Crown Holdings today announced its financial results for the first quarter ended March 31, 2014.
First Quarter Highlights
-Mivisa acquisition approved by European Commission
-Income per diluted share $0.17; Before Certain Items $0.57, an increase of 14%
-Global beverage can volumes grew 6%, driven by strong growth in Brazil and Asia Pacific
Net sales in the first quarter grew to $1,993 million over the $1,973 million in the first quarter of 2013, primarily driven by increased global beverage can sales unit volumes.
Segment income (a non-GAAP measure defined by the Company as gross profit excluding the timing impact of hedge ineffectiveness, less selling and administrative expense) increased to $200 million in the first quarter compared to $195 million in the first quarter of 2013 primarily due to the increase in beverage can sales.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We started off the year well and on target and look forward to a promising 2014. Global beverage can volumes were up 6%, which follows first quarter volume growth of 6% and 7% in 2013 and 2012, respectively.
The gains were driven primarily by strong shipments in Asia Pacific and Brazil. In order to meet continuing market growth and an increasing consumer preference for beverage cans in Brazil, we will begin commercial production this month at our new plant in Teresina.
In the European Beverage segment, first quarter year-on-year shipments rose 5% in continental Europe and the United Kingdom. Global food can shipments were 3% lower in the quarter compared to the first quarter of 2013.
"Earlier this week, the European Commission formally approved our pending acquisition of Mivisa Envases, SAU. We anticipate that the transaction will close on April 23, 2014. The acquisition of Mivisa will significantly build upon our existing position in the strategically important European food can segment by substantially increasing our presence in Spain, one of Europe's leading agricultural economies. We believe that adding this well-performing business to our broad network of food can operations in Europe will result in compelling benefits to both customers and shareholders."
Following the Mivisa acquisition closing, the Company will divest certain Crown and Mivisa operations as required by the Commission. In connection with the planned divestment of the Crown operations, the Company recorded charges in the first quarter to write down the value of the net assets to be sold.
The total impairment charge for the quarter was $42 million ($42 million, net of tax, or $0.30 per diluted share).
Net income attributable to Crown Holdings in the first quarter was $24 million, compared to $41 million in the first quarter of 2013. Reported earnings per diluted share were $0.17 in the first quarter of 2014 compared to $0.28 in the 2013 first quarter. Net income per diluted share before certain items was $0.57 compared to $0.50 in 2013.
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 regarding net income before certain items and 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.
