Highlights
- Acquired the Dispensing Systems
business on April 6, 2017
- Net income per share of $0.42
- Record adjusted net income per share of
$0.62
- Issued new U.S. Dollar and Euro senior
notes due 2025
- Amended and restated senior secured
credit facility extending maturities and increasing
flexibility
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for consumer goods products, today reported first quarter
2017 net income of $23.2 million, or $0.42 per diluted share, as
compared to first quarter 2016 net income of $26.6 million, or
$0.44 per diluted share.
“We are pleased with our first quarter 2017 results, as we
reported record adjusted net income per diluted share of $0.62,
representing a 37.8 percent increase over the prior year,” said
Tony Allott, President and CEO. “As expected, our metal and plastic
container businesses benefitted from lower manufacturing costs and
improved efficiencies resulting from our recently completed
footprint optimization programs. In addition, our metal container
business benefitted from a favorable mix of products sold in the
current year period. Our closures business performed well as
compared to a record quarter in the prior year. We are off to a
good start to the year, driven primarily by timing benefits in the
quarter, and are excited to welcome the newly acquired Dispensing
Systems business into Silgan. As a result of the net impact of the
recent acquisition and financing activities, we are raising our
full year 2017 estimate of adjusted net income per diluted share to
a range of $3.20 to $3.40,” continued Mr. Allott.
Adjusted net income per diluted share was $0.62 for the first
quarter of 2017, after adjustments increasing net income per
diluted share by $0.20. 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. 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 2017 were $805.4 million, an
increase of $12.7 million, or 1.6 percent, as compared to $792.7
million in 2016. This increase was primarily the result of an
increase in net sales in the metal container business.
Income from operations for the first quarter of 2017 was $56.8
million, a decrease of $0.6 million, or 1.0 percent, as compared to
$57.4 million for the first quarter of 2016, and operating margin
decreased to 7.1 percent from 7.2 percent for the same periods. The
decrease in income from operations was primarily the result of
initial costs attributed to the acquisition of the Dispensing
Systems business of $13.2 million, partially offset by an increase
in income from operations in the metal and plastic container
businesses.
Interest and other debt expense before loss on early
extinguishment of debt for the first quarter of 2017 was $20.4
million, an increase of $4.0 million as compared to the first
quarter of 2016. This increase was primarily due to higher weighted
average interest rates, including the impact from the issuance in
February 2017 of the 4 3/4% senior notes due 2025 and 3 1/4% senior
notes due 2025, and higher average outstanding borrowings. 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 new
senior notes.
The effective tax rates were 31.0 percent and 35.2 percent for
the first quarters of 2017 and 2016, respectively. The effective
tax rate in the first quarter of 2017 benefitted from higher income
in more favorable tax jurisdictions. 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.
Metal Containers
Net sales of the metal container business were $466.2 million
for the first quarter of 2017, an increase of $12.8 million, or 2.8
percent, as compared to $453.4 million in the same period in 2016.
This increase was primarily a result of a favorable mix of products
sold and the pass through of higher raw material costs, partially
offset by the impact of unfavorable foreign currency
translation.
Income from operations of the metal container business in the
first quarter of 2017 increased $6.3 million to $43.9 million as
compared to $37.6 million in first quarter of 2016, and operating
margin increased to 9.4 percent from 8.3 percent over the same
periods. The increase in income from operations was primarily
attributable to lower manufacturing costs, a favorable mix of
products sold and foreign currency transaction gains, partially
offset by the unfavorable impact from the contractual pass through
to customers of indexed deflation and higher depreciation
expense.
Closures
Net sales of the closures business were $197.7 million in the
first quarter of 2017, an increase of $1.6 million, or 0.8 percent,
as compared to $196.1 million in the first quarter of 2016. This
increase was primarily the result of the pass through of higher raw
material costs, partially offset by the impact of unfavorable
foreign currency translation.
Income from operations of the closures business for the first
quarter of 2017 decreased $0.7 million to $23.8 million as compared
to a record $24.5 million in the same period in 2016, and operating
margin decreased to 12.0 percent from 12.5 percent over the same
periods. The decrease in income from operations was primarily due
to the unfavorable impact from the lagged pass through of increases
in raw material costs.
Plastic Containers
Net sales of the plastic container business were $141.5 million
in the first quarter of 2017, a decrease of $1.7 million, or 1.2
percent, as compared to $143.2 million in the first quarter of
2016. This decrease was principally due to a less favorable mix of
products sold, partially offset by the pass through of higher raw
material costs, an increase in volumes of approximately 1 percent
and the impact of favorable foreign currency translation.
Income from operations of the plastic container business for the
first quarter of 2017 was $6.8 million, an increase of $6.7 million
as compared to $0.1 million in the same period in 2016, and
operating margin increased to 4.8 percent from 0.1 percent over the
same periods. The increase in income from operations was primarily
attributable to lower manufacturing costs, higher volumes and lower
rationalization charges, partially offset by higher depreciation
expense. Rationalization charges were $0.1 million and $1.0 million
in the same period in 2017 and 2016, respectively.
Outlook for 2017
The Company increased its estimate of adjusted net income per
diluted share for the full year of 2017, which excludes transaction
related costs attributed to announced acquisitions, rationalization
charges and loss from early extinguishment of debt, to a range of
$3.20 to $3.40 from the previous range of $3.15 to $3.35. This
estimate includes the favorable impact from the recently acquired
Dispensing Systems business, net of related purchase accounting
adjustments, partially offset by the impact from higher average
interest rates primarily as a result of the issuance of the new
senior notes in the first quarter of 2017. This estimate compares
to adjusted net income per diluted share for the full year of 2016
of $2.77.
The Company is providing an estimate of adjusted net income per
diluted share for the second quarter of 2017, which excludes
transaction related costs attributed to announced acquisitions,
rationalization charges and loss from early extinguishment of debt,
in the range of $0.65 to $0.75. This estimate includes the
unfavorable impact from the recently acquired Dispensing Systems
business, which is expected to be modestly dilutive in the second
quarter of 2017 due to anticipated purchase accounting adjustments,
and higher average interest rates primarily as a result of the
issuance of the new senior notes. This estimate compares to
adjusted net income per diluted share of $0.60 in the second
quarter of 2016.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the first quarter of 2017 at 11:00 a.m.
eastern time on April 26, 2017. The toll free number for those in
the U.S. and Canada is (877) 440-5804, and the number for
international callers is (719) 325-4807. For those unable to listen
to the live call, a taped rebroadcast will be available through May
10, 2017. 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 9734831.
* * *
Silgan is a leading supplier of rigid packaging for consumer
goods products with annual net sales of approximately $3.6 billion
in 2016. Silgan operates 100 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, 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 2016 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)
2017
2016
Net sales $ 805.4 $ 792.7 Cost of goods sold
680.8 678.8 Gross profit
124.6 113.9 Selling, general and administrative expenses
66.9 55.4 Rationalization charges
0.9
1.1 Income from operations 56.8 57.4
Interest and other debt expense before loss
on early extinguishment of debt
20.4 16.4 Loss on early extinguishment of debt
2.7 - Interest and other
debt expense
23.1 16.4
Income before income taxes 33.7 41.0 Provision for
income taxes
10.5 14.4
Net income
$ 23.2 $
26.6 Earnings per share: Basic net income per
share $ 0.42 $ 0.44 Diluted net income per share $ 0.42 $ 0.44
Cash dividends per common share $ 0.18 $ 0.17
Weighted average shares (000’s): Basic 55,115 60,451 Diluted 55,608
60,825
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL
DATA (UNAUDITED)
For the quarter ended March 31,
(Dollars in millions)
2017
2016
Net sales: Metal containers $ 466.2 $ 453.4 Closures 197.7 196.1
Plastic containers
141.5
143.2 Consolidated
$
805.4 $ 792.7
Income from operations: Metal containers (a) $ 43.9 $
37.6 Closures (b) 23.8 24.5 Plastic containers (c) 6.8 0.1
Corporate (d)
(17.7 )
(4.8
) Consolidated
$ 56.8
$ 57.4
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions)
March 31, March
31, Dec. 31,
2017
2016
2016
Assets: Cash and cash equivalents $ 350.6 $ 66.6 $ 24.7 Trade
accounts receivable, net 331.7 338.9 288.2 Inventories 712.9 753.0
603.0 Other current assets 48.4 48.2 46.3 Property, plant and
equipment, net 1,166.6 1,153.0 1,157.0 Other assets, net
1,039.8 1,024.8
1,030.2 Total assets
$
3,650.0 $ 3,384.5
$ 3,149.4 Liabilities and
stockholders’ equity: Current liabilities, excluding debt $ 512.8 $
484.9 $ 644.7 Current and long-term debt 2,172.0 1,818.0 1,561.6
Other liabilities 474.9 413.6 473.7 Stockholders’ equity
490.3 668.0
469.4 Total liabilities and stockholders’ equity
$ 3,650.0 $
3,384.5 $ 3,149.4 (a)
Includes rationalization charges of $0.7 million in 2017.
(b) Includes rationalization charges of $0.1 million in each of
2017 and 2016. (c) Includes rationalization charges of $0.1 million
and $1.0 million in 2017 and 2016, respectively. (d) Includes costs
attributed to announced acquisitions of $13.2 million in 2017.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
For the quarter ended March 31,
(Dollars in millions)
2017
2016
Cash flows provided by (used in) operating activities: Net
income $ 23.2 $ 26.6 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation and
amortization 37.6 36.2 Rationalization charges 0.9 1.1 Loss on
early extinguishment of debt 2.7 - Other changes that provided
(used) cash: Trade accounts receivable, net (41.5 ) (54.9 )
Inventories (107.4 ) (120.8 ) Trade accounts payable and other
changes, net
(56.4 )
(39.0 ) Net cash used in operating
activities
(140.9 )
(150.8
) Cash flows provided by (used in) investing activities:
Capital expenditures (38.9 ) (62.0 ) Proceeds from asset sales
0.4 1.1 Net
cash used in investing activities
(38.5 )
(60.9 ) Cash flows provided by (used in)
financing activities: Dividends paid on common stock (10.1 ) (10.5
) Changes in outstanding checks – principally vendors (78.9 )
(101.8 ) Net borrowings and other financing activities
594.3 290.7 Net cash
provided by financing activities
505.3
178.4 Cash and cash equivalents:
Net increase (decrease) 325.9 (33.3 ) Balance at beginning of year
24.7 99.9
Balance at end of period
$ 350.6
$ 66.6
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1) (UNAUDITED)
For the quarter ended March 31,
Table A
2017
2016
Net income per diluted share as reported $ 0.42 $ 0.44
Adjustments: Rationalization charges 0.01 0.01 Loss on early
extinguishment of debt 0.03 - Costs attributed to announced
acquisitions
0.16 -
Adjusted net income per diluted share
$
0.62 $ 0.45
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
2017
2017
2016
2017
2017
2016
Net income per diluted share as estimated for 2017 and as reported
for 2016 $0.47 $0.57 $0.55 $2.82 $3.02 $2.55 Adjustments:
Rationalization charges 0.01 0.01 0.05 0.02 0.02 0.20 Loss on early
extinguishment of debt 0.05 0.05 - 0.08 0.08 - Costs attributed to
announced acquisitions
0.12 0.12
- 0.28 0.28
0.02 Adjusted net income per diluted share as
estimated for 2017 and presented for 2016
$0.65
$0.75 $0.60 $3.20
$3.40 $2.77 (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 attributed to announced
acquisitions and the loss on early extinguishment of debt 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. Acquisition costs
attributed 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426005145/en/
Silgan Holdings Inc.Robert B. Lewis,
203-406-3160
Silgan (NASDAQ:SLGN)
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