News Details

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

STAMFORD, Conn.--(BUSINESS WIRE)--Jul. 22, 2015-- 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.

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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.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150722005266/en/

Source: Silgan Holdings Inc.

Silgan Holdings Inc.
Robert B. Lewis, 203-406-3160