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 THIRD QUARTER
EARNINGS
STAMFORD, CT, October 22, 2008 -- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported record third
quarter 2008 net income of $52.8 million, or $1.38 per diluted share, as
compared to third quarter 2007 net income of $47.6 million, or $1.25 per diluted
share. Results for the third quarter of 2008 included pre-tax rationalization
charges of $2.4 million, or $0.07 per diluted share net of tax which includes
the impact of a tax valuation allowance related to the rationalization activity.
Results for the third quarter of 2007 included pre-tax rationalization charges
of $0.7 million, or $0.01 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 diluted
share for certain items, can be found in Tables A and B at the back of this
press release.
"Despite a quarter that saw significant financial turmoil and a spike in
commodity costs, we delivered record adjusted net income per diluted share of
$1.45 for the third quarter of 2008, representing a 15 percent increase in
adjusted net income per diluted share as compared to the
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SILGAN HOLDINGS
October 22, 2008
Page 2
third quarter of 2007. Our businesses continue to focus on cost control and
manufacturing efficiencies to counteract these difficult market dynamics," said
Tony Allott, President and CEO. "Our metal food container business showed modest
unit volume growth as a result of a solid vegetable pack season. Our plastic
container business successfully managed costs in light of the significant
inflation in resin costs during the quarter. Demand levels for plastic bottles
and closures for beverage products were negatively impacted by continued
consumer pull backs. Finally, in our effort to stay ahead of the credit crisis,
we did elect to borrow an incremental $200 million on our credit facility, which
resulted in increased interest costs," continued Mr. Allott. "In light of the
non-operational costs of carrying this additional liquidity, we are revising our
full year earnings estimate of adjusted net income per diluted share to a range
of $3.45 to $3.65," concluded Mr. Allott.
Net sales for the third quarter of 2008 were $964.3 million, an increase of
$59.5 million, or 6.6 percent, as compared to $904.8 million in the third
quarter of 2007. This increase was primarily the result of higher average
selling prices across all businesses largely attributable to the pass through of
higher raw material and other manufacturing costs, sales attributed to
international closures operations acquired during the first half of 2008 and
favorable foreign currency translation, partially offset by slightly lower unit
volumes in the plastic container and closures businesses.
Income from operations for the third quarter of 2008 was $99.6 million, an
increase of $7.0 million, or 7.6 percent, as compared to $92.6 million for the
third quarter of 2007, and operating margin increased to 10.3 percent from 10.2
percent for the same periods. Income from operations increased significantly in
our metal food container business but was partially offset by modest declines in
the plastic container and closures businesses in the third quarter of 2008 as
compared to the same period last year.
Interest and other debt expense for the third quarter of 2008 was $15.1 million,
a decrease of $2.2 million as compared to 2007, which was primarily due to lower
market interest rates. Interest expense would have been more favorable had the
Company not chosen to borrow an additional
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SILGAN HOLDINGS
October 22, 2008
Page 3
$200 million on its credit facility in September as it remained cautious about
the condition of the financial institutions in the current credit crisis.
During the third quarter of 2008, the Company approved a plan to cease
operations of the closures manufacturing plant in Turkey resulting in a total
rationalization charge of $3.3 million, of which $3.1 million, or $0.08 per
diluted share net of tax, was recorded in the quarter. The total cash cost of
this plan is expected to be $1.6 million.
The Company's effective tax rate for the third quarter of 2008 was 37.5 percent
as compared to 36.8 percent in the same period of 2007. The effective tax rate
for the third quarter of 2008 was negatively impacted by a $1.2 million
valuation allowance against tax positions in Turkey related to the Company's
decision to close the operating facility.
Metal Food Containers
Net sales of the metal food container business were $617.4 million for the third
quarter of 2008, an increase of $32.3 million, or 5.5 percent, as compared to
$585.1 million in 2007. This increase was primarily the result of higher average
selling prices due to the pass through of higher raw material and other
manufacturing costs and modestly higher unit volumes.
Income from operations of the metal food container business increased $13.9
million in the third quarter of 2008 to $76.6 million as compared to $62.7
million in the third quarter of 2007, and operating margin increased to 12.4
percent from 10.7 percent over the same periods. This increase was primarily the
result of cost control and manufacturing efficiencies, the net impact of a
larger third quarter 2007 inventory reduction versus the current year quarter
and improved unit volumes. Additionally, the third quarter of 2008 included a
rationalization credit of $0.5 million, while the third quarter of 2007 included
rationalization charges of $0.7 million.
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SILGAN HOLDINGS
October 22, 2008
Page 4
Plastic Containers
Net sales of the plastic container business were $162.6 million in the third
quarter of 2008, an increase of $9.5 million, or 6.2 percent, as compared to
$153.1 million in the third quarter of 2007. This increase was due to higher
average selling prices as a result of the pass through of higher raw material
costs, partially offset by slight volume declines attributable to generally soft
market demand.
Income from operations in the plastic container business for the third quarter
of 2008 was $9.1 million, a decrease of $1.2 million as compared to $10.3
million in 2007, and operating margin decreased to 5.6 percent from 6.7 percent
over the same periods. This decrease was attributable to inflation in resin
costs not yet passed through to customers, other manufacturing cost inflation
and slightly lower unit volumes, partially offset by ongoing benefits from cost
controls. In addition, the plastic container business was negatively impacted by
costs attributable to Hurricane Ike which caused damage and disruption to the
Houston facility during the quarter.
Closures
Net sales of the closures business were $184.3 million in the third quarter of
2008, an increase of $17.7 million, or 10.6 percent, as compared to $166.6
million in the third quarter of 2007. This increase was primarily the result of
sales from operations acquired in 2008 in Brazil, Spain and China, favorable
foreign currency translation and higher average selling prices due to the pass
through of higher raw material costs, partially offset by the impact of soft
beverage demand on unit volumes.
Income from operations in the closures business for the third quarter of 2008
decreased $4.7 million to $17.1 million as compared to $21.8 million in 2007,
and operating margin decreased to 9.3 percent from 13.1 percent over the same
periods. This decrease was primarily due to rationalization charges of $2.8
million recognized in the third quarter of 2008 principally related to the shut
down of the manufacturing facility in Turkey, inflation in manufacturing and
other costs, including delays in passing through resin costs which spiked in the
quarter, and a decrease in unit volumes.
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SILGAN HOLDINGS
October 22, 2008
Page 5
Nine Months
Net income for the first nine months of 2008 was $107.3 million, or $2.80 per
diluted share, as compared to net income for the first nine months of 2007 of
$102.9 million, or $2.70 per diluted share. Results for the first nine months of
2008 included rationalization charges of $0.20 per diluted share net of tax, as
compared with rationalization charges of $0.07 per diluted share net of tax in
the same period a year ago. Adjusted net income per diluted share for the first
nine months of 2008 was $3.00 versus $2.77 in the prior year period.
Net sales for the first nine months of 2008 increased $140.2 million, or 6.3
percent, to $2.38 billion as compared to $2.24 billion for the first nine months
of 2007. This increase was primarily due to higher average selling prices
resulting from the pass through of inflation in raw material and other
manufacturing costs, favorable foreign currency translation and an increase in
unit volumes in the closures business, slightly offset by lower unit volumes in
the metal food and plastic container businesses.
Income from operations for the first nine months of 2008 was $214.4 million, an
increase of $1.2 million from the same period in 2007. This increase was
primarily the result of improved manufacturing efficiencies and cost control
across all businesses, management fee income from the management of the
Brazilian White Cap closures operations prior to the acquisition and the net
impact of a larger year-over-year inventory reduction in 2007 as compared to
2008 in the metal food container business. These increases were partially offset
by inflation in manufacturing and other costs, higher depreciation expense,
benefits realized in the first quarter of 2007 due to the lagged pass through of
declines in resin costs in the plastic container and closures businesses and
$5.8 million of higher rationalization charges incurred in 2008. Rationalization
charges in 2008 related to the shut down of the Tarrant, Alabama metal food
container manufacturing facility, the Richmond, Virginia plastic container
manufacturing facility and the closures manufacturing facility in Turkey and the
consolidation of certain activities and administrative positions within our
European closures operations.
Interest and other debt expense for the first nine months of 2008 was $46.2
million, a decrease of $4.1 million as compared to the first nine months of
2007. This decrease was primarily due to
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SILGAN HOLDINGS
October 22, 2008
Page 6
lower market interest rates and higher interest income attributable to the cash
on hand during 2008, partially offset by the effects of higher average
borrowings.
The Company's effective tax rate for the first nine months of 2008 was 36.2
percent as compared to 36.8 percent in the same period of 2007. The 2008
effective tax rate benefited from a $1.7 million tax credit recorded in the
second quarter relating to certain non-recurring state tax incentives, partially
offset by the $1.2 million valuation allowance recorded in the third quarter
related to the shut down of the Turkey operations.
Dividend
On September 15, 2008, the Company paid a quarterly cash dividend in the amount
of $0.17 per share to holders of record of common stock of the Company on August
29, 2008. This dividend payment aggregated $6.5 million.
Outlook for 2008
The Company continues to focus on cost reductions and operational efficiencies
throughout its businesses and, despite continued concerns over the
macro-economic environment, feels comfortable with its ability to meet its
operational targets. The Company continues to be cautious about the on-going
credit crisis and as such has taken actions throughout the year to ensure access
to capital in this tumultuous environment. As a result, it has and may continue
to incur incremental costs associated with these decisions estimated at an
aggregate amount of approximately $0.05 per diluted share and, therefore, is
modifying its estimate of adjusted net income per diluted share for the full
year of 2008 to a range of $3.45 to $3.65, including the anticipated tax benefit
of the renewed research and development tax credit. This estimate excludes
rationalization charges for previously announced plans, currently estimated at
$0.23 per diluted share.
The Company is providing an estimate of adjusted net income per diluted share
for the fourth quarter of 2008, which excludes rationalization charges, in the
range of $0.45 to $0.65. The $0.20 range of estimated adjusted net income per
diluted share for the fourth quarter of 2008 is reflective of the current market
uncertainty regarding both consumer spending patterns and the
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SILGAN HOLDINGS
October 22, 2008
Page 7
on-going credit crisis. Should the credit markets ease, the Company may elect to
unwind its current position within its credit facility, which could lead its
earnings guidance to the higher end of the range.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the third quarter of 2008 at 11:00 a.m. eastern time on Wednesday,
October 22, 2008. The toll free number for domestic callers is (800) 478-6251,
and the number for international callers is (913) 312-0860. For those unable to
listen to the live call, a taped rebroadcast will be available through November
5, 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 9807497.
* * *
Silgan Holdings is a leading manufacturer of consumer goods packaging products
with annual net sales of approximately $2.9 billion in 2007. Silgan operates 67
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 2007
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
------------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Net sales $964.3 $904.8 $2,379.4 $2,239.2
Cost of goods sold 823.0 774.5 2,040.0 1,909.6
------ ------ -------- --------
Gross profit 141.3 130.3 339.4 329.6
Selling, general and administrative expenses 39.3 37.0 115.2 112.4
Rationalization charges 2.4 0.7 9.8 4.0
------ ------ -------- --------
Income from operations 99.6 92.6 214.4 213.2
Interest and other debt expense 15.1 17.3 46.2 50.3
------ ------ -------- --------
Income before income taxes 84.5 75.3 168.2 162.9
Provision for income taxes 31.7 27.7 60.9 60.0
------ ------ -------- --------
Net income $ 52.8 $ 47.6 $ 107.3 $ 102.9
====== ====== ======== ========
Earnings per share:
Basic net income per share $1.39 $1.26 $2.83 $2.73
Diluted net income per share $1.38 $1.25 $2.80 $2.70
Cash dividends per common share $0.17 $0.16 $0.51 $0.48
Weighted average shares (000's):
Basic 37,932 37,690 37,853 37,653
Diluted 38,321 38,180 38,267 38,149
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and nine months ended September 30,
(Dollars in millions)
Third Quarter Nine Months
------------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Net sales:
Metal food containers $617.4 $585.1 $1,346.1 $1,295.7
Plastic containers 162.6 153.1 501.6 472.7
Closures 184.3 166.6 531.7 470.8
------ ------ -------- --------
Consolidated $964.3 $904.8 $2,379.4 $2,239.2
====== ====== ======== ========
Income from operations:
Metal food containers (a) $ 76.6 $ 62.7 $ 134.8 $ 119.2
Plastic containers (b) 9.1 10.3 35.2 42.5
Closures (c) 17.1 21.8 53.4 58.5
Corporate (3.2) (2.2) (9.0) (7.0)
------ ------ -------- --------
Consolidated $ 99.6 $ 92.6 $ 214.4 $ 213.2
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SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
Sept. 30, Sept. 30, Dec. 31,
2008 2007 2007
---- ---- ----
Assets:
Cash and cash equivalents $ 290.4 $ 26.8 $ 95.9
Trade accounts receivable, net 487.3 456.3 219.8
Inventories 415.1 412.7 427.8
Other current assets 28.4 27.3 27.7
Property, plant and equipment, net 920.8 926.5 939.6
Other assets, net 430.2 419.7 429.2
-------- -------- --------
Total assets $2,572.2 $2,269.3 $2,140.0
======== ======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 397.1 $ 344.9 $ 378.0
Current and long-term debt 1,303.1 1,173.7 992.5
Other liabilities 279.4 282.1 269.4
Stockholders' equity 592.6 468.6 500.1
-------- -------- --------
Total liabilities and stockholders' equity $2,572.2 $2,269.3 $2,140.0
======== ======== ========
(a) Includes a rationalization credit of $0.5 million for the three months
ended September 30, 2008 and rationalization charges of $0.7 million
for the three months ended September 30, 2007 and rationalization
charges of $2.8 million and $3.8 million for the nine months ended
September 30, 2008 and 2007, respectively.
(b) Includes rationalization charges of $0.1 million for the three months
ended September 30, 2008 and $0.9 million and $0.2 million for the
nine months ended September 30, 2008 and 2007, respectively.
(c) Includes rationalization charges of $2.8 million and $6.1 million for
the three and nine months ended September 30, 2008, respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months ended September 30,
(Dollars in millions)
2008 2007
---- ----
Cash flows provided by (used in) operating activities:
Net income $ 107.3 $ 102.9
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 108.3 101.5
Rationalization charges 9.8 4.0
Other changes that provided (used) cash, net
of effects from acquisitions:
Trade accounts receivable, net (269.4) (214.1)
Inventories 15.8 23.4
Trade accounts payable and other changes, net 106.2 39.5
------- -------
Net cash provided by operating activities 78.0 57.2
------- -------
Cash flows provided by (used in) investing activities:
Purchases of businesses, net of cash acquired (14.5) (7.8)
Capital expenditures (87.7) (112.6)
Proceeds from asset sales 1.1 2.8
------- -------
Net cash used in investing activities (101.1) (117.6)
------- -------
Cash flows provided by (used in) financing activities:
Dividends paid on common stock (19.5) (18.2)
Net borrowings and other financing activities 237.1 88.7
------- -------
Net cash provided by financing activities 217.6 70.5
------- -------
Cash and cash equivalents:
Net increase 194.5 10.1
Balance at beginning of year 95.9 16.7
------- -------
Balance at end of period $ 290.4 $ 26.8
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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
------------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Net income per diluted share as reported $1.38 $1.25 $2.80 $2.70
Adjustments:
Rationalization charges, net of tax 0.07 0.01 0.20 0.07
----- ----- ----- -----
Adjusted net income per diluted share $1.45 $1.26 $3.00 $2.77
===== ===== ===== =====
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
2008 2008 2007 2008 2008 2007
---- ---- ---- ---- ---- ----
Net income per diluted share as estimated
for 2008 and as reported for 2007 $0.42 $0.62 $0.52 $3.22 $3.42 $3.22
Adjustments:
Rationalization charges, net of tax 0.03 0.03 0.03 0.23 0.23 0.10
----- ----- ----- ----- ----- -----
Adjusted net income per diluted share
as estimated for 2008 and presented for 2007 $0.45 $0.65 $0.55 $3.45 $3.65 $3.32
===== ===== ===== ===== ===== =====
(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 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.