Crown Holdings Inc. (NYSE:) reported first-quarter 2017 adjusted earnings per share of 72 cents, which came ahead of the Zacks Consensus Estimate of 70 cents and inched up 3% year over year. Earnings came within management’s guidance of 65–75 cents.
On a reported basis, earnings came in at 77 cents per share, up 35% from 57 cents in the prior-year quarter.
Net sales in the quarter edged up 0.4% year over year to $1,901 million. Revenues beat the Zacks Consensus Estimate of $1,888 million. Improved beverage, food and aerosol can volumes, and the pass through of higher material costs to customers were partially offset by negative impact of currency translation.
Cost of products sold remained flat year over year at $1,519 million. On a year-over-year basis, gross profit rose 3% to $382 million, while gross margin expanding 40 basis points (bps) to 20.1% in the quarter.
Selling and administrative expenses declined 1% year over year to $90 million. Adjusted segment operating income improved 5% year over year to $233 million in the quarter. Operating margin expanded 60 bps to 12.3% from 11.7% 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 from the Americas Beverage segment were $674 million, down 2% from $688 million in the year-ago quarter. Segment operating profit dipped 2% to $105 million from $107 million in the year-ago quarter.
The North-America Food segment’s sales went down 0.6% year over year to $153 million. Operating earnings remained flat year over year at $16 million.
The European Beverage segment’s sales dropped 4% year over year to $303 million. However, operating income declined 5% year over year to $39 million.
Revenues in the European Food segment were down 4% year over year to $396 million. Segment operating profit went down 2% to $51 million from $52 million in the year-ago quarter.
Revenues in the Asia-Pacific segment decreased 1% year over year to $278 million. Operating profit remained flat at $39 million in the reported quarter.
Financial Update
Crown Holdings had cash and cash equivalents of $338 million at the end of the first quarter compared with $257 million at the end of the prior-year quarter. Cash used in operations was $320 million in the quarter compared with $408 million in the prior-year quarter. Adjusted free cash flow was $427 million in first-quarter 2017 with $437 million in the prior-year quarter. As of the quarter end, Crown Holdings’ total debt fell to $5.3 billion from $5.6 billion as of the prior-year quarter end.
Crown Holdings repurchased $133 million of shares in the quarter followed by an additional $60 million in April.
Outlook
The Company currently expects 2017 adjusted diluted earnings per share to be in the range of $3.80–$4.00. Adjusted diluted earnings per share for the second quarter are projected in the range of $1.05–$1.15.
In the past one year, Crown Holdings has underperformed the Zacks categorized Containers- Metal/ Glass sub industry. The company’s shares increased 3%, while the industry gained 7.4%.
Zacks Rank & Key Picks
Crown Holdings currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Altra Industrial Motion Corp. (NASDAQ:) , DXP Enterprises, Inc. (HN:) and Graco Inc. (NYSE:) . All three of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion generated a positive average earnings surprise of 12.49% in the trailing four quarters. DXP Enterprises has delivered an average positive earnings surprise of 50.37% in the last four quarters. Graco has delivered an average positive earnings surprise of 2.21% in the past four quarters.
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