Crown Holdings' Earnings Beat in 1Q - Analyst Blog

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Crown Holdings Inc. ( CCK ) reported first-quarter adjusted earnings per share (EPS) of 50 cents, up 9% from 46 cents in the year-ago quarter and ahead of the Zacks Consensus Estimate of 48 cents. Including restructuring charges and loss from early extinguishment of debt, EPS stood at 28 cents in the quarter.

Total revenue inched up 1% on a year-over-year basis to $1.97 billion in the quarter but missed the Zacks Consensus Estimate of $2.02 billion. Global beverage can volumes were up 6% in the quarter, driven by strong growth in Brazil and Asia-Pacific.

Costs and Margins

Cost of sales increased 1% to $1.64 billion in the reported quarter. Gross profit improved 4% to $299 million in the quarter from $287 million in the prior-year quarter. Increase in beverage can sales and lower depreciation expense, somewhat offset by lower profits in the European Food segment, led to the overall increase. Gross margin expanded 50 basis points year over year to 15.2%.

Selling, engineering and administration expenses decreased 2% to $104 million in the quarter from $106 million in the prior-year quarter. Adjusted operating income increased 8% to $195 million from $181 million in the year-ago quarter. Operating margin expanded 60 basis points to 9.9% in the quarter.

Financial Position

As of Mar 31, 2013, cash and cash equivalents amounted to $304 million compared with $250 million as of Mar 31, 2012. Receivables increased to $1.16 billion as of Mar 31, 2013 compared with $1.07 billion as of Mar 31, 2012. Long-term debt remained flat year over year at $3.71 billion as of Mar 31, 2013. Cash flow from operating activities was usage of $432 million in the first quarter compared with usage of $389 in the prior-year quarter.

In Jan 2013, Crown Holdings issued $1.0 billion principal amount of 4.5% senior unsecured notes due 2023.  In connection with the issue, Crown Holdings redeemed its outstanding $400 million 7.625% senior notes due 2017 and repaid $500 million of indebtedness under its senior secured term loan facilities, and recognized a charge of $38 million for premiums paid and the write-off of deferred financing fees and unamortized discounts.

Other Updates

During the quarter, Crown Holdings commercialized its second beverage can lines in Putian, China and Bangi, Malaysia, both on time and budget.  Crown Holdings will be opening new beverage can plants in Danang, Vietnam and Bangkok, Thailand in the second quarter and will begin production at its new plant in Sihanoukville, Cambodia in the third quarter.  Crown Holdings has started constructing a new facility in the city of Teresina in northern Brazil and expects to begin commercial shipments early next year.

Philadelphia, Pa.-based Crown Holdings engages in the design, manufacture, and sale of packaging products for consumer marketing companies worldwide. The company's products include aluminum beverage cans and ends, and other packaging products to beverage and beer companies; food cans and ends, aerosol cans and ends as well as steel containers for food products.

The company currently retains a Zacks Rank #4 (Sell). Among Crown Holdings peers, Ball Corporation ( BLL ) and Silgan Holdings Inc. ( SLGN ) are expected to release their first-quarter results on Apr 24, while Mobile Mini, Inc. ( MINI ) is expected to announce its results on Apr 30.



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This article appears in: Investing , Business , Earnings , Stocks

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