CANPACK Reports Q2 2022 Results
August 30, 2022
Krakow, Poland, August 30, 2022 – CANPACK (the “Company” or the “Group”), a global manufacturer of aluminum beverage cans and packaging solutions for the beverage and food industry, is pleased to announce, on a U.S. GAAP basis, with U.S. dollars (defined as “$”) as the reporting currency, its results for the three and six months ended June 30, 2022 (“Q2 2022”) and its trading update for Q2 and H1 2022.
Q2 and H1 2022 Highlights
- During the three and six months ended June 30, 2022, beverage can bodies volumes grew 10% and 7%, respectively, in comparison to corresponding periods in 2021. CANPACK’s strong volume performance is due to production from our U.S. facility, which began operations in the second half of 2021, as well as capacity expansion in Colombia and several plants in Europe. However, volumes were partially off-set mainly by the temporary shutdown of our production facility in Ukraine from February 24, 2022 through May 11, 2022.
- Net sales increased 31% and 30% for the three and six months ended June 30, 2022, respectively. This strong performance was mainly driven by 10% and 7% volume growth in the Beverage Can and Ends division in the respective periods, higher LME levels passed through to our customers, increased selling prices per unit and higher transportation charges invoiced to our customers. Net sales performance was partially offset by unfavorable foreign currency movements during the three and six months ended June 30, 2022 compared to the corresponding periods in 2021.
- Cost of sales increased by 42% and 39% for the three and six months ended June 30, 2022, respectively, due to increased beverage can volumes, higher aluminum prices due to higher LME, premium and ingot to sheet conversion, higher labor costs primarily due to inflation, ramp-up costs in the U.S. and increased transportation costs during both periods compared to the prior year.
- Adjusted EBITDA decreased to $143 million for the three months ended June 30, 2022 compared to $158 million for the same period in 2021, a decline of 9%, driven by a $10 million unfavorable impact from the depreciation of the euro against the U.S. dollar and a $2 million impact of ramp-up costs at our plant in Olyphant, PA. Adjusted EBITDA decreased to $274 million for the six months ended June 30, 2022 compared to $284 million for the same period in 2021, a decline of 3%, driven by a $15 million unfavorable impact from the depreciation of the euro against the U.S. dollar and a $10 million impact from ramp-up costs at Olyphant, PA. Excluding these items, adjusted EBITDA increased to $299 million for the six months ended June 30, 2022 as compared to $284 million for the same period in 2021.
- Capital expenditures increased to $147 million and $239 million for the three and six months ended June 30, 2022, respectively, compared to $100 million and $144 million in the corresponding periods in 2021. These higher levels of capital expenditures in both periods were mainly due to spending for our U.S. greenfield projects in Olyphant, Pennsylvania and Muncie, Indiana.
- Net cash provided by operating activities decreased by $207 million to a net outflow of $140 million for the three months ended June 30, 2022 from a net inflow of $67 million for the three months ended June 30, 2021. Net cash provided by operating activities decreased by $176 million to a net outflow of $43 million for the six months ended June 30, 2022 from a net inflow of $133 million for the six months ended June 30, 2021. These decreases in cash provided by operating activities were caused by higher working capital employed, mainly as a result of higher trade receivables balances as well as higher raw material and finished goods inventories (due to higher LME and volume levels) during the three and six months ended June 30, 2022 compared to the corresponding period in the prior year.
- Free cash flow decreased by $279 million from a $13 million cash inflow for the three months ended June 30, 2021 to a $266 million cash outflow for the three months ended June 30, 2022. Free cash flow decreased by $270 million from a $48 million cash inflow for the six months ended June 30, 2021 to a $222 million cash outflow for the six months ended June 30, 2022. This performance was due to lower adjusted EBITDA, increased CAPEX spending and higher working capital employed mainly as result of higher trade receivables balances, higher raw material and finished goods inventories (due to higher LME and volume levels) during the three and six months ended June 30, 2022 compared to the corresponding periods in 2021.
Chief Executive Officer, Roberto Villaquirán, Commented:
“I am pleased to report solid first half performance, with revenue growth of 30% and EBITDA of $274 million, an improvement of 5% vs prior year excluding the adverse impact of foreign exchange rates and ramp-up costs at our Olyphant, Pennsylvania facility.
In the first half of 2022, we have been able to successfully navigate many challenges, including rapidly increasing inflationary costs, tight supply chains and the impact of the conflict in Ukraine. CANPACK’s geographic diversity, continued focus on efficiency, margin recovery and leading innovation have enabled us to offset many of these adverse impacts.
I am especially proud of the tremendous efforts of our teams, who continue to deliver above and beyond in these challenging times. I also want to thank our key partners for their support, as they have enabled us to navigate forward successfully and continue to build on our combined strengths.”
CANPACK Group, part of Giorgi Global Holdings, Inc, is a global manufacturer of aluminum beverage cans and packaging solutions for the food and beverage industries, as well as glass bottles and metal closures. Headquartered in Krakow (Poland), CANPACK employs nearly 8,500 people worldwide and has operations in 17 countries. For more information, visit www.canpack.com.
Conference Call Details
The Company will host a conference call at 14:00 BST / 15:00 CET / 09:00 EDT on Tuesday, August 30, 2022 to discuss its financial results with the investment community. Investors and analysts wishing to attend this event can request registration via email at IR@canpack.com or click on the following link.
More detailed financial information can be found on the Company’s IR website at the Financial Results and Bondholder Downloads section (click here to gain access).
Forward-Looking Statements Disclaimer
These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “anticipate,” “assume,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “forecasts,” “should,” “could,” “would,” “may,” “will” and other similar expressions or, in each case, their negative or other variations or comparable terminology.
All statements other than statements of historical facts included in this document, including, without limitation, statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, may be deemed to be forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties.
We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.
Any forward-looking statement that we make in this document speaks only as of the date on which it is made, and we do not intend to update such statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may not be within our control.
Moreover, the Company operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.
The above press release contains certain financial measures and ratios, including adjusted EBITDA, free cash flow, net leverage, changes in working capital, beverage can bodies volume and capital expenditures, that are not required by, or presented in accordance with, U.S. GAAP (the “Non-GAAP Measures”).
We present these Non-GAAP Measures because they are measures that our management uses to assess operating performance and liquidity, and we believe that they and similar measures are widely used in our industry as supplemental measures of performance and liquidity. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under U.S. GAAP or other generally accepted accounting principles.
Non-GAAP Measures and ratios are not measurements of our performance or liquidity under U.S. GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with U.S. GAAP or as alternatives to cash flow from operating, investing or financing activities.
CANPACK IR team
Group Investor Relations Manager
Group Communications Manager
CANPACK IR Advisor
Li Zhao – Maitland/AMO
Phone: +44 (0) 207 379 5151