Silgan Announces Record Third Quarter Earnings Per Share

  Silgan Announces Record Third Quarter Earnings Per Share

Business Wire

STAMFORD, Conn. -- October 24, 2012

Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid consumer goods
packaging products, today reported third quarter 2012 net income of $78.7
million, or $1.13 per diluted share, as compared to third quarter 2011 net
income of $78.8 million, or $1.12 per diluted share. Adjusted net income per
diluted share was $1.17 for the third quarter of 2012 as compared to $1.14 for
the third quarter of 2011, after adjustments increasing net income per diluted
share by $0.04 for the third quarter of 2012 and $0.02 for the third quarter
of 2011. 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.

“Silgan had another strong quarter and performed as expected in the face of
continued volatility in growing conditions and European economic challenges.
We delivered adjusted net income per diluted share of $1.17 for the third
quarter of 2012 and $2.22 for the first nine months of 2012, which was an
increase of 7.2 percent over the prior year comparable nine month period,”
said Tony Allott, President and CEO. “Our metal container business benefited
slightly from domestic fresh pack volumes that were better than the prior
year, but were well short of our initial expectations. In addition, our metal
container business reduced inventory by a greater amount than in the third
quarter of 2011 and was therefore negatively impacted by under absorbed
overhead costs. Unit volumes in our closures business benefited from the
continuation of strong single-serve beverage volumes in the U.S., but our
European closures operations continued to experience weaker demand patterns
which we attribute to general economic conditions. Our plastic container
business benefited from improved operating performance and effect of the
timing of resin pass throughs, which more than overcame expected volume
shortfalls. Our recent acquisition of the plastic food container business from
Rexam PLC has been integrated into our plastic container segment and we are
very pleased with its performance thus far,” continued Mr. Allott. “Based on
our year-to-date performance and continued caution given the global economic
environment, we are refining our full year 2012 earnings estimate of adjusted
net income per diluted share in the range of $2.80 to $2.85,” concluded Mr.
Allott.

Net sales for the third quarter of 2012 were $1,139.5 million, a decrease of
$8.5 million, or slightly under 1.0 percent, as compared to $1,148.0 million
in 2011. This decrease was the result of lower net sales over the prior year
period in the closures and plastic container businesses, partially offset by
higher net sales in the metal container business.

Income from operations for the third quarter of 2012 was $132.4 million as
compared to $136.1 million for the third quarter of 2011, and operating margin
decreased to 11.6 percent from 11.9 percent over the same periods. The
decrease in income from operations was primarily attributable to a decrease in
income from operations in the metal container business, partially offset by an
increase in income from operations in the plastic container business and lower
selling, general and administrative expenses.

Interest and other debt expense before loss on early extinguishment of debt
for the third quarter of 2012 was $16.0 million, a decrease of $0.3 million as
compared to 2011. The third quarter of 2011 included a loss on early
extinguishment of debt of $1.0 million as a result of the refinancing of the
senior secured credit facility in July 2011.

The effective tax rate was 32.4 percent and 33.7 percent for the third
quarters of 2012 and 2011, respectively. The effective tax rate for the third
quarter of 2012 benefited from the resolution of certain issues with tax
authorities and changes to statutory tax rates enacted in certain
jurisdictions.

Metal Containers

Net sales of the metal container business were $814.1 million for the third
quarter of 2012, an increase of $15.4 million, or 1.9 percent, as compared to
$798.7 million in 2011. This increase was primarily due to an increase in unit
volumes and higher average selling prices as a result of the pass through of
higher raw material costs, partially offset by the impact of unfavorable
foreign currency translation of approximately $12.0 million. Unit volumes
increased in the third quarter of 2012 primarily as a result of an improved
fresh vegetable pack in 2012 as compared to a weak vegetable pack in 2011 and
net sales contributed from the recent acquisition of Öntaş in Turkey.

Income from operations of the metal container business decreased $8.2 million
in the third quarter of 2012 to $103.5 million as compared to $111.7 million
in 2011, and operating margin decreased to 12.7 percent from 14.0 percent over
the same periods. These decreases were primarily the result of the negative
impact from lower absorption of overhead costs due to inventory reductions in
the third quarter of 2012 in excess of reductions in 2011. Also contributing
to this decline in income from operations were lower price realization in the
European markets largely in exchange for improved customer credit terms
negotiated earlier in the year, rationalization charges of $1.7 million in the
third quarter of 2012 from the recently announced closing of the Kingsburg,
California manufacturing facility and costs of $1.4 million associated with
the start-up of new production facilities in eastern Europe and one new
facility in the Middle East. These decreases were partially offset by an
increase in unit volumes.

Closures

Net sales of the closures business were $182.7 million in the third quarter of
2012, a decrease of $6.8 million, or 3.6 percent, as compared to $189.5
million in 2011. This decrease was primarily the result of the impact of
unfavorable foreign currency translation of approximately $10.9 million,
partially offset by an increase in unit volumes.

Income from operations of the closures business for the third quarter of 2012
decreased $0.3 million to $24.1 million as compared to $24.4 million in 2011,
while operating margin increased to 13.2 percent from 12.9 percent over the
same periods. Volume improvements in the U.S. largely in the single-serve
beverage market, improved manufacturing efficiencies and on-going operating
cost savings were more than offset by declines in Europe resulting from
on-going macroeconomic issues and higher rationalization charges.

Plastic Containers

Net sales of the plastic container business were $142.7 million in the third
quarter of 2012, a decrease of $17.1 million, or 10.7 percent, as compared to
$159.8 million in 2011. This decrease was principally a result of lower unit
volumes partially due to planned third quarter shut downs by certain
customers, lower average selling prices as a result of the pass through of
lower resin costs and the unfavorable impact of foreign currency translation
of approximately $0.5 million, partially offset by the inclusion of net sales
from the plastic food container business acquired from Rexam PLC on August 30,
2012.

Income from operations of the plastic container business for the third quarter
of 2012 was $6.2 million, an increase of $2.4 million as compared to $3.8
million in 2011, and operating margin increased to 4.3 percent from 2.4
percent over the same periods. These increases were primarily attributable to
continued improvement in operating performance, the favorable comparison of
the year-over-year resin pass through lag effect which benefited the third
quarter of 2012 and lower rationalization charges, partially offset by a
decrease in unit volumes.

Nine Months

Net income for the first nine months of 2012 was $122.0 million, or $1.74 per
diluted share, as compared to net income for the first nine months of 2011 of
$156.1 million, or $2.22 per diluted share. Adjusted net income per diluted
share for the first nine months of 2012 was $2.22 versus $2.07 in the prior
year period, after adjustments increasing net income per diluted share by
$0.48 for the first nine months of 2012 and adjustments decreasing net income
per diluted share by $0.15 for the first nine months of 2011.

Net sales for the first nine months of 2012 increased $56.2 million, or 2.1
percent, to $2.73 billion as compared to $2.67 billion for the first nine
months of 2011. This increase was primarily due to the inclusion of net sales
from acquisitions, higher average selling prices in the metal container and
plastic container businesses due to the pass through of higher raw material
costs, higher unit volumes in the metal container and closures businesses
principally in the U.S. and a favorable mix of products sold in the plastic
container business. These increases were partially offset by the impact of
unfavorable foreign currency translation of approximately $46.6 million, lower
unit volumes in the plastic container business and lower net sales in Europe
due to weak economic conditions.

Income from operations for the first nine months of 2012 was $266.8 million, a
decrease of $17.4 million, or 6.1 percent, from the same period in 2011. This
decrease was primarily a result of income of $25.2 million included in the
first nine months of 2011 in corporate selling, general and administrative
expenses for proceeds received as a result of the termination of the Graham
Packaging merger agreement, net of costs attributable to certain corporate
development activities, volume declines and price pressure in Europe due to
weak economic conditions, the unfavorable impact from inventory reductions in
the metal container business, start-up costs of $4.3 million for new metal
container production facilities in eastern Europe and the Middle East and
higher rationalization charges. These decreases were partially offset by the
favorable comparison of the year-over-year resin pass through lag effect,
higher unit volumes in the metal container and closures businesses and
improved manufacturing efficiencies and ongoing cost controls across all
businesses. Rationalization charges were $5.8 million in the first nine months
of 2012 as compared to $4.8 million in the first nine months of 2011, and
results for 2011 included a $3.3 million charge related to the resolution of a
past product liability dispute.

Interest and other debt expense before loss on early extinguishment of debt
for the first nine months of 2012 was $47.6 million, an increase of $0.9
million as compared to the first nine months of 2011. This increase was
primarily due to higher average outstanding borrowings largely attributable to
the refinancing of the senior secured credit facility in July 2011 and the
issuance in March 2012 of $500 million of 5% Senior Notes due 2020, partially
offset by lower average interest rates. The first nine months of 2012 included
a loss on early extinguishment of debt of $38.7 million related to the early
redemption of the 7¼% Senior Notes due 2016.

The effective tax rate was 32.4 percent and 34.0 percent for the first nine
months of 2012 and 2011, respectively. The effective tax rate for the first
nine months of 2012 was favorably impacted by changes to statutory tax rates
enacted in certain jurisdictions and the resolution of certain issues with tax
authorities.

Acquisition

On August 30, 2012, the Company acquired the plastic thermoformed food
business of Rexam PLC. This business, with anticipated sales of approximately
$100 million in 2012, provides thermoformed packaging solutions such as
retortable bowls and barrier trays to the world’s leading packaged food and
ready-meal companies.

Capital Stock and Dividends

The Company repurchased an aggregate of 288,655 shares of its common stock at
an average price per share of $40.80, for a total purchase price of $11.8
million, in the third quarter of 2012.

On September 18, 2012, the Company paid a quarterly cash dividend in the
amount of $0.12 per share to holders of record of common stock of the Company
on September 4, 2012. This dividend payment aggregated $8.4 million.

Outlook for 2012

The Company refined its estimate of adjusted net income per diluted share for
the full year of 2012 in the range of $2.80 to $2.85 from the previous range
of $2.80 to $2.90. This estimate compares to adjusted net income per diluted
share of $2.63 for 2011.

The Company is providing an estimate of adjusted net income per diluted share
for the fourth quarter of 2012 in the range of $0.58 to $0.63. This estimate
compares to adjusted net income per diluted share of $0.56 in the fourth
quarter of 2011.

Conference Call

Silgan Holdings Inc. will hold a conference call to discuss the Company’s
results for the third quarter of 2012 at 11:00 a.m. eastern time on October
24, 2012. The toll free number for those in the U.S. and Canada is (888)
401-4691, and the number for international callers is (719) 325-2453. For
those unable to listen to the live call, a taped rebroadcast will be available
through November 7, 2012. 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 9647919.

Silgan Holdings is a leading supplier of rigid packaging for consumer goods
products with annual net sales of approximately $3.5 billion in 2011. Silgan
operates 82 manufacturing facilities in North and South America, Europe and
Asia. Silgan is a leading supplier of metal containers in North America and
Europe, and a leading worldwide supplier of metal, composite and plastic
vacuum closures for food and beverage products. In addition, Silgan is a
leading supplier of plastic containers for 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. 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
2011 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 nine months ended September 30,

(Dollars in millions, except per share amounts)
                                                                                                            
                   Third Quarter                    Nine Months
                        2012         2011                    2012             2011
                                                                                                            
Net sales             $ 1,139.5       $ 1,148.0               $ 2,729.5               $ 2,673.3
                                                                                                            
Cost of goods          960.7          965.0                  2,321.4                2,271.5
sold
                                                                                                            
Gross profit            178.8           183.0                   408.1                   401.8
                                                                                                            
Selling,
general and             44.3            46.3                    135.5                   112.8
administrative
expenses
                                                                                                            
Rationalization        2.1            0.6                    5.8                    4.8
charges
                                                                                                            
Income from             132.4           136.1                   266.8                   284.2
operations
                                                                                                            
Interest and
other debt
expense before
loss on
early
extinguishment          16.0            16.3                    47.6                    46.7
of debt
                                                                                                            
Loss on early
extinguishment         -              1.0                    38.7                   1.0
of debt
                                                                                                            
Interest and
other debt              16.0            17.3                    86.3                    47.7
expense
                                                                                                            
Income before           116.4           118.8                   180.5                   236.5
income taxes
                                                                                                            
Provision for          37.7           40.0                   58.5                   80.4
income taxes
                                                                                                            
Net income            $ 78.7          $ 78.8                  $ 122.0                 $ 156.1
                                                                                                            
Earnings per
share:
Basic net
income per            $ 1.13          $ 1.13                  $ 1.75                  $ 2.23
share
Diluted net
income per            $ 1.13          $ 1.12                  $ 1.74                  $ 2.22
share
                                                                                                            
Cash dividends
per common            $ 0.12          $ 0.11                  $ 0.36                  $ 0.33
share
                                                                                                            
Weighted
average shares
(000’s):
Basic                   69,375          69,981                  69,679                  70,036
Diluted                 69,685          70,320                  69,984                  70,444
                                                                                                            

                                                                                                                          
SILGAN HOLDINGS INC.

CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)

For the quarter and nine months ended September 30,

(Dollars in millions)
                                                                                                                                 
                      Third Quarter                              Nine Months
                                 2012              2011                      2012               2011
Net sales:
Metal                          $ 814.1                 $ 798.7                   $ 1,738.7                 $ 1,671.4
containers
Closures                         182.7                   189.5                     528.8                     534.1
Plastic                         142.7                 159.8                   462.0                   467.8
containers
Consolidated                   $ 1,139.5              $ 1,148.0                $ 2,729.5                $ 2,673.3
                                                                                                                                 
                                                                                                                                 
Income from
operations:
Metal
containers                     $ 103.5                 $ 111.7                   $ 185.6                   $ 193.0
(a)
Closures (b)                     24.1                    24.4                      65.1                      62.9
Plastic
containers                       6.2                     3.8                       24.2                      14.6
(c)
Corporate                       (1.4    )              (3.8    )                (8.1    )                13.7
(d)
Consolidated                   $ 132.4                $ 136.1                  $ 266.8                  $ 284.2
                                                                                                                                 

                                                                          
SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in millions)
                     Sept. 30,     Sept. 30,     Dec. 31,
                             2012              2011              2011
Assets:
Cash and cash              $ 422.5           $ 140.5           $ 397.1
equivalents
Trade accounts
receivable,                  597.7             579.5             339.9
net
Inventories                  561.5             580.4             554.2
Other current                51.6              45.2              42.6
assets
Property,
plant and                    1,092.6           1,071.4           1,064.7
equipment, net
Other assets,               816.1            602.6            580.6
net
Total assets               $ 3,542.0         $ 3,019.6         $ 2,979.1
                                                                             
Liabilities
and
stockholders’
equity:
Current
liabilities,               $ 407.3           $ 503.7           $ 507.7
excluding debt
Current and                  1,989.7           1,431.0           1,376.3
long-term debt
Other                        408.7             417.4             437.1
liabilities
Stockholders’               736.3            667.5            658.0
equity
Total
liabilities
and                        $ 3,542.0         $ 3,019.6         $ 2,979.1
stockholders’
equity
                                                                             

    
      Includes new plant start-up costs of $1.4 million and $4.3 million for
      the three and nine months ended September 30, 2012, respectively.
      Includes rationalization charges of $1.7 million for each of the three
(a)   and nine months ended September 30, 2012 and rationalization charges of
      $1.4 million for the nine months ended September 30, 2011. Includes a
      charge for the resolution of a past product liability dispute of $3.3
      million for the nine months ended September 30, 2011.
      Includes rationalization charges of $0.5 million and $0.3 million for
(b)   the three months ended September 30, 2012 and 2011, respectively, and
      $2.6 million and $1.7 million for the nine months ended September 30,
      2012 and 2011, respectively.
      Includes a rationalization credit and rationalization charges of $0.1
      million and $0.3 million for the three months ended September 30, 2012
(c)   and 2011, respectively, and rationalization charges of $1.5 million and
      $1.7 million for the nine months ended September 30, 2012 and 2011,
      respectively.
      Includes costs attributable to announced acquisitions of $0.8 million
      and $1.5 million for the three and nine months ended September 30, 2012,
(d)   respectively. Includes income of $25.2 million for the nine months ended
      September 30, 2011 for proceeds received as a result of the termination
      of the Graham Packaging merger agreement, net of costs associated with
      certain corporate development activities.
      




SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the nine months ended September 30,

(Dollars in millions)
                                         2012            2011
                                                                    
Cash flows provided by (used in)
operating activities:
Net income                                     $ 122.0              $ 156.1
Adjustments to reconcile net
income to net cash
(used in) provided by operating
activities:
Depreciation and amortization                    125.2                120.9
Rationalization charges                          5.8                  4.8
Loss on early extinguishment of                  38.7                 1.0
debt
Other changes that provided (used)
cash, net of
effects from acquisitions:
Trade accounts receivable, net                   (239.2 )             (286.7 )
Inventories                                      10.8                 (47.2  )
Trade accounts payable and other                 6.7                  127.3
changes, net
Contributions to domestic pension               (76.0  )            -      
benefit plans
Net cash (used in) provided by                  (6.0   )            76.2   
operating activities
                                                                    
Cash flows provided by (used in)
investing activities:
Purchases of businesses, net of                  (317.5 )             (289.4 )
cash acquired
Capital expenditures                             (84.7  )             (123.2 )
Proceeds from asset sales                       1.4                3.4    
Net cash used in investing                      (400.8 )            (409.2 )
activities
                                                                    
Cash flows provided by (used in)
financing activities:
Dividends paid on common stock                   (25.4  )             (23.4  )
Changes in outstanding checks –                  (66.2  )             (92.9  )
principally vendors
Shares repurchased under                         (33.9  )             (15.8  )
authorized repurchase program
Net borrowings and other financing              557.7              430.4  
activities
Net cash provided by financing                  432.2              298.3  
activities
                                                                    
Cash and cash equivalents:
Net increase (decrease)                          25.4                 (34.7  )
Balance at beginning of year                    397.1              175.2  
Balance at end of period                       $ 422.5             $ 140.5  
                                                                    


SILGAN HOLDINGS INC.

RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)

For the quarter and nine months ended September 30,

Table A
                          Third Quarter          Nine Months
                              2012      2011         2012      2011
                                                                     
Net income per
diluted share as              $ 1.13       $ 1.12       $ 1.74       $ 2.22
reported
                                                                     
Adjustments:
Rationalization                 0.02         0.01         0.05         0.04
charges
New plant start-up              0.01         -            0.04         -
costs
Proceeds from
termination of merger           -            -            -            (0.37 )
agreement
Costs attributable to
announced                       0.01         -            0.02         0.14
acquisitions
Loss on early
extinguishment of               -            0.01         0.37         0.01
debt
Resolution of product          -           -           -           0.03  
liability dispute
Adjusted net income           $ 1.17       $ 1.14       $ 2.22       $ 2.07  
per diluted share
                                                                             


SILGAN HOLDINGS INC.

RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)

(UNAUDITED)

For the quarter and year ended,

Table B

                Fourth Quarter                      Year Ended
                December 31,                           December 31,
                Estimated              Actual       Estimated              Actual
                                                             
                Low          High                      Low          High
                  2012         2012         2011         2012         2012         2011
Net income per
diluted share
as estimated
for 2012 and as
reported for    $ 0.50       $ 0.55       $ 0.53       $ 2.24       $ 2.29       $ 2.75
2011
                                                                                 
Adjustments:
Rationalization   0.06         0.06         0.03         0.11         0.11         0.07
charges
New plant         0.02         0.02         -            0.06         0.06         -
start-up costs
Proceeds from
termination of    -            -            -            -            -            (0.37 )
merger
agreement
Costs
attributable to
announced         -            -            -            0.02         0.02         0.14
acquisitions ^
(2)
Loss on early
extinguishment    -            -            -            0.37         0.37         0.01
of debt
Resolution of
product          -           -           -           -           -           0.03  
liability
dispute
Adjusted net
income per
diluted share
                $ 0.58       $ 0.63       $ 0.56       $ 2.80       $ 2.85       $ 2.63  
as estimated
for 2012 and
presented for
2011


    
      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, new plant start-up costs, proceeds from
      the termination of acquisition agreements, costs attributable to
      announced acquisitions, the loss on early extinguishment of debt and the
      impact from the resolution of a past product liability dispute from its
      net income per diluted share as calculated under U.S. generally accepted
      accounting principles because such Non-GAAP financial measure allows for
(1)   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. 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)   Costs attributable to announced acquisitions have not been estimated for
      future periods.
      

Contact:

Silgan Holdings Inc.
Robert B. Lewis, 203-406-3160