Silgan Announces Footprint Optimization in Metal Container Business
June 04 2019 - 5:30PM
Business Wire
Silgan Holdings Inc. (Nasdaq:SLGN) announced today that it is
closing its metal container manufacturing facilities in Mt. Vernon,
Missouri and Waupun, Wisconsin. The Company anticipates closing
both of these facilities during the fourth quarter of 2019. These
plant closings, in conjunction with the ratification last month of
a new labor agreement at the Company’s Menomonee Falls, Wisconsin
metal container manufacturing facility that provides for the
Company’s withdrawal from the Central States Pension Fund for that
facility, will result in the Company’s complete withdrawal from the
Central States Pension Fund. Volumes from the closed facilities
will be absorbed in existing facilities and in a new plant to be
leased in the Midwest of the United States.
“Decisions regarding footprint optimization plans are always
difficult, and we want to thank our dedicated employees at both
facilities for their long service and their anticipated efforts
during this transition. At Silgan, these decisions are driven by a
relentless pursuit to lower our overall cost structure, improve
operating efficiencies and enhance our leading competitive position
in our metal container business,” said Adam Greenlee, President of
Silgan. “Separately, we believe that withdrawing from the Central
States Pension Fund and providing our Menomonee Falls employees
with a company sponsored benefit plan is a better long-term
solution,” concluded Mr. Greenlee.
The Company expects to recognize estimated pre-tax
rationalization charges related to the plant closings, excluding
charges related to the withdrawal from the Central States Pension
Fund, of approximately $5.2 million in 2019, approximately $2.1
million of which is expected to be realized in the second quarter
of 2019 and approximately $2.2 million of which will be non-cash.
These rationalization charges include the write-down in carrying
value of assets, employee severance costs and plant exit costs
related to the plant closings.
While the Company has had annual funding requirements to the
Central States Pension Fund, the Company’s payments to the Central
States Pension Fund as a result of its complete withdrawal from
such pension fund will be fixed and will be for a definite period
not to exceed twenty years. As a result, the Company also expects
to recognize an estimated pre-tax rationalization charge of
approximately $37 million in 2019 for the present value of the
currently estimated withdrawal liability, of which approximately
$36 million is expected to be recognized in the second quarter of
2019. The Company expects that its annual withdrawal payments to
the Central States Pension Fund will be approximately $2.8 million
for no more than twenty years, likely starting in 2020. Although
the annual withdrawal payments will be somewhat higher than the
Company’s current annual funding requirements to the Central States
Pension Fund, such increase will not be significant to the Company.
The actual amount of the charge and payments could vary based on
final benefit calculations.
The Company’s earnings guidance for adjusted net income per
diluted share for the full year 2019 and second quarter of 2019 are
not impacted by the rationalization charges to be incurred in
connection with the plant closings and the withdrawal from the
Central States Pension Fund, as these charges are treated as
adjustments for purposes of adjusted net income per diluted share.
These charges will also not have an impact on the Company’s
estimate of free cash flow for 2019.
Silgan is a leading supplier of rigid packaging for consumer
goods products with annual net sales of approximately $4.4 billion
in 2018. 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, personal care, 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 2018 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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version on businesswire.com: https://www.businesswire.com/news/home/20190604006089/en/
Silgan Holdings Inc.Robert B. Lewis, (203) 406-3160
Silgan (NASDAQ:SLGN)
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