Crown Holdings, Inc. (CCK) Earnings & Analysis

Latest quarter

Crown reported third-quarter revenue of $3.7 billion, above the consensus estimate of $3.4 billion. Adjusted earnings per share of $2.39 also exceeded the consensus of $2.25.

Revenue rose from $3.2 billion a year earlier. CFO Kevin Clothier said higher global beverage can shipments and the pass-through of higher material costs drove the increase, partly offset by unfavorable currency translation. CEO Timothy Donahue said North American beverage can volumes rose 6% and Brazilian volumes rose 4%, while Mexico declined about 1%.

Clothier said segment income fell to $484 million from $490 million as inflationary costs and lower transit packaging results offset higher beverage can shipments. Crown’s gross margin declined to 16.4% from 19.0%, while operating margin fell to 11.9% from 13.2%. Diluted earnings per share rose to $2.08 from $1.85. Crown reported quarterly free cash flow of $299.0 million, down from $491.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Timothy Donahue said global beverage can shipments advanced 6% in the quarter. He attributed European growth to a 7% increase across the continent, partly offset by a 4% decline in the Gulf States. In Asia Pacific, he said Southeast Asian volume gains helped offset higher energy and transport costs.

Donahue said transit packaging volumes and profits fell short of Crown’s prior expectations, with freight costs adding to the effect of lower volumes. Asked about the business, he said equipment quoting activity had picked up, but Crown needed firm orders before becoming more confident. He said equipment sales can lead to future tools and service business.

CFO Kevin Clothier said inflationary pressures related to the Middle East conflict reduced third-quarter segment income by approximately $17 million. Donahue said energy, industrial gas and freight costs remained above pre-conflict levels and that contractual recovery of those and other nonmetal costs would occur through a look-back formula in 2027. Asked about pricing, he said North American contracts would reprice mostly around April 1 and recapture much of the 2026 headwind.

Donahue said capacity projects in Greece and Spain remained on plan and Crown was installing a third line at its Peterborough plant in the UK. Asked about India, he said more than 90% of the new two-line beverage can plant was under contract and Crown was working to start it up to serve those commitments.

For the fourth quarter, Donahue said Crown had included another inflationary headwind and estimated global beverage can volume growth of 3.5% to 4%. Asked about 2027, he said North American capacity limits would determine whether growth was 2% or 4%, while it was too early to say where Asian income would come in.

Guidance

Clothier said Crown narrowed its full-year adjusted earnings per share range to $8.35 to $8.45 while keeping the midpoint unchanged. He also said Crown now expects adjusted free cash flow of at least $950 million, raising its previous expectation because working capital was performing better than originally expected.