Crown Holdings' EPS on Par

Crown Holdings Inc. (CCK - Snapshot Report) has reported second-quarter adjusted earnings per share (EPS) of 84 cents, flat with the year-ago quarter and also in line with the Zacks Consensus Estimate.

Including restructuring charges and gains on asset sale, EPS in the quarter stood at 89 cents. Including loss on early extinguishment of debt, EPS in the prior year quarter was 83 cents.

Total revenue declined 4% on a year-over-year basis to $2.18 billion in the quarter, missing the Zacks Consensus Estimate of $2.28 billion as a result of unfavorable currency translation.

Costs and Margins

Cost of sales improved 4% to $1.8 billion in the reported quarter. Gross profit dipped 8% to $340 million in the quarter from $371 million in the prior-year quarter. Weak results in Europe, lower customer demand and production activity for three-piece steel products and unfavorable foreign currency translation led to the decline. Gross margin contracted 70 basis points year over year to 15.6%.

Selling, engineering and administration expenses also improved to $90 million in the quarter from $100 million in the prior year quarter. Adjusted operating income declined 8% to $250 million from $271 million in the year-earlier quarter due to weak performance in Europe and unfavorable foreign currency translation. Operating margins contracted 50 basis points to 11.4% in the quarter.

Financial Position

As of June 30, 2012, cash and cash equivalents amounted to $230 million compared with $250 million as of March 31, 2012. Receivables increased to $1.19 billion as of June 30, 2012 compared with $1.07 billion as of March 31, 2012. Long term debt reduced to $3.5 billion as of June 30, 2012 from $3.7 billion as of March 31, 2012. Cash flow from operating activities was a usage of $216 million in the quarter compared with $247 in the prior year quarter.

Outlook

The company expects fiscal 2012 EPS to be in the range of $2.90 to $3.00 and for the third quarter to be between 95 cents and $1.05.

Philadelphia, Pennsylvania-based Crown Holdings engages in the design, manufacture, and sale of packaging products for consumer marketing companies worldwide. The company’s products include aluminum beverage cans and ends, and other packaging products to beverage and beer companies; food cans and ends, aerosol cans and ends as well as steel containers for food products.

It competes with Ball Corporation (BLL - Analyst Report), Rexam plc (REXMY) ad Silgan Holdings Inc. (SLGN - Analyst Report). The company currently retains a Zacks #4 Rank (short-term Sell recommendation).