Highlights
- Net income per share of $1.15
- Adjusted net income per share of
$1.23
- Burlington, Iowa metal container plant
commenced commercial production
- LaPorte, Indiana metal container plant
closed
- Cape Girardeau, Missouri plastic
container plant closed
- Commenced tender offer for up to $250
million of common stock
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for shelf-stable food and other consumer goods products,
today reported third quarter 2016 net income of $69.8 million, or
$1.15 per diluted share, as compared to third quarter 2015 net
income of $70.3 million, or $1.16 per diluted share.
“We are pleased with our third quarter 2016 results, as we
reported adjusted net income per diluted share of $1.23 which was
in line with our expectations,” said Tony Allott, President and
CEO. “Volumes in our metal container business were flat compared to
the prior year period as a result of stronger sales for pet food,
offset by a weaker than anticipated seasonal harvest in Europe due
to unfavorable weather conditions across the region. The metal
container business is on track with the qualification process of
the new can manufacturing facility, allowing for the shutdown of
the LaPorte plant in the beginning of October. Our closures
business continued to experience strong volume growth due to the
demand for single-serve beverages in the U.S., partially offset by
softer volumes in Europe as a result of unfavorable weather
conditions,” continued Mr. Allott. “As expected, our plastic
container business saw sequential improvement in its manufacturing
performance, allowing it to close operations in Cape Girardeau at
the end of September. Based on our year to date performance and an
early completion of the pack season, we are narrowing our full year
2016 earnings estimate of adjusted net income per diluted share to
a range of $2.70 to $2.80,” continued Mr. Allott.
Adjusted net income per diluted share was $1.23 for the third
quarter of 2016, after adjustments increasing net income per
diluted share by $0.08. Adjusted net income per diluted share was
$1.26 for the third quarter of 2015, 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.
Net sales for the third quarter of 2016 were $1.14 billion, a
decrease of $63.9 million, or 5.3 percent, as compared to $1.20
billion in 2015. This decrease was the result of lower net sales in
all of our businesses, each of which was unfavorably impacted by
the pass through of lower raw material costs.
Income from operations for the third quarter of 2016 was $122.4
million, an increase of $0.5 million, or 0.4 percent, as compared
to $121.9 million for the third quarter of 2015, and operating
margin increased to 10.7 percent from 10.1 percent for the same
periods. The increase in income from operations was the result of
an increase in income from operations in the closures and plastic
container businesses, partially offset by a decrease in income from
operations in the metal container business. Rationalization charges
were $7.8 million and $9.1 million in the third quarters of 2016
and 2015, respectively.
The effective tax rates were 33.6 percent and 32.9 percent for
the third quarters of 2016 and 2015, respectively. The effective
tax rate in 2015 benefited from higher income in lower tax
jurisdictions.
Metal Containers
Net sales of the metal container business were $797.4 million
for the third quarter of 2016, a decrease of $48.0 million, or 5.7
percent, as compared to $845.4 million in 2015. This decrease was
primarily the result of the pass through of lower raw material and
other manufacturing costs and a less favorable mix of products
sold. Unit volumes in the third quarter of 2016 were flat as
compared to the same period in the prior year, as higher volumes
for pet food were offset by a decrease in unit volumes across
Europe due to wet weather which resulted in poor growing conditions
for the fruit and vegetable pack.
Income from operations of the metal container business in the
third quarter of 2016 decreased $8.0 million to $98.0 million as
compared to $106.0 million in 2015, and operating margin decreased
to 12.3 percent from 12.5 percent over the same periods. The
decrease in income from operations was primarily due to the
unfavorable impact from the contractual pass through to customers
of indexed deflation, higher rationalization charges and a less
favorable mix of products sold, partially offset by better
operating performance than in the prior year quarter.
Rationalization charges were $4.3 million in the third quarter of
2016 primarily related to the shutdown of the LaPorte, Indiana
manufacturing facility.
Closures
Net sales of the closures business were $211.9 million in the
third quarter of 2016, a decrease of $3.8 million, or 1.8 percent,
as compared to $215.7 million in the third quarter of 2015. This
decrease was primarily the result of the pass through of lower raw
material costs, partially offset by an increase in unit volumes of
approximately 2 percent. The increase in unit volumes was primarily
due to continued strong demand from U.S. beverage markets,
partially offset by volume declines in Europe due to wet weather
and poor growing conditions for the fruit and vegetable pack.
Income from operations of the closures business for the third
quarter of 2016 increased $1.3 million to $28.4 million as compared
to $27.1 million in 2015, and operating margin increased to 13.4
percent from 12.6 percent over the same periods. The increase in
income from operations was primarily due to higher unit volumes and
improved manufacturing efficiencies.
Plastic Containers
Net sales of the plastic container business were $130.3 million
in the third quarter of 2016, a decrease of $12.1 million, or 8.5
percent, as compared to $142.4 million in the third quarter of
2015. This decrease was principally due to lower unit volumes of
approximately 6 percent as a result of the continued rebalancing of
the customer portfolio in conjunction with the footprint
optimization program and the pass through of lower raw material
costs.
Income from operations of the plastic container business for the
third quarter of 2016 was $0.8 million, an increase of $8.1 million
as compared to a loss from operations of $7.3 million in 2015. The
increase in income from operations was primarily attributable to
lower rationalization charges and improved manufacturing
performance, partially offset by lower unit volumes.
Rationalization charges were $3.5 million and $8.9 million in the
third quarters of 2016 and 2015, respectively.
Nine Months
Net income for the first nine months of 2016 was $129.7 million,
or $2.13 per diluted share, as compared to net income for the first
nine months of 2015 of $145.9 million, or $2.37 per diluted share.
Adjusted net income per diluted share for the first nine months of
2016 was $2.27 versus $2.49 in the prior year period, after
adjustments increasing net income per diluted share by $0.14 for
the first nine months of 2016 and by $0.12 for the first nine
months of 2015.
Net sales for the first nine months of 2016 decreased $127.3
million, or 4.3 percent, to $2.81 billion as compared to $2.93
billion for the first nine months of 2015. This decrease was
primarily the result of the pass through of lower raw material and
other manufacturing costs in the metal container and closures
businesses and lower unit volumes, the pass through of lower raw
material costs and the impact of unfavorable foreign currency
translation in the plastic container business, partially offset by
an increase in unit volumes in the closures business.
Income from operations for the first nine months of 2016 was
$247.5 million, a decrease of $19.8 million, or 7.4 percent, from
the same period in 2015. This decrease was primarily due to higher
manufacturing costs in the metal and plastic container businesses
including start-up costs related to the new manufacturing
facilities, lower unit volumes in the plastic container business,
the contractual pass through to customers of indexed deflation in
the metal container business, the unfavorable impact from the
lagged pass through of changes in resin costs in the closures and
plastic container businesses as compared to the prior year period
and higher rationalization charges. These decreases were partially
offset by an increase in unit volumes and improved manufacturing
efficiencies in the closures business. Rationalization charges were
$13.9 million and $10.8 million in the first nine months of 2016
and 2015, respectively.
The effective tax rate for the first nine months of 2016 was
34.1 percent as compared to 32.8 percent for the first nine months
of 2015. The effective tax rate in 2015 benefited from higher
income in more favorable tax jurisdictions.
Outlook for 2016
The Company narrowed its estimate of adjusted net income per
diluted share for the full year of 2016, which excludes
rationalization charges, to a range of $2.70 to $2.80 from a range
of $2.70 to $2.90. 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 fourth quarter of 2016, which excludes
rationalization charges, in the range of $0.43 to $0.53. This
estimate compares to adjusted net income per diluted share of $0.48
in the fourth quarter of 2015, which was favorably impacted by a
lower effective tax rate and the absorption benefit from a sizeable
inventory build in the metal container business.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the third quarter of 2016 at 11:00 a.m.
eastern time on October 26, 2016. The toll free number for those in
the U.S. and Canada is (888) 300-2343, and the number for
international callers is (719) 325-2234. For those unable to listen
to the live call, a taped rebroadcast will be available through
November 9, 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 for the rebroadcast is
7703295.
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 87
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 and nine months ended
September 30,
(Dollars in millions, except per share
amounts)
Third
Quarter
Nine
Months
2016
2015
2016
2015
Net sales $ 1,139.6 $ 1,203.5 $ 2,807.0 $ 2,934.3
Cost of goods sold
957.7
1,018.4 2,383.5
2,493.3 Gross profit 181.9 185.1 423.5 441.0
Selling, general and administrative expenses 51.7 54.1 162.1
162.9 Rationalization charges
7.8
9.1 13.9 10.8
Income from operations 122.4 121.9 247.5 267.3
Interest and other debt expense
17.3
17.1 50.7 50.4
Income before income taxes 105.1 104.8 196.8 216.9
Provision for income taxes
35.3
34.5 67.1 71.0
Net income
$ 69.8 $
70.3 $ 129.7 $
145.9 Earnings per share: Basic net income per
share $ 1.15 $ 1.16 $ 2.14 $ 2.38 Diluted net income per share $
1.15 $ 1.16 $ 2.13 $ 2.37 Cash dividends per common share $
0.17 $ 0.16 $ 0.51 $ 0.48 Weighted average shares (000’s):
Basic 60,445 60,417 60,467 61,222 Diluted 60,829 60,696 60,838
61,493
SILGAN HOLDINGS INC. CONSOLIDATED
SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and nine months ended
September 30,
(Dollars in millions)
Third
Quarter
Nine
Months
2016
2015
2016
2015
Net sales: Metal containers $ 797.4 $ 845.4 $ 1,780.4 $ 1,858.0
Closures 211.9 215.7 614.6 620.9 Plastic containers
130.3 142.4
412.0 455.4 Consolidated
$ 1,139.6 $
1,203.5 $ 2,807.0
$ 2,934.3 Income from operations:
Metal containers (a) $ 98.0 $ 106.0 $ 181.5 $ 195.0 Closures (b)
28.4 27.1 78.2 73.2 Plastic containers (c) 0.8 (7.3 ) 1.9 11.3
Corporate
(4.8 )
(3.9 )
(14.1 )
(12.2 )
Consolidated
$ 122.4 $
121.9 $ 247.5 $
267.3 SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
Sept. 30, Sept. 30, Dec. 31,
2016
2015
2015
Assets: Cash and cash equivalents $ 93.6 $ 104.2 $ 99.9 Trade
accounts receivable, net 515.6 623.6 281.0 Inventories 638.1 580.3
628.1 Other current assets 51.1 29.1 36.1 Property, plant and
equipment, net 1,171.2 1,099.9 1,125.4 Other assets, net
1,031.9 1,054.8
1,022.2 Total assets
$
3,501.5 $ 3,491.9
$ 3,192.7 Liabilities and
stockholders’ equity: Current liabilities, excluding debt $ 512.1 $
492.1 $ 628.9 Current and long-term debt 1,818.4 1,918.9 1,513.5
Other liabilities 419.3 449.0 411.1 Stockholders’ equity
751.7 631.9
639.2 Total liabilities and stockholders’ equity
$ 3,501.5 $
3,491.9 $ 3,192.7 (a)
Includes rationalization charges of $4.3 million and $8.3
million for the three and nine months ended September 30, 2016,
respectively. (b) Includes rationalization charges of $0.2 million
for the three months ended September 30, 2015, and $0.5 million and
$1.4 million for the nine months ended September 30, 2016 and 2015,
respectively. (c) Includes rationalization charges of $3.5 million
and $8.9 million for the three months ended September 30, 2016 and
2015, respectively, and $5.1 million and $9.4 million for the nine
months ended September 30, 2016 and 2015, respectively.
SILGAN HOLDINGS INC. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September
30,
(Dollars in millions)
2016
2015
Cash flows provided by (used in) operating activities: Net
income $ 129.7 $ 145.9 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation and
amortization 110.3 109.8 Rationalization charges 13.9 10.8 Other
changes that provided (used) cash: Trade accounts receivable, net
(231.7 ) (325.3 ) Inventories (6.5 ) (43.7 ) Trade accounts payable
and other changes, net
(27.2 )
55.0 Net cash used in operating activities
(11.5 )
(47.5 ) Cash
flows provided by (used in) investing activities: Purchase of
business, net of cash acquired - (0.7 ) Capital expenditures (151.5
) (151.4 ) Proceeds from asset sales
8.9
0.2 Net cash used in investing activities
(142.6 )
(151.9 ) Cash
flows provided by (used in) financing activities: Dividends paid on
common stock (31.3 ) (29.9 ) Changes in outstanding checks –
principally vendors (101.8 ) (82.8 ) Shares repurchased under
authorized repurchase program (7.2 ) (170.1 ) Net borrowings and
other financing activities
288.1
363.8 Net cash provided by financing activities
147.8 81.0 Cash and cash
equivalents: Net decrease (6.3 ) (118.4 ) Balance at beginning of
year
99.9 222.6 Balance at
end of period
$ 93.6 $
104.2 SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and nine months ended
September 30,
Table A
Third
Quarter
Nine
Months
2016
2015
2016
2015
Net income per diluted share as reported $ 1.15 $ 1.16 $
2.13 $ 2.37 Adjustments: Rationalization charges
0.08 0.10 0.14
0.12 Adjusted net income per diluted share
$ 1.23 $ 1.26
$ 2.27 $ 2.49
SILGAN HOLDINGS INC. RECONCILIATION OF
ADJUSTED NET INCOME PER DILUTED SHARE (1) (UNAUDITED)
For the quarter and year ended,
Table B
Fourth
Quarter
Year
Ended
December
31,
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 $ 0.44 $ 2.55 $ 2.65 $ 2.81
Adjustments: Rationalization charges 0.01 0.01 0.04 0.15 0.15 0.16
Costs attributable to announced acquisitions (2)
- - -
- - - Adjusted
net income per diluted share as estimated for 2016 and presented
for 2015
$ 0.43 $
0.53 $ 0.48 $
2.70 $ 2.80 $
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/20161026005243/en/
For Silgan Holdings Inc.Robert B. Lewis, 203-406-3160
Silgan (NASDAQ:SLGN)
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