Crown Holdings has announced its financial results for Q4 ended 31 December, 2022.

Q4 Results

Net sales in Q4 were $3,012 million compared to $3,054 million in Q4 of 2021 reflecting the pass through of higher raw material costs and increased beverage sales unit volumes, offset by lower volumes in the Transit Packaging businesses and unfavourable foreign currency translation of $92 million.

Income from operations was $229 million in Q4 compared to $303 million in Q4 of 2021.

Segment income in Q4 of 2022 was $292 million compared to $357 million in the prior year Q4 reflecting costs associated with higher inventory levels, lower cost absorption from planned inventory reductions and higher energy prices.

Commenting on the quarter, Timothy J. Donahue, chairman, president and chief executive officer, stated, “The operating environment remained challenging in Q4, as the impacts from inflation and higher interest rates adversely affected the company’s income performance.  Global beverage can shipments advanced 3% in the quarter with North America up modestly.

“Continued global volume growth across beverage cans coupled with the contractual recovery of raw material and other inflationary costs is expected to meaningfully improve segment income performance in 2023.  The Transit business is expected to benefit from a much lower cost structure, the result of a significant overhead reduction program and the non-recurrence of steel cost headwinds that affected 2022 performance.  

“Our measured approach to beverage can expansion remains on schedule to meet global customer demand.

“In the US, the first line of our new plant in Martinsville, Virginia began shipments to customers in November, and the second line will commence commercial production this month. In Mesquite, Nevada we expect to begin commercial production from line one in June and line two in October.

“Across Europe the company is adding much needed capacity to our system with high-speed production lines being added to facilities in Parma, Italy and Agoncillo, Spain with startups expected in March and May, respectively.

“Additionally, the previously announced relocation of beverage can operations to our new site in Peterborough, UK is underway with the first line expected to commence production late in Q2 and the second line in August.

“In North American Food, our capacity expansion has principally centred on expanding pet food can capacity with the third two-piece steel production line to the Owatonna, Minnesota plant completed in November.

“Additionally, the company is installing a pet food can line to the Dubuque, Iowa plant with operations expected to commence in Q3.”

Interest expense was $90 million in Q4 of 2022 compared to $50 million in 2021 reflecting higher outstanding debt and higher interest rates.

Net income attributable to Crown Holdings in Q4 was $89 million compared to a net loss of $1,001 million in Q4 of 2021.

Reported diluted earnings per share were $0.74 in Q4 of 2022 compared to a reported diluted loss per share of $7.95 in 2021.  Adjusted diluted earnings per share were $1.17 compared to $1.66 in 2021.

Full Year Results

Net sales for the full year of 2022 were $12,943 million compared to $11,394 million in 2021, primarily due to the pass through of higher raw material costs and increased beverage sales unit volumes, which more than offset unfavourable foreign currency translation of $372 million.

Income from operations was $1,336 million for the full year 2022 compared to $1,363 million in 2021.  Segment income for the full year 2022 was $1,443 million versus $1,500 million in the prior year period, primarily due to costs associated with higher inventory levels, higher energy prices and unfavourable foreign currency translation of $29 million.

Interest expense was $284 million for the full year 2022 compared to $253 million in 2021 primarily due to higher interest rates.

Net income attributable to Crown Holdings in 2022 was $727 million compared to a loss of $560 million in 2021.

Reported diluted earnings per share were $5.99 compared to a diluted loss per share of $4.30 in 2021 and adjusted diluted earnings per share were $6.75 compared to $7.66 in 2021.

The company repurchased $722 million, or 6.4 million shares of its common stock. The company has remaining board authorisation to repurchase an additional $2.3 billion through December 2024.

Since reinitiating the share repurchase program in 2021, Crown have now repurchased 15.3 million or 11% of its shares then outstanding.

The following supplemental information is provided below: a reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share and the impact of foreign currency translation.

Outlook

With improved results expected in each of our global beverage can businesses as well as in Transit Packaging, adjusted EBITDA is anticipated to grow in the range of 8-12% in 2023.

Crown currently estimates full year 2023 adjusted diluted earnings per share to be in the range of $6.20 to $6.40, including a $0.40 per diluted share year over year impact from additional noncash pension and postretirement.

As a result of higher average outstanding borrowings and higher interest rates, net interest expense is expected to be approximately $400 million in 2023, an increase of more than $130 million or $0.80 per diluted share compared to 2022.

The company expects the adjusted effective income tax rate to be between 24% and 25% compared to 23.6% in 2022 and adjusted free cash flow to be approximately $500 million after $900 million in capital expenditures.

Q1 adjusted diluted earnings per share is expected to be in the range of $1.00 to $1.10 which includes headwinds from higher interest and pension expense as well as the negative year on year impact from steel repricing.

Non-GAAP Measures

Segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share, net interest expense, EBITDA and adjusted EBITDA are not defined terms under US generally accepted accounting principles (non-GAAP measures).

Non-GAAP measures should not be considered in isolation or as a substitute for income from operations, net income, diluted earnings per share, effective tax rates, interest expense, interest income, cash flow or leverage ratio data prepared in accordance with US GAAP and may not be comparable to calculations of similarly titled measures by other companies.

Crown views segment income as the principal measure of the performance of its operations and adjusted free cash flow and adjusted net leverage ratio as the principal measure of its liquidity. The company considers all of these measures in the allocation of resources.