EXHIBIT 99.1
News SILGAN HOLDINGS INC.
For Immediate Release 4 Landmark Square
Suite 400
Stamford, CT 06901
Telephone: (203) 975-7110
Fax: (203) 975-7902
Contact:
Robert B. Lewis
(203) 406-3160
SILGAN HOLDINGS REPORTS THIRD QUARTER EARNINGS
AND INCREASES FULL YEAR 2006 ESTIMATE
STAMFORD, CT, October 19, 2006-- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported third quarter 2006
net income of $49.7 million, or $1.31 per diluted share, as compared to third
quarter 2005 net income of $45.2 million, or $1.20 per diluted share. The
results for 2006 included a benefit of $0.15 per diluted share attributable to
tax initiatives implemented in the third quarter, net of fees, reduced by
rationalization charges of $0.03 per diluted share net of tax.
"We are pleased with our financial performance in the third quarter of 2006,
particularly the solid results from our recently acquired international closures
business," said Tony Allott, President and CEO. "As anticipated, food can
volumes were negatively impacted by poor growing conditions in California, some
of which we expect to shift into the fourth quarter. Plastic volumes
strengthened from the second quarter and we continued to benefit from cost
reduction initiatives. Our closures business continued to perform well and
benefited from the accretive impact of our recent international acquisition,"
Mr. Allott continued. "As a result of encouraging year-to-date performance, we
have increased our earnings estimate for 2006 to a range of $2.56 to $2.61 per
diluted share," Mr. Allott concluded.
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SILGAN HOLDINGS
October 19, 2006
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Net sales for the third quarter of 2006 were $856.4 million, an increase of
$58.9 million, or 7.4 percent, as compared to $797.5 million for the same period
in 2005. This increase was primarily due to the acquisition of the international
closures business and the pass through of higher raw material costs in all three
businesses, partially offset by volume declines in the metal food and plastic
container businesses.
Income from operations for the third quarter of 2006 was $86.9 million, an
increase of $0.8 million as compared to $86.1 million for the third quarter of
2005. This increase was primarily due to the international closures acquisition,
offset by rationalization charges, lower volumes in both the metal food and
plastic container businesses and inflation in manufacturing costs. The Company
also incurred additional professional fees in the third quarter of 2006 for the
implementation of certain tax initiatives which were included in selling,
general and administrative expenses.
Interest and other debt expense for the third quarter of 2006 was $17.9 million,
an increase of $5.3 million as compared to the same period in 2005. This
increase was primarily due to higher outstanding borrowings resulting from the
international closures acquisition and the effects of higher market interest
rates.
The Company's effective tax rate for the third quarter of 2006 was 28.0 percent
as compared to 38.4 percent in the same period of 2005. The 2006 effective tax
rate was impacted by the cumulative benefit of tax initiatives related to
research and development credits completed during the third quarter.
Metal Food Containers
Net sales of the metal food container business were $557.9 million in the third
quarter of 2006, a decrease of $15.9 million, or 2.8 percent, as compared to the
same quarter a year ago. This decrease was principally due to a decrease in
volumes, partially offset by higher average selling prices due to the pass
through of higher raw material and other inflationary costs. This volume
shortfall was primarily due to poor growing conditions in California, reducing
yields for certain
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SILGAN HOLDINGS
October 19, 2006
Page 3
fruits and vegetables and delaying the timing of packing these products. Volume
for the fourth quarter of 2006 is expected to include some can units delayed
from the third quarter.
Income from operations of the metal food container business decreased in the
third quarter of 2006 to $63.5 million as compared to $70.7 million for the same
period in 2005, and operating margin decreased to 11.4 percent from 12.3 percent
over the same periods. These decreases resulted primarily from lower unit
volumes and incremental rationalization charges in the quarter.
Plastic Containers
Net sales of the plastic container business were $144.0 million in the third
quarter of 2006, a decrease of $2.4 million, or 1.6 percent, as compared to the
third quarter of 2005. This decrease was primarily a result of a decline in unit
volumes as compared with the third quarter of 2005.
Income from operations of the plastic container business for the third quarter
of 2006 was $7.2 million as compared to $7.4 million in the third quarter of
2005, and operating margin decreased to 5.0 percent from 5.1 percent over the
same periods. Income from operations and operating margin were essentially flat,
despite lower unit volumes and incremental rationalization charges in the
quarter, as a result of the benefits of continued productivity improvements and
cost reduction initiatives.
Closures
Net sales of the closures business were $154.5 million in the third quarter of
2006, an increase of $77.2 million as compared to $77.3 million in the third
quarter of 2005. This increase was primarily the result of the international
closures acquisition.
Income from operations in the closures business for the third quarter of 2006
increased $9.4 million to $19.9 million, as compared to $10.5 million in the
same quarter a year ago. This increase was primarily a result of the effect of a
full quarter from the operations of the international closures acquisition and
continued cost reductions in the domestic closures business. Operating margin
for the third quarter of 2006 decreased to 12.9 percent from 13.6
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SILGAN HOLDINGS
October 19, 2006
Page 4
percent in the prior year period due primarily to the inclusion of the
international operations, which generally incur selling, general and
administrative expense at a higher percentage of sales as compared to the
domestic business.
Nine Months
Net income for the first nine months of 2006 was $83.2 million, or $2.20 per
diluted share, as compared to net income for the first nine months of 2005 of
$73.6 million, or $1.96 per diluted share. Results for the first nine months of
2006 included four months of operations of the acquired international closures
business, a tax benefit net of fees of $0.15 per diluted share and
rationalization charges of $0.18 per diluted share net of tax, as compared with
rationalization charges of $0.01 per diluted share net of tax and a loss on
early extinguishment of debt of $0.18 per diluted share net of tax in the same
period a year ago.
Net sales for the first nine months of 2006 increased $114.8 million, or 6.0
percent, to $2.023 billion as compared to $1.909 billion for the first nine
months of 2005. This increase was largely the result of the acquisition of the
international closures business, strong volumes in the domestic closures
business and higher average selling prices in both the metal food and plastic
container businesses primarily as a result of the pass through of higher raw
material costs, partially offset by lower volumes in the metal food and plastic
container businesses.
Income from operations for the first nine months of 2006 was $166.4 million, a
decrease of $2.8 million, or 1.7 percent, from the same period in 2005. The
decrease in income from operations was primarily due to the impact of pre-tax
rationalization charges of $10.1 million and lower unit volumes in the metal
food and plastic container businesses. These decreases were largely offset by
the results of the international closures acquisition, strong operational
results in the domestic closures business and continued benefits from
rationalization and integration activities at manufacturing facilities.
Interest and other debt expense for the first nine months of 2006 was $43.4
million, a decrease of $6.2 million as compared to the first nine months of
2005. This decrease was primarily attributable to the impact of the $11.0
million loss on early extinguishment of debt recorded in
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October 19, 2006
Page 5
the second quarter of 2005, offset by higher outstanding borrowings due to the
international closures acquisition and the effects of higher market interest
rates.
Dividend
On September 15, 2006, 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 1, 2006. This dividend payment aggregated $4.5 million.
Outlook for 2006
Previously, the Company's earnings estimate for the full year 2006 was $2.33 to
$2.43 per diluted share, which included estimated full year rationalization
charges of $0.22 per diluted share net of tax. Based on the Company's
year-to-date financial performance, including the performance of the
international closures business in the third quarter, and the outlook for the
fourth quarter of 2006, the Company has increased its earnings estimate for 2006
to a range of $2.56 to $2.61 per diluted share, which includes full year
estimates for previously announced rationalization plans of $0.22 per diluted
share net of tax and the benefit of $0.15 per diluted share resulting from the
tax initiatives completed during the third quarter of 2006. The Company is
currently reviewing a plan to close an additional metal food container facility,
which may be announced in the fourth quarter of 2006 and would result in an
additional rationalization charge not currently included in its earnings
estimates.
As a result, the Company expects net income per diluted share for the fourth
quarter of 2006 to be in the range of $0.37 to $0.42, which includes
rationalization charges of $0.05 per diluted share net of tax associated with
rationalization activities previously announced. This compares to net income per
diluted share of $0.37 in the fourth quarter of 2005.
Additionally, the Company reiterated that it estimates a year-end 2006 debt
balance of approximately $900 million as compared to the current debt level of
$1,157.4 million.
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October 19, 2006
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The Company's current earnings estimates for both the fourth quarter and full
year include the impact of the international closures acquisition which is now
estimated to be accretive to earnings for the full year.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the third quarter of 2006 at 11:00 a.m. eastern time on Thursday,
October 19, 2006. The toll free number for domestic callers is (800) 811-7286,
and the number for international callers is (913) 981-4902. For those unable to
listen to the live call, a taped rebroadcast will be available until 5:00 p.m.
eastern time on October 27, 2006. 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 4743332.
* * *
Silgan Holdings is a leading North American manufacturer of consumer goods
packaging products with annual pro forma net sales of approximately $2.8 billion
in 2005. Silgan operates 64 manufacturing facilities in the U.S., Canada and
Europe. 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 supplier of metal, composite and
plastic vacuum closures for food and beverage products in North America and
Europe.
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 2005
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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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
------------- -----------
2006 2005 2006 2005
---- ---- ---- ----
Net sales $856.4 $797.5 $2,023.5 $1,908.7
Cost of goods sold 731.2 681.2 1,751.7 1,652.5
------ ------ -------- --------
Gross profit 125.2 116.3 271.8 256.2
Selling, general and administrative expenses 36.6 30.2 95.3 86.5
Rationalization charges 1.7 -- 10.1 0.5
------ ------ -------- --------
Income from operations 86.9 86.1 166.4 169.2
Interest and other debt expense before loss on
early extinguishment of debt 17.9 12.6 43.4 38.6
Loss on early extinguishment of debt -- -- -- 11.0
------ ------ -------- --------
Interest and other debt expense 17.9 12.6 43.4 49.6
Income before income taxes 69.0 73.5 123.0 119.6
Provision for income taxes 19.3 28.3 39.8 46.0
------ ------ -------- --------
Net income $ 49.7 $ 45.2 $ 83.2 $ 73.6
====== ====== ======== ========
Earnings per share:
Basic net income per share $1.33 $1.22 $2.23 $1.99
Diluted net income per share $1.31 $1.20 $2.20 $1.96
Cash dividends per common share $0.12 $0.10 $0.36 $0.30
Weighted average shares (000's):
Basic 37,411 37,172 37,346 37,059
Diluted 37,926 37,646 37,878 37,573
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and nine months ended September 30,
(Dollars in millions)
Third Quarter Nine Months
------------- -----------
2006 2005 2006 2005
---- ---- ---- ----
Net sales:
Metal food containers (a) $557.9 $573.8 $1,242.7 $1,233.2
Plastic containers 144.0 146.4 452.3 461.0
Closures (a) 154.5 77.3 328.5 214.5
------ ------ -------- --------
Consolidated $856.4 $797.5 $2,023.5 $1,908.7
====== ====== ======== ========
Income from operations:
Metal food containers (a) (b) $ 63.5 $ 70.7 $ 100.6 $ 123.3
Plastic containers (c) 7.2 7.4 32.8 29.5
Closures (a) 19.9 10.5 41.1 24.0
Corporate (3.7) (2.5) (8.1) (7.6)
------ ------ -------- --------
Consolidated $ 86.9 $ 86.1 $ 166.4 $ 169.2
====== ====== ======== ========
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
Sept. 30, Sept. 30, Dec. 31,
2006 2005 2005
---- ---- ----
Assets:
Cash and cash equivalents $ 27.8 $ 63.8 $ 20.5
Other current assets 848.9 683.3 500.0
Property, plant and equipment, net 874.0 763.2 758.1
Other assets, net 374.8 248.4 252.0
-------- -------- --------
Total assets $2,125.5 $1,758.7 $1,530.6
======== ======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 348.2 $ 305.8 $ 319.3
Current and long-term debt 1,157.4 970.7 700.4
Other liabilities 277.3 201.4 237.5
Stockholders' equity 342.6 280.8 273.4
-------- -------- --------
Total liabilities and stockholders' equity $2,125.5 $1,758.7 $1,530.6
======== ======== ========
(a) Current and prior year results have been restated to present our new
Closures segment which includes the newly acquired international
closures business.
(b) Includes rationalization charges of $1.4 million and $7.2 million for
the three and nine months ended September 30, 2006, respectively.
(c) Includes rationalization charges of $0.3 million for the three months
ended September 30, 2006 and $2.9 million and $0.5 million for the
nine months ended September 30, 2006 and 2005, respectively.