Crown Holdings, Inc. Reports Strong Second Quarter 2021 Results

YARDLEY, Pa., July 19, 2021 /PRNewswire/ -- Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the second quarter ended June 30, 2021.

Highlights

• Earnings per share $0.95 versus $0.94 in 2020
• Adjusted earnings per share increased to $2.14 over the $1.33 in 2020
• Global beverage can volumes grew 20%
• Solid food can demand
• Repurchased $379 million in Company shares year to date through July 16
• European Tinplate sale on schedule for expected Q3 closing; reported as discontinued operations

Net sales in the second quarter were $2,856 million compared to $2,137 million in the second quarter of 2020 reflecting increased beverage can and transit packaging sales unit volumes, the pass through of higher material costs and favorable currency translation of $125 million.

Income from operations was $385 million in the second quarter compared to $208 million in the second quarter of 2020.  Segment income was $395 million in the second quarter compared to $250 million in the prior year second quarter primarily due to increased sales unit volumes and $18 million of favorable currency translation.

Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "The Company's performance during the second quarter continued to be strong, and Crown remains on track for another record year in earnings.  Adjusted earnings per share and segment income increased 61% and 58%, respectively, and were largely fueled by beverage can volume growth of 20%, as each global region recorded double-digit gains.  Demand recovery has been robust in regions such as Brazil, throughout Europe, Mexico, the Middle East and Southeast Asia that previously had been adversely impacted by the pandemic.  Each of our businesses performed very well commercially and operationally despite certain challenges posed by supply chain disruptions.  The strong results delivered by Transit Packaging were driven by continuing improvement in global manufacturing activity and the achievement of several cost reduction initiatives.  So far this year, the Company has repurchased $379 million of common stock, executing on our capital allocation strategy of returning cash to shareholders.

"The Company previously announced an agreement to sell its European Tinplate business to KPS Capital Partners.  The business comprises 44 manufacturing facilities in Europe, the Middle East and Africa that produce food cans and ends, aerosol cans, metal closures and promotional packaging for various consumer brands.  We expect that the transaction will close during the third quarter of 2021.  Net proceeds from the transaction will be used for debt reduction, beverage can capital projects and continued share repurchases over time.

"To meet accelerating demand for beverage cans, the world's most recycled and sustainable beverage packaging, the Company is implementing several capacity expansion projects globally, which include both the construction of new plants and the addition of production lines to existing facilities.  By the end of 2022, we expect to have 97 billion units of annualized global beverage can capacity, an increase of 28%, or 21 billion units, from the 2019 base.  During the second quarter, the first line in our new Bowling Green, Kentucky facility began commercial shipments, with the second line expected to commence production during the third quarter.  Also early in the fourth quarter, the Company will begin operation of a new one-line plant in Vung Tau, Vietnam as well as additional production lines in Olympia, Washington and Rio Verde, Brazil.  Beverage cans now account for approximately 75% of the Company's income from operations."

Interest expense was $68 million in the second quarter of 2021 compared to $73 million in 2020 primarily due to lower outstanding debt balances.

Net income attributable to Crown Holdings in the second quarter was $128 million compared to $126 million in the second quarter of 2020.  Reported diluted earnings per share were $0.95 in the second quarter of 2021 compared to $0.94 in 2020.  Adjusted diluted earnings per share increased to $2.14 over the $1.33 in 2020. 

A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.

Six Month Results
Net sales for the first six months of 2021 were $5,420 million compared to $4,443 million in the first six months of 2020, primarily due to increased sales unit volumes, the pass through of higher material costs and $177 million of favorable currency translation.

Income from operations was $712 million in the first half of 2021 compared to $426 million in the first half of 2020.  Segment income in the first half of 2021 was $764 million versus $515 million in the prior year period, primarily due to increased sales unit volumes and $24 of foreign currency translation.

Interest expense was $137 million for the first six months of 2021 compared to $151 million in 2020 primarily due to lower outstanding debt balances.

Net income attributable to Crown Holdings in the first six months of 2021 was $339 million compared to $214 million in the first six months of 2020.  Reported diluted earnings per share were $2.52 compared to $1.59 in 2020.  Adjusted diluted earnings per share were $3.97 compared to $2.46 in 2020.

Outlook
The Company currently expects third quarter adjusted earnings to be in the range of $1.90 to $2.00 per share, and full year adjusted earnings in the range of $7.30 to $7.40 per share.  These estimates include the results of the European Tinplate business through August 31, 2021.

Non-GAAP Measures
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 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 third quarter and full year of 2021 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 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.  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.

Conference Call
The Company will hold a conference call tomorrow, July 20, 2021 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 July 27.  The telephone numbers for the replay are 203-369-3272 or toll free 800-396-1242.

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 2021, including consumer preference for beverage cans and increasing global beverage can demand; future demand for food cans; the Company's ability to close the European Tinplate sale in the third quarter of 2021, or at all, and the impact of the transaction on the Company's earnings; 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, 2020 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.