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 REPORTS RECORD SECOND QUARTER
EARNINGS AND CONFIRMS FULL YEAR 2007 ESTIMATE
STAMFORD, CT, July 18, 2007-- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported second quarter
2007 net income of $26.8 million, or $0.70 per diluted share, as compared to
second quarter 2006 net income of $16.4 million, or $0.43 per diluted share.
Results for the second quarter of 2007 included a pre-tax rationalization charge
of $2.3 million, or $0.04 per diluted share net of tax. Results for the second
quarter of 2006 included a pre-tax rationalization charge of $6.2 million, or
$0.10 per diluted share net of tax. 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 share for certain items, can be
found in Tables 4 and 5 at the back of this press release.
"Results in the second quarter were in-line with our expectations and adjusted
net income per diluted share was 40% higher than in the second quarter of 2006.
Unit volumes increased in each of our three business units," said Tony Allott,
President and CEO. "Performance was particularly strong in our closures
business, where the recently acquired European operations were solidly
accretive. The metal food container business significantly outperformed the
second quarter of 2006, and we successfully concluded certain union
negotiations. As a result, we began
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SILGAN HOLDINGS
July 18, 2007
Page 2
reducing provisional inventory earlier than we had anticipated and incurred some
of the related overhead costs during the quarter. We were pleased with the
volume growth in the core plastic container business, but were somewhat
disappointed by the comparative demand levels in our plastic food product line,"
Mr. Allott continued. "Based on our results to date and our outlook for the
remainder of the year, we are reconfirming our 2007 full year earnings
estimate," Mr. Allott concluded.
Net sales for the second quarter of 2007 were $683.6 million, an increase of
$86.4 million, or 14.5 percent, as compared to $597.2 million for the same
period in 2006. This increase was primarily due to the inclusion of the
acquisitions completed in 2006, higher average selling prices resulting from the
pass through of inflation in raw material and other manufacturing costs and
improved volumes across all businesses.
Income from operations for the second quarter of 2007 was $58.5 million, an
increase of $18.6 million, or 46.6 percent, as compared to $39.9 million for the
second quarter of 2006. This increase was a result of higher income from
operations in each operating segment, largely a result of the acquisitions
completed in 2006, higher rationalization charges incurred in 2006 for the shut
down of the St. Paul, Minnesota manufacturing facility, improved volumes in each
business and continued benefits from cost reductions, slightly offset by a less
favorable mix of products sold in the plastic container business and the effect
from the initial reduction of the provisional inventory built in prior quarters
in the metal food container business.
Interest and other debt expense for the second quarter of 2007 was $16.9
million, an increase of $2.7 million as compared to the same period in 2006.
This increase was due to higher average borrowings as a result of the 2006
acquisitions, higher working capital and the effects of higher market interest
rates.
Metal Food Containers
Net sales of the metal food container business were $365.0 million for the
second quarter of 2007, an increase of $15.0 million, or 4.3 percent, over the
second quarter of 2006 primarily as a
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SILGAN HOLDINGS
July 18, 2007
Page 3
result of an increase in volumes and higher average selling prices due to the
pass through of inflation in raw material and other manufacturing costs.
Income from operations of the metal food container business increased in the
second quarter of 2007 to $27.7 million as compared to $18.9 million for the
same period in 2006 and operating margin increased to 7.6 percent from 5.4
percent over the same periods. These increases were due primarily to pre-tax
rationalization charges of $5.8 million incurred in the second quarter of 2006,
increased sales volumes, the lagged contractual pass through beginning in the
latter part of 2006 of significant inflation in other manufacturing costs and
benefits derived from ongoing cost reduction initiatives. These benefits were
slightly offset by an earlier than anticipated reduction in the provisional
inventory built during prior quarters as certain union negotiations were
successfully completed during the quarter. The second quarter of 2007 also
included pre-tax rationalization charges of $2.1 million for the ongoing costs
associated with the plans to close the St. Paul, Minnesota and Stockton,
California metal food container facilities.
Plastic Containers
Net sales of the plastic container business were $157.2 million in the second
quarter of 2007, an increase of $12.2 million, or 8.4 percent, over the second
quarter of 2006. This increase was primarily a result of the inclusion of sales
from Cousins-Currie which was acquired in December 2006 and increased volumes.
These benefits were partially offset by lower demand levels for the food product
line primarily as a result of less customer promotional activity versus the same
period a year ago.
Income from operations of the plastic container business for the second quarter
of 2007 was $12.4 million as compared to $11.8 million in the second quarter of
2006, and operating margin decreased slightly to 7.9 percent from 8.1 percent
over the same periods. Income from operations increased primarily as a result of
the impact from the Cousins-Currie acquisition and volume growth, offset by a
less favorable mix of products sold attributable to lower demand levels for the
food product line as discussed above. The slight decrease in operating margin
was due primarily to the less favorable mix of products sold.
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SILGAN HOLDINGS
July 18, 2007
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Closures
Net sales of the closures business were $161.4 million in the second quarter of
2007, an increase of $59.2 million over the second quarter of 2006 primarily as
a result of the international closures acquisitions during 2006.
Income from operations of the closures business increased in the second quarter
of 2007 to $20.8 million as compared to $10.7 million for the same period in
2006 due primarily to the inclusion of the acquired international closures
operations. Operating margin for the second quarter of 2007 increased to 12.9
percent from 10.4 percent for the same period in 2006 due primarily to the
unfavorable impact of the inventory write-up for the international operations in
the second quarter of 2006 as a result of purchase accounting.
Six Months
Net income for the first six months of 2007 was $55.3 million, or $1.45 per
diluted share, as compared to net income for the first six months of 2006 of
$33.5 million, or $0.89 per diluted share. Results for the first six months of
2007 included rationalization charges of $0.06 per diluted share net of tax, as
compared with rationalization charges of $0.14 per diluted share net of tax in
the same period a year ago.
Net sales for the first six months of 2007 increased $167.3 million, or 14.3
percent, to $1.33 billion as compared to $1.17 billion for the first six months
of 2006. This increase was primarily due to the inclusion of the acquisitions
completed in 2006, higher average selling prices resulting from the pass through
of inflation in raw material and other manufacturing costs in the metal food
container and closures businesses and improved volumes in the metal food and
plastic containers businesses.
Income from operations for the first six months of 2007 was $120.6 million, an
increase of $41.1 million, or 51.7 percent, from the same period in 2006. This
increase was a result of higher income from operations across each operating
segment, largely as a result of the acquisitions completed in 2006, higher
rationalization charges incurred in 2006 for the shut down of the St.
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July 18, 2007
Page 5
Paul, Minnesota and Valencia, California manufacturing facilities, continued
benefits from cost reductions and the lagged contractual pass through of
inflation in other manufacturing costs.
Interest and other debt expense for the first six months of 2007 was $33.0
million, an increase of $7.5 million as compared to the first six months of
2006. This increase was primarily attributable to higher average borrowings as a
result of the 2006 acquisitions and the effects of higher market interest rates.
Dividend
On June 15, 2007, the Company paid a quarterly cash dividend in the amount of
$0.16 per share to holders of record of common stock of the Company on June 1,
2007. This dividend payment aggregated $6.1 million.
Outlook for 2007
Based on the year to date financial performance and the outlook for the
remainder of 2007, the Company reconfirmed its adjusted net income per diluted
share estimate for 2007 in the range of $3.15 to $3.25 per diluted share. The
current full year estimate includes the negative impact on comparative earnings
of reducing levels of provisional inventory which benefited results when it was
built in the fourth quarter of 2006 and the first quarter of 2007.
The Company expects adjusted net income per diluted share for the third quarter
of 2007 to be in the range of $1.15 to $1.25, as compared to adjusted net income
per diluted share of $1.19 in the third quarter of 2006.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the second quarter of 2007 at 11:00 a.m. eastern time on Wednesday,
July 18, 2007. The toll free number for domestic callers is (800) 819-9193, and
the number for international callers is (913) 981-4911. For those unable to
listen to the live call, a taped rebroadcast will be available through August 1,
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 6824183.
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July 18, 2007
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* * *
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 2006
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 six months ended June 30,
(Dollars in millions, except per share amounts)
Second Quarter Six Months
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net sales $683.6 $597.2 $1,334.4 $1,167.1
Cost of goods sold 584.3 521.9 1,135.1 1,020.6
------ ------ -------- --------
Gross profit 99.3 75.3 199.3 146.5
Selling, general and administrative expenses 38.5 29.2 75.3 58.7
Rationalization charges 2.3 6.2 3.4 8.3
------ ------ -------- --------
Income from operations 58.5 39.9 120.6 79.5
Interest and other debt expense 16.9 14.2 33.0 25.5
------ ------ -------- --------
Income before income taxes 41.6 25.7 87.6 54.0
Provision for income taxes 14.8 9.3 32.3 20.5
------ ------ -------- --------
Net income $ 26.8 $ 16.4 $ 55.3 $ 33.5
====== ====== ======== ========
Earnings per share:
Basic net income per share $0.71 $0.44 $1.47 $0.90
Diluted net income per share $0.70 $0.43 $1.45 $0.89
Cash dividends per common share $0.16 $0.12 $0.32 $0.24
Weighted average shares (000's):
Basic 37,654 37,354 37,634 37,313
Diluted 38,162 37,878 38,134 37,853
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and six months ended June 30,
(Dollars in millions)
Second Quarter Six Months
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net sales:
Metal food containers $365.0 $350.0 $ 710.6 $ 684.8
Plastic containers 157.2 145.0 319.6 308.2
Closures 161.4 102.2 304.2 174.1
------ ------ -------- --------
Consolidated $683.6 $597.2 $1,334.4 $1,167.1
====== ====== ======== ========
Income from operations:
Metal food containers (a) $ 27.7 $ 18.9 $ 56.5 $ 37.1
Plastic containers (b) 12.4 11.8 32.2 25.6
Closures 20.8 10.7 36.6 21.3
Corporate (2.4) (1.5) (4.7) (4.5)
------ ------ -------- --------
Consolidated $ 58.5 $ 39.9 $ 120.6 $ 79.5
====== ====== ======== ========
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
June 30, June 30, Dec. 31,
2007 2006 2006
---- ---- ----
Assets:
Cash and cash equivalents $ 25.3 $ 23.9 $ 16.7
Trade accounts receivable, net 320.3 301.7 232.4
Inventories 548.3 494.8 426.6
Other current assets 32.8 28.7 42.1
Property, plant and equipment, net 913.3 865.6 894.6
Other assets, net 419.0 376.1 396.0
-------- -------- --------
Total assets $2,259.0 $2,090.8 $2,008.4
======== ======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 341.1 $ 326.1 $ 406.6
Current and long-term debt 1,204.3 1,170.9 955.6
Other liabilities 290.0 294.6 279.7
Stockholders' equity 423.6 299.2 366.5
-------- -------- --------
Total liabilities and stockholders' equity $2,259.0 $2,090.8 $2,008.4
======== ======== ========
(a) Includes rationalization charges of $2.1 million and $5.8 million for the
three months ended June 30, 2007 and 2006, respectively, and $3.2 million
and $5.8 million for the six months ended June 30, 2007 and 2006,
respectively.
(b) Includes rationalization charges of $0.2 million for the three and six
months ended June 30, 2007 and $0.4 million and $2.5 million for the three
and six months ended June 30, 2006, respectively.
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and six months ended June 30,
Table 4
-------
Second Quarter Six Months
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net income per diluted share as reported $0.70 $0.43 $1.45 $0.89
Adjustments:
Rationalization charges, net of tax 0.04 0.10 0.06 0.14
----- ----- ----- -----
Adjusted net income per diluted share $0.74 $0.53 $1.51 $1.03
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SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended,
Table 5
-------
Third Quarter Year Ended
------------- ----------
September 30, 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 $1.13 $1.23 $1.31 $3.06 $3.16 $2.74
Adjustments:
Rationalization charges, net of tax 0.02 0.02 0.03 0.09 0.09 0.29
Cumulative prior year benefit of
R&D tax credits - - (0.15) - - (0.15)
----- ----- ----- ----- ----- -----
Adjusted net income per diluted share
as estimated for 2007 and presented for 2006 $1.15 $1.25 $1.19 $3.15 $3.25 $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 and the cumulative effect of prior year tax benefits
recorded in 2006 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.