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Crown Holdings (CCK) Q3 Earnings Top Estimates, Ups '21 View

Crown Holdings, Inc. CCK reported third-quarter 2021 adjusted earnings per share of $2.03, outpacing the Zacks Consensus Estimate of $1.99. The bottom line not only improved 4% year over year but also surpassed the company’s guidance of earnings per share between $1.90 and $2.00. Strong performances in the North American beverage and food businesses, and the Transit Packaging business led to improved results. It helped offset global inflationary and supply chain pressures, and weakness in Asia Pacific stemming from lower volumes in Vietnam due to extensive lockdown measures in the country to stem the spread of COVID-19.

Including one-time items, earnings per share from continuing operations was $1.44 in the quarter under review compared with the prior-year quarter’s $1.10.

Net sales in the quarter totaled $2,920 million, up from the year-ago quarter’s $2,489 million. The top line benefited from increased beverage can and transit packaging sales unit volumes, and pass through of higher material costs. However, the reported figure missed the Zacks Consensus Estimate of $2,926 million.

Crown Holdings, Inc. Price, Consensus and EPS Surprise

Crown Holdings, Inc. price-consensus-eps-surprise-chart | Crown Holdings, Inc. Quote

Cost and Margins

Cost of products sold increased 21% year over year to $2,322 million. On a year-over-year basis, gross profit went up 6% to $598 million. Gross margin contracted 210 basis points to 20.5% from the year-ago quarter’s 22.6%.

Selling and administrative expenses flared up 12% year over year to $148 million. Segment operating income increased 3% year over year to $379 million during the quarter under review on higher sales volumes. Operating margin came in at 13.0% compared with 14.7% in the prior-year quarter.

Segment Performance

Net sales in the Americas Beverage segment totaled $1,151 million, up 20% year over year. Segment operating profit declined 1.6% year over year to $190 million.

The European Beverage segment’s sales were up 23% year over year to $513 million. Operating income remained flat year over year at $78 million.

The Asia-Pacific segment’s revenues were at $280 million, reflecting a 0.4% dip year over year. Operating profit declined 22% year over year to $32 million.

Revenues in the Transit Packaging segment totaled $644 million compared with the year-ago quarter’s $511 million. Operating profit climbed 15% year over year to $83 million.

Financial Update

Crown Holdings had cash and cash equivalents of $2,261 million at the end of third-quarter 2021, a significant improvement from $613 million at the end of year-ago quarter. The company generated $245 million cash from operating activities in the nine-month period ended Sep 30, 2021 compared with $309 million in the comparable period last year. As of Oct 22, the company repurchased $759 million of its shares.

Crown Holdings’ long-term debt decreased to $6,034 million as of Sep 30, 2021 from $8,039 million as of Sep 30, 2020.

Business Update

On Aug 31, Crown Holdings completed the sale of its European Tinplate business. In April, the company had entered into an agreement to divest the business to KPS Capital Partners, LP for €1.9 billion ($2.3 billion), while retaining 20% shareholding interest in the business. The Tinplate business consists of 44 manufacturing plants across 17 countries in Europe, the Middle East and Africa (EMEA). Crown Holdings expects to utilize net proceeds of the deal in reducing debt, funding beverage can capital projects and making share repurchases.


Crown Holdings projects fourth-quarter 2021 adjusted earnings per share between $1.50 and $1.55. For the ongoing year, the company now anticipates adjusted earnings per share in the range of $7.50 to $7.55, up from the prior guidance of $7.30 to $7.40.

Beverage can demand growth remains strong and the company is expected to benefit from this trend. Crown Holdings continues to implement several beverage-can capacity-expansion projects in a bid to meet the surging beverage-can demand. It is focused on the construction of new plants and the addition of production lines to its existing facilities.

Price Performance

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Crown Holdings’ shares have appreciated 15% over the past year compared with the industry’s growth of 7%.

Zacks Rank and Stocks to Consider

Crown Holdings currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include Nordson Corporation NDSN, Worthington Industries, Inc. WOR and DXP Enterprises, Inc. DXPE. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nordson has an anticipated earnings growth rate of 45.2% for fiscal 2021. The company’s shares have gained around 22%, year to date.

Worthington has an estimated earnings growth rate of 3.6% for fiscal 2022. Year to date, the company’s shares have risen 9.8%.

DXP Enterprises has a projected earnings growth rate of 77.6% for the current year. The stock has appreciated around 49%, so far this year.

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