First Quarter 2016
Highlights
- Net income per share of $0.44
- Adjusted net income per share of
$0.45
- Metal container volume growth of 2
percent
- Closures volume growth of 5
percent
- Announced the shutdown of one metal
container facility
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for shelf-stable food and other consumer goods products,
today reported first quarter 2016 net income of $26.6 million, or
$0.44 per diluted share, as compared to first quarter 2015 net
income of $33.3 million, or $0.53 per diluted share.
“We are pleased with our first quarter 2016 results, as we
reported adjusted net income per diluted share of $0.45, at the
high end of our estimate, with our metal and plastic container
businesses performing as expected and our closures business off to
a strong start,” said Tony Allott, President and CEO. “We continued
to experience logistical inefficiencies and incremental costs
related to our footprint optimization programs, but we have made
progress toward qualification in our new manufacturing facilities.
Our metal container business benefited from volume growth in the
quarter, but as expected continued to experience higher
manufacturing costs, including start-up costs related to the new
manufacturing facility in Iowa. The business also benefited from
better than expected cost absorption, as higher inventory levels
were maintained in anticipation of optimizing production in the
latter half of the year. Our closures business continued to perform
well operationally and experienced volume growth as the beverage
season in the U.S. got off to a strong start. Due to our ongoing
major plant optimization program in our plastic container business,
we continued to incur higher expenses and start-up costs related to
its two new manufacturing facilities. We are pleased with our
results thus far and the progress on our longer-term footprint
optimization, but we remain cautious of the risks still ahead of
us. At this time, we are confirming our full year 2016 earnings
estimate of adjusted net income per diluted share in the range of
$2.80 to $3.00,” continued Mr. Allott.
Adjusted net income per diluted share was $0.45 for the first
quarter of 2016, after adjustments increasing net income per
diluted share by $0.01. Adjusted net income per diluted share was
$0.54 for the first quarter of 2015, after adjustments increasing
net income per diluted share by $0.01. 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 first quarter of 2016 were $792.7 million, a
decrease of $23.9 million, or 2.9 percent, as compared to $816.6
million in 2015. This decrease was the result of a decrease in net
sales across all of our businesses due primarily to the pass
through of lower raw material costs.
Income from operations for the first quarter of 2016 was $57.4
million, a decrease of $9.7 million, or 14.5 percent, as compared
to $67.1 million for the first quarter of 2015, and operating
margin decreased to 7.2 percent from 8.2 percent for the same
periods. The decrease in income from operations was the result of a
decrease in income from operations in the metal and plastic
container businesses, partially offset by an increase in income
from operations in the closures business.
The effective tax rates were 35.2 percent and 34.2 percent for
the first quarters of 2016 and 2015, respectively. The effective
tax rate in the first quarter of 2016 was unfavorably impacted by
the cumulative adjustment of a change in tax law in a certain
foreign jurisdiction, partially offset by higher income in more
favorable tax jurisdictions.
Metal Containers
Net sales of the metal container business were $453.4 million
for the first quarter of 2016, a decrease of $5.5 million, or 1.2
percent, as compared to $458.9 million in 2015. This decrease was
primarily a result of the pass through of lower raw material costs
and the impact of slightly unfavorable foreign currency
translation, partially offset by an increase in unit volumes of
approximately 2 percent.
Income from operations of the metal container business in the
first quarter of 2016 decreased $3.1 million to $37.6 million as
compared to $40.7 million in 2015, and operating margin decreased
to 8.3 percent from 8.9 percent over the same periods. The decrease
in income from operations was primarily attributable to higher
manufacturing costs, including start-up costs related to the new
manufacturing facility in Iowa, and foreign currency transaction
gains in the prior year period, partially offset by higher unit
volumes. As a result of capacity additions in the new facility, the
Company announced its intention to shutdown its two-piece can
manufacturing plant in LaPorte, Indiana in the latter half of
2016.
Closures
Net sales of the closures business were $196.1 million in the
first quarter of 2016, a decrease of $2.0 million, or 1.0 percent,
as compared to $198.1 million in the first quarter of 2015. This
decrease was primarily the result of the pass through of lower raw
material costs and the impact of slightly unfavorable foreign
currency translation, mostly offset by an increase in unit volumes
of approximately 5 percent due primarily to higher demand from U.S.
beverage markets.
Income from operations of the closures business for the first
quarter of 2016 increased $2.9 million to $24.5 million as compared
to $21.6 million in 2015, and operating margin increased to 12.5
percent from 10.9 percent over the same periods. The increase in
income from operations was primarily due to higher unit volumes and
manufacturing efficiencies, partially offset by the favorable
impact in the prior year period from the lagged pass through of
decreases in resin costs.
Plastic Containers
Net sales of the plastic container business were $143.2 million
in the first quarter of 2016, a decrease of $16.4 million, or 10.3
percent, as compared to $159.6 million in the first quarter of
2015. This decrease was principally due to the pass through of
lower raw material costs, lower volumes of approximately 1 percent
and the impact of unfavorable foreign currency translation.
Income from operations of the plastic container business for the
first quarter of 2016 was $0.1 million, a decrease of $9.1 million
as compared to $9.2 million in 2015, and operating margin decreased
to 0.1 percent from 5.8 percent over the same periods. The decrease
in income from operations was primarily attributable to higher
incremental costs and inefficiencies incurred to service customers
during the footprint optimization program, start-up costs related
to the new manufacturing facilities, lower volumes, the favorable
impact in the prior year period from the lagged pass through of
decreases in resin costs, foreign currency transaction losses and
higher rationalization charges. Rationalization charges were $1.0
million and $0.4 million in 2016 and 2015, respectively.
Outlook for 2016
The Company confirmed its estimate of adjusted net income per
diluted share for the full year of 2016, which excludes
rationalization charges, in the range of $2.80 to $3.00. This
estimate compares to adjusted net income per diluted share for the
full year of 2015 of $2.97.
The Company is providing an estimate of adjusted net income per
diluted share for the second quarter of 2016, which excludes
rationalization charges, in the range of $0.50 to $0.60. This
estimate includes continued incremental spending during the quarter
associated with the footprint optimization programs and the
start-up of the new manufacturing facilities. This estimate
compares to adjusted net income per diluted share of $0.71 in the
second quarter of 2015.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the first quarter of 2016 at 11:00 a.m.
eastern time on April 27, 2016. The toll free number for those in
the U.S. and Canada is (888) 634-7543, and the number for
international callers is (719) 325-2133. For those unable to listen
to the live call, a taped rebroadcast will be available through May
11, 2016. 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 2459616.
Silgan is a leading supplier of rigid packaging for shelf-stable
food and other consumer goods products with annual net sales of
approximately $3.8 billion in 2015. 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 2015 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 ended March 31,
(Dollars in millions, except per share
amounts)
2016
2015
Net sales $792.7 $816.6 Cost of goods sold
678.8 694.4 Gross profit 113.9
122.2 Selling, general and administrative expenses 55.4 54.4
Rationalization charges
1.1 0.7
Income from operations
57.4 67.1 Interest and other debt expense
16.4
16.5 Income before income taxes 41.0 50.6
Provision for income taxes
14.4
17.3 Net income
$ 26.6 $
33.3 Earnings per share: Basic net income per share
$0.44 $0.53 Diluted net income per share $0.44 $0.53 Cash
dividends per common share $0.17 $0.16 Weighted average
shares (000’s): Basic 60,451 62,801
Diluted
60,825 63,082
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL
DATA (UNAUDITED)
For the quarter ended March 31,
(Dollars in millions)
2016
2015
Net sales: Metal containers $ 453.4 $ 458.9 Closures 196.1 198.1
Plastic containers
143.2
159.6 Consolidated
$
792.7 $ 816.6
Income from operations: Metal containers $ 37.6 $
40.7 Closures (a) 24.5 21.6 Plastic containers (b) 0.1 9.2
Corporate
(4.8 )
(4.4 )
Consolidated
$ 57.4 $
67.1
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions)
March 31, March
31, Dec. 31,
2016
2015
2015
Assets: Cash and cash equivalents $ 66.6 $ 129.1 $ 99.9 Trade
accounts receivable, net 338.9 382.8 281.0 Inventories 753.0 680.2
628.1 Other current assets 48.2 36.4 36.1 Property, plant and
equipment, net 1,153.0 1,049.7 1,125.4 Other assets, net
1,024.8 1,052.0
1,022.2 Total assets
$
3,384.5 $ 3,330.2
$ 3,192.7 Liabilities and
stockholders’ equity: Current liabilities, excluding debt $ 484.9 $
447.4 $ 628.9 Current and long-term debt 1,818.0 1,896.6 1,513.5
Other liabilities 413.6 443.3 411.1 Stockholders’ equity
668.0 542.9
639.2 Total liabilities and stockholders’ equity
$ 3,384.5 $
3,330.2 $ 3,192.7
(a) Includes rationalization charges of $0.1 million and $0.3
million in 2016 and 2015, respectively.
(b) Includes rationalization charges of $1.0 million and $0.4
million in 2016 and 2015, respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
For the quarter ended March 31,
(Dollars in millions)
2016
2015
Cash flows provided by (used in) operating activities: Net
income $ 26.6 $ 33.3 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation and
amortization 36.2 36.7 Rationalization charges 1.1 0.7 Other
changes that provided (used) cash: Trade accounts receivable, net
(54.9 ) (84.7 ) Inventories (120.8 ) (145.0 ) Trade accounts
payable and other changes, net
(39.0
) 15.3 Net cash used in
operating activities
(150.8 )
(143.7 ) Cash flows provided by (used in)
investing activities: Capital expenditures (62.0 ) (48.8 ) Proceeds
from asset sales
1.1
- Net cash used in investing activities
(60.9 )
(48.8 ) Cash flows
provided by (used in) financing activities: Dividends paid on
common stock (10.5 ) (10.3 ) Changes in outstanding checks –
principally vendors (101.8 ) (82.8 ) Shares repurchased under
authorized repurchase program - (162.6 ) Net borrowings and other
financing activities
290.7
354.7 Net cash provided by financing activities
178.4 99.0
Cash and cash equivalents: Net decrease (33.3 ) (93.5 )
Balance at beginning of year
99.9
222.6 Balance at end of period
$
66.6 $ 129.1
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter ended March 31,
Table A
2016
2015
Net income per diluted share as reported $ 0.44 $ 0.53
Adjustments: Rationalization charges
0.01 0.01 Adjusted net income per
diluted share
$ 0.45 $
0.54
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended,
Table B
Second
Quarter
Year
Ended
June 30,
December
31,
Estimated
Actual
Estimated
Actual
Low High Low High
2016
2016
2015
2016
2016
2015
Net income per diluted share as estimated for 2016 and as reported
for 2015 $0.42 $0.52 $0.70 $2.70 $2.90 $2.81 Adjustments:
Rationalization charges 0.08 0.08 0.01 0.10 0.10 0.16 Costs
attributable to announced acquisitions (2)
-
- - - -
- Adjusted net income per diluted share as estimated
for 2016 and presented for 2015
$0.50
$0.60 $0.71 $2.80
$3.00 $2.97 (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 and costs
attributable to announced acquisitions 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. 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/20160427005182/en/
Silgan Holdings Inc.Robert B. Lewis,
203-406-3160
Silgan (NASDAQ:SLGN)
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