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 ANNOUNCES SECOND QUARTER EARNINGS
AND RAISES FULL YEAR 2009 ESTIMATE
STAMFORD, CT, July 22, 2009 -- Silgan Holdings Inc. (Nasdaq:SLGN), a leading
supplier of consumer goods packaging products, today reported second quarter
2009 net income of $33.7 million, or $0.88 per diluted share, as compared to
second quarter 2008 net income of $33.3 million, or $0.87 per diluted share.
Results for 2009 included a pre-tax charge of $0.7 million, or $0.01 per diluted
share net of tax, for the loss on early extinguishment of debt related to the
issuance of $250 million aggregate principal amount of 7.25% senior notes in May
2009. Results for 2008 included pre-tax rationalization charges of $2.7 million,
or $0.05 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.
"We are pleased with our performance for the second quarter of 2009 as each of
our businesses responded to the challenging economic environment with an
unwavering focus on cost controls and manufacturing efficiencies, resulting in
better than expected financial results for the second quarter of 2009," said
Tony Allott, President and CEO. "Our metal food container business benefited
from year-over-year volume improvements and solid operational performance. Our
closures business effectively managed their costs to offset the negative impact
from continued
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SILGAN HOLDINGS
July 22, 2009
Page 2
volume softness in the single-serve beverage market. In spite of significant
cost reductions and operating efficiencies, we saw disappointing results in our
plastic bottle business as its markets continued to suffer from weak consumer
demand and some trade down to products with less value added packaging,"
continued Mr. Allott. "Given our relatively stable markets and strong operating
performance year to date and our expectations for continued performance in the
second half, we are raising our full year 2009 earnings estimate of adjusted net
income per diluted share by $0.15 to a range of $3.75 to $3.95," concluded Mr.
Allott.
Net sales for the second quarter of 2009 were $689.5 million, a decrease of
$45.8 million, or 6.2 percent, as compared to $735.3 million in 2008. This
decrease was primarily the result of lower average selling prices in the plastic
container business largely attributable to the pass through of resin price
declines, the impact of unfavorable foreign currency translation and lower
volumes in the plastic container and closures businesses, partially offset by
higher average selling prices in the metal food container business due to the
pass through of higher raw material and other manufacturing costs.
Income from operations for the second quarter of 2009 was $65.0 million as
compared to $64.9 million for the second quarter of 2008, and operating margin
increased to 9.4 percent from 8.8 percent for the same periods. These increases
were primarily attributable to effective cost control and manufacturing
efficiencies and lower year-over-year rationalization charges, principally
offset by the impact from lower unit volumes in the plastic container and
closures businesses and increased pension and depreciation expense.
Interest and other debt expense before loss on early extinguishment of debt for
the second quarter of 2009 was $12.2 million, a decrease of $2.6 million as
compared to 2008. This decrease was primarily due to lower average debt balances
outstanding in the second quarter of 2009 as compared to the same period in
2008, partially offset by slightly higher interest rates largely as a result of
the issuance of $250 million principal amount of 7.25% senior notes in May 2009.
The net proceeds from this issuance were utilized to prepay all of the 2009 term
loan installment payments and substantially all of the 2010 term loan
installment payments due under the Company's senior secured credit facility. As
a result of these prepayments, the Company
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SILGAN HOLDINGS
July 22, 2009
Page 3
incurred a loss on early extinguishment of debt for the write off of debt
issuance costs of $0.7 million.
The Company's effective tax rate for the second quarter of 2009 was 35.4 percent
as compared to 33.6 percent in the same period of 2008. The effective tax rate
for the second quarter of 2008 benefited from a $1.7 million tax credit relating
to certain non-recurring state tax incentives.
Metal Food Containers
Net sales of the metal food container business were $405.3 million for the
second quarter of 2009, an increase of $27.8 million, or 7.4 percent, as
compared to $377.5 million in 2008. This increase was primarily due to higher
average selling prices as a result of the pass through of higher net raw
material and other manufacturing costs and slightly higher unit volumes.
Income from operations of the metal food container business increased $8.7
million in the second quarter of 2009 to $41.8 million as compared to $33.1
million in 2008, and operating margin increased to 10.3 percent from 8.8 percent
over the same periods. These increases were primarily the result of ongoing cost
controls, improved manufacturing efficiencies including benefits from rebuilding
inventory which was reduced late in the fourth quarter of 2008 and lower
rationalization charges, partially offset by higher pension and depreciation
expense. The second quarter of 2008 included rationalization charges of $2.0
million.
Closures
Net sales of the closures business were $154.6 million in the second quarter of
2009, a decrease of $36.3 million, or 19.0 percent, as compared to $190.9
million in 2008. This decrease was primarily the result of unfavorable foreign
currency translation and moderately lower unit volumes largely attributable to
softer demand in the single-serve beverage markets as a result of the current
economic environment.
Income from operations of the closures business for the second quarter of 2009
increased $0.4 million to $22.2 million as compared to $21.8 million in 2008,
and operating margin increased to 14.4 percent from 11.4 percent over the same
periods. These increases were primarily
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SILGAN HOLDINGS
July 22, 2009
Page 4
attributable to the benefits of ongoing cost reduction initiatives, improved
manufacturing efficiencies and lower rationalization charges, principally offset
by lower unit volumes. Rationalization charges of $0.6 million were recognized
in the second quarter 2008.
Plastic Containers
Net sales of the plastic container business were $129.6 million in the second
quarter of 2009, a decrease of $37.3 million, or 22.3 percent, as compared to
$166.9 million in 2008. This decrease was principally due to the impact of lower
average selling prices as a result of the lagged pass through of lower raw
material costs, a decline in unit volumes attributable to the ongoing weakness
in demand which was further impacted by some consumers trading down to products
with less value added packaging and the impact of unfavorable foreign currency
translation.
Income from operations of the plastic container business for the second quarter
of 2009 was $4.3 million, a decrease of $9.3 million as compared to $13.6
million in 2008, and operating margin decreased to 3.3 percent from 8.1 percent
over the same periods. These decreases were primarily attributable to lower unit
volumes, a less favorable mix of products sold, the negative cost impact
attributable to a reduction in inventory, the unfavorable effect from the lagged
pass through of recent resin price increases and higher pension expense,
partially offset by improved manufacturing efficiencies and ongoing cost
controls.
Six Months
Net income for the first six months of 2009 was $61.4 million, or $1.60 per
diluted share, as compared to net income for the first six months of 2008 of
$54.5 million, or $1.42 per diluted share. Results for the first six months of
2009 included a loss on early extinguishment of debt of $0.01 per diluted share
net of tax related to the recent issuance of 7.25% senior notes and
rationalization charges of $0.02 per diluted share net of tax. Results for the
first six months of 2008 included rationalization charges of $0.13 per diluted
share net of tax. Adjusted net income per diluted share for the first six months
of 2009 was $1.63 versus $1.55 in the prior year period, a 5.2% increase.
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SILGAN HOLDINGS
July 22, 2009
Page 5
Net sales for the first six months of 2009 decreased $70.2 million, or 5.0
percent, to $1.34 billion as compared to $1.42 billion for the first six months
of 2008. This decrease was primarily due to lower unit volumes across all
businesses, lower average selling prices in the plastic container business
largely attributable to the pass through of resin price declines and unfavorable
foreign currency translation, partially offset by higher average selling prices
in the metal food container business due to the pass through of higher raw
material and other manufacturing costs.
Income from operations for the first six months of 2009 was $118.6 million, an
increase of $3.8 million, or 3.3 percent, from the same period in 2008. This
increase was a result of lower rationalization charges, improved manufacturing
efficiencies and ongoing cost controls across all businesses. These increases
were partially offset by lower unit volumes across all businesses, higher
pension and depreciation expense and inflation in manufacturing and other costs
as well as the impact of management fee income of $2.2 million recognized in the
first quarter of 2008 from the management of the Brazilian White Cap closures
operations. Rationalization charges of $1.4 million in the first six months of
2009 were primarily related to a reduction in workforce at the closures
operating facility in Germany. Rationalization charges of $7.4 million in the
first six months of 2008 were related to the shut down of the Tarrant, Alabama
metal food container manufacturing facility and the Richmond, Virginia plastic
container manufacturing facility and the consolidation of certain activities and
administrative positions within the European closures operations.
Interest and other debt expense for the first six months of 2009 was $23.3
million, a decrease of $7.8 million as compared to the first six months of 2008.
This decrease was primarily attributable to lower outstanding debt balances and
higher interest income attributable to the cash on hand during 2009, partially
offset by the impact of higher borrowing rates largely resulting from the
issuance of $250 million principal amount of 7.25% senior notes in May 2009.
The Company's effective tax rate for the first six months of 2009 was 35.6
percent as compared to 34.9 percent in the same period of 2008. The 2008
effective tax rate benefited from a $1.7 million tax credit relating to certain
non-recurring state tax incentives.
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SILGAN HOLDINGS
July 22, 2009
Page 6
Dividend
On June 15, 2009, the Company paid a quarterly cash dividend in the amount of
$0.19 per share to holders of record of common stock of the Company on June 1,
2009. This dividend payment aggregated $7.3 million.
Outlook for 2009
The Company is raising its estimate of adjusted net income per diluted share for
the full year of 2009 to a range of $3.75 to $3.95. This estimate excludes
rationalization charges and loss on early extinguishment of debt. The Company
also estimates adjusted net income per diluted share for the third quarter of
2009, which excludes rationalization charges, will be in the range of $1.45 to
$1.65, as compared to adjusted net income per diluted share of $1.45 in the
third quarter of 2008.
Conference Call
Silgan Holdings Inc. will hold a conference call to discuss the Company's
results for the second quarter of 2009 at 11:00 a.m. eastern time on July 22,
2009. The toll free number for domestic callers is (877) 718-5092, and the
number for international callers is (719) 325-4763. The pass code is 3491393.
For those unable to listen to the live call, a taped rebroadcast will be
available through August 5, 2009. 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 3491393.
* * *
Silgan Holdings is a leading manufacturer of consumer goods packaging products
with annual net sales of approximately $3.1 billion in 2008. Silgan operates 66
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.
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SILGAN HOLDINGS
July 22, 2009
Page 7
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 2008
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 six months ended June 30,
(Dollars in millions, except per share amounts)
Second Quarter Six Months
-------------- ----------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $689.5 $735.3 $1,344.9 $1,415.1
Cost of goods sold 584.5 627.3 1,143.6 1,217.0
------ ------ -------- --------
Gross profit 105.0 108.0 201.3 198.1
Selling, general and administrative expenses 40.1 40.4 81.3 75.9
Rationalization (credit) charges (0.1) 2.7 1.4 7.4
------ ------ -------- --------
Income from operations 65.0 64.9 118.6 114.8
Interest and other debt expense before loss
on early extinguishment of debt 12.2 14.8 22.6 31.1
Loss on early extinguishment of debt 0.7 -- 0.7 --
------ ------ -------- --------
Interest and other debt expense 12.9 14.8 23.3 31.1
Income before income taxes 52.1 50.1 95.3 83.7
Provision for income taxes 18.4 16.8 33.9 29.2
------ ------ -------- --------
Net income $ 33.7 $ 33.3 $ 61.4 $ 54.5
====== ====== ======== ========
Earnings per share:
Basic net income per share $0.88 $0.88 $1.61 $1.44
Diluted net income per share $0.88 $0.87 $1.60 $1.42
Cash dividends per common share $0.19 $0.17 $0.38 $0.34
Weighted average shares (000's):
Basic 38,146 37,851 38,117 37,812
Diluted 38,444 38,269 38,431 38,239
SILGAN HOLDINGS INC.
CONSOLIDATED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED)
For the quarter and six months ended June 30,
(Dollars in millions)
Second Quarter Six Months
-------------- ----------
2009 2008 2009 2008
---- ---- ---- ----
Net sales:
Metal food containers $405.3 $377.5 $ 777.0 $ 728.7
Closures 154.6 190.9 296.9 347.4
Plastic containers 129.6 166.9 271.0 339.0
------ ------ -------- --------
Consolidated $689.5 $735.3 $1,344.9 $1,415.1
====== ====== ======== ========
Income from operations:
Metal food containers (a) $ 41.8 $ 33.1 $ 68.4 $ 58.2
Closures (b) 22.2 21.8 36.5 36.3
Plastic containers (c) 4.3 13.6 20.4 26.2
Corporate (3.3) (3.6) (6.7) (5.9)
------ ------ -------- --------
Consolidated $ 65.0 $ 64.9 $ 118.6 $ 114.8
====== ====== ======== ========
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
June 30, June 30, Dec. 31,
2009 2008 2008
---- ---- ----
Assets:
Cash and cash equivalents $ 79.6 $ 86.1 $ 163.0
Trade accounts receivable, net 289.3 346.2 266.9
Inventories 555.7 576.1 392.3
Other current assets 28.5 30.2 31.1
Property, plant and equipment, net 877.0 940.3 902.2
Other assets, net 409.0 449.3 408.1
-------- -------- --------
Total assets $2,239.1 $2,428.2 $2,163.6
======== ======== ========
Liabilities and stockholders' equity:
Current liabilities, excluding debt $ 351.1 $ 385.3 $ 412.0
Current and long-term debt 984.6 1,214.6 884.9
Other liabilities 326.8 271.3 342.1
Stockholders' equity 576.6 557.0 524.6
-------- -------- --------
Total liabilities and stockholders' equity $2,239.1 $2,428.2 $2,163.6
======== ======== ========
(a) Includes rationalization charges of $2.0 million and $3.3 million for the
three and six months ended June 30, 2008, respectively.
(b) Includes a rationalization credit of $0.1 million for the three months
ended June 30, 2009 and rationalization charges of $0.6 million for the
three months ended June 30, 2008 and $1.3 million and $3.3 million for the
six months ended June 30, 2009 and 2008, respectively.
(c) Includes rationalization charges of $0.1 million for the three months ended
June 30, 2008 and $0.1 million and $0.8 million for the six months ended
June 30, 2009 and 2008, respectively.
SILGAN HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six months ended June 30,
(Dollars in millions)
2009 2008
---- ----
Cash flows provided by (used in) operating activities:
Net income $ 61.4 $ 54.5
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 73.2 71.5
Rationalization charges 1.4 7.4
Loss on early extinguishment of debt 0.7 --
Other changes that provided (used) cash, net
of effects from acquisitions:
Trade accounts receivable, net (23.2) (119.1)
Inventories (163.6) (131.4)
Trade accounts payable and other changes, net (21.5) 73.1
------- -------
Net cash used in operating activities (71.6) (44.0)
------- -------
Cash flows provided by (used in) investing activities:
Purchases of businesses, net of cash acquired -- (14.5)
Capital expenditures (48.8) (55.4)
Proceeds from asset sales 2.5 0.9
------- -------
Net cash used in investing activities (46.3) (69.0)
------- -------
Cash flows provided by (used in) financing activities:
Dividends paid on common stock (14.6) (13.0)
Changes in outstanding checks - principally vendors (50.0) (88.1)
Net borrowings and other financing activities 99.1 204.3
------- -------
Net cash provided by financing activities 34.5 103.2
------- -------
Cash and cash equivalents:
Net decrease (83.4) (9.8)
Balance at beginning of year 163.0 95.9
------- -------
Balance at end of period $ 79.6 $ 86.1
======= =======
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and six months ended June 30,
Table A
-------
Second Quarter Six Months
-------------- ----------
2009 2008 2009 2008
---- ---- ---- ----
Net income per diluted share as reported $0.88 $0.87 $1.60 $1.42
Adjustments:
Rationalization charges, net of tax -- 0.05 0.02 0.13
Loss on early extinguishment of debt, net of tax 0.01 -- 0.01 --
----- ----- ----- -----
Adjusted net income per diluted share $0.89 $0.92 $1.63 $1.55
===== ===== ===== =====
SILGAN HOLDINGS INC.
RECONCILIATION OF ADJUSTED NET INCOME PER DILUTED SHARE (1)
(UNAUDITED)
For the quarter and year ended,
Table B
-------
Third Quarter Year Ended
------------- ----------
September 30, December 31,
------------- ------------
Estimated Actual Estimated Actual
--------- ------ --------- ------
Low High Low High
2009 2009 2008 2009 2009 2008
---- ---- ---- ---- ---- ----
Net income per diluted share as estimated
for 2009 and as reported for 2008 $1.45 $1.65 $1.38 $3.72 $3.92 $3.44
Adjustments:
Rationalization charges, net of tax -- -- 0.07 0.02 0.02 0.25
Loss on early extinguishment of debt, net of tax -- -- -- 0.01 0.01 --
----- ----- ----- ----- ----- -----
Adjusted net income per diluted share
as estimated for 2009 and presented for 2008 $1.45 $1.65 $1.45 $3.75 $3.95 $3.69
===== ===== ===== ===== ===== =====
(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 loss on early extinguishment of
debt 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.