Crown Holdings, Inc. (CCK) is a leading global manufacturer of metal packaging products, including beverage cans, food cans, and specialty containers. With a rich history spanning over a century, Crown Holdings has established itself as a trusted name in the packaging industry, renowned for its innovative solutions and commitment to sustainability.
Company History and Evolution
Founded in 1892 as the Crown Cork & Seal Company, the company began its journey by producing the first commercially successful bottle cap. Over the decades, Crown Holdings has evolved, diversifying its product portfolio and expanding its global footprint to become a global packaging powerhouse. Today, the company operates in over 40 countries, serving a diverse customer base across the beverage, food, aerosol, and industrial sectors.
In 1963, Crown Cork & Seal Company, the predecessor to Crown Holdings, acquired a U.S. company involved in the insulation business. This acquisition would later lead to significant asbestos-related liabilities for the company. In the late 1990s and early 2000s, Crown Cork faced a substantial number of lawsuits filed by people alleging bodily injury as a result of exposure to asbestos. The company has worked to manage these asbestos-related liabilities over the years. Throughout the 2000s, Crown Holdings continued to expand its global footprint, making acquisitions and opening new facilities around the world to meet the growing demand for metal packaging. The company successfully weathered the global financial crisis of 2008-2009 and has since delivered strong financial performance, driven by growth in its beverage can business.
Financials
Crown Holdings' financial performance has been consistently strong, showcasing its ability to navigate challenging market conditions. In the most recent quarter, the company reported revenue of $2,903 million and net income of $358 million. Operating cash flow for the quarter was $295 million, with free cash flow of $146 million. These figures represent year-over-year growth, driven by higher beverage can shipments in the Americas and European Beverage segments, partially offset by lower shipments in Asia Pacific, Transit Packaging, and Other segments.
For the full year 2024, Crown Holdings delivered record adjusted EBITDA of $1.942 billion, compared to $1.882 billion in 2023. The company generated $814 million of free cash flow in 2024 after contributing $100 million to annuitize the US and Canadian pension plans and making a $50 million tax payment related to the Eviosus sale.
Looking ahead, Crown Holdings has provided guidance for Q1 2025 with adjusted EPS in the range of $1.20 to $1.30 per share. For the full year 2025, the company expects adjusted EPS to be in the range of $6.60 to $7.00 per share. Crown Holdings estimates full-year 2025 adjusted free cash flow to be approximately $800 million after $450 million of capital spending.
Strategic Focus on Sustainability
One of the key drivers of Crown Holdings' success has been its focus on the growing demand for sustainable packaging solutions. The company has made significant investments in research and development to develop innovative can designs and production processes that minimize environmental impact. This strategic emphasis on sustainability has positioned Crown Holdings as a preferred partner for customers seeking eco-friendly packaging options.
Resilience Amid Challenges
Despite the challenges posed by the COVID-19 pandemic and global supply chain disruptions, Crown Holdings has demonstrated its resilience and adaptability. The company's diverse product portfolio and geographic reach have helped it weather the storm, with strong performance in its beverage can business offsetting temporary softness in other segments.
Future Outlook
Looking ahead, Crown Holdings remains well-positioned for continued growth. The company's guidance for the upcoming fiscal year projects adjusted earnings per share in the range of $6.60 to $7.00, reflecting its confidence in the underlying strength of its business. Additionally, the company plans to return approximately $550 million to $600 million to shareholders through a combination of debt reduction and share repurchases, further enhancing shareholder value.
Liquidity
Crown Holdings maintains a strong liquidity position. As of September 30, 2024, the company had cash of $1,740 million. The company has revolving credit facilities providing capacity of $1,650 million, of which $1,610 million was available as of September 30, 2024. The current ratio stands at 1.21, while the quick ratio is 0.80. Crown Holdings expects net leverage to be closer to their targeted ratio of 2.5 times by the end of 2025.
Shareholder Returns
Crown Holdings' strong financial position allows it to return value to shareholders while maintaining a healthy balance sheet. The company's planned return of $550 million to $600 million to shareholders demonstrates its commitment to creating value for investors.
Product Segments and Geographic Performance
Crown Holdings operates across several key product segments:
The Americas Beverage segment manufactures aluminum beverage cans and ends, steel crowns, glass bottles, and aluminum closures, supplying a variety of customers from operations in the U.S., Brazil, Canada, Colombia, and Mexico. This segment has benefited from growth in the U.S. and Canadian beverage can markets due to the introduction of new beverage products in cans versus other packaging formats. In Brazil and Mexico, the company's volumes have increased in recent years primarily due to market growth driven by increased per capita incomes and a preference for cans over other beverage packaging. To meet the growing demand in these markets, the company added a new greenfield facility in Mesquite, Nevada in 2023. The Americas Beverage segment reported an 8% increase in segment income in the fourth quarter.
The European Beverage segment manufactures aluminum beverage cans and ends, supplying customers throughout Europe, the Middle East, and North Africa. The European beverage can market has also been growing in recent years due to a shift towards cans versus other packaging formats. To address this demand, the company added additional line capacity in Agoncillo, Spain, a new greenfield facility in Peterborough, U.K., and acquired a beverage can and end manufacturing facility in Saarlouis, Germany in 2023. The European Beverage segment saw an 8% increase in volumes in the fourth quarter.
The Asia Pacific segment consists of beverage can operations in several countries in Southeast Asia, as well as non-beverage can operations like food cans and specialty packaging. Growth in the beverage can market in Southeast Asia has historically been driven by increased per capita incomes and consumption, along with a preference for cans over other packaging. However, the segment experienced volume softness across the region in 2023 as it continued to struggle with the effects of higher inflation and interest rates. The company also announced the closure of beverage can facilities in Vietnam and Singapore, with capacity relocated to its facility in Vung Tau, Vietnam. Despite these challenges, the Asia Pacific segment remained resilient, with a 27% increase in full year segment income.
The Transit Packaging segment includes the company's worldwide automation and equipment technologies, protective packaging solutions, and steel and plastic consumables. This segment experienced decreases in net sales and segment income for both the three and nine month periods ended September 30, 2024 compared to the prior year, primarily related to lower volumes across most product lines and margin compression due to lower selling prices, partially offset by improved cost performance.
The company's "Other" segment includes its food can, aerosol can, and closures businesses in North America, as well as its beverage tooling and equipment operations in the U.S. and U.K. This segment saw decreases in both net sales and segment income, driven by lower volumes in the equipment, aerosol can, and Mexico food can businesses, as well as the pass-through of lower steel costs.
In conclusion, Crown Holdings' long-standing industry leadership, commitment to innovation, and focus on sustainability make it a compelling investment opportunity in the packaging sector. With a strong financial foundation, diversified product portfolio, and strategic initiatives to drive growth, Crown Holdings is poised to continue its trajectory as a dominant player in the global packaging market. The company's ability to adapt to changing market conditions, its strong performance in key beverage can markets, and its clear guidance for future growth underscore its position as a resilient leader in the global packaging industry.