Second Quarter 2017
Highlights
- Completed a two-for-one stock
split
- Net income per share of $0.25
- Adjusted net income per share increased
16.7 percent to $0.35
- Closed acquisition of Dispensing
Systems Business and advanced integration activities
- Redeemed $220 million 5% senior notes
due 2020
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for consumer goods products, today reported second
quarter 2017 net income of $27.9 million, or $0.25 per diluted
share, as compared to second quarter 2016 net income of $33.3
million, or $0.27 per diluted share.
“We are pleased with our second quarter 2017 results, as we
reported adjusted net income per diluted share of $0.35, an
increase of 16.7 percent over the prior year period with
improvement in each of our businesses,” said Tony Allott, President
and CEO. “Our results include the recently acquired Dispensing
Systems operations, which is performing well and making good
progress towards integration and synergy targets. Our metal and
plastic container businesses continue to benefit from lower
manufacturing costs and improved efficiencies resulting from our
recently completed footprint optimization program. Our closures
business benefitted from the inclusion of Dispensing Systems in the
quarter, and the legacy operations performed well primarily due to
manufacturing cost savings and efficiencies, partially offset by
lower unit volumes as compared to record volumes in the prior year
quarter,” continued Mr. Allott. “Based upon our performance to date
and continued confidence in achieving our proposed synergy targets
for the Dispensing Systems operations, we are confirming our full
year 2017 earnings estimate of adjusted net income per diluted
share in the range of $1.60 to $1.70,” continued Mr. Allott.
Adjusted net income per diluted share was $0.35 for the second
quarter of 2017, after adjustments increasing net income per
diluted share by $0.10. Adjusted net income per diluted share was
$0.30 for the second quarter of 2016, after adjustments increasing
net income per diluted share by $0.03. 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. All per
share amounts have been adjusted for the two-for-one stock split
that occurred on May 26, 2017.
Net sales for the second quarter of 2017 were $1,021.8 million,
an increase of $147.2 million, or 16.8 percent, as compared to
$874.6 million in 2016. This increase was the result of the
acquisition of Dispensing Systems in April 2017 and higher net
sales across all of the businesses.
Income from operations for the second quarter of 2017 was $75.2
million, an increase of $7.5 million, or 11.1 percent, as compared
to $67.7 million for the second quarter of 2016, while operating
margin decreased to 7.4 percent from 7.7 percent for the same
periods. The increase in income from operations was the result of
the net benefit from the acquisition of Dispensing Systems and
higher income from operations in each of the businesses. The
decrease in operating margin was due primarily to the negative
impact from the purchase accounting write-up of inventory of
Dispensing Systems and acquisition related costs in the quarter.
Rationalization charges were $3.0 million and $5.0 million in the
second quarters of 2017 and 2016, respectively.
Interest and other debt expense before loss on early
extinguishment of debt for the second quarter of 2017 was $29.1
million, an increase of $12.2 million as compared to the second
quarter of 2016. This increase was primarily due to higher average
outstanding borrowings as a result of additional borrowings under
the senior secured credit facility for the acquisition of
Dispensing Systems in April 2017 and higher weighted average
interest rates, including the impact from increasing long-term
fixed rate debt through the issuance in February 2017 of the 4 3/4%
senior notes due 2025 and the 3 1/4% senior notes due 2025. Loss on
early extinguishment of debt of $4.4 million in the second quarter
of 2017 was primarily a result of the partial redemption of the 5%
senior notes due 2020 in April 2017.
The effective tax rates were 33.0 percent and 34.4 percent for
the second quarters of 2017 and 2016, respectively. The effective
tax rate in the second quarter of 2017 benefitted from the
settlement of a state tax audit.
Metal Containers
Net sales of the metal container business were $529.7 million
for the second quarter of 2017, an increase of $0.1 million, as
compared to $529.6 million in 2016. This increase was primarily the
result of the pass through of higher raw material costs, mostly
offset by a less favorable mix of products sold and the impact of
unfavorable foreign currency translation.
Income from operations of the metal container business in the
second quarter of 2017 increased $3.5 million to $49.4 million as
compared to $45.9 million in 2016, and operating margin increased
to 9.3 percent from 8.7 percent over the same periods. The increase
in income from operations was primarily attributable to lower
manufacturing costs and lower rationalization charges, partially
offset by the unfavorable impact of a $3.0 million charge related
to the resolution of a past non-commercial legal dispute, a smaller
build in inventory in the second quarter of 2017 as compared to the
prior year period, higher depreciation expense, foreign currency
transaction losses in the current year quarter and the unfavorable
impact from the contractual pass through to customers of indexed
deflation. Rationalization charges were $2.2 million and $4.0
million in the second quarters of 2017 and 2016, respectively.
Closures
Net sales of the closures business were $349.1 million in the
second quarter of 2017, an increase of $142.6 million, or 69.1
percent, as compared to $206.5 million in the second quarter of
2016. This increase was primarily the result of the inclusion of
the recently acquired Dispensing Systems operations and the pass
through of higher raw material costs, partially offset by lower
unit volumes of approximately 2 percent in the legacy closures
operations principally due to lower sales for single-serve
beverages as compared to record volumes in the prior year period
and the impact of unfavorable foreign currency translation.
Income from operations of the closures business for the second
quarter of 2017 increased $8.5 million to $33.8 million as compared
to $25.3 million in 2016, while operating margin decreased to 9.7
percent from 12.3 percent over the same periods. The increase in
income from operations was primarily due to the acquisition of
Dispensing Systems and manufacturing cost savings and efficiencies,
partially offset by lower unit volumes in the legacy closures
operations. Operating margin was unfavorably impacted due to the
write-up of inventory of Dispensing Systems for purchase
accounting.
Plastic Containers
Net sales of the plastic container business were $143.0 million
in the second quarter of 2017, an increase of $4.5 million, or 3.2
percent, as compared to $138.5 million in the second quarter of
2016. This increase was principally due to the pass through of
higher raw material costs, partially offset by a less favorable mix
of products sold and the impact of unfavorable foreign currency
translation.
Income from operations of the plastic container business for the
second quarter of 2017 was $6.7 million, an increase of $5.7
million as compared to $1.0 million in 2016, and operating margin
increased to 4.7 percent from 0.7 percent over the same periods.
The increase in income from operations was primarily attributable
to lower manufacturing costs, partially offset by higher
depreciation expense.
Six Months
Net income for the first six months of 2017 was $51.2 million,
or $0.46 per diluted share, as compared to net income for the first
six months of 2016 of $59.9 million, or $0.49 per diluted share.
Adjusted net income per diluted share for the first six months of
2017 was $0.66 versus $0.52 in the prior year period, after
adjustments increasing net income per diluted share by $0.20 for
the first six months of 2017 and adjustments increasing net income
per diluted share by $0.03 for the first six months of 2016.
Net sales for the first six months of 2017 increased $159.8
million, or 9.6 percent, to $1.83 billion as compared to $1.67
billion for the first six months of 2016. This increase was a
result of higher net sales in each of the businesses primarily due
to the acquisition of Dispensing Systems, the pass through of
higher raw material costs across all businesses, a favorable mix of
products sold in the metal container business and slightly higher
volumes in the plastic container business, partially offset by the
impact of unfavorable foreign currency translation, a less
favorable mix of products sold in the plastic container business
and lower unit volumes in the legacy closures operations.
Income from operations for the first six months of 2017 was
$132.0 million, an increase of $6.9 million, or 5.5 percent, from
the same period in 2016, while operating margin decreased to 7.2
percent from 7.5 percent for the same periods. The increase in
income from operations was a result of higher income from
operations in each of the businesses primarily due to lower
manufacturing costs in each of the businesses, the acquisition of
Dispensing Systems, a favorable mix of products sold in the metal
container business, lower rationalization charges and slightly
higher volumes in the plastic container business. These increases
were partially offset by acquisition related costs of $23.0
million, higher depreciation expense, the unfavorable impact
related to the resolution of a past non-commercial legal dispute, a
smaller build in inventory in the metal container business in the
current year period, the unfavorable impact from the contractual
pass through to customers of indexed deflation in the metal
container business and lower unit volumes in the legacy closures
operations. Operating margin was unfavorably impacted due to
acquisition related costs and the write-up of inventory of
Dispensing Systems for purchase accounting. Rationalization charges
were $3.9 million and $6.1 million in the first six months of 2017
and 2016, respectively.
Interest and other debt expense before loss on early
extinguishment of debt for the first six months of 2017 was $49.6
million, an increase of $16.3 million as compared to the same
period in 2016. This increase was primarily due to higher weighted
average interest rates, including the impact from increasing
long-term fixed rate debt through the issuance in February 2017 of
the 4 3/4% senior notes due 2025 and the 3 1/4% senior notes due
2025, and higher average outstanding borrowings primarily as a
result of additional borrowings under the senior secured credit
facility for the acquisition of Dispensing Systems in April 2017.
Loss on early extinguishment of debt of $7.1 million in 2017 was 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 and the
partial redemption of the 5% senior notes due 2020 in April
2017.
The effective tax rate for the first six months of 2017 was 32.1
percent as compared to 34.7 percent for the first six months of
2016. The effective tax rate in 2017 benefitted from the settlement
of a state tax audit. The effective tax rate in 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.
Outlook for 2017
The Company confirmed 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, in the range of
$1.60 to $1.70. This estimate compares to adjusted net income per
diluted share for the full year of 2016 of $1.38.
The Company is providing an estimate of adjusted net income per
diluted share for the third quarter of 2017, which excludes
transaction related costs attributed to announced acquisitions and
rationalization charges, in the range of $0.64 to $0.71. Given the
uncertainties around the timing of the fruit and vegetable harvest
in the U.S. and Europe, 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 $0.61 in the
third quarter of 2016.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the second quarter of 2017 at 11:00 a.m.
Eastern time on July 26, 2017. The toll free number for those in
the U.S. and Canada is (877) 856-1968, and the number for
international callers is (719) 457-2615. For those unable to listen
to the live call, a taped rebroadcast will be available through
August 9, 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 2059827.
Silgan is a leading supplier of rigid packaging for consumer
goods products with annual net sales, on a pro forma basis to
include the Dispensing Systems operations which was acquired on
April 6, 2017, of approximately $4.2 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 and six months ended June
30,
(Dollars in millions, except per share
amounts)
Second
Quarter
Six
Months
2017
2016
2017
2016
Net sales $ 1,021.8 $ 874.6 $ 1,827.2 $ 1,667.4 Cost
of goods sold
856.6 746.9
1,537.4 1,425.8
Gross profit 165.2 127.7 289.8 241.6 Selling, general and
administrative expenses 87.0 55.0 153.9 110.4
Rationalization charges
3.0
5.0 3.9 6.1
Income from operations 75.2 67.7 132.0 125.1 Interest
and other debt expense before loss on early extinguishment of debt
29.1 16.9 49.6 33.3 Loss on early extinguishment of debt
4.4 -
7.1 - Interest and other
debt expense
33.5 16.9
56.7 33.3 Income
before income taxes 41.7 50.8 75.3 91.8 Provision for income
taxes
13.8 17.5
24.1 31.9 Net income
$ 27.9 $ 33.3
$ 51.2 $ 59.9
Earnings per share: (1) Basic net income per share $ 0.25 $
0.28 $ 0.46 $ 0.50 Diluted net income per share $ 0.25 $ 0.27 $
0.46 $ 0.49 Cash dividends per common share (1) $ 0.09 $
0.09 $ 0.18 $ 0.17 Weighted average shares (000’s): (1)
Basic 110,358 121,009 110,291 120,953 Diluted 111,326 121,719
111,267 121,682
(1)
Per share and share amounts have been adjusted for the
two-for-one stock split that occurred on May 26, 2017
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL
DATA (UNAUDITED)
For the quarter and six months ended June
30,
(Dollars in millions)
Second
Quarter
Six
Months
2017
2016
2017
2016
Net sales: Metal containers $ 529.7 $ 529.6 $ 995.9 $ 983.1
Closures 349.1 206.5 546.8 402.6 Plastic containers
143.0 138.5
284.5 281.7
Consolidated
$ 1,021.8
$ 874.6 $
1,827.2 $ 1,667.4
Income from operations: Metal containers (a) $ 49.4 $
45.9 $ 93.3 $ 83.5 Closures (b) 33.8 25.3 57.6 49.8 Plastic
containers (c) 6.7 1.0 13.5 1.1 Corporate (d)
(14.7 )
(4.5 )
(32.4 )
(9.3 )
Consolidated
$ 75.2 $
67.7 $ 132.0
$ 125.1
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions)
June 30, June 30,
Dec. 31,
2017
2016
2016
Assets: Cash and cash equivalents $ 142.1 $ 120.5 $ 24.7 Trade
accounts receivable, net 528.4 394.8 288.2 Inventories 830.9 806.5
603.0 Other current assets 68.0 45.6 46.3 Property, plant and
equipment, net 1,452.6 1,165.1 1,157.0 Other assets, net
1,872.6 1,021.7
1,030.2 Total assets
$
4,894.6 $ 3,554.2
$ 3,149.4 Liabilities and
stockholders’ equity: Current liabilities, excluding debt $ 630.4 $
508.4 $ 644.7 Current and long-term debt 3,093.8 1,935.1 1,561.6
Other liabilities 627.4 421.3 473.7 Stockholders’ equity
543.0 689.4
469.4 Total liabilities and stockholders’ equity
$ 4,894.6 $
3,554.2 $ 3,149.4
(a) Includes rationalization charges of
$2.2 million and $4.0 million for the three months ended June 30,
2017 and 2016, respectively, and $2.9 million and $4.0 million for
the six months ended June 30, 2017 and 2016, respectively. Includes
a $3.0 million charge for the three and six months ended June 30,
2017 related to the resolution of a past non-commercial legal
dispute. (b) Includes rationalization charges of $0.3 million for
each of the three months ended June 30, 2017 and 2016 and $0.4
million for each of the six months ended June 30, 2017 and 2016.
(c) Includes rationalization charges of $0.5 million and $0.7
million for the three months ended June 30, 2017 and 2016,
respectively, and $0.6 million and $1.7 million for the six months
June 30, 2017 and 2016, respectively. (d) Includes costs attributed
to announced acquisitions of $9.8 million and $23.0 million for the
three and six months ended June 30, 2017, respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
For the six months ended June 30,
(Dollars in millions)
2017
2016
Cash flows provided by (used in) operating activities: Net
income $ 51.2 $ 59.9 Adjustments to reconcile net income to net
cash provided by (used in) operating activities: Depreciation and
amortization 83.3 73.0 Rationalization charges 3.9 6.1 Loss on
early extinguishment of debt 7.1 - Other changes that provided
(used) cash, net of effects from acquisition: Trade accounts
receivable, net (118.5 ) (111.6 ) Inventories (134.4 ) (176.4 )
Trade accounts payable and other changes, net
(31.4 ) (13.6
) Net cash used in operating activities
(138.8 )
(162.6 ) Cash
flows provided by (used in) investing activities: Purchase of
business, net of cash acquired (1,022.1 ) - Capital expenditures
(81.3 ) (111.7 ) Proceeds from asset sales
0.5
8.8 Net cash used in investing
activities
(1,102.9 )
(102.9 ) Cash flows provided by (used in)
financing activities: Dividends paid on common stock (20.3 ) (20.9
) Changes in outstanding checks – principally vendors (78.9 )
(101.8 ) Net borrowings and other financing activities
1,458.3 408.8 Net
cash provided by financing activities
1,359.1
286.1 Cash and cash
equivalents: Net increase 117.4 20.6 Balance at beginning of year
24.7 99.9
Balance at end of period
$ 142.1
$ 120.5
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1)(2)
(UNAUDITED)
For the quarter and six months ended June
30,
Table A
Second
Quarter
Six
Months
2017
2016
2017
2016
Net income per diluted share as reported $0.25 $0.27 $0.46
$0.49 Adjustments:
Rationalization charges
0.02 0.03 0.02 0.03 Loss on early extinguishment of debt 0.02 -
0.04 - Costs attributed to announced acquisitions
0.06
- 0.14 - Adjusted net income
per diluted share
$0.35 $0.30
$0.66 $0.52
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME
PER DILUTED SHARE (1)(2)
(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
2017
2017
2016
2017
2017
2016
Net income per diluted share as estimated for 2017 and as reported
for 2016 $0.64 $0.71 $0.57 $1.40 $1.50 $1.27 Adjustments:
Rationalization charges - - 0.04 0.02 0.02 0.10 Loss on early
extinguishment of debt - - - 0.04 0.04 - Costs attributed to
announced acquisitions
- - -
0.14 0.14 0.01 Adjusted net
income per diluted share as estimated for 2017 and presented for
2016
$0.64 $0.71 $0.61
$1.60 $1.70 $1.38 (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. (2) Per share amounts have been
adjusted for the two-for-one stock split that occurred on May 26,
2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726005131/en/
Silgan Holdings Inc.Robert B. Lewis,
203-406-3160
Silgan (NASDAQ:SLGN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Silgan (NASDAQ:SLGN)
Historical Stock Chart
From Apr 2023 to Apr 2024
