Crown Holdings, Inc. (NYSE: CCK) announced its financial results for the first quarter ended March 31, 2015.
First Quarter Highlights
Income per diluted share $0.32; Before Certain Items $0.53, including $0.06 of unfavorable currency translation impact
Global beverage can volumes grew 4% versus 2014; food can volumes grew 17%
Empaque acquisition completed on February 18, 2015
Mivisa and Empaque integrations progressing as planned
Net sales in the first quarter grew to $1,997 million over the $1,993 million in the first quarter of 2014, primarily due to the impact of the Mivisa and Empaque acquisitions offset by $172 million of unfavorable currency translation impact.
Segment income (a non-GAAP measure defined by the Company as gross profit excluding the impact of fair value adjustments to inventory acquired in an acquisition and timing impact of hedge ineffectiveness, less selling and administrative expense) was $192 million in the first quarter compared to $200 million in the first quarter of 2014, and included $16 million of unfavorable currency translation impact primarily due to the strength of the U.S. dollar against the euro.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We started off the year as expected, and the fundamentals underlying our businesses remain strong. On a currency neutral basis, the Company's segment income for the first quarter increased by 4% over 2014, despite significantly elevated aluminum premiums in Europe and political conflict in parts of the Middle East, which resulted in lower regional sales volumes.
"On February 18, we completed our acquisition of Empaque, a leading Mexican manufacturer of aluminum cans and ends, bottle caps and glass bottles for the beverage industry. We are pleased that Empaque's excellent management team and highly efficient manufacturing facilities are integrating smoothly into the Crown organization. Also on February 18, we announced the construction of a new beverage can plant in Monterrey, Mexico to meet the growing demand for both beer and non-alcoholic beverages in the market surrounding this metropolitan area of more than four million people.
"The integration of Mivisa, a leading Spanish producer of two- and three-piece food cans and ends which we acquired during the second quarter of 2014, is proceeding as planned, as demonstrated in our first quarter European Food results."
Interest expense increased to $65 million in the first quarter of 2015 over the $58 million in 2014 primarily due to increased borrowings to fund the Empaque and Mivisa acquisitions.
Net income attributable to Crown Holdings in the first quarter was $44 million compared to $24 million in the first quarter of 2014. Reported earnings per diluted share were $0.32 in the first quarter of 2015 compared to $0.17 in the 2014 first quarter. Net income per diluted share before certain items was $0.53 compared to $0.57 in 2014.
A reconciliation from net income and income per diluted share to net income before certain items and income per diluted share before certain items is provided below.
Non-GAAP Measures
Segment income and free cash flow are not defined terms under U.S. generally accepted accounting principles (non-GAAP measures). In addition, the information presented excluding the impact of currency translation, regarding net income before certain items and regarding income before certain items per diluted share does not conform to GAAP and includes non-GAAP measures. Non-GAAP measures should not be considered in isolation or as a substitute for net income, income per diluted 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 and free cash flow as the principal measures of performance of its operations and for the allocation of resources. 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 net income before certain items and income before certain items per diluted share are useful in evaluating the Company's operations. Segment income, free cash flow, net income before certain items and income before certain items per diluted 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, free cash flow, net income before certain items and income before certain items per diluted share can be found within this release.
www.crowncork.com
