Second Quarter 2015
Highlights
- Net income per share of $0.70
- Adjusted net income per share of
$0.71
- Metal container volume growth of 11
percent
- Continued progress on footprint
optimization
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for shelf-stable food and other consumer goods products,
today reported second quarter 2015 net income of $42.2 million, or
$0.70 per diluted share, as compared to second quarter 2014 net
income of $44.0 million, or $0.69 per diluted share.
“As expected, our footprint optimization programs in each of our
businesses impacted second quarter results as we delivered adjusted
net income per diluted share of $0.71 in the second quarter of
2015,” said Tony Allott, President and CEO. “Our metal container
business achieved 11 percent growth in volumes for the quarter
which, as anticipated, created additional strain on our existing
infrastructure and temporarily increased our freight and logistics
costs. Our closures business also saw volume growth in the quarter
and completed its planned inventory reductions from higher levels
in the prior year due to the Portola integration. Our plastic
container business continued to be impacted by soft market demand
and incurred additional costs associated with the realignment of
equipment to optimize plant production and grow strategically with
select customers,” continued Mr. Allott. “We knew these activities
across each of our businesses were going to create near term
challenges, but we remain convinced of the long-term benefits to
our franchise market positions. Based on our year-to-date
performance and our outlook for the remainder of the year, we are
confirming our full year 2015 earnings estimate of adjusted net
income per diluted share in a range of $3.10 to $3.30,” concluded
Mr. Allott.
Adjusted net income per diluted share was $0.71 for the second
quarter of 2015, after adjustments increasing net income per
diluted share by $0.01. Adjusted net income per diluted share was
$0.73 for the second quarter of 2014, after adjustments increasing
net income per diluted share by $0.04. 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.
Net sales for the second quarter of 2015 were $914.2 million, a
decrease of $3.1 million, or 0.3 percent, as compared to $917.3
million in 2014. This decrease was the result of a decrease in net
sales in the closures and plastic container businesses due partly
to the impact of unfavorable foreign currency translation,
partially offset by an increase in net sales in the metal container
business.
Income from operations for the second quarter of 2015 was $78.3
million, a decrease of $7.8 million, or 9.1 percent, as compared to
$86.1 million for the second quarter of 2014, and operating margin
decreased to 8.6 percent from 9.4 percent for the same periods. The
decrease was the result of a decrease in income from operations in
each business.
Interest and other debt expense for the second quarter of 2015
was $16.8 million, a decrease of $2.2 million as compared to the
second quarter of 2014 due to lower weighted average interest
rates, lower average outstanding borrowings and the impact from
favorable foreign currency translation.
The effective tax rate was 31.3 percent and 34.4 percent for the
second quarters of 2015 and 2014, respectively. The effective tax
rate in the second quarter of 2015 benefitted from higher income in
lower tax jurisdictions.
Metal Containers
Net sales of the metal container business were $553.7 million
for the second quarter of 2015, an increase of $35.0 million, or
6.7 percent, as compared to $518.7 million in 2014. This increase
was primarily a result of higher unit volumes, partially offset by
the impact of unfavorable foreign currency translation. Unit
volumes increased approximately 11 percent due principally to
volumes associated with the recent acquisition of the Van Can
operations, an earlier start of the midwest vegetable pack in the
U.S. and stronger volume levels in Europe.
Income from operations of the metal container business in the
second quarter of 2015 decreased $2.6 million to $48.3 million as
compared to $50.9 million in 2014, and operating margin decreased
to 8.7 percent as compared to 9.8 percent in 2014. The decrease in
income from operations was primarily due to higher manufacturing
costs due largely to logistical challenges from changes in customer
demand patterns, the inclusion of the less efficient Van Can
operations and a less favorable mix of products sold, partially
offset by higher unit volumes.
Closures
Net sales of the closures business were $207.1 million in the
second quarter of 2015, a decrease of $25.1 million, or 10.8
percent, as compared to $232.2 million in the second quarter of
2014. This decrease was primarily the result of the impact of
unfavorable foreign currency translation and the pass through of
lower resin costs, partially offset by an increase in unit volumes
of approximately 1 percent.
Income from operations of the closures business for the second
quarter of 2015 decreased $0.6 million to $24.6 million as compared
to $25.2 million in 2014, while operating margin increased to 11.9
percent from 10.9 percent over the same periods. The decrease in
income from operations was primarily due to the impact of
unfavorable foreign currency translation and a reduction in
inventory in the second quarter of 2015 as compared to an inventory
build in the prior year period, partially offset by operational
losses of $2.9 million in the second quarter of 2014 in Venezuela,
which ceased operations at the end of 2014, and higher unit
volumes.
Plastic Containers
Net sales of the plastic container business were $153.4 million
in the second quarter of 2015, a decrease of $13.0 million, or 7.8
percent, as compared to $166.4 million in the second quarter of
2014. This decrease was principally due to the pass through of
lower raw material costs, the impact of unfavorable foreign
currency translation, the unfavorable financial impact from recent
longer-term customer contract renewals and lower volume of
approximately 2 percent primarily due to weaker demand in certain
markets.
Income from operations of the plastic container business for the
second quarter of 2015 was $9.4 million, a decrease of $3.6 million
as compared to $13.0 million in 2014, and operating margin
decreased to 6.1 percent from 7.8 percent over the same periods.
The decrease in income from operations was primarily attributable
to the unfavorable financial impact from recent longer-term
customer contract renewals as well as the delayed implementation of
certain mitigating cost reduction programs, manufacturing
inefficiencies associated with equipment moves and new business
awards, lower volumes and the impact of unfavorable foreign
currency translation.
Six Months
Net income for the first six months of 2015 was $75.5 million,
or $1.22 per diluted share, as compared to net income for the first
six months of 2014 of $75.5 million, or $1.18 per diluted share.
Adjusted net income per diluted share for the first six months of
2015 was $1.24 versus $1.26 in the prior year period, after
adjustments increasing net income per diluted share by $0.02 for
the first six months of 2015 and adjustments increasing net income
per diluted share by $0.08 for the first six months of 2014.
Net sales for the first six months of 2015 decreased $42.4
million, or 2.4 percent, to $1.73 billion as compared to $1.77
billion for the first six months of 2014. This decrease was
primarily the result of the unfavorable impact of foreign currency
translation, the pass through of lower raw material costs in the
closures and plastic container businesses, lower volumes in the
plastic container business, the unfavorable financial impact from
recent longer-term customer contract renewals and the cessation of
operations in Venezuela at the end of 2014. These decreases were
partially offset by the impact of higher volumes in the metal
container and closures businesses and the pass through of higher
raw material and other manufacturing costs in the metal container
business.
Income from operations for the first six months of 2015 was
$145.4 million, a decrease of $8.7 million, or 5.6 percent, from
the same period in 2014. This decrease was primarily a result of
higher manufacturing costs in the metal container business, the
unfavorable impact from recent longer-term customer contract
renewals and manufacturing inefficiencies in the plastic container
business, the impact of unfavorable foreign currency translation,
lower volumes in the plastic container business, a less favorable
mix of products sold in the metal container business and the impact
from a reduction in inventory as compared to an inventory build in
the prior year period in the closures business. These decreases
were partially offset by an increase in volumes in the metal
container and closures businesses, operational losses in Venezuela
in the first half of 2014 of $3.4 million, foreign currency
transactional losses incurred in the prior year period and the
favorable impact from the lagged pass through of lower resin costs
in the closures and plastic container businesses.
Interest and other debt expense before loss on early
extinguishment of debt for the first six months of 2015 was $33.2
million, a decrease of $4.4 million as compared to the first six
months of 2014. This decrease was primarily due to lower weighted
average interest rates, lower average outstanding borrowings and
the impact from favorable foreign currency translation. Loss on
early extinguishment of debt of $1.5 million in the first six
months of 2014 was a result of the refinancing of the senior
secured credit facility in January 2014.
The effective tax rate for the first six months of 2015 was 32.6
percent as compared to 34.4 percent for the first six months of
2014. The effective tax rate in 2015 benefitted from higher income
in lower tax jurisdictions.
Outlook for 2015
The Company confirmed its estimate of adjusted net income per
diluted share for the full year of 2015 in a range of $3.10 to
$3.30. This estimate compares to adjusted net income per diluted
share for the full year of 2014 of $3.17.
The Company is providing an estimate of adjusted net income per
diluted share for the third quarter of 2015, which excludes
rationalization charges, in the range of $1.35 to $1.45. Given the
uncertainties around the timing of the fruit and vegetable pack,
the results of the back half of the year could shift between the
third and fourth quarters. This estimate compares to adjusted net
income per diluted share of $1.33 in the third quarter of 2014.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the second quarter of 2015 at 11:00 a.m.
eastern time on July 22, 2015. The toll free number for those in
the U.S. and Canada is (888) 523-1244, and the number for
international callers is (719) 325-2408. For those unable to listen
to the live call, a taped rebroadcast will be available through
August 5, 2015. 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 9011691.
* * *
Silgan is a leading supplier of rigid packaging for shelf-stable
food and other consumer goods products with annual net sales of
approximately $3.9 billion in 2014. Silgan operates 88
manufacturing facilities in North and South America, Europe and
Asia. Silgan is a leading supplier of metal containers in North
America and Europe and a leading worldwide supplier of metal,
composite and plastic closures for food and beverage products. In
addition, Silgan 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 2014 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.
* * *
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)
For the quarter and six months ended June
30,
(Dollars in millions, except per share
amounts)
Second
Quarter
Six
Months
2015 2014
2015 2014
Net sales $914.2 $917.3 $1,730.8 $1,773.2 Cost of
goods sold
780.5 773.6
1,474.9 1,501.5 Gross profit 133.7
143.7 255.9 271.7 Selling, general and administrative
expenses 54.4 56.7 108.9 115.1 Rationalization charges
1.0 0.9 1.6 2.5
Income from operations 78.3 86.1 145.4 154.1 Interest
and other debt expense before loss on early extinguishment of debt
16.8 19.0 33.2 37.6 Loss on early extinguishment of debt
- - - 1.5
Interest and other debt expense
16.8
19.0 33.2 39.1 Income
before income taxes 61.5 67.1 112.2 115.0 Provision for
income taxes
19.3 23.1 36.7
39.5 Net income
$ 42.2 $
44.0 $ 75.5 $ 75.5 Earnings
per share: Basic net income per share $0.70 $0.69 $1.23 $1.19
Diluted net income per share $0.70 $0.69 $1.22 $1.18 Cash
dividends per common share $0.16 $0.15 $0.32 $0.30 Weighted
average shares (000’s): Basic 60,473 63,525 61,631 63,511 Diluted
60,728 63,874 61,899 63,899
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL
DATA (UNAUDITED)
For the quarter and six months ended June
30,
(Dollars in millions)
Second
Quarter
Six
Months
2015
2014
2015
2014
Net sales: Metal containers $553 .7 $518 .7 $ 1,012 .6 $ 987 .1
Closures 207 .1 232 .2 405 .2 446 .0 Plastic containers
153 .4 166 .4
313 .0 340 .1
Consolidated
$914 .2 $917
.3 $1,730 .8
$1,773 .2 Income from
operations: Metal containers $ 48 .3 $ 50 .9 $ 89 .0 $ 91 .4
Closures (a) 24 .6 25 .2 46 .2 43 .0 Plastic containers (b) 9 .4 13
.0 18 .6 25 .8 Corporate
(4 .0)
(3 .0)
(8 .4)
(6 .1) Consolidated
$78
.3 $86 .1 $145
.4 $154 .1
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions)
June 30,2015
June 30,2014
Dec. 31,2014
Assets: Cash and cash equivalents $ 126.7 $ 133.9 $ 222.6 Trade
accounts receivable, net 443.9 447.7 310.7 Inventories 753.3 748.2
548.8 Other current assets 58.3 61.4 75.7 Property, plant and
equipment, net 1,082.7 1,103.0 1,063.6 Other assets, net
1,062.1 1,146.7
1,082.5 Total assets
$
3,527.0 $ 3,640.9
$ 3,303.9 Liabilities and
stockholders’ equity: Current liabilities, excluding debt $ 505.8 $
439.4 $ 539.3 Current and long-term debt 1,984.1 2,017.5 1,599.0
Other liabilities 454.1 426.3 455.6 Stockholders’ equity
583.0 757.7
710.0 Total liabilities and stockholders’ equity
$ 3,527.0 $
3,640.9 $ 3,303.9 (a)
Includes rationalization charges of $0.8 million and $0.9
million for the three months ended June 30, 2015
and 2014, respectively, and $1.1 million
and $1.5 million for the six months ended June 30, 2015 and
2014,
respectively. Includes losses from
operations in Venezuela of $2.9 million for the three months ended
June
30, 2014 and $3.4 million for the six
months ended June 30, 2014.
(b) Includes rationalization charges of $0.2 million for the
three months ended June 30, 2015 and $0.5 million
and $1.0 million for the six months ended
June 30, 2015 and 2014, respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
For the six months ended June 30,
(Dollars in millions)
2015
2014
Cash flows provided by (used in) operating activities: Net
income $ 75 .5 $ 75 .5 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation and
amortization 73 .0 76 .5 Rationalization charges 1 .6 2 .5 Loss on
early extinguishment of debt - 1 .5 Other changes that provided
(used) cash: Trade accounts receivable, net (140 .4) (116 .4)
Inventories (212 .8) (234 .6) Trade accounts payable and other
changes, net
66 .4
32 .2 Net cash used in operating
activities
(136 .7)
(162 .8) Cash flows provided by
(used in) investing activities: Purchase of business, net of cash
acquired (0 .7) - Capital expenditures (98 .2) (60 .0) Proceeds
from asset sales
0 .1
0 .3 Net cash used in investing
activities
(98 .8)
(59 .7) Cash flows provided by
(used in) financing activities: Dividends paid on common stock (20
.1) (19 .4) Changes in outstanding checks – principally vendors (82
.8) (86 .5) Shares repurchased under authorized repurchase program
(170 .1) (7 .7) Net borrowings and other financing activities
412 .6 309
.5 Net cash provided by financing activities
139 .6 195
.9 Cash and cash equivalents: Net decrease (95
.9) (26 .6) Balance at beginning of year
222
.6 160 .5 Balance at
end of period
$ 126 .7
$ 133 .9
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1) (UNAUDITED)
For the quarter and six months ended June
30,
Table A
Second
Quarter
Six
Months
2015
2014
2015
2014
Net income per diluted share as reported $0 .70 $0 .69 $1
.22 $1 .18 Adjustments: Rationalization charges 0 .01 0 .01
0 .02 0 .02 Loss on early extinguishment of debt - - - 0 .02 Net
loss from operations in Venezuela
- 0
.03 - 0 .04
Adjusted net income per diluted share
$0
.71 $0 .73 $1
.24 $1 .26
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1) (UNAUDITED)
For the quarter and year ended,
Table B
Third
Quarter
Year
Ended
September
30,
December
31,
Estimated
Actual
Estimated
Actual
Low High Low High
2015
2015
2014
2015
2015
2014
Net income per diluted share as estimated for 2015 and as reported
for 2014 $1.35 $1.45 $1.31 $3.05 $3.25 $2.86
Adjustments: Rationalization charges - - 0.03 0.05 0.05 0.26 Costs
attributable to announced acquisitions (2) - - - - - - Loss on
early extinguishment of debt - - - - - 0.02 Net (income) loss from
operations in Venezuela
- -
(0.01) - - 0.03
Adjusted net income per diluted share as estimated for 2015 and
presented for 2014
$1.35 $1.45
$1.33 $3.10 $3.30
$3.17 (1) The Company has presented
adjusted net income per diluted share for the periods covered by
this press release, which measure is a Non-GAAP financial measure.
The Company’s management believes it is useful to exclude
rationalization charges, costs attributable to announced
acquisitions, the loss on early extinguishment of debt, and net
results from operations in Venezuela, including the impact from the
remeasurement of net assets in Venezuela, from its net income per
diluted share as calculated under U.S. generally accepted
accounting principles because such Non-GAAP financial measure
allows for a more appropriate evaluation of its operating results.
While rationalization costs are incurred on a regular basis,
management views these costs more as an investment to generate
savings rather than period costs. Costs attributable to announced
acquisitions consist of third party fees and expenses that are
viewed by management as part of the acquisition and not indicative
of the ongoing cost structure of the Company. Due to the political
environment in Venezuela and an increasingly restrictive monetary
policy, the operations in Venezuela were unable to import raw
materials on a regular basis, and as a result the Company has
ceased operations in Venezuela. Therefore, management does not view
the net results from operations in Venezuela to be meaningful or
indicative. Such Non-GAAP financial measure is not in accordance
with U.S. generally accepted accounting principles and should not
be considered in isolation but should be read in conjunction with
the unaudited condensed consolidated statements of income and the
other information presented herein. Additionally, such Non-GAAP
financial measure should not be considered a substitute for net
income per diluted share as calculated under U.S. generally
accepted accounting principles and may not be comparable to
similarly titled measures of other companies. (2) Costs
attributable to announced acquisitions have not been estimated for
future periods.
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version on businesswire.com: http://www.businesswire.com/news/home/20150722005266/en/
Silgan Holdings Inc.Robert B. Lewis,
203-406-3160
Silgan (NASDAQ:SLGN)
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