Silgan Announces Second Quarter Earnings and Confirms Full Year 2010 Estimate
STAMFORD, Conn., Jul 28, 2010 (BUSINESS WIRE) --
Copyright Business Wire 2010
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of consumer goods
packaging products, today reported second quarter 2010 net income of
$36.3 million, or $0.47 per diluted share, as compared to second quarter
2009 net income of $34.8 million, or $0.45 per diluted share. Results
for 2010 included $0.7 million, or $0.01 per diluted share net of tax,
for rationalization charges. Results for 2009 included $0.7 million, or
$0.01 per diluted share net of tax, for the loss on early extinguishment
of debt related to the issuance of 7.25% senior notes in May 2009. A
reconciliation of net income per diluted share to "adjusted net income
per diluted share," a Non-GAAP financial measure used by the Company,
which adjusts net income per diluted share for certain items, can be
found in Tables A and B at the back of this press release.
"We are pleased with our year-to-date 2010 performance. Strategically,
we successfully completed our bank refinancing, obtained authorization
for share repurchases and effected a two-for-one stock split.
Operationally, our businesses continued to perform well, as we delivered
adjusted net income per diluted share of $0.48 in the second quarter of
2010 as compared to $0.46 in the second quarter of 2009," said Tony
Allott, President and CEO. "This modest increase over strong results in
2009 was primarily the result of continued solid operational performance
in our metal food container and closures businesses. Our plastic
container business benefitted from an increase in unit volumes in the
second quarter of 2010, however, as expected, resin cost increases
through May provided headwind to the quarter as we experienced the
lagged pass through of these costs to our customers," continued Mr.
Allott. "Based on our year to date performance we are confirming our
full year 2010 earnings estimate of adjusted net income per diluted
share in the range of $2.10 to $2.20, which includes the impact of the
incremental borrowings and higher interest rates resulting from our
recently completed $1.4 billion senior secured credit facility,"
concluded Mr. Allott.
Net sales for the second quarter of 2010 were $693.9 million, an
increase of $4.4 million, or 0.6 percent, as compared to $689.5 million
in 2009. This increase was primarily the result of higher average
selling prices in the plastic container business largely attributable to
the pass through of resin cost increases and higher unit volumes in the
plastic container and closures businesses, partially offset by lower
average selling prices in the metal food container business as a result
of the pass through of lower raw material costs and a decrease in unit
volumes in the metal food container business due primarily to the timing
of customer requirements.
Income from operations for the second quarter of 2010 was $67.1 million
as compared to $66.8 million for the second quarter of 2009, and
operating margin remained unchanged at 9.7 percent. The increase in
income from operations was primarily attributable to higher unit volumes
in the plastic container and closures businesses and effective cost
control and manufacturing efficiencies, partially offset by lower unit
volumes in the metal food container business, the impact from the lagged
pass through of increases in resin costs in the plastic container and
closures businesses and higher rationalization charges.
Interest and other debt expense before loss on early extinguishment of
debt for the second quarter of 2010 was $12.0 million, a decrease of
$0.2 million as compared to 2009.
Metal Food Containers
Net sales of the metal food container business were $378.1 million for
the second quarter of 2010, a decrease of $27.2 million, or 6.7 percent,
as compared to $405.3 million in 2009. This decrease was primarily due
to lower average selling prices as a result of the pass through of lower
raw material costs and lower unit volumes attributable principally to
the timing of customer requirements.
Income from operations of the metal food container business increased
$2.2 million in the second quarter of 2010 to $44.0 million as compared
to $41.8 million in 2009, and operating margin increased to 11.6 percent
from 10.3 percent over the same periods. These increases were primarily
the result of ongoing cost control and continued improvement in
manufacturing efficiencies, partially offset by the effect of lower unit
volumes.
Closures
Net sales of the closures business were $165.8 million in the second
quarter of 2010, an increase of $11.2 million, or 7.2 percent, as
compared to $154.6 million in 2009. This increase was primarily the
result of higher unit volumes, largely attributable to some volume
recovery in the domestic single-serve beverage market and overall volume
improvement in Europe. This increase was partially offset by the impact
of unfavorable foreign currency translation.
Income from operations of the closures business for the second quarter
of 2010 increased $1.8 million to $24.0 million as compared to $22.2
million in 2009, and operating margin increased to 14.5 percent from
14.4 percent over the same periods. These increases were primarily
attributable to increased unit volumes, the benefits of ongoing cost
reduction initiatives and improved manufacturing efficiencies, partially
offset by the impact from the lagged pass through of increases in resin
costs to customers.
Plastic Containers
Net sales of the plastic container business were $150.0 million in the
second quarter of 2010, an increase of $20.4 million, or 15.7 percent,
as compared to $129.6 million in 2009. This increase was principally due
to the impact of higher average selling prices as a result of the pass
through of resin cost increases, an increase in unit volumes and the
impact of favorable foreign currency translation.
Income from operations of the plastic container business for the second
quarter of 2010 was $4.0 million, a decrease of $2.0 million as compared
to $6.0 million in 2009, and operating margin decreased to 2.7 percent
from 4.6 percent over the same periods. These decreases were primarily
attributable to the impact from the lagged pass through of increases in
resin costs to customers and higher rationalization charges, partially
offset by the effect of an increase in unit volumes.
Six Months
Net income for the first six months of 2010 was $63.0 million, or $0.82
per diluted share, as compared to net income for the first six months of
2009 of $61.7 million, or $0.80 per diluted share. Results for the first
six months of 2010 included $0.02 per diluted share net of tax for
rationalization charges and $0.04 per diluted share net of tax for the
impact from the remeasurement of the net assets in Venezuela. Results
for the first six months of 2009 included a loss on early extinguishment
of debt of $0.01 per diluted share net of tax related to the issuance of
7.25% senior notes and rationalization charges of $0.01 per diluted
share net of tax. Adjusted net income per diluted share for the first
six months of 2010 was $0.88 versus $0.82 in the prior year period, a
7.3 percent increase.
Net sales for the first six months of 2010 increased $13.0 million, or
1.0 percent, to $1.36 billion as compared to $1.34 billion for the first
six months of 2009. This increase was primarily due to higher unit
volumes in the plastic container and closures businesses, higher average
selling prices in the plastic container business largely attributable to
the pass through of resin cost increases and the impact of favorable
foreign currency translation, partially offset by lower average selling
prices in the metal food container business as a result of the pass
through of lower raw material costs.
Income from operations for the first six months of 2010 was $123.8
million, an increase of $4.6 million, or 3.9 percent, from the same
period in 2009. This increase was primarily a result of improved
manufacturing efficiencies and ongoing cost controls, the year-over-year
benefit resulting from the timing of certain contractual pass throughs
of changes in manufacturing costs in the metal food container business
and higher unit volumes in the plastic container and closures
businesses. These increases were partially offset by the impact from the
lagged pass through of significant increases in resin costs in the
plastic container and closures businesses, the recognition of a charge
of $3.2 million in selling, general and administrative expenses for the
remeasurement of net assets in the Venezuelan operations and higher
rationalization charges. Rationalization charges of $2.7 million in the
first six months of 2010 were primarily related to the announced shut
down of the Port Clinton, Ohio plastic container manufacturing facility.
Rationalization charges of $1.4 million in the first six months of 2009
were primarily related to a reduction in workforce at the closures
operating facility in Germany.
Interest and other debt expense before loss on early extinguishment of
debt for the first six months of 2010 was $24.5 million, an increase of
$1.9 million as compared to the first six months of 2009. This increase
was primarily due to higher average interest rates, largely attributable
to the issuance of the 7.25% senior notes in May 2009.
Dividend
On June 15, 2010, the Company paid a quarterly cash dividend in the
amount of $0.105 per share to holders of record of common stock of the
Company on June 1, 2010. This dividend payment aggregated $8.1 million.
Outlook for 2010
The Company is confirming its estimate of adjusted net income per
diluted share for the full year of 2010 in the range of $2.10 to $2.20.
This estimate includes higher interest expense of $0.07 per diluted
share related to the impact of incremental borrowings and higher
interest rates under our recently completed $1.4 billion senior secured
credit facility and excludes the estimated impact of the loss on early
extinguishment of debt resulting from the refinancing of the Company's
credit facility of $0.04 per diluted share, rationalization charges and
the impact from the remeasurement of net assets in Venezuela.
The Company estimates adjusted net income per diluted share for the
third quarter of 2010 will be in the range of $0.85 to $0.95. The
Company expects improvement in its plastic container business in the
third quarter of 2010 versus the same period last year, offset by a
return to a more normal pack season for the metal food container
business as compared to the historically large fruit and vegetable
harvest in 2009. In addition, given the magnitude of the third quarter
and the potential impact of movement in harvest dates, the results of
the back half of the year can shift between the third and fourth
quarter. This estimate includes higher interest expense of $0.04 per
diluted share as a result of the new credit facility and excludes the
estimated impact of the loss on early extinguishment of debt of $0.04
per diluted share and rationalization charges. This estimate compares to
adjusted net income per diluted share of $0.96 in the third quarter of
2009.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the
Company's results for the second quarter of 2010 at 11:00 a.m. eastern
time on July 28, 2010. The toll free number for domestic callers is
(888) 329-8905, and the number for international callers is (719)
325-2263. For those unable to listen to the live call, a taped
rebroadcast will be available through August 12, 2010. To access the
rebroadcast, the toll free number for domestic callers is (888)
203-1112, and the number for international callers is (719) 457-0820.
The pass code is 8311484.
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Silgan Holdings is a leading manufacturer of consumer goods packaging
products with annual net sales of approximately $3.1 billion in 2009.
Silgan operates 66 manufacturing facilities in North and South America,
Europe and Asia. In North America, Silgan is the largest supplier of
metal containers for food products and a leading supplier of plastic
containers for personal care products. In addition, Silgan is a leading
worldwide supplier of metal, composite and plastic vacuum closures for
food and beverage products.
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. 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 2009 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.
* * *
SOURCE: Silgan Holdings Inc.
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