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Silgan Announces Record First Quarter Earnings and Confirms Full Year Earnings Outlook
Copyright Business Wire 2018

--Record net income per share of $0.41

--Record adjusted net income per share of $0.42

--Continued significant improvement in the plastic container business

--Strong growth and accretion from Dispensing Systems operations

--Announced redemption of all outstanding 5% Senior Notes

Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid packaging for consumer goods products, today reported first quarter 2018 net income of $45.7 million, or $0.41 per diluted share, as compared to first quarter 2017 net income of $23.2 million, or $0.21 per diluted share.

"We are pleased with our first quarter 2018 results, as we reported record adjusted net income per diluted share of $0.42, an increase of 35.5 percent over the prior year period," said Tony Allott, President and CEO. "Our closures business continued its strong performance primarily as a result of the inclusion of the Dispensing Systems operations, which was further enhanced by higher volumes in the fragrance, health care and lawn and garden markets. Our plastic container business benefitted in the first quarter of 2018 from higher volumes and continued strong operating performance. As expected, segment income in our metal container business was lower than the prior year, as the planned reduction in the seasonal inventory build resulted in a less favorable absorption of overhead costs," continued Mr. Allott. "Since much of our performance in the quarter was driven by timing factors, we are confirming our full year 2018 earnings estimate of adjusted net income per diluted share in the range of $2.03 to $2.13, an increase of 26 percent at the midpoint of the range as compared to 2017," concluded Mr. Allott.

Adjusted net income per diluted share was $0.42 for the first quarter of 2018, after an adjustment increasing net income per diluted share by $0.01. Adjusted net income per diluted share was $0.31 for the first quarter of 2017, after adjustments increasing net income per diluted share by $0.10. A reconciliation of net income per diluted share to "adjusted net income per diluted share," a Non-GAAP financial measure used by the Company that adjusts net income per diluted share for certain items, can be found in Tables A and B at the back of this press release.

All per share amounts for the first quarter of 2017 have been adjusted for the two-for-one stock split that occurred on May 26, 2017.

Net sales for the first quarter of 2018 were $1.01 billion, an increase of $206.9 million, or 25.7 percent, as compared to $805.4 million in 2017. This increase was the result of the acquisition of the Dispensing Systems operations in April 2017 and higher net sales in each of the businesses.

Income before interest and income taxes for the first quarter of 2018 was $92.2 million, an increase of $35.4 million, or 62.3 percent, as compared to $56.8 million for the first quarter of 2017, and margins increased to 9.1 percent from 7.1 percent for the same periods. The increase in income before interest and income taxes was the result of higher segment income in the closures and plastic container businesses, partially offset by lower segment income in the metal container business. Rationalization charges were $0.7 million and $0.9 million in the first quarters of 2018 and 2017, respectively. Additionally, the first quarter of 2017 included costs attributed to announced acquisitions of $13.2 million.

Interest and other debt expense before loss on early extinguishment of debt for the first quarter of 2018 was $30.5 million, an increase of $10.1 million as compared to the first quarter of 2017. This increase was primarily due to higher average outstanding borrowings principally as a result of borrowings for the acquisition of Dispensing Systems and higher weighted average interest rates. Loss on early extinguishment of debt of $2.7 million in the first quarter of 2017 was primarily a result of the prepayment of outstanding U.S. term loans and Euro term loans under the previous senior secured credit facility in conjunction with the issuance of the 4 3/4% senior notes due 2025 and the 3 1/4% senior notes due 2025.

The effective tax rates were 25.9 percent and 31.0 percent for the first quarters of 2018 and 2017, respectively. The effective tax rate in the first quarter of 2018 benefitted from the recently enacted U.S. Tax Cuts and Jobs Act of 2017, partially offset by higher income in less favorable tax jurisdictions. The effective tax rate in the first quarter of 2017 benefitted from higher income in more favorable tax jurisdictions.

Metal Containers

Net sales of the metal container business were $486.0 million for the first quarter of 2018, an increase of $19.8 million, or 4.2 percent, as compared to $466.2 million in the first quarter of 2017. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs and the impact of favorable foreign currency translation, partially offset by a less favorable mix of products sold and lower unit volumes of approximately two percent. Unit volumes declined primarily as a result of lower volumes with certain customers who bought ahead in the fourth quarter of 2017, the carry-over impact from a customer loss in the prior year and a customer plant shutdown in the fruit market, partially offset by continued growth in volumes for pet food.

Segment income of the metal container business in the first quarter of 2018 decreased $6.8 million to $37.1 million as compared to $43.9 million in the first quarter of 2017, and segment income margin decreased to 7.6 percent from 9.4 percent over the same periods. The decrease in segment income was primarily attributable to the unfavorable impact from the planned lower seasonal inventory build in the first quarter of 2018 as compared to the prior year period, a less favorable mix of products sold, lower unit volumes and foreign currency transaction gains in the prior year period, partially offset by lower manufacturing costs.

Closures

Net sales of the closures business were $370.3 million in the first quarter of 2018, an increase of $172.6 million, or 87.3 percent, as compared to $197.7 million in the first quarter of 2017. This increase was primarily the result of the inclusion of the Dispensing Systems operations which was acquired in April 2017, the impact of favorable foreign currency translation and the pass through of higher raw material costs, partially offset by lower unit volumes of approximately four percent in the legacy closures operations principally as a result of the timing of customer purchases for the single-serve beverage market.

Segment income of the closures business for the first quarter of 2018 increased $24.4 million to $48.2 million as compared to $23.8 million in the first quarter of 2017, and segment income margin increased to 13.0 percent from 12.0 percent over the same periods. The increase in segment income was primarily due to the inclusion of the Dispensing Systems operations and continued strong operating performance despite lower unit volumes in the legacy closures operations.

Plastic Containers

Net sales of the plastic container business were $156.0 million in the first quarter of 2018, an increase of $14.5 million, or 10.2 percent, as compared to $141.5 million in the first quarter of 2017. This increase was principally due to the pass through of higher raw material costs, higher volumes of approximately five percent and the impact of favorable foreign currency translation.

Segment income of the plastic container business for the first quarter of 2018 was $11.1 million, an increase of $4.3 million as compared to $6.8 million in the first quarter of 2017, and segment income margin increased to 7.1 percent from 4.8 percent over the same periods. The increase in segment income was primarily attributable to higher volumes and lower manufacturing costs.

Outlook for 2018

The Company confirmed its estimate of adjusted net income per diluted share for the full year of 2018 in the range of $2.03 to $2.13, which excludes rationalization charges and loss on early extinguishment of debt. This estimate compares to adjusted net income per diluted share for the full year of 2017 of $1.65.

The Company is providing an estimate of adjusted net income per diluted share for the second quarter of 2018, which excludes rationalization charges and loss on early extinguishment of debt, in the range of $0.50 to $0.54. At the midpoint of this range, this estimate reflects a 48.6 percent increase over adjusted net income per diluted share of $0.35 in the second quarter of 2017. The earnings estimate for the second quarter of 2018 anticipates improvement in each of the businesses over the prior year period. The second quarter of 2017 included the unfavorable impact of an $11.9 million charge for the write-up of inventory of the Dispensing Systems operations for purchase accounting.

Conference Call

Silgan Holdings Inc. will hold a conference call to discuss the Company's results for the first quarter of 2018 at 11:00 a.m. eastern time on April 25, 2018. The toll free number for those in the U.S. and Canada is (800) 289-0438, and the number for international callers is (323) 794-2423. For those unable to listen to the live call, a taped rebroadcast will be available through May 9, 2018. To access the rebroadcast, U.S. and Canadian callers should dial (888) 203-1112, and international callers should dial (719) 457-0820. The pass code is 2087308.

Silgan is a leading supplier of rigid packaging for consumer goods products with annual net sales of approximately $4.1 billion in 2017. Silgan operates 99 manufacturing facilities in North and South America, Europe and Asia. The Company is a leading supplier of metal containers in North America and Europe for food and general line products. The Company is also a leading worldwide supplier of metal and plastic closures and dispensing systems for food, beverage, health care, garden, personal care, home and beauty products. In addition, the Company is a leading supplier of plastic containers for shelf-stable food and personal care products in North America.

Statements included in this press release which are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934, as amended. Such forward looking statements are made based upon management's expectations and beliefs concerning future events impacting the Company and therefore involve a number of uncertainties and risks, including, but not limited to, those described in the Company's Annual Report on Form 10-K for 2017 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the Company could differ materially from those expressed or implied in such forward looking statements.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180425005383r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: https://www.businesswire.com/news/home/20180425005383/en/

SOURCE: Silgan Holdings Inc.


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