EXHIBIT 99.1
News
For Immediate Release SILGAN HOLDINGS INC.
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 ANNOUNCES RECORD FOURTH QUARTER AND
FULL YEAR EARNINGS FOR 2006
STAMFORD, CT, January 31, 2007 -- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported full year 2006 net
income of $104.0 million, or $2.74 per diluted share, as compared to full year
2005 net income of $87.6 million, or $2.33 per diluted share. Results for 2006
included rationalization charges of $0.29 per diluted share net of tax,
partially offset by a benefit of $0.15 per diluted share, net of fees,
attributable to tax initiatives implemented during the year. Results for 2005
included a non-cash pre-tax charge of $11.2 million, or $0.18 per diluted share
net of tax, for the loss on early extinguishment of debt. A reconciliation of
net income per diluted share to "adjusted net income per diluted share," a
Non-GAAP financial measure used by the Company, can be found in Tables 4 and 5
at the back of this press release.
"We are pleased with the very positive financial results for the fourth quarter
and full year in spite of the challenges that 2006 presented, with adjusted net
income per diluted share increasing 14.7% for the full year" said Tony Allott,
President and CEO. "Stronger than anticipated results from our recently acquired
international closures operations contributed to an overall positive performance
from our closures business for the year. Our plastic container business
continued to improve its operating margin through cost reductions and
productivity improvements even as
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SILGAN HOLDINGS
January 31, 2007
Page 2
volumes suffered due to tepid demand levels, partially attributable to inventory
corrections. Our metal food container business, which had been impacted by poor
crop yields on the West Coast, ended the year on a much stronger note,"
continued Mr. Allott. "In addition, we exit 2006 with positive momentum as we
have completed the acquisitions of Cousins-Currie and substantially all of the
White Cap closures businesses, made significant capital investments in our core
operations and implemented three significant rationalization programs to reduce
our overall cost structure. As a result, we are optimistic about an even
stronger 2007 and continued shareholder value creation," concluded Mr. Allott.
Highlights of the Company's performance in 2006 include:
o Achieved record sales of $2.7 billion.
o Posted record income from operations of $214.6 million and adjusted
net income per diluted share of $2.88 as compared to $2.51 in the
prior year.
o Established a third franchise business for Silgan by combining the
domestic closures operation with the successful acquisitions of White
Cap closures operations in Europe, China, the Philippines and
Venezuela.
o Solidified a leading manufacturing position in the Canadian plastic
container market with the acquisition of Cousins-Currie in December
2006.
o Achieved debt targets for the year through positive cash flow
generation.
o Continued to implement strategic cost reduction initiatives with the
closing of manufacturing facilities in St. Paul, Minnesota, Valencia,
California and Stockton, California.
o Increased the annual cash dividend by 20% to $0.48 per share.
o Increased our investment in growth capital in the area of QuickTop(TM)
easy-open ends for food cans, incremental plastic closure capacity to
support the growth of alternative beverages and state of the art
plastic container manufacturing capacity.
Full Year
Net sales for the full year 2006 were a record $2.7 billion, an increase of
$171.9 million, or 6.9 percent, as compared to $2.5 billion in 2005. This
increase was largely the result of the acquisition of the international closures
operations. Additionally, contributing to this increase
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SILGAN HOLDINGS
January 31, 2007
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were higher average selling prices across all businesses primarily as a result
of the pass through of higher raw material costs, partially offset by volume
declines in the metal food and plastic container businesses.
Income from operations for 2006 was $214.6 million, an increase of $5.6 million
as compared to $209.0 million for 2005, while operating margin decreased to 8.0%
from 8.4% for the same periods. The increase in income from operations was
primarily due to the acquisition of the international closures operations and
strong operating performance in the domestic closures operations, partially
offset by the impact of rationalization charges of $16.4 million and lower
volumes in the metal food and plastic container businesses. The decrease in
operating margin of 0.4% was primarily the result of the rationalization charges
in 2006, which reduced operating margin by 0.6%.
Interest and other debt expense before the loss on early extinguishment of debt
for the full year 2006 was $59.2 million, an increase of $9.8 million as
compared to 2005. This increase was due to higher outstanding borrowings as a
result of the acquisitions completed in 2006 and the effects of higher market
interest rates. Loss on early extinguishment of debt for 2006 of $0.2 million
was $11.0 million lower than in 2005, which is directly attributable to the
mid-year refinancing of the Company's bank credit facility in 2005.
The Company's effective tax rate for 2006 was 33.0% as compared to 41.0% in
2005. The 2006 effective tax rate was impacted by the cumulative prior year
benefits of tax initiatives related to research and development credits
completed during the year and the overall impact of a lower effective tax rate
associated with the international operations.
Metal Food Containers
Net sales of the metal food container business were $1.62 billion in 2006, an
increase of $15.1 million, or 0.9 percent, over 2005. This increase was the
result of higher average selling prices as a result of the pass through of
higher raw material and other inflationary costs, partially offset by lower food
can volumes. Volume reductions were primarily due to poor growing conditions in
California, particularly for peaches.
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January 31, 2007
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Income from operations of the metal food container business in 2006 was $133.4
million, a decrease of $18.0 million as compared to $151.4 million in 2005, and
operating margin decreased to 8.2% from 9.4% over the same periods. This
decrease was principally due to rationalization charges of $12.1 million related
to the closing of manufacturing facilities in St. Paul and Stockton which
negatively impacted operating margin by 0.7%, inflation in manufacturing costs
and lower unit sales volumes.
Plastic Containers
Net sales of the plastic container business were $592.3 million in 2006, a
decrease of $17.8 million, or 2.9 percent, as compared to $610.1 million in
2005. This decrease was principally a result of lower unit volumes, primarily as
a result of the shutdown of the Valencia manufacturing facility. This decrease
was partially offset by higher average selling prices as a result of the pass
through of higher raw material costs.
Income from operations in the plastic container business was $42.5 million, an
increase of $1.7 million as compared to 2005, and operating margin increased to
7.2% from 6.7% over the same periods. Income from operations and operating
margin increased primarily as a result of the benefits of productivity
improvements and headcount reductions and the benefit of declining resin costs
during the first quarter of 2006 due to the timing of raw material price pass
throughs. These benefits were partially offset by lower unit volumes and
rationalization charges of $4.3 million related to the closing of the Valencia
manufacturing facility, which negatively impacted operating margin by 0.7%.
Closures
Net sales of the closures business were $450.3 million for 2006, an increase of
$174.6 million as compared to $275.7 million in 2005. This increase was
primarily the result of the international closures acquisition and higher
average selling prices due to the pass through of higher raw material costs.
Income from operations in the closures business for 2006 increased $22.5 million
to $49.8 million, as compared to $27.3 million in 2005. This increase was
primarily a result of the effect
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SILGAN HOLDINGS
January 31, 2007
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of seven months of operations of the European portion of the international
closures acquisition and continued cost reductions in the domestic closures
operations. Operating margin for 2006 increased to 11.1% from 9.9% in 2005 due
primarily to cost reductions in the domestic closures operations, offset by the
inclusion of the international operations which generally incur selling, general
and administrative expenses at a higher percentage of sales as compared to the
domestic operations.
Fourth Quarter
The Company reported net income for the fourth quarter of 2006 of $20.8 million,
or $0.55 per diluted share, as compared to net income for the fourth quarter of
2005 of $14.0 million, or $0.37 per diluted share. Results for the fourth
quarter of 2006 included pre-tax rationalization charges of $6.3 million, or
$0.11 per diluted share net of tax.
Net sales for the fourth quarter of 2006 increased $57.2 million, or 9.7
percent, to $644.0 million as compared to $586.8 million in the fourth quarter
of 2005. This increase was principally the result of the international closures
acquisition and higher average selling prices in the metal food container and
closures businesses due to price increases in response to higher raw material
costs, partially offset by volume declines in the metal food and plastic
container businesses. While tomato volumes did recover in the fourth quarter in
the metal food container business, unseasonably warm weather during the fourth
quarter contributed to lower than expected sales of soup, chili and certain
other food products.
Income from operations for the fourth quarter of 2006 was $48.2 million, an
increase of $8.4 million over the same period in 2005. This increase was
primarily the result of a favorable mix of products sold in the metal food
container business due to a shift in the timing of the packing of product,
primarily tomatoes, from the third quarter to the fourth quarter, a year-end
inventory build in the metal food container business in connection with upcoming
union negotiations in 2007, the inclusion of the recently acquired international
closures operations and benefits from cost reductions and productivity
efficiencies in the plastic container business. These benefits were partially
offset by $6.3 million of rationalization charges related to the closing of
manufacturing facilities in Stockton, St. Paul and Valencia.
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January 31, 2007
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Interest and other debt expense for the fourth quarter of 2006 was $16.0
million, an increase of $5.0 million as compared to the fourth quarter of 2005.
This increase resulted primarily from higher average borrowings as a result of
the acquisitions in 2006 and the effects of higher market interest rates.
The effective tax rate for the fourth quarter of 2006 was 35.5% as compared to
51.4% for the same period in 2005. The decrease in the effective tax rate was
principally due to an after tax charge in 2005 for the repatriation of cash from
the Canadian operations under the American Jobs Creation Act.
Dividend
On December 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
December 1, 2006. This dividend payment aggregated $4.5 million.
Outlook for 2007
The Company currently estimates that its adjusted net income per diluted share
for the full year 2007, which excludes rationalization charges, will be in the
range of $3.10 to $3.20, benefiting from a full year of operations of the
acquired businesses, cost reductions late in the year resulting from
rationalization activity announced in 2006, productivity improvements and a
generally improving volume outlook in the plastic container and closures
businesses, partially offset by inflation in manufacturing costs. The Company
anticipates higher net sales in each of its businesses in 2007 as compared to
2006, primarily as a result of price increases to pass through inflation in raw
material and other costs and volume improvements in the plastic container and
closures businesses.
Net sales in the metal food container business are expected to increase in 2007
as compared to 2006 primarily as a result of price increases to pass through
higher raw material and other inflationary costs and a more favorable mix of
products sold. Volumes are anticipated to be flat as the Midwest pack is not
expected to be as strong as last year, but the West Coast fruit and, to a lesser
extent, tomato pack should be somewhat improved from 2006. The impact of higher
net
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January 31, 2007
Page 7
sales as well as productivity initiatives, cost reductions derived from
rationalization activities and other benefits derived from capital investments
are expected to result in a modest improvement to operating income for the metal
food container business, despite anticipated inflation in manufacturing costs.
In the plastic container business, the impact of the acquisition of
Cousins-Currie is expected to be slightly accretive to the business. Net sales
in the plastic container business are expected to increase as a result of the
inclusion of the Cousins-Currie acquisition and modest volume growth in the
existing business. Productivity enhancements are expected to continue to offset
manufacturing cost inflation. Net sales and operating income in the closures
operations are expected to increase in 2007 due primarily to the inclusion of a
full year of results from the international closures operations and continued
growth for domestic plastic closures.
The Company expects interest expense to increase in 2007 as compared to 2006,
due to higher average borrowings related to recent borrowings for acquisitions
and anticipated higher market interest rates.
In addition, the Company currently estimates that it will generate approximately
$150 million of cash in 2007 that may be used to fund acquisitions or for other
purposes such as further debt reduction, share repurchases or dividends to
shareholders.
The Company is providing an estimate of adjusted net income per diluted share
for the first quarter of 2007, which excludes rationalization charges, in the
range of $0.40 to $0.50, as compared to adjusted net income per diluted share of
$0.48 in the first quarter of 2006. The first quarter of 2006 benefited from
strong results in the plastic container business due to the lag effect of the
recovery of resin cost escalations experienced in the fourth quarter of 2005 as
resin costs rapidly declined during the first quarter of 2006. Additionally, the
recently acquired businesses are not expected to be significantly accretive in
the first quarter of 2007, as income from operations during this seasonally slow
quarter is predominantly offset by the incremental interest expense.
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January 31, 2007
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Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the fourth quarter and full year 2006 at 11:00 a.m. eastern time on
February 1, 2007. The toll free number for domestic callers is (800) 810-0924,
and the number for international callers is (913) 981-4900. For those unable to
listen to the live call, a taped rebroadcast will be available until 5:00 p.m.
eastern time on February 16, 2007. 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 3148430.
* * *
Silgan Holdings is a leading manufacturer of consumer goods packaging products
with annual net sales of approximately $2.7 billion in 2006. Silgan operates 69
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 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 year ended December 31,
(Dollars in millions, except per share amounts)
Fourth Quarter Year Ended
-------------- ----------
2006 2005 2006 2005
---- ---- ---- ----
Net sales $644.0 $586.8 $2,667.5 $2,495.6
Cost of goods sold 553.4 519.1 2,305.1 2,171.6
------ ------ -------- --------
Gross profit 90.6 67.7 362.4 324.0
Selling, general and administrative expenses 36.1 28.1 131.4 114.7
Rationalization charges (credit) 6.3 (0.2) 16.4 0.3
------ ------ -------- --------
Income from operations 48.2 39.8 214.6 209.0
Interest and other debt expense before loss
on early extinguishment of debt 15.8 10.8 59.2 49.4
Loss on early extinguishment of debt 0.2 0.2 0.2 11.2
------ ------ -------- --------
Interest and other debt expense 16.0 11.0 59.4 60.6
------ ------ -------- --------
Income before income taxes 32.2 28.8 155.2 148.4
Provision for income taxes 11.4 14.8 51.2 60.8
------ ------ -------- --------
Net income $ 20.8 $ 14.0 $ 104.0 $ 87.6
====== ====== ======== ========
Earnings per share:
Basic net income per share $0.55 $0.38 $2.78 $2.36
Diluted net income per share $0.55 $0.37 $2.74 $2.33
Cash dividends per common share $0.12 $0.10 $0.48 $0.40
Weighted average shares (000's):
Basic 37,514 37,237 37,388 37,104
Diluted 38,017 37,617 37,913 37,585
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and year ended December 31,
(Dollars in millions)
Fourth Quarter Year Ended
-------------- ----------
2006 2005 2006 2005
---- ---- ---- ----
Net sales:
Metal food containers (a) $382.2 $376.6 $1,624.9 $1,609.8
Plastic containers 140.1 149.0 592.3 610.1
Closures (a) 121.7 61.2 450.3 275.7
------ ------ -------- --------
Consolidated $644.0 $586.8 $2,667.5 $2,495.6
====== ====== ======== ========
Income from operations:
Metal food containers (a) (b) $ 32.8 $ 28.1 $ 133.4 $ 151.4
Plastic containers (c) 9.8 11.3 42.5 40.8
Closures (a) 8.6 3.3 49.8 27.3
Corporate (3.0) (2.9) (11.1) (10.5)
------ ------ -------- --------
Consolidated $ 48.2 $ 39.8 $ 214.6 $ 209.0
====== ====== ======== ========
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31,
(Dollars in millions)
2006 2005
---- ----
Assets:
Cash and cash equivalents $ 16.7 $ 20.5
Other current assets 701.1 500.0
Property, plant and equipment, net 894.6 758.1
Other assets, net 396.0 252.0
-------- --------
Total assets $2,008.4 $1,530.6
======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 406.6 $ 319.3
Current and long-term debt 955.6 700.4
Other liabilities 279.7 237.5
Stockholders' equity 366.5 273.4
-------- --------
Total liabilities and
stockholders' equity $2,008.4 $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 operations.
(b) Includes rationalization charges of $4.9 million for the fourth
quarter of 2006 and $12.1 million for the year ended 2006.
(c) Includes rationalization charges of $1.4 million and a rationalization
credit of $0.2 million for the fourth quarter of 2006 and 2005,
respectively. Includes rationalization charges of $4.3 million and
$0.3 million for the years ended 2006 and 2005, respectively.
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended December 31,
Table 4
-------
Fourth Quarter Year Ended
-------------- ----------
2006 2005 2006 2005
---- ---- ---- ----
Net income per diluted share as reported $0.55 $0.37 $2.74 $2.33
Adjustments:
Rationalization charges, net of tax 0.11 - 0.29 -
Loss on early extinguishment of
debt, net of tax - - - 0.18
Cumulative prior year benefit of
R&D tax credits - - (0.15) -
----- ----- ----- -----
Adjusted net income per diluted share $0.66 $0.37 $2.88 $2.51
===== ===== ===== =====
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended,
Table 5
-------
First Quarter Year Ended
------------- ----------
March 31, December 31,
--------- ------------
Estimated Actual Estimated Actual
--------- ------ --------- ------
Low High Low High
2007 2007 2006 2007 2007 2006
---- ---- ---- ---- ---- ----
Net income per diluted share as estimated
for 2007 and as reported for 2006 $0.37 $0.47 $0.45 $3.01 $3.11 $2.74
Adjustments:
Rationalization charges, net of tax 0.03 0.03 0.03 0.09 0.09 0.29
Cumulative prior year benefit of
R&D tax credits - - - - - (0.15)
----- ----- ----- ----- ----- -----
Adjusted net income per diluted share
as estimated for 2007 and presented
for 2006 $0.40 $0.50 $0.48 $3.10 $3.20 $2.88
===== ===== ===== ===== ===== =====
(1) 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, the loss on early extinguishment of debt and the
cumulative effect of prior year tax benefits recorded in the current period
attributable to tax initiatives completed during 2006 from its net income per
diluted share as calculated under U.S. generally accepted accounting principles
because such Non-GAAP financial measure allows for 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.