Crown Holdings(CCK) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion, market risk disclosures, and controls and procedures Item 1. Financial Statements Financial statements for Q2 2025 show increased net sales, net income, and improved operating cash flow Consolidated Statements of Operations This statement details the company's revenues, operating income, and net income for the reported periods Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $3,149 | $3,040 | $6,036 | $5,824 | | Income from operations | $391 | $379 | $756 | $624 | | Net income attributable to Crown Holdings | $181 | $174 | $374 | $241 | | Diluted Earnings per share | $1.56 | $1.45 | $3.21 | $2.01 | Consolidated Statements of Comprehensive Income This statement presents net income and other comprehensive income components, leading to total comprehensive income Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $216 | $207 | $443 | $300 | | Total other comprehensive income / (loss) | $43 | $(114) | $8 | $(101) | | Total comprehensive income | $259 | $93 | $451 | $199 | | Comprehensive income attributable to Crown Holdings | $222 | $60 | $380 | $143 | Consolidated Balance Sheets (Condensed) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $4,652 | $4,211 | | Total assets | $14,478 | $13,848 | | Total current liabilities | $4,373 | $3,465 | | Total long-term debt | $5,618 | $6,058 | | Total equity | $3,372 | $3,228 | | Total liabilities and equity | $14,478 | $13,848 | Consolidated Statements of Cash Flows (Condensed) This statement summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $463 | $343 | | Net cash used for investing activities | $(44) | $(143) | | Net cash used for financing activities | $(427) | $(70) | | Net change in cash, cash equivalents and restricted cash | $22 | $111 | Notes to Condensed Consolidated Financial Statements These notes provide additional details and explanations for the condensed consolidated financial statements - The company recorded restructuring charges of $47 million in Q2 2025, primarily from asset impairments in China and costs in the Transit Packaging segment[37] - As of June 30, 2025, the accrual for asbestos-related claims was $189 million, including $117 million for unasserted claims. A recent unfavorable jury verdict in California resulted in an $11 million charge in Q2 2025[38][48][54] - In May 2025, the company issued $700 million of 5.875% senior notes due 2033 and used the proceeds to redeem $875 million of 4.75% notes due 2026[100] - The company repurchased $209 million of its common stock in the first six months of 2025 under a $2 billion authorization valid through 2027[106] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased net sales, strong segment income, and robust liquidity, maintaining a 2.5x net leverage ratio Business Strategy and Trends This section outlines the company's strategic focus on shareholder value, growth, and capital allocation - The company's strategy focuses on maximizing shareholder value through profitable growth, dividends, and share repurchases[130] - Global demand for beverage cans is growing, particularly in North America, Brazil, and Europe, driven by new products and sustainability benefits. The company expects to meet demand with its current capital base[131] - Capital spending is expected to be approximately $450 million in 2025, down from previous years[131] - The company has a long-term net leverage ratio target of 2.5x adjusted EBITDA and a $2 billion share repurchase authorization through 2027[132] Results of Operations This section analyzes the company's financial performance, including sales drivers and segment income contributions Segment Income Performance (in millions) | Segment | Q2 2025 Segment Income | Q2 2024 Segment Income | YTD 2025 Segment Income | YTD 2024 Segment Income | | :--- | :--- | :--- | :--- | :--- | | Americas Beverage | $268 | $243 | $504 | $432 | | European Beverage | $97 | $88 | $164 | $139 | | Asia Pacific | $50 | $55 | $97 | $97 | | Transit Packaging | $72 | $73 | $132 | $141 | | Other | $35 | $14 | $64 | $22 | - Q2 2025 net sales increased primarily due to $120 million from the pass-through of higher material costs and higher beverage can volumes in North America and Europe[143] - European Beverage segment volumes grew by 6% in Q2 and 8% in the first six months of 2025[153] - Asia Pacific segment income was flat year-over-year as improved manufacturing performance and restructuring savings offset lower volumes[161] Liquidity and Capital Resources This section details the company's cash flow, debt management, and available liquidity - Cash from operating activities increased to $463 million for the first six months of 2025, up from $343 million in the same period of 2024, mainly due to higher income from operations[185] - Cash used for investing activities decreased to $44 million from $143 million year-over-year, primarily due to lower capital expenditures[187] - The company's total net leverage ratio was 2.5 to 1.0 at June 30, 2025, in compliance with its covenant requirement of no greater than 4.5 to 1.0[193] - The company has available liquidity of $1,619 million under its revolving credit facilities as of June 30, 2025[191] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from foreign exchange, interest rates, and commodity prices using derivative instruments - The company uses derivative instruments, such as swaps and forwards, to manage risks from foreign exchange, interest rates, and commodity prices, not for speculative purposes[211] - A hypothetical 0.25% change in floating interest rates on its $1.8 billion of floating rate debt and $1.4 billion of securitization would change annual interest expense by approximately $8 million before tax[214] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[215] - No changes in internal controls over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[216] PART II – OTHER INFORMATION This section covers legal proceedings, equity security sales, and other significant corporate information Item 1. Legal Proceedings This section refers to Notes I and J in Part I for details on asbestos-related liabilities and other litigation - Information regarding legal proceedings, including asbestos liabilities and other contingencies, is incorporated by reference from Note I and Note J of the financial statements[218] Item 2. Unregistered Sale of Equity Securities and Use of Proceeds The company has $1,593 million remaining under its $2 billion share repurchase authorization through 2027 - As of June 30, 2025, the company has remaining authorization to repurchase $1,593 million of its common stock under its current program[221] Item 5. Other Information Key personnel changes include the resignation of the Corporate Controller and the CEO's new 10b5-1 trading plan - Christy Kalaus, Vice President and Corporate Controller, resigned for personal reasons, effective on or about August 25, 2025[225] - CFO Kevin C. Clothier will assume the role of interim principal accounting officer upon Ms. Kalaus's departure[226] - On May 20, 2025, CEO Timothy J. Donahue entered into a new 10b5-1 trading plan for the potential sale of up to 90,000 shares of common stock[227]