CANPACK Reports Third Quarter 2022 Results
November 30, 2022
Krakow, Poland, November 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 hereby providing, on a U.S. GAAP basis, with U.S. dollars (defined as “$”) as the reporting currency, its results for the three and nine months ended September 30, 2022 (“Q3 2022”) and its trading update for Q3 and 9M 2022.
Q3 and 9M 2022 Highlights
- During the three and nine months ended September 30, 2022, beverage can bodies volumes grew 3% and 6%, respectively, in comparison to corresponding periods in 2021. CANPACK’s increased 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 lower sales in Brazil, United Arab Emirates (as a result of minimal U.S. exports in 2022), Ukraine and UK.
- Net sales increased 12% and 24% for the three and nine months ended September 30, 2022, respectively. This strong performance was mainly driven by 3% and 6% volume growth in the Beverage Can and Ends division in the respective periods, higher LME levels passed through to our customers (for the nine months ended September 30, 2022) and increased selling prices per unit. Net sales performance was partially offset by unfavorable foreign currency movements during the three and nine months ended September 30, 2022 compared to the corresponding periods in 2021.
- Cost of sales increased by 28% and 35% for the three and nine months ended September 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, and ramp up impact in the U.S. during both periods compared to the prior year.
- Adjusted EBITDA decreased to $64 million for the three months ended September 30, 2022 compared to $148 million for the same period in 2021, a decline of 57%, driven mainly by decreased sales volumes in Brazil, United Arab Emirates, Ukraine and UK, $18 million LME time lag impact due to sharp decrease of aluminum LME quotations, $11 million ramp up impact at our plant in Olyphant, PA and $8 million unfavorable impact from the depreciation of the euro against the U.S. dollar. Adjusted EBITDA decreased to $338 million for the nine months ended September 30, 2022 compared to $432 million for the same period in 2021, a decline of 22%, driven mainly by the decrease of volumes sold in Brazil, United Arab Emirates, Ukraine and UK, $23 million unfavorable impact from the depreciation of the euro against the U.S. dollar, $21 million due to ramp up impact up at Olyphant, PA and $18 million due to LME time lag impact due to sharp decrease of aluminum LME quotations .
- Capital expenditures increased to $132 million and $370 million for the three and nine months ended September 30, 2022, respectively, compared to $117 million and $261 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.
- Free cash flow decreased by $63 million from a $27 million cash outflow for the three months ended September 30, 2021 to a $90 million cash outflow for the three months ended September 30, 2022. Free cash flow decreased by $333 million from a $21 million cash inflow for the nine months ended September 30, 2021 to a $312 million cash outflow for the nine months ended September 30, 2022. This performance was due to, higher working capital employed mainly as result of the higher value of raw material inventories (due to higher LME and higher quantities in stock) during the three and nine months ended September 30, 2022 compared to the corresponding periods in 2021, as well as increased CAPEX spending and lower adjusted EBITDA.
Interim Chief Executive Officer, Marius Croitoru, Commented:
“The performance in Q3 2022 was under pressure as result of lower volumes in certain geographies, further unfavorable EUR/USD impact, sharp decrease in aluminum LME value, and ramp up impact related to our Olyphant facility in the US.
With input costs expected to remain elevated and many customers adjusting their order patterns in response to lower consumer spending, we expect the operating environment and margins to remain under pressure for the balance of 2022 and into the first half of 2023. In the meantime, our balance sheet remains strong with no significant near-term debt maturities until November 2025 and with all existing bonds having fixed interest rates.
While the short-term environment is expected to remain challenging, we continue to focus on activities that will enhance our long-term success including the continued implementation of the Cost passthrough model and internal cost controls.”
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 over 9,000 people worldwide and has operations in 16 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 Wednesday, November 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 Treasury & Investor Relations Director
Group Communications Manager
CANPACK IR Advisor
Li Zhao – Maitland/AMO
Phone: +44 (0) 207 379 5151