARDLEY, Pa., Feb. 4, 2020 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the fourth quarter and year ended December 31, 2019.
- Fourth quarter earnings per share of $0.64 versus $0.40 in 2018
- Fourth quarter adjusted earnings per share of $1.04 versus $1.00 in 2018
- Full year cash from operations of $1.2 billion; record adjusted free cash flow of $754 million
- Beverage can volumes up 7% in quarter, 3% for the year
- Deleveraging plans on target
- Beverage can capacity projects on schedule
- Beverage can volumes expected to be up more than 5% in 2020
- Increase in 2020 capital spending to support growing beverage can demand
Fourth Quarter Results
Net sales in the fourth quarter were $2,791 million compared to $2,734 million in the fourth quarter of 2018, reflecting a 7% increase in beverage can volumes.
Income from operations was $199 million in the quarter compared to $218 million in the fourth quarter of 2018. Segment income was $285 million in the fourth quarter compared to $279 million in the prior year fourth quarter.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "The Company had a strong year in 2019, with fourth quarter overall performance in line with expectations, as strong operating results in Americas Beverage offset underperformance in the European Food business. Also, as planned, we reduced inventories in our Transit Packaging business in anticipation of a softness in manufacturing activity which, while having an adverse impact on segment income, helped the Company achieve record cash flow in 2019. Beverage can volumes were particularly robust in Brazil, Europe, Southeast Asia and the United States, as consumers in both emerging and developed markets continue to increasingly prefer cans over other packaging options. Our full year adjusted free cash flow of over $750 million allowed us to continue to reduce debt and meet our deleveraging targets.
"In 2019, the North American beverage can industry grew at its fastest pace in 25 years. This expansion was driven by a growing proportion of new beverage products being introduced in cans versus other packaging formats, which is expected to continue. To meet these increasing requirements in North America, we installed a new aluminum beverage can line at our Weston, Ontario plant which began production last month and are adding a third line at our Nichols, New York facility which will commence operations during the second quarter of this year. In addition, Crown holds beverage can leadership positions in a number of faster-growing developing regions, and we have established an excellent platform for further growth in the coming years. To meet this rising demand, during November 2019 the Company commenced operations at a new facility in Rio Verde, Brazil and has begun construction of a new beverage can plant in Nong Khae, Thailand which will begin production during the third quarter of 2020. Lastly, our multi-year project to convert beverage can capacity in Spain from steel to aluminum now nears completion. Both lines in the Seville plant, which have multi-size capability, will be in commercial production early in the second quarter.
"Looking ahead, we are excited about 2020. Beverage cans are the world's most sustainable and responsible beverage packaging format and, with the commercialization of significant new capacity, Crown is poised to continue to benefit from the global growth in beverage cans. Moreover, our other global metal packaging and transit businesses continue generating significant and stable free cash flow, funding beverage can expansion and rapid deleveraging."
Interest expense was $88 million in the fourth quarter of 2019 compared to $102 million in 2018 primarily due to lower debt levels in the current year.
Net income attributable to Crown Holdings in the fourth quarter was $87 million compared to $53 million in the fourth quarter of 2018. Reported diluted earnings per share were $0.64 in the fourth quarter of 2019 compared to $0.40 in 2018. Adjusted diluted earnings per share were $1.04 compared to $1.00 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.
Full Year Results
Net sales for the full year of 2019 increased to $11,665 million compared to $11,151 million in 2018 primarily due to the impact of the Signode acquisition, partially offset by $254 million of unfavorable currency translation.
Income from operations was $1,196 million in 2019 compared to $1,096 million in 2018. Segment income in 2019 increased to $1,381 million over the $1,328 million in the prior year period, reflecting the impact of the Signode acquisition offset by $24 million of unfavorable currency translation.
Interest expense was $378 million for 2019 compared to $384 million in 2018 primarily due to lower interest rates offset by higher average outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings in 2019 was $510 million compared to $439 million in 2018. Reported diluted earnings per share were $3.78 compared to $3.28 in 2018. Adjusted diluted earnings per share were $5.11 compared to $5.20 in 2018.
The Company currently expects 2020 adjusted diluted earnings per share in the range of $5.40 to $5.60. Adjusted diluted earnings per share for the 2020 first quarter are expected to be in the range of $0.90 to $1.00.
The adjusted effective income tax rate for 2020 is expected to be between 24% and 25%.
Cash provided by operating activities is currently expected to be approximately $1,200 million for 2020 with capital spending of approximately $600 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 first quarter and full year of 2020 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 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, February 5, 2020 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 12. The telephone numbers for the replay are (402) 998-0478 or toll free (800) 759-4056.
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 2020, including consumer preference for beverage cans and increasing global beverage can demand and demand in Brazil, Europe, Southeast Asia, and the United States; the Company's ability to successfully complete and begin production at capacity expansion projects within expected timelines and budgets in the U.S. and Thailand and the Company's ability to generate expected earnings and cash flow in 2020 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.