Crown Holdings, Inc. (CCK) Bundle
Understanding Crown Holdings, Inc. (CCK) Revenue Streams
Understanding Crown Holdings, Inc.’s Revenue Streams
The company generates revenue through various segments, primarily including:
- Americas Beverage
- European Beverage
- Asia Pacific
- Transit Packaging
- Other
Revenue Breakdown by Segment
| Segment | Three Months Ended September 30, 2024 (in millions) | Three Months Ended September 30, 2023 (in millions) | Nine Months Ended September 30, 2024 (in millions) | Nine Months Ended September 30, 2023 (in millions) |
|---|---|---|---|---|
| Americas Beverage | $ 1,368 | $ 1,295 | $ 3,915 | $ 3,848 |
| European Beverage | $ 573 | $ 536 | $ 1,615 | $ 1,547 |
| Asia Pacific | $ 284 | $ 307 | $ 853 | $ 977 |
| Transit Packaging | $ 526 | $ 554 | $ 1,596 | $ 1,715 |
| Other | $ 323 | $ 377 | $ 919 | $ 1,065 |
| Total Revenue | $ 3,074 | $ 3,069 | $ 8,898 | $ 9,152 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates for the segments are as follows:
- Americas Beverage: 5.6% increase in Q3 2024 compared to Q3 2023
- European Beverage: 6.9% increase in Q3 2024 compared to Q3 2023
- Asia Pacific: 7.5% decrease in Q3 2024 compared to Q3 2023
- Transit Packaging: 5.0% decrease in Q3 2024 compared to Q3 2023
- Other: 14.3% decrease in Q3 2024 compared to Q3 2023
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions to overall revenue were:
- Americas Beverage: 44%
- European Beverage: 18%
- Asia Pacific: 9%
- Transit Packaging: 18%
- Other: 10%
Significant Changes in Revenue Streams
Notable changes impacting revenue streams include:
- Decrease in shipments in the Asia Pacific segment by 11% for Q3 2024.
- Impact of lower aluminum costs, contributing to a $67 million reduction in revenue in the Americas Beverage segment.
- Transition in product mix and market demand leading to a 5% decrease in revenue from the Transit Packaging segment.
Overall, the total revenue for the nine months ended September 30, 2024 was $8,898 million, reflecting a 2.8% decrease from $9,152 million in the same period in 2023.
A Deep Dive into Crown Holdings, Inc. (CCK) Profitability
A Deep Dive into Crown Holdings, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 22.6%, compared to 21.7% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 12.0%, up from 11.0% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, was 1.7%, compared to 4.6% in the same period of 2023.
Trends in Profitability Over Time
Net income attributable to the company for the nine months ended September 30, 2024, was $66 million, a decrease from $418 million in 2023. The net income for the third quarter of 2024 was ($175 million), compared to $159 million in the third quarter of 2023.
| Period | Net Income (millions) | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|---|
| Q3 2023 | $159 | 21.7 | 11.0 | 4.6 |
| Q3 2024 | ($175) | 22.6 | 12.0 | 1.7 |
| 9M 2023 | $418 | 21.7 | 11.0 | 4.6 |
| 9M 2024 | $66 | 22.6 | 12.0 | 1.7 |
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin in the packaging industry is approximately 23%, indicating that the company's gross profit margin is slightly below industry averages. The operating profit margin industry average is around 10%, showing a competitive edge for the company.
Analysis of Operational Efficiency
The cost of products sold for the nine months ended September 30, 2024, was $7,009 million, compared to $7,301 million for the same period in 2023. Selling and administrative expenses increased to $450 million from $437 million.
Days sales outstanding for trade receivables decreased from 32 days in 2023 to 29 days in 2024. Inventory turnover decreased from 67 days to 60 days, reflecting better inventory management. Days outstanding for trade payables increased from 78 days to 93 days.
| Metric | 2023 | 2024 |
|---|---|---|
| Cost of Products Sold (millions) | $7,301 | $7,009 |
| Selling & Administrative Expense (millions) | $437 | $450 |
| Days Sales Outstanding | 32 | 29 |
| Inventory Turnover (days) | 67 | 60 |
| Days Outstanding for Trade Payables | 78 | 93 |
Debt vs. Equity: How Crown Holdings, Inc. (CCK) Finances Its Growth
Debt vs. Equity: How Crown Holdings, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total long-term debt of the company stood at $7,461 million, with $749 million classified as current maturities. This reflects a slight increase from $7,421 million in long-term debt as of December 31, 2023. The short-term debt was reported at $89 million as of September 30, 2024, compared to $16 million at the end of 2023.
| Debt Type | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Short-term Debt | $89 million | $16 million |
| Long-term Debt | $7,461 million | $7,421 million |
| Total Debt | $7,550 million | $7,437 million |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for the company is calculated at 2.38 as of September 30, 2024, based on total equity of $3,045 million. This is above the industry average, which typically ranges from 1.0 to 1.5, indicating a higher reliance on debt financing than many of its peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In August 2024, the company issued €600 million of 4.50% senior unsecured notes due 2030, using the proceeds to repay €600 million of 2.625% senior unsecured notes that were due in September 2024. The estimated fair value of the company’s debt was approximately $7,596 million as of September 30, 2024. The company maintains a credit rating of Baa3 from Moody’s and BBB- from S&P, reflecting moderate credit risk.
How the Company Balances Between Debt Financing and Equity Funding
The company utilizes both debt and equity to finance its operations and growth initiatives. During the nine months ended September 30, 2024, cash used for financing activities increased significantly to $260 million, primarily due to payments of long-term debt and stock repurchases. The company has also authorized a new share repurchase program of up to $2,000 million through the end of 2027, showing a commitment to returning value to shareholders while managing debt levels.
Assessing Crown Holdings, Inc. (CCK) Liquidity
Assessing Crown Holdings, Inc. Liquidity
Current and Quick Ratios
As of September 30, 2024, the company's current ratio was 1.63, indicating a solid liquidity position. The quick ratio, which excludes inventory from current assets, stood at 0.79.
Analysis of Working Capital Trends
Working capital increased to $1,070 million as of September 30, 2024, compared to $892 million in the previous year, reflecting improved operational efficiency and inventory management.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $897 million, up from $832 million in the same period in 2023. The breakdown is as follows:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $897 | $832 |
| Investing Activities | ($208) | ($520) |
| Financing Activities | ($260) | ($35) |
Investing activities saw a significant decrease in cash used, dropping from $520 million in 2023 to $208 million in 2024, primarily due to reduced capital expenditures. Financing activities, however, increased substantially to $260 million in 2024, up from $35 million in 2023, largely attributable to debt repayments and stock repurchase activities.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $1,738 million in cash and cash equivalents, with about $1,229 million held outside the U.S. The company's revolving credit facility had a capacity of $1,650 million, with available capacity of $1,613 million. The total net leverage ratio was reported at 2.9 to 1.0, well below the covenant limit of 4.5 to 1.0.
Overall, the company appears to maintain a strong liquidity position, with sufficient cash reserves and credit facilities to meet its short-term obligations and operational needs.
Is Crown Holdings, Inc. (CCK) Overvalued or Undervalued?
Valuation Analysis
To determine if the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio is currently 15.5. The industry average P/E ratio is approximately 18.0, suggesting that the company may be undervalued relative to its peers.
Price-to-Book (P/B) Ratio
The current P/B ratio stands at 2.0, while the industry average is around 2.5. This indicates a potential undervaluation when compared to the industry norm.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 11.0, compared to the industry average of 12.5. This suggests that the company is trading at a lower multiple than its industry peers.
Stock Price Trends
Over the last 12 months, the stock price has seen a decline from a high of $80 to a low of $55, with a current price of approximately $60. This represents a 25% decrease over the past year.
Dividend Yield and Payout Ratios
The company has a dividend yield of 1.5% with a payout ratio of 40%. The quarterly dividend was declared at $0.25 per share.
Analyst Consensus on Stock Valuation
According to the latest reports, analysts have a consensus rating of Hold, with 60% recommending Hold, 30% recommending Buy, and 10% recommending Sell.
| Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 15.5 | 18.0 |
| P/B Ratio | 2.0 | 2.5 |
| EV/EBITDA Ratio | 11.0 | 12.5 |
| Current Stock Price | $60 | |
| 12-Month Price High | $80 | |
| 12-Month Price Low | $55 | |
| Dividend Yield | 1.5% | |
| Payout Ratio | 40% | |
| Analyst Consensus | Hold |
Key Risks Facing Crown Holdings, Inc. (CCK)
Key Risks Facing Crown Holdings, Inc. (CCK)
Understanding the risk landscape is crucial for investors evaluating the financial health of Crown Holdings, Inc. The company faces a variety of internal and external risks that could impact its operations and financial performance.
Industry Competition
The competitive landscape in the packaging industry is intense, with numerous players vying for market share. As of September 30, 2024, net sales remained flat at $3,074 million, compared to $3,069 million in the same period of 2023. This stagnation reflects pressures from competitors and pricing strategies that may impact profitability.
Regulatory Changes
Regulatory changes, particularly those related to environmental standards and packaging requirements, pose significant risks. Effective January 1, 2024, various jurisdictions enacted the Pillar II directive, establishing a global minimum corporate tax rate of 15%. While the company does not expect a material impact on its financial results, ongoing regulatory scrutiny may lead to increased compliance costs.
Market Conditions
Market conditions have fluctuated due to varying consumer preferences and economic factors. For example, the company reported a $32 million decrease in aluminum costs and a $10 million unfavorable foreign currency translation impact during the first nine months of 2024. Additionally, the global beverage can market has faced challenges, with demand fluctuations affecting production volumes across regions.
Operational Risks
Operational risks include potential supply chain disruptions and inefficiencies in production. The company closed its food can plant in La Villa, Mexico, in 2024, which may lead to reduced capacity and increased costs. The operational adjustments from the closure are expected to be significant, with a $22 million gain recognized from equipment sales.
Financial Risks
Financial risks are exacerbated by high debt levels. As of September 30, 2024, total long-term debt stood at $7,461 million, with $750 million due within the current year. Interest expenses have also increased, with $119 million recorded for the quarter ending September 30, 2024, compared to $111 million in the previous year.
Strategic Risks
Strategic risks arise from the company's expansion and investment strategies. The company plans capital expenditures of no more than $450 million in 2024. However, the effectiveness of these investments in generating returns remains uncertain, particularly in light of recent operational restructurings and market conditions.
Mitigation Strategies
The company has outlined several strategies to mitigate these risks. For instance, by diversifying its product offerings and enhancing operational efficiency, it aims to navigate competitive pressures. Additionally, the company has taken steps to improve liquidity, with cash provided by operating activities increasing from $832 million in 2023 to $897 million in 2024.
Summary of Key Risks
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | High competition in packaging sector | Flat sales growth: $3,074M in 2024 |
| Regulatory Changes | New corporate tax rate of 15% | Potential compliance costs |
| Market Conditions | Fluctuating consumer demand | Decrease in aluminum costs: $32M |
| Operational Risks | Closure of La Villa plant | Expected cost increases |
| Financial Risks | High debt levels: $7,461M | Increased interest expenses: $119M |
| Strategic Risks | Uncertainty in investment returns | Capex plans: $450M in 2024 |
Future Growth Prospects for Crown Holdings, Inc. (CCK)
Future Growth Prospects for Crown Holdings, Inc.
Analysis of Key Growth Drivers
The company's growth opportunities are significantly driven by various factors including product innovations, market expansions, and strategic acquisitions. In 2023, a new greenfield facility was added in Mesquite, Nevada to support the increasing volume requirements in the U.S. and Canadian beverage can markets, which have seen growth due to new beverage products being introduced in cans.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue was reported at $8,898 million, slightly down from $9,152 million in the same period of 2023. Revenue recognized over time increased to $5,027 million from $4,968 million, while revenue recognized at a point in time decreased to $3,871 million from $4,184 million.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has actively pursued strategic initiatives, including the acquisition of Helvetia Packaging AG, which enhances its manufacturing capacity in Europe. The company is also focusing on improving manufacturing efficiencies and reducing costs across segments, which is expected to support profitability moving forward.
Competitive Advantages That Position the Company for Growth
The company's competitive advantages stem from its extensive manufacturing capabilities and a strong market presence in North America, Europe, and Asia Pacific. As of September 30, 2024, the Americas Beverage segment reported net sales of $3,915 million with segment income of $712 million, reflecting a significant increase compared to the previous year. The European Beverage segment also showed growth with net sales of $1,615 million and segment income of $225 million.
| Segment | Net Sales (2024) | Net Sales (2023) | Segment Income (2024) | Segment Income (2023) |
|---|---|---|---|---|
| Americas Beverage | $3,915 million | $3,848 million | $712 million | $621 million |
| European Beverage | $1,615 million | $1,547 million | $225 million | $181 million |
| Asia Pacific | $853 million | $977 million | $147 million | $107 million |
| Transit Packaging | $1,596 million | $1,715 million | $211 million | $256 million |
| Other | $919 million | $1,065 million | $49 million | $100 million |
Overall, the company's focus on strategic acquisitions and operational efficiencies, coupled with a strong market position, provides a solid foundation for future growth.
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Article updated on 8 Nov 2024
Resources:
- Crown Holdings, Inc. (CCK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Crown Holdings, Inc. (CCK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Crown Holdings, Inc. (CCK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.