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Crown Holdings (CCK) Q1 Earnings In Line, Sales Top Estimates

Zacks Equity Research

Crown Holdings, Inc. CCK recorded first-quarter 2019 adjusted earnings per share of $1.05, up 11.7% year over year. Earnings came in line with the Zacks Consensus Estimate.

On a reported basis, earnings per share increased 15% year over year to 77 cents in the quarter.

Net sales in the quarter climbed 25.4% year over year to $2,755 million, beating the Zacks Consensus Estimate of $2,750 million. This upside was driven by positive impact of the Signode acquisition, increased beverage and food can volumes, partly offset by unfavorable currency-translation impact of $100 million. Global beverage can volumes grew 3% year over year in the first quarter.

Cost and Margins

Cost of products sold rose 22.2% year over year to $2,210 million. On a year-over-year basis, gross profit surged 40% to $545 million and gross margin increased to 19.7% from 17.7% in the year-ago quarter.
 
Selling and administrative expenses flared up 74% year over year to $157 million. Segment operating income increased 28.5% year over year to $315 million in the reported quarter. Operating margin inched up to 11.4% from 11% reported in the year-ago quarter.

Crown Holdings, Inc. Price, Consensus and EPS Surprise

Crown Holdings, Inc. Price, Consensus and EPS Surprise | Crown Holdings, Inc. Quote

Segment Performance

Net sales in the Americas Beverage segment came in at $788 million, up 4% from the prior-year quarter’s tally of $758 million. Segment operating profit increased 15.3% year over year to $113 million.

The European Beverage segment’s sales fell 8.6% year over year to $339 million. Operating income dropped 29% year over year to $39 million.

Revenues in the European Food segment edged down 1.2% year over year to $423 million. Segment operating profit went down 14.3% year over year to $48 million from $56 million.

The Asia-Pacific segment revenues slipped 4.7% year over year to $321 million. Operating profit went up to $45 million from $44 million witnessed in the comparable period last year.

Revenues in the Transit Packaging segment totaled $569 million. Operating profit came in at $73 million.

Financial Update

Crown Holdings had cash and cash equivalents of $301 million at the end of the reported quarter compared with $2,201 million at the end of the prior-year quarter. The company reported cash used in operating activities of $666 million in the reported quarter compared with cash usage of $751 million recorded in the year-earlier period.

Adjusted free cash flow was $735 million in the reported quarter compared with the prior-year quarter’s $665 million. As of the quarter’s end, Crown Holdings’ long-term debt increased to $8,814 million from $7,778 million as of the year-ago quarter end.

During the reported quarter, Crown Holdings began operations on the third beverage can line at its existing plant in Phnom Penh, Cambodia, and started the second high-speed aluminum line at the new beverage can facility in Valencia, Spain. During the fourth quarter, this year, the company will commence operations in a one-line beverage can plant in Rio Verde, central Brazil.

Outlook

Crown Holdings maintained its adjusted earnings per share guidance of $5.20-$5.40 for 2019. Adjusted earnings per share for second-quarter 2019 are forecast in the range of $1.43-$1.53. Adjusted free cash flow guidance remained unchanged at $775 million for the year.

Share Price Performance

In the past year, Crown Holdings’ stock has appreciated around 17.5% compared with the industry’s 28.2% gain.



Zacks Rank and Stocks to Consider

Crown Holdings currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and DXP Enterprises, Inc. DXPE, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DMC Global has an estimated earnings growth rate of 77.3% for the ongoing year. The company’s shares have surged 128.6%, in the past year.

Lawson Products has an expected earnings growth rate of a whopping 102.5% for the current year. The stock has appreciated 33.4% in a year’s time.

DXP Enterprises has a projected earnings growth rate of 21.6% for 2019. The company’s shares have gained 21.4%, over the past year.

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