SLGN
Silgan Holdings INC
NYSE
10-Q: Silgan Holdings Reports Lower Q1 2024 Sales and Earnings Amidst Volume Declines
Sentiment:
Quarterly Report
8 May 2024 2:10 PM
Silgan Holdings experienced a decrease in net sales and income for the first quarter of 2024, primarily due to lower volumes across all segments and unfavorable impacts from raw material costs.
Worse than expected
The company's net sales and net income were lower than the same period last year due to lower volumes and unfavorable impacts from raw material costs.
The company's earnings per share were lower than the same period last year due to lower net income.
The company's adjusted EBIT was lower than the same period last year due to lower sales and higher costs.
Summary
- Silgan Holdings reported a decrease in net sales to $1.32 billion for the first quarter of 2024, down from $1.42 billion in the same period of 2023.
- The company's net income also declined to $55.2 million, or $0.52 per diluted share, compared to $72 million, or $0.65 per diluted share, in the first quarter of 2023.
- The decrease in sales was primarily due to lower volumes across all segments, the pass-through of lower raw material costs in the metal containers segment, and a less favorable product mix in the dispensing and specialty closures segment.
- Gross profit margin increased slightly to 17.0% from 16.8% in the prior year.
- Rationalization charges increased to $11.7 million in Q1 2024 from $4.1 million in Q1 2023.
- Interest and other debt expense increased to $38.6 million from $36.8 million due to higher weighted average interest rates.
- The company's effective tax rate was 24.5% for Q1 2024, compared to 23.8% for Q1 2023.
Sentiment
Score: 4
Explanation: The document indicates a negative sentiment due to decreased sales, earnings, and increased rationalization charges. While there are some positives, the overall tone suggests a challenging quarter.
Positives
- Gross profit margin saw a slight increase to 17.0% from 16.8% in the prior year.
- The company continues to evaluate acquisition opportunities in the consumer goods packaging market.
- Silgan is in compliance with all financial and operating covenants contained in its financing agreements.
Negatives
- Net sales decreased by 7.1% year-over-year, primarily due to lower volumes across all segments.
- Net income decreased significantly to $55.2 million from $72 million in the same quarter of the previous year.
- Rationalization charges increased substantially to $11.7 million from $4.1 million.
- Interest and other debt expense increased due to higher weighted average interest rates.
- The company experienced customer destocking across several categories, impacting sales volumes.
Risks
- The company's performance is subject to fluctuations in raw material costs, particularly metal prices.
- Seasonal sales patterns, especially in the metal containers segment, can lead to variability in financial results.
- The company faces risks related to interest rate changes and foreign currency exchange rate fluctuations.
- The company's reliance on debt financing exposes it to risks associated with changes in credit markets.
- The company's business is dependent on the size and quality of vegetable and fruit harvests, which are subject to weather conditions.
Future Outlook
The company believes that cash generated from operations and funds from borrowings will be sufficient to meet its expected operating needs, planned capital expenditures, debt service, tax obligations, pension benefit plan contributions, share repurchases and common stock dividends for the foreseeable future. The company continues to evaluate acquisition opportunities in the consumer goods packaging market.
Management Comments
- Management uses non-GAAP financial measures to review and analyze the operating performance of the Company and its segments.
- Management believes that it is important and useful to present these non-GAAP financial measures because they allow for a better period-over-period comparison of results by removing the impact of items that, in managements view, do not reflect the Company's or its segments core operating performance.
Industry Context
The results reflect a broader trend of destocking by customers across various industries, impacting sales volumes. The company's performance is also influenced by raw material costs and seasonal factors, which are common in the packaging industry.
Comparison to Industry Standards
- Silgan's performance is impacted by similar factors as other packaging companies, such as raw material costs and customer destocking.
- Comparable companies in the rigid packaging sector include Crown Holdings and Ball Corporation, which also face similar challenges related to raw material costs and demand fluctuations.
- Silgan's adjusted EBIT margin of 10.3% is within the range of other major packaging companies, but the decrease in sales and earnings is a concern.
- The company's debt levels are significant, which is typical for companies in this sector that have grown through acquisitions, but the increase in interest expense is a negative factor.
Stakeholder Impact
- Shareholders will be impacted by the decrease in earnings and share price.
- Employees may be affected by ongoing rationalization plans.
- Customers may experience changes in product availability due to destocking and supply chain adjustments.
- Suppliers may be impacted by the company's supply chain finance program.
Next Steps
- The company will continue to evaluate cost reduction opportunities across each of its segments.
- The company will continue to evaluate acquisition opportunities in the consumer goods packaging market.
- The company will monitor its seasonal working capital requirements and fund them through revolving loans and cash on hand.
Key Dates
- 2022-03-04: Board of Directors authorized the repurchase of up to $300 million of common stock.
- 2023-03: Entered into four U.S. dollar interest rate swap agreements.
- 2024-03-31: End of the first quarter of 2024, the period covered by this report.
- 2024-04-30: Number of shares outstanding of the Registrant's common stock was 106,775,134.
- 2026-12-31: End date for the authorized common stock repurchase program.
Keywords
packaging, containers, closures, metal, plastic, rigid packaging, financial results, quarterly report, sales, earnings, EBIT, debt, rationalization, interest rates, volumes
SLGN
Silgan Holdings INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
6 June 2025 4:31 PM
Executive Departure Announcement
- The departure of Thomas J. Snyder, President of Silgan Containers, a key operational segment, is generally viewed as a negative development due to the potential for leadership vacuum and operational disruption.
Better than expected
8 May 2025 9:04 AM
Quarterly Report
- Net sales increased by 11.4% due to the Weener Packaging acquisition and organic growth.
- Gross profit margin improved to 18.4%.
- Income before interest and income taxes rose to $130.5 million.
- Net income increased to $67.96 million, or $0.63 per diluted share.
Better than expected
30 April 2025 8:31 PM
Earnings Release
- The company reported record first quarter results, with adjusted EPS growth of 19% exceeding expectations.
- The company confirmed its full-year earnings and free cash flow estimates, indicating confidence in future performance.
Better than expected
29 January 2025 4:30 PM
Earnings Release
- The company anticipates double-digit percentage earnings and free cash flow growth in 2025.
- The company achieved record fourth-quarter adjusted EPS of $0.85, a 35% increase year-over-year.
Better than expected
8 November 2024 5:19 PM
Credit Facility Amendment Announcement
- The extension of maturity dates and increased financial flexibility are better than expected, as they provide Silgan with a more stable financial outlook.
Worse than expected
7 November 2024 11:04 AM
Quarterly Report
- Net sales decreased by 3.2% in Q3 2024 compared to Q3 2023, indicating worse performance.
- Income before interest and income taxes decreased by $26.8 million in Q3 2024 compared to Q3 2023, indicating worse performance.
Capital raise
7 November 2024 11:04 AM
Quarterly Report
- The acquisition of Weener Plastics Holding B.V. was funded with term and revolving loan borrowings under the Credit Agreement, including a new 700.0 million incremental term loan, and cash on hand.
- The company increased the aggregate amount of Euro term loans under the Credit Agreement from 700.0 million to 900.0 million.
Worse than expected
30 October 2024 4:33 PM
Quarterly Report
- The company reported a decrease in net sales and net income compared to the same quarter last year, indicating worse results.
Capital raise
18 October 2024 4:31 PM
Merger Announcement
- The acquisition was funded through term and revolving loan borrowings under the Company's senior secured credit facility, including a $700 million incremental term loan.
Capital raise
8 August 2024 10:40 AM
Quarterly Report
- The company expects to fund the Weener acquisition with a combination of cash on hand and borrowings under the Credit Agreement.
- The company may incur additional indebtedness to finance acquisitions.
Worse than expected
8 August 2024 10:40 AM
Quarterly Report
- Net sales decreased by 3.2% in the second quarter of 2024 compared to the same period in 2023.
- Income before interest and income taxes decreased slightly in the second quarter of 2024 compared to the same period in 2023.
- The metal containers segment experienced lower fixed cost absorption due to reduced inventory build.
Worse than expected
8 May 2024 2:10 PM
Quarterly Report
- The company's net sales and net income were lower than the same period last year due to lower volumes and unfavorable impacts from raw material costs.
- The company's earnings per share were lower than the same period last year due to lower net income.
- The company's adjusted EBIT was lower than the same period last year due to lower sales and higher costs.
Worse than expected
29 February 2024 12:33 PM
Annual Report
- Consolidated net sales were down 6.6% compared to 2022.
- Volumes were lower across all segments.
- Other pension and postretirement expense in 2023 was $4.3 million, while other pension and postretirement (income) in 2022 was $(45.2) million.
Worse than expected
31 January 2024 4:31 PM
Annual Results
- The company's net sales and net income decreased in 2023 compared to 2022, indicating worse results.
- Free cash flow also decreased in 2023 compared to 2022, further indicating worse results.
- The company's adjusted net income per diluted share for 2023 was lower than the record result in 2022, indicating worse results.
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