Crown Holdings, Inc. (NYSE: CCK) today announced its financial results for the first quarter ended March 31, 2012.
First Quarter Highlights
-- Net sales rose 3.5%
-- Global beverage can volumes increased 7%
-- Income per diluted share of $0.46
-- New plant in Putian, China commercialized in first quarter
Net sales in the first quarter grew to $1,947 million over the $1,882 million in the first quarter of 2011, primarily driven by increased global beverage can sales unit volumes offset by $36 million from foreign currency translation.
First quarter gross profit was $287 million compared to $292 million in the 2011 first quarter, reflecting 2011 inventory holding gains that did not recur in 2012 and $4 million from unfavorable foreign currency translation, partially offset by increased global beverage can sales unit volumes.
Selling and administrative expenses were $106 million in the first quarter compared to $102 million in the prior year.
Segment income (a non-GAAP measure defined by the Company as gross profit less selling and administrative expense) was $181 million in the first quarter compared to $190 million in the first quarter of 2011 primarily due to 2011 inventory holding gains that did not recur and $2 million of unfavorable foreign currency translation.
Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "I am pleased to report that 2012 has started well and on target. Beverage can volumes were up 7% on top of a 6% increase in the first quarter last year, primarily driven by improved volumes in Europe and from recent capacity expansion projects and strong demand in Brazil, Southeast Asia and China. Our North American Food can business enjoyed increased volumes over the same period last year while our European three-piece steel packaging businesses were impacted by the economic uncertainties in Europe.
"Our pipeline of emerging market growth projects for beverage cans remains robust and exciting. During the first quarter, our new plant in Putian, China was commercialized and is on its scheduled learning curve. During the second quarter we expect to begin production at our new plant in Ziyang, China as well as complete the expansion of our plant in Ho Chi Minh City, Vietnam. We expect to commence commercial operations at new plants in Osmaniye, Turkey in the second quarter and Heshan, China in the third quarter.
"Demand for our products is being driven by a growing middle class and increasing disposable income in these markets. We continue to closely monitor demand and trends in all of our markets and are committed to conservative deployment of capital," Mr. Conway added.
Interest expense in the first quarter was $58 million compared to $56 million in the first quarter of 2011. The increase primarily reflects the impact of higher average debt outstanding.
Net income attributable to Crown Holdings in the first quarter was $69 million, compared to $16 million in the first quarter of 2011. Earnings per diluted share were $0.46 in the first quarter of 2012 compared to $0.10 in 2011. Net income per diluted share before certain items was $0.46 compared to $0.48 in 2011.
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 can be used to evaluate 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.
