TAMPA, Fla. - Crown Holdings, Inc. (NYSE: NYSE:CCK), a global leader in packaging products, has announced an agreement with Massachusetts Mutual Life Insurance Company (MassMutual) to purchase a group annuity contract. This contract will cover benefits for approximately 12,000 participants in Crown's primary US defined benefit plans.
The agreement, aiming to transfer pension obligations to MassMutual, will see Crown eliminate around $740 million in US pension plan assets and liabilities. According to Kevin Clothier, Crown's Senior Vice President and Chief Financial Officer, this move will "significantly reduce future earnings and cash flow risk," ensuring secure benefits for pension plan participants.
MassMutual, recognized for its financial strength and long history in the insurance industry, will begin making payments to participants starting November 1, 2024. The retirees and deferred vested participants under the contract will not see any changes to their benefits as a result of this transaction.
Crown has also disclosed plans to make a $100 million contribution to the pension plan and expects to record a one-time non-cash charge of about $450 million ($340 million after tax) in the third quarter of 2024 as part of the settlement. Despite this charge, Crown reaffirms its 2024 full-year adjusted free cash flow guidance of at least $750 million.
This transaction follows Crown's strategy of annuitizing pension liabilities, which has resulted in the annuitization of approximately $4 billion of pension liabilities since 2021, including previous buy-outs in Canada and the UK.
The information in this article is based on a press release statement from Crown Holdings, Inc. The company has cautioned that forward-looking statements contained in the press release involve risks and uncertainties, and actual results may differ. Crown has also clarified that adjusted free cash flow is a non-GAAP measure and should not be considered a comprehensive reflection of the company's financial performance.
In other recent news, Crown Holdings, Inc. has seen noteworthy developments. The company's subsidiary, Crown European Holdings S.A., successfully issued €600 million in senior unsecured notes, aiming to refinance existing debt. The notes carry a 4.5% interest rate and are due in 2030. Additionally, Crown Holdings has initiated a stock repurchase program of up to $2 billion by the end of 2027.
The company's Q2 performance exceeded expectations, with earnings per share increasing from $1.31 to $1.45 and net sales reaching $3 billion, propelled by a 6% rise in global beverage can volumes. Following this, Crown Holdings has updated its full-year EPS guidance to a range of $6.00 to $6.25, indicating a year-over-year growth of about 4.6%.
Analyst firms such as RBC Capital Markets, Truist Securities, Loop Capital, and Citi have adjusted their price targets for Crown Holdings based on these results and updated guidance. RBC Capital predicts that Crown Holdings will generate significant free cash flow, over $750 million, in fiscal year 2024, supporting the company's debt reduction and share repurchase initiatives. These are the recent developments for Crown Holdings, Inc.
InvestingPro Insights
As Crown Holdings, Inc. (NYSE: CCK) progresses with its strategic financial management, the company's stock performance and valuation metrics provide additional insights for investors. Crown Holdings has been demonstrating a commitment to shareholder returns, evident by the fact that it has raised its dividend for three consecutive years, showing a pattern of consistent shareholder value distribution. This is particularly noteworthy for income-focused investors considering the company's recent pension risk transfer agreement.
Moreover, the company's valuation suggests an attractive investment opportunity with a strong free cash flow yield. This aligns with Crown's reaffirmation of a robust adjusted free cash flow guidance for 2024. With a market capitalization of $10.63 billion and a P/E ratio of 24.58, Crown Holdings trades at a high Price / Book multiple of 4.24, which could indicate that the market recognizes its assets' value and future growth prospects. Additionally, the company's stock is trading near its 52-week high, reflecting investor confidence in its performance and strategic initiatives.
Investors looking for further insights can find additional InvestingPro Tips for Crown Holdings, Inc. at Investing.com/pro/CCK, where a total of 7 tips, including analyst predictions and profitability assessments, are available to guide investment decisions.
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