Crown Holdings (CCK) Top Q1 Earnings and Sales Estimates, Up Year-over-Year

Crown Holdings, Inc. CCK reported first-quarter 2022 adjusted earnings per share (EPS) of $2.01, beating Zacks’ consensus estimate of $1.82. Net income increased 9.8% year over year and beat EPS guidance by $1.80 to $1.90.

Including one-time items, the company reported earnings of $1.74 per share in the quarter under review, compared to $1.57 per share in the first quarter of 2021.

Net sales for the quarter totaled $3,162 million, up from $2,564 million in the prior year quarter. Sales benefited from higher beverage unit volumes and the impact of higher material costs. The reported figure exceeded Zacks’ consensus estimate of $3,011 million.

Cost and margins

Cost of goods sold increased 29% year over year to $2,547 million. On an annual basis, gross profit increased 6% to $615 million. Gross margin contracted to 19.4% from 22.6% in the prior year quarter.

Selling and administrative expenses increased 9.8% year over year to $157 million. Segment operating profit was $383 million in the quarter under review, compared with $369 million in the prior year quarter. The operating margin was 12.1% compared to 14.4% in the prior year quarter.

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

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

Sector performance

Americas Beverage segment net sales totaled $1,226 million, up 23% year-over-year. Segment operating profit fell 13% year-over-year to $164 million.

Sales in the European beverage segment increased 31% year-over-year to $510 million. Operating profit was $53 million compared to $62 million in the prior year quarter.

Asia Pacific segment revenue totaled $413 million, up 25% year-over-year. Operating profit was $53 million compared to $52 million in the prior year quarter.

Transit Packaging segment revenue totaled $657 million compared to $557 million in the prior year quarter. Operating profit fell 13% year-over-year to $61 million.

Financial update

Crown Holdings had cash and cash equivalents of $389 million at the end of the first quarter of 2022, compared to $588 million at the end of the year-ago quarter. The company used $301 million of cash in operating activities in the first quarter, compared with $385 million in the year-ago quarter.

Crown Holdings’ long-term debt decreased to $5,654 million as of March 31, 2022, from $7,875 million as of March 31, 2021.

Company Update

During the quarter, Crown Holdings reached an agreement to sell the Kiwiplan business of the Transit Packaging segment for $182 million. The agreement is expected to close during the second quarter of 2022. The company expects to record an after-tax gain of approximately $100 million related to the transaction with net proceeds, after tax and other transaction-related costs, which should be used for debt reduction. , finance investment projects and buy back shares over time.

Outlook

Crown Holdings forecasts adjusted EPS for the second quarter of 2022 between $2.00 and $2.10. For the current year, the company expects adjusted EPS in the range of $8.00 to $8.20.

Beverage demand growth remains strong and the company should benefit from this trend. Crown Holdings continues to implement several beverage can capacity expansion projects to meet growing demand. The company is focused on building new factories and adding production lines to its existing facilities.

Price performance

Shares of Crown Holdings are down 1.3% over the past year compared to the industry’s 1.3% plunge.

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Zacks Ranking and Stocks to Consider

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

Some higher ranked stocks in the industrials sector are Alcoa YY, Packing Company of America PKG and Greif Inc. EMF. While AA and PKG carry a Zacks rank #1 (strong buy), GEF carries a Zacks rank #2 (buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Alcoa forecasts a profit growth rate of 107% for the current year. The Zacks consensus estimate for 2022 revenue has moved north 76% in the past 60 days.

Alcoa delivered a four-quarter earnings surprise of 17.4% on average. Alcoa shares have jumped 81% over the past year.

Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. Zacks’ consensus estimate for current-year earnings is up 4.2% over the past 60 days.

PKG has a surprise on earnings for the last four quarters of 19.6% on average. Packaging Corporation shares have gained 9.7% over the past year.

Greif has an estimated earnings growth rate of 16% for fiscal 2022. In the past 60 days, Zacks’ consensus estimate for current-year earnings has been revised up by 4, 2%.

GEF has realized a surprise on the profits of the last four quarters of 14.7% on average. The company’s shares appreciated 5% in one year.

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