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 ANNOUNCES FOURTH QUARTER AND RECORD
FULL YEAR EARNINGS FOR 2007 AND EXPECTS
CONTINUED STRENGTH IN 2008
STAMFORD, CT, January 29, 2008 -- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported record full year
2007 net income of $122.8 million, or $3.22 per diluted share, as compared to
full year 2006 net income of $104.0 million, or $2.74 per diluted share. Results
for 2007 included rationalization charges of $0.10 per diluted share net of tax.
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. 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 the results for the full year, with adjusted net income per
diluted share increasing 15.3 percent," said Tony Allott, President and CEO.
"While inventory fluctuations and the timing of certain pack products made
quarterly comparisons difficult in the metal food container business, full year
earnings in this business improved significantly in 2007. Our plastic
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SILGAN HOLDINGS
January 29, 2008
Page 2
container business improved its operating results despite the negative effects
of an escalating resin environment, as we leveraged incremental volumes against
an improved cost structure and benefited from the Cousins-Currie acquisition.
Our closures business benefited from stronger domestic unit volumes and the full
year impact of the acquired international closures operations, and delivered
strong year-over-year performance," continued Mr. Allott. "In addition, we have
continued to successfully implement various management transitions that assure
our ability to further drive shareholder value in 2008 and beyond," concluded
Mr. Allott.
Highlights of the Company's performance in 2007 include:
o Achieved record net sales and income from operations and increased adjusted
net income per diluted share by 15.3 percent over the prior year.
o Increased income from operations in each of the business segments.
o Invested over $150 million in capital to support growth and productivity
improvements and delivered attractive returns on segment assets in each
business.
o Increased the annual cash dividend by 33 percent to $0.64 per share.
o Continued to strengthen the Balance Sheet through positive cash flows and
disciplined investment strategies.
o Successfully negotiated renewals or extensions of various long-term
customer contracts representing more than 35 percent of net sales in our
metal food container business, including a significant contract extension
with one of our largest customers.
o Successfully integrated our worldwide closures operations into a third
sustainable business segment with net sales of $615.2 million and income
from operations of $66.2 million in 2007.
o Established a new Food Can Product Development facility to augment our
Technical Center and accelerate innovation in metal food packaging.
o Successfully negotiated a major long-term labor agreement covering multiple
metal food can facilities.
o Continued to implement our management succession plan.
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SILGAN HOLDINGS
January 29, 2008
Page 3
Full Year
Net sales for the full year 2007 were a record $2.92 billion, an increase of
$255.5 million, or 9.6 percent, as compared to $2.67 billion in 2006. This
increase was largely the result of the full year impact from the acquisitions of
the international closures operations and Cousins-Currie. Also contributing to
this increase were higher average selling prices across all businesses primarily
as a result of the pass through of higher raw material and other manufacturing
costs, improved volumes in each business and favorable foreign currency
translation.
Income from operations for 2007 was $259.2 million, an increase of $44.6
million, or 20.8 percent, as compared to $214.6 million for 2006, and operating
margin increased to 8.9 percent from 8.0 percent for the same periods. The
increase in income from operations was attributable to stronger earnings across
all three businesses and the impact of $10.7 million lower rationalization
charges versus the prior year.
Interest and other debt expense for the full year 2007 was $66.0 million, an
increase of $6.6 million as compared to 2006. This increase was primarily due to
the full year impact of the 2006 acquisition borrowings.
The Company's effective tax rate for 2007 was 36.5 percent as compared to 33.0
percent in 2006. The increase in the effective tax rate was primarily
attributable to the cumulative prior year benefits of tax initiatives related to
research and development tax credits recorded in 2006, partly offset by lower
statutory rates in certain jurisdictions associated with acquired international
operations.
The Company is providing a reconciliation in Table C of this press release of
net cash provided by operating activities to free cash flow, a Non-GAAP
financial measure, which adjusts net cash provided by operating activities for
capital expenditures. The Company's free cash flow for 2007 was $124.7 million
versus $99.7 million in 2006. While free cash flow improved versus 2006, working
capital levels at year end 2007 were higher than originally forecasted,
primarily as a result of decisions made later in the year not to reduce
inventories to projected levels and the timing of payments to certain vendors.
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SILGAN HOLDINGS
January 29, 2008
Page 4
Metal Food Containers
Net sales of the metal food container business were $1.68 billion in 2007, an
increase of $55.5 million, or 3.4 percent, as compared to $1.62 billion in 2006.
This increase was primarily the result of higher average selling prices as a
result of the pass through of higher raw material and other manufacturing costs
as well as slightly higher unit volumes.
Income from operations of the metal food container business in 2007 was $151.3
million, an increase of $17.9 million as compared to $133.4 million in 2006, and
operating margin increased to 9.0 percent from 8.2 percent over the same
periods. This improvement was a result of $6.6 million lower rationalization
charges in 2007, benefits derived from ongoing cost reduction initiatives
including from plant closings completed during the year, slightly higher unit
volumes and improved manufacturing performance. These benefits were partially
offset by the negative cost impact attributable to the reduction of provisional
inventory in 2007 as compared to the benefits of building this inventory in
2006.
Plastic Containers
Net sales of the plastic container business were $627.4 million in 2007, an
increase of $35.1 million, or 5.9 percent, as compared to $592.3 million in
2006. This increase was principally a result of the Cousins-Currie acquisition,
improved unit volumes and higher average selling prices as a result of the pass
through of higher raw material costs, partially offset by a less favorable mix
of products sold.
Income from operations in the plastic container business was $50.2 million, an
increase of $7.7 million as compared to 2006, and operating margin increased to
8.0 percent from 7.2 percent over the same periods. Income from operations
increased primarily as a result of the impact of the Cousins-Currie acquisition,
a $4.1 million reduction in rationalization charges in 2007, improved volumes
and the benefits of productivity improvements and cost reductions. These
benefits were partially offset by the negative effect of resin cost increases
and the timing of the corresponding customer price pass through and a less
favorable mix of products sold.
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SILGAN HOLDINGS
January 29, 2008
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Closures
Net sales of the closures business were $615.2 million for 2007, an increase of
$164.9 million, or 36.6 percent, as compared to $450.3 million in 2006. This
increase was primarily the result of the full year impact from the international
closures acquisition, favorable foreign currency translation, strong unit volume
increases and higher average selling prices due to the pass through of higher
raw material costs.
Income from operations in the closures business for 2007 increased $16.4 million
to $66.2 million, as compared to $49.8 million in 2006. This increase was
primarily attributable to the full year effect of the international closures
acquisition, improved volumes and continued cost reductions across the closures
business. Operating margin for 2007 decreased to 10.8 percent from 11.1 percent
in 2006 due primarily to the inclusion for the full year 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 2007 of $19.9 million,
or $0.52 per diluted share, as compared to net income for the fourth quarter of
2006 of $20.8 million, or $0.55 per diluted share. Results for the fourth
quarter of 2007 included pre-tax rationalization charges of $1.7 million, or
$0.03 per diluted share net of tax, while 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 2007 increased $39.8 million, or 6.2
percent, to $683.8 million as compared to $644.0 million in the fourth quarter
of 2006. This increase was principally the result of the full quarter impact
from certain smaller components of the international closures acquisitions
completed in late December 2006 and January 2007, the inclusion of the
Cousins-Currie acquisition, higher average selling prices across the businesses
due to price increases in response to higher raw material and other
manufacturing costs, favorable foreign currency translation and increased
volumes in each business. These benefits were partially offset by a less
favorable mix of products sold in the metal food container business.
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January 29, 2008
Page 6
Income from operations for the fourth quarter of 2007 was $46.0 million, a
decrease of $2.2 million over the same period in 2006. This decrease was
primarily the result of a less favorable mix of products sold in the metal food
container business due to the delayed tomato pack in 2006 that benefited the
fourth quarter of that year, a negative comparison relating to the 2006
provisional inventory build in the metal food container business, the benefit of
a one-time management fee in 2006 related to the delayed acquisition of certain
international closures operations and the negative lag effect of recovering
resin price escalations that occurred late in the fourth quarter of 2007. These
items were largely offset by $4.6 million of lower rationalization charges and
improved volumes across each of the businesses.
Interest and other debt expense for the fourth quarter of 2007 was $15.7
million, a decrease of $0.3 million as compared to the fourth quarter of 2006.
This decrease resulted primarily from lower market interest rates and offsetting
interest income attributable to the cash balances held during the fourth
quarter.
The effective tax rate for the fourth quarter of 2007 was 34.4 percent as
compared to 35.5 percent for the same period in 2006. The decrease in the
effective tax rate was principally due to lower statutory rates in certain
jurisdictions.
Dividend
On December 14, 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
November 30, 2007. This dividend payment aggregated $6.1 million.
Management Succession
On October 1, 2007, the Company implemented certain previously planned
management changes which represent a continuation of the management succession
plan that began in 2004. As part of that plan, Adam Greenlee, who previously
served as President of the domestic closures operations, was promoted to
Executive Vice President of Operations for Silgan Holdings. Peter Konieczny,
formerly President of the international closures operations, was promoted to the
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SILGAN HOLDINGS
January 29, 2008
Page 7
newly created position of President of the global closures business and will be
relocating to the United States.
Jim Beam, who served as President of the metal food container business for the
past 18 years, has assumed an Executive Vice President role at Silgan Holdings
as part of the Corporate Development team. Thomas Snyder, formerly Executive
Vice President of the metal food container business, was promoted to the
position of President.
Russ Gervais, who served as President of the plastic container business for the
past 15 years, has assumed an Executive Vice President role at Silgan Holdings
as part of the Corporate Development team. Alan Koblin, who was formerly
President of the Consumer Products operations, was promoted to President of the
plastic container business.
Outlook for 2008
The Company currently estimates that its adjusted net income per diluted share
for the full year 2008, which excludes rationalization charges, will be in the
range of $3.45 to $3.65, benefiting from capital investments made in 2007,
continued cost reductions and productivity improvements, modest volume growth
and lower interest expense, partially offset by inflation in manufacturing and
other costs.
Net sales in the metal food container business are expected to increase in 2008
as compared to 2007 primarily as a result of price increases to pass through
higher raw material and other manufacturing costs and flat to slightly higher
unit volumes. Operating profit in the metal food container business is expected
to show modest improvement, as the impact of higher net sales, cost reductions
and productivity initiatives and other benefits derived from capital investments
should more than offset anticipated inflation in manufacturing and other costs.
In the plastic container business, net sales are expected to increase as a
result of the pass through of higher raw material costs and modest volume
growth. The benefits of incremental volume and productivity enhancements are
expected to be largely offset by the negative lag effects from resin pass
throughs and inflation in manufacturing and other costs. Net sales and operating
income in the closures business are expected to increase in 2008, primarily
attributable to increased volumes,
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January 29, 2008
Page 8
ongoing cost reductions and productivity improvements which are expected to be
partly offset by manufacturing and other cost inflation.
The Company expects interest expense to decrease in 2008 as compared to 2007,
primarily due to anticipated lower market interest rates and the benefits from
either higher cash balances or lower outstanding debt balances.
The Company currently estimates that it will generate higher free cash flow in
2008 versus 2007 as a result of more normal levels of capital expenditures and
modest reductions in working capital.
The Company is providing an estimate of adjusted net income per diluted share
for the first quarter of 2008, which excludes rationalization charges, in the
range of $0.45 to $0.55, as compared to adjusted net income per diluted share of
$0.77 in the first quarter of 2007. The first quarter of 2007 benefited from
strong results in the metal food container business as a result of the
provisional inventory build, the lag effect of the recovery of resin cost
escalations experienced in the fourth quarter of 2006 as resin costs declined
during the first quarter of 2007, and a one-time sale of capping equipment. None
of these are expected to repeat in the first quarter of 2008. In addition, the
plastic container business is expected to be negatively impacted by a lag in
passing through recent resin price increases.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the fourth quarter and full year 2007 at 11:00 a.m. eastern time on
January 30, 2008. The toll free number for domestic callers is (888) 663-2230,
and the number for international callers is (913) 312-0954. For those unable to
listen to the live call, a taped rebroadcast will be available through February
13, 2008. 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 6145463.
* * *
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January 29, 2008
Page 9
Silgan Holdings is a leading manufacturer of consumer goods packaging products
with annual net sales of approximately $2.92 billion in 2007. Silgan operates 68
manufacturing facilities in North and South America, Europe and Asia. In North
America, the Company 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.
* * *
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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
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net sales $683.8 $644.0 $2,923.0 $2,667.5
Cost of goods sold 599.8 553.4 2,509.3 2,305.1
------ ------ -------- --------
Gross profit 84.0 90.6 413.7 362.4
Selling, general and administrative expenses 36.3 36.1 148.8 131.4
Rationalization charges 1.7 6.3 5.7 16.4
------ ------ -------- --------
Income from operations 46.0 48.2 259.2 214.6
Interest and other debt expense before loss
on early extinguishment of debt 15.7 15.8 66.0 59.2
Loss on early extinguishment of debt - 0.2 - 0.2
------ ------ -------- --------
Interest and other debt expense 15.7 16.0 66.0 59.4
------ ------ -------- --------
Income before income taxes 30.3 32.2 193.2 155.2
Provision for income taxes 10.4 11.4 70.4 51.2
------ ------ -------- --------
Net income $ 19.9 $ 20.8 $ 122.8 $ 104.0
====== ====== ======== ========
Earnings per share:
Basic net income per share $0.53 $0.55 $3.26 $2.78
Diluted net income per share $0.52 $0.55 $3.22 $2.74
Cash dividends per common share $0.16 $0.12 $0.64 $0.48
Weighted average shares (000's):
Basic 37,738 37,514 37,674 37,388
Diluted 38,213 38,017 38,165 37,913
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and year ended December 31,
(Dollars in millions)
Fourth Quarter Year Ended
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net sales:
Metal food containers $384.7 $382.2 $1,680.4 $1,624.9
Plastic containers 154.7 140.1 627.4 592.3
Closures 144.4 121.7 615.2 450.3
------ ------ -------- --------
Consolidated $683.8 $644.0 $2,923.0 $2,667.5
====== ====== ======== ========
Income from operations:
Metal food containers (a) $ 32.1 $ 32.8 $ 151.3 $ 133.4
Plastic containers (b) 7.6 9.8 50.2 42.5
Closures 7.8 8.6 66.2 49.8
Corporate (1.5) (3.0) (8.5) (11.1)
------ ------ -------- --------
Consolidated $ 46.0 $ 48.2 $ 259.2 $ 214.6
====== ====== ======== ========
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31,
(Dollars in millions)
2007 2006
---- ----
Assets:
Cash and cash equivalents $ 95.9 $ 16.7
Trade accounts receivable, net 219.8 232.5
Inventories 427.8 426.6
Other current assets 27.7 42.0
Property, plant and equipment, net 939.6 894.6
Other assets, net 429.2 396.0
-------- --------
Total assets $2,140.0 $2,008.4
======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 378.0 $ 406.6
Current and long-term debt 992.5 955.6
Other liabilities 269.4 279.7
Stockholders' equity 500.1 366.5
-------- --------
Total liabilities and stockholders' equity $2,140.0 $2,008.4
======== ========
(a) Includes rationalization charges of $1.7 million and $4.9 million for the
fourth quarters of 2007 and 2006, respectively, and $5.5 million and $12.1
million for the years ended 2007 and 2006, respectively.
(b) Includes rationalization charges of $1.4 million for the fourth quarter of
2006 and $0.2 million and $4.3 million for the years ended 2007 and 2006,
respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the year ended December 31,
(Dollars in millions)
2007 2006
---- ----
Cash flows provided by (used in) operating activities:
Net income $ 122.8 $ 104.0
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 139.3 127.4
Rationalization charges 5.7 16.4
Other (13.6) 19.8
Other changes that provided (used) cash, net
of effects from acquisitions:
Trade accounts receivable, net 24.3 (18.7)
Inventories 11.5 (37.5)
Trade accounts payable and other changes, net (10.3) 10.0
------- -------
Net cash provided by operating activities 279.7 221.4
------- -------
Cash flows provided by (used in) investing activities:
Purchases of businesses, net of cash acquired (7.8) (318.2)
Capital expenditures (155.0) (121.7)
Proceeds from asset sales 3.9 1.4
------- -------
Net cash used in investing activities (158.9) (438.5)
------- -------
Cash flows provided by (used in) financing activities:
Dividends paid on common stock (24.3) (18.0)
Net (repayments) borrowings and other financing activitie (17.3) 231.3
------- -------
Net cash (used in) provided by financing activities (41.6) 213.3
------- -------
Cash and cash equivalents:
Net increase (decrease) 79.2 (3.8)
Balance at beginning of year 16.7 20.5
------- -------
Balance at end of period $ 95.9 $ 16.7
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SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended December 31,
Table A
-------
Fourth Quarter Year Ended
-------------- ----------
2007 2006 2007 2006
---- ---- ---- ----
Net income per diluted share as reported $0.52 $0.55 $3.22 $2.74
Adjustments:
Rationalization charges, net of tax 0.03 0.11 0.10 0.29
Cumulative prior year benefit of
R&D tax credits - - - (0.15)
----- ----- ----- -----
Adjusted net income per diluted share $0.55 $0.66 $3.32 $2.88
===== ===== ===== =====
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended,
Table B
-------
First Quarter Year Ended
------------- ----------
March 31, December 31,
--------- ------------
Estimated Actual Estimated Actual
--------- ------ --------- ------
Low High Low High
2008 2008 2007 2008 2008 2007
---- ---- ---- ---- ---- ----
Net income per diluted share as estimated
for 2008 and as reported for 2007 $0.43 $0.53 $0.75 $3.42 $3.62 $3.22
Adjustments:
Rationalization charges, net of tax 0.02 0.02 0.02 0.03 0.03 0.10
----- ----- ----- ----- ----- -----
Adjusted net income per diluted share
as estimated for 2008 and presented
for 2007 $0.45 $0.55 $0.77 $3.45 $3.65 $3.32
===== ===== ===== ===== ===== =====
SILGAN HOLDINGS INC.
RECONCILIATION OF FREE CASH FLOW (2)
(UNAUDITED)
For the year ended December 31,
(Dollars in millions)
Table C
-------
2007 2006
---- ----
Net cash provided by operating activities $ 279.7 $ 221.4
Capital expenditures (155.0) (121.7)
------- -------
Free cash flow $ 124.7 $ 99.7
======= =======
(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.
(2) The Company has presented free cash flow in this press release, which is a
Non-GAAP financial measure. The Company's management believes that free
cash flow is important to support its stated business strategy of investing
in internal growth and acquisitions. Free cash flow is defined as net cash
provided by operating activities less capital expenditures. At times, there
may be other unusual cash items that will be excluded from free cash flow.
Net cash provided by operating activities is the most comparable financial
measure under U.S. generally accepted accounting principles to free cash
flow, and it should not be inferred that the entire free cash flow amount
is available for discretionary expenditures. 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 cash
flows and the other information presented herein. Additionally, such
Non-GAAP financial measure should not be considered a substitute for net
cash provided by operating activities as calculated under U.S. generally
accepted accounting principles and may not be comparable to similarly
titled measures of other companies.