³Ô¹Ï51±¬ÁÏÍø Holdings, Inc. Reports First Quarter 2023 Results
Net sales in the first quarter were
Income from operations was
Commenting on the quarter,
"Volumes in Americas Beverage were up 6% during the quarter with
"Our strategy from 2019 has been to responsibly deploy capital into our global beverage can operations to profitably expand production capacity in support of growing customer demand. As we near completion of the multi-year beverage can expansion program, we will remain keenly focused on supporting customers' needs from our global platform and will use expected increasing cash flow to pay down debt and return capital to shareholders. In the near term, consumer demand may continue to be impacted by inflationary pressures; however, we believe the beverage can remains the preferred package for new product launches with unmatched sustainability benefits."
Interest expense was
Net income attributable to
In the first quarter of 2023, the Company received an
Outlook
We continue to expect full year improved operating results in global beverage as well as in
We affirm our previously issued guidance including adjusted annual EBITDA growth of 8-12% and 2023 adjusted diluted earnings per share to be in the range of
Second quarter adjusted diluted earnings per share is expected to be in the range of
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
The Company 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 measures of its liquidity. The Company considers all of these measures in the allocation of resources. Adjusted 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 adjusted free cash flow and adjusted net leverage ratio provide meaningful measures of liquidity and a useful basis for assessing the Company's ability to fund its activities, including the financing of acquisitions, debt repayments, share repurchases or dividends. The Company believes that adjusted net income, the adjusted effective tax rate and adjusted diluted earnings per share are useful in evaluating the Company's operations as these measures are adjusted for items that affect comparability between periods. 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 derived from the Company's Consolidated Statements of Operations, Cash Flows and Consolidated Balance Sheets, as applicable, and reconciliations to segment income, adjusted free cash flow, adjusted net leverage ratio, adjusted net income, the adjusted effective tax rate, adjusted diluted earnings per share and adjusted EBITDA can be found within this release. Reconciliations of estimated adjusted diluted earnings per share for the second quarter and full year of 2023 to estimated diluted earnings per share on a GAAP basis are not provided in this release due to the unavailability of estimates of the following, the timing and magnitude of which the Company is unable to reliably forecast without unreasonable efforts, which are excluded from estimated adjusted diluted earnings per share and could have a significant impact on earnings per share on a GAAP basis: gains or losses on the sale of businesses or other assets, restructuring and other costs, asset impairment charges, asbestos-related charges, losses from early extinguishment of debt, pension settlement and curtailment charges, the tax and noncontrolling interest impact of the items above, and the impact of tax law changes or other tax matters. We have not provided a reconciliation of the range of anticipated growth of projected adjusted EBITDA to the most comparable GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including restructuring and other charges which are event-driven.
Conference Call
The Company will hold a conference call tomorrow,
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements. These forward-looking statements involve a number of risks, uncertainties and other factors, including the Company's ability to continue to operate its plants, distribute its products, and maintain its supply chain; the future impact of currency translation; the continuation of performance and market trends in 2023, including consumer preference for beverage cans and increasing global beverage can demand; the future impact of inflation, including the potential for higher interest rates and energy prices and the Company's ability to recover raw material and other inflationary costs; future demand for food cans; the Company's ability to successfully complete its previously announced capacity expansion projects and begin production within expected timelines; and the impact of overhead reduction efforts in the
For more information, contact:
Unaudited Consolidated Statements of Operations, Balance Sheets, Statements of Cash Flows, Segment Information and Supplemental Data follow.
Consolidated Statements of Operations (Unaudited) |
|||||
Three Months Ended |
|||||
2023 |
2022 |
||||
Net sales |
$ 2,974 |
$ 3,162 |
|||
Cost of products sold |
2,411 |
2,547 |
|||
Depreciation and amortization |
123 |
115 |
|||
Selling and administrative expense |
160 |
157 |
|||
Restructuring and other |
11 |
(1) |
|||
Income from operations (1) |
269 |
344 |
|||
Other pension and postretirement |
11 |
(4) |
|||
Foreign exchange |
4 |
(10) |
|||
Earnings before interest and taxes |
254 |
358 |
|||
Interest expense |
102 |
54 |
|||
Interest income |
(9) |
(3) |
|||
Income from operations before income taxes |
161 |
307 |
|||
Provision for income taxes |
42 |
78 |
|||
Equity earnings |
3 |
17 |
|||
Net income |
122 |
246 |
|||
Net income attributable to noncontrolling interests |
20 |
30 |
|||
Net income attributable to |
$ 102 |
$ 216 |
|||
Earnings per share attributable to common shareholders: |
|||||
Basic |
$ 0.86 |
$ 1.75 |
|||
Diluted |
$ 0.85 |
$ 1.74 |
|||
Weighted average common shares outstanding: |
|||||
Basic |
119,238,117 |
123,644,811 |
|||
Diluted |
119,643,244 |
124,430,160 |
|||
Actual common shares outstanding at quarter end |
120,101,710 |
123,362,113 |
|||
(1) |
Reconciliation from income from operations to segment income follows. |
Consolidated Supplemental Financial Data (Unaudited) |
||||||
Reconciliation from Income from Operations to Segment Income |
||||||
Three Months Ended |
||||||
2023 |
2022 |
|||||
Income from operations |
$ |
269 |
$ |
344 |
||
Intangibles amortization |
40 |
40 |
||||
Restructuring and other |
11 |
(1) |
||||
Segment income |
$ |
320 |
$ |
383 |
||
Segment Information |
||||||
|
Three Months Ended |
|||||
2023 |
2022 |
|||||
Americas Beverage |
$ |
1,261 |
$ |
1,226 |
||
European Beverage |
479 |
510 |
||||
|
338 |
413 |
||||
|
564 |
657 |
||||
Other (1) |
332 |
356 |
||||
Total net sales |
$ |
2,974 |
$ |
3,162 |
||
Segment Income |
||||||
Americas Beverage |
$ |
178 |
$ |
164 |
||
European Beverage |
45 |
53 |
||||
|
36 |
53 |
||||
|
78 |
61 |
||||
Other (1) |
27 |
94 |
||||
Corporate and other unallocated items |
(44) |
(42) |
||||
Total segment income |
$ |
320 |
$ |
383 |
(1) |
Includes the Company's food can, aerosol can and closures businesses in |
Consolidated Supplemental Data (Unaudited) |
||||||||||||||
Reconciliation from Net Income and Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted |
||||||||||||||
The following table reconciles reported net income and diluted earnings per share attributable to the Company to adjusted |
||||||||||||||
Three Months Ended |
||||||||||||||
2023 |
2022 |
|||||||||||||
Net income/diluted earnings per share attributable to |
$ |
102 |
$ |
0.85 |
$ |
216 |
$ |
1.74 |
||||||
Intangibles amortization (1) |
40 |
0.33 |
40 |
0.32 |
||||||||||
Restructuring and other (2) |
11 |
0.09 |
(1) |
(0.01) |
||||||||||
Income taxes (3) |
(12) |
(0.10) |
(7) |
(0.06) |
||||||||||
Equity earnings (4) |
3 |
0.03 |
2 |
0.02 |
||||||||||
Adjusted net income/diluted earnings per share |
$ |
144 |
$ |
1.20 |
$ |
250 |
$ |
2.01 |
||||||
Effective tax rate as reported |
26.1 % |
25.4 % |
||||||||||||
Adjusted effective tax rate |
25.5 % |
24.6 % |
||||||||||||
Adjusted net income, adjusted diluted earnings per share and the adjusted effective tax rate are non-GAAP measures and are not meant to be considered in isolation or as a substitute for net income, diluted earnings per share and effective tax rates determined in accordance with
(1) |
In the first quarters of 2023 and 2022, the Company recorded charges of |
(2) |
In the first quarter of 2023, the Company recorded net restructuring and other charges of |
(3) |
The Company recorded income tax benefits of |
(4) |
In the first quarters of 2023 and 2022, the Company recorded its proportional share of intangible amortization, net of tax, recorded by its equity method investment, Eviosys, in the line Equity earnings. |
Consolidated Balance Sheets (Condensed & Unaudited) (in millions) |
||||||||
|
2023 |
2022 |
||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
403 |
$ |
389 |
||||
Receivables, net |
1,957 |
2,170 |
||||||
Inventories |
2,058 |
2,063 |
||||||
Prepaid expenses and other current assets |
244 |
341 |
||||||
Current assets held for sale |
99 |
|||||||
Total current assets |
4,662 |
5,062 |
||||||
|
4,339 |
4,483 |
||||||
Property, plant and equipment, net |
4,704 |
4,083 |
||||||
Other non-current assets |
707 |
802 |
||||||
Total assets |
$ |
14,412 |
$ |
14,430 |
||||
Liabilities and equity |
||||||||
Current liabilities |
||||||||
Short-term debt |
$ |
163 |
$ |
96 |
||||
Current maturities of long-term debt |
124 |
1,137 |
||||||
Accounts payable and accrued liabilities |
3,289 |
3,856 |
||||||
Current liabilities held for sale |
17 |
|||||||
Total current liabilities |
3,576 |
5,106 |
||||||
Long-term debt, excluding current maturities |
7,046 |
5,654 |
||||||
Other non-current liabilities |
1,308 |
1,410 |
||||||
Noncontrolling interests |
452 |
440 |
||||||
|
2,030 |
1,820 |
||||||
Total equity |
2,482 |
2,260 |
||||||
Total liabilities and equity |
$ |
14,412 |
$ |
14,430 |
||||
Consolidated Statements of Cash Flows (Condensed & Unaudited) (in millions) |
||||||||||
Three months ended |
2023 |
2022 |
||||||||
Cash flows from operating activities |
||||||||||
Net income |
$ |
122 |
$ |
246 |
||||||
Depreciation and amortization |
123 |
115 |
||||||||
Restructuring and other |
11 |
(1) |
||||||||
Pension expense |
15 |
8 |
||||||||
Pension contributions |
1 |
20 |
||||||||
Stock-based compensation |
11 |
10 |
||||||||
Working capital changes and other (3) |
(518) |
(699) |
||||||||
Net cash used for operating activities (1) |
(235) |
(301) |
||||||||
Cash flows from investing activities |
||||||||||
Capital expenditures |
(233) |
(117) |
||||||||
Acquisitions and divestitures |
(18) |
|||||||||
Eviosys distribution (3) |
56 |
|||||||||
Other |
16 |
18 |
||||||||
Net cash used for investing activities |
(161) |
(117) |
||||||||
Cash flows from financing activities |
||||||||||
Net change in debt |
307 |
717 |
||||||||
Dividends paid to shareholders |
(29) |
(27) |
||||||||
Common stock repurchased |
(6) |
(350) |
||||||||
Dividends paid to noncontrolling interests |
(11) |
(11) |
||||||||
Other, net |
1 |
(8) |
||||||||
Net cash provided by financing activities |
262 |
321 |
||||||||
Effect of exchange rate changes on cash and cash equivalents |
(3) |
(36) |
||||||||
Net change in cash and cash equivalents |
(137) |
(133) |
||||||||
Cash and cash equivalents at |
639 |
593 |
||||||||
Cash, cash equivalents and restricted cash at |
$ |
502 |
$ |
460 |
||||||
(1) |
Adjusted free cash flow is defined by the Company as net cash from operating activities less capital expenditures and certain other items. |
(2) |
Cash and cash equivalents include |
(3) |
Working capital changes and other includes |
Three Months Ended |
|||||||||
2023 |
2022 |
||||||||
Net cash used for operating activities |
$ |
(235) |
$ |
(301) |
|||||
|
(1) |
(24) |
|||||||
Interest included in investing activities (5) |
13 |
13 |
|||||||
Capital expenditures |
(233) |
(117) |
|||||||
Insurance receivable (6) |
(23) |
||||||||
Adjusted free cash flow |
$ |
(479) |
$ |
(429) |
(4) |
In |
(5) |
Interest benefit of cross currency swaps included in investing activities. |
(6) |
Insurance proceeds received in the first quarter of 2023 related to the |
Consolidated Supplemental Data (Unaudited) |
|||||||
Impact of Foreign Currency Translation – Favorable/(Unfavorable) (1) |
|||||||
Three Months Ended |
|||||||
|
Segment |
||||||
Americas Beverage |
$ |
10 |
$ |
(1) |
|||
European Beverage |
(21) |
(1) |
|||||
|
(6) |
||||||
|
(17) |
(2) |
|||||
Corporate and other |
(2) |
(1) |
|||||
$ |
(36) |
$ |
(5) |
(1) |
The impact of foreign currency translation represents the difference between actual current year |
Reconciliation of Adjusted EBITDA and Adjusted Net Leverage Ratio |
||||||||||||
Twelve Months |
||||||||||||
Q1 2023 |
Q1 2022 |
Full Year 2022 |
|
|||||||||
Income from operations |
$ |
269 |
$ |
344 |
$ |
1,336 |
$ |
1,261 |
||||
Add: |
||||||||||||
Intangibles amortization |
40 |
40 |
159 |
159 |
||||||||
Restructuring and other |
11 |
(1) |
(52) |
(40) |
||||||||
Segment income |
320 |
383 |
1,443 |
1,380 |
||||||||
Depreciation |
83 |
75 |
301 |
309 |
||||||||
Adjusted EBITDA |
$ |
403 |
$ |
458 |
$ |
1,744 |
$ |
1,689 |
||||
Total debt |
$ |
6,977 |
$ |
7,333 |
||||||||
Less cash |
550 |
403 |
||||||||||
Net debt |
$ |
6,427 |
$ |
6,930 |
||||||||
Adjusted net leverage ratio |
3.7x |
4.1x |
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