SLGN - Earnings call transcript Q3 2019

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Operator

Thank you for joining the Silgan Holdings Third Quarter 2019 Earnings Results Conference Call. Today's call is being recorded.

At this time, I would like to turn the call over to Kim Ulmer, Vice President, Finance and Treasurer. Please go ahead.

Kim Ulmer

Thank you.

company Lewis, have Adam EVP and the and Allott, Greenlee, from COO. Bob CEO; and me today, Tony I Chairman President Joining CFO; and

it we begin described concerning the filings this not on and made may XXXX These like call of based we impacting statements. call events certain those today, the uncertainties limited forward-looking company but statements Before to risks made the including conference make beliefs and forward-looking clear SEC. be involve Report number today upon future Annual and that a statements and for to expectations would on with are in company's XX-K therefore Form management's the other

could the Therefore, or those the actual statements. of forward-looking or results company materially implied differ expressed operations in financial the from of condition

With it that, to Tony. I turn over will

Tony Allott

our earnings Welcome quarter Kim. call. Thanks, third to everyone XXXX conference

financial and any outlook Our on Adam, focus agenda the the remarks take prepared be remainder of and our for the review Bob, I'll quarter happy morning for for XXXX. After a to performance questions. third of the will then

in in you the with matching knowing the year press release, quarter diluted share income current overcame in estimates we our As that the performance quarter. a of prior $X.XX also saw year our pension the we third adjusted record earnings and for decrease non-cash delivered in per line quarter, $X.XX

expectations environment and However, quarter. our pack Europe economic for of our of kept a challenging little range of were short us high-end the volumes short little both in a the

of performance volume improved solid quarter leading another once business delivered again operational plastic and Our results. to growth

year. were our The metal largely line in with container prior businesses closure and

businesses the volumes in weaker start did pack, profit well with operating resulted and controlling both expectations. achieving conventional objectives. below in However, U.S. combined costs Despite late Europe that, initial another in relatively pack a our in

and a estimated vegetable year-to-date our $X.XX tightening which than we're October, end pack quarter unfavorable per headwinds fruit per approximately maintaining share. results range earnings includes share outlook in of for guidance and anticipated full-year Based for to diluted adjusted on includes earlier to an which the early pension our our and $X.XX the the non-cash $X.XX fourth to the

now detail turn results provide on review our additional that, to estimates the remainder year. I'll financial to in over of Bob and With earnings for the more the explanation

Bob Lewis

everyone. you, Tony. morning, Good Thank

highlighted, quarter as with an adjusted per Tony As in record consistent was the earnings prior in-line quarter the we in-line of share estimates. diluted with earnings and year delivered $X.XX performance our

in basis, sales. from pack metal due year-over-year container efficiencies the resulting volume inventories less declined business benefited curtailed quarter the production to lower as On from expected a the sales than

not and business. Arkansas, also container We closures light and impact year. did The prior costs performance volume to of Fort operating the benefited recur, strong from prior in which business in costs resin favorable as Smith, impact the higher of from in pass-through plastic the lower startup in year the unfavorable gains the costs compared

all businesses of and pack gains. across offset million more than approximately non-cash primarily of higher movements, The to products rationalization less pension quarter charges mix favorable $X lower the sold for income related these

In addition, rate. lower benefited lower slightly interest tax the expense and quarter a also from

the and container an volumes net increase $X.XXX and sold, in $XX a of offset container by the in in foreign million. higher of for were the third business currency an raw of products plastic metal mix basis less business lower raw plastic material the primarily translation impact unfavorable pass-through costs approximately of partially XXXX business sales of due consolidated the favorable material the improved pass-through container a On $XX.X quarter billion, to of in million, costs

on share early metal XXXX. earnings Therefore third of $X.XX third the quarter and two adjustments per container the per debt. quarter a announced XXXX. the were of diluted XXXX $X.XX totaling share for attributable adjusted extinguishment shutdown to quarters loss There of were of in third XXXX results each The to in the charges facilities no include earnings and of

on weighted notes to and part due loss the million for on lower largely of expense the senior and August in due of The XXXX of of X before the of early average X.X% third a a XXXX. outstanding result decreased $X.X the debt redemption redemption the million, quarter million debt on X.X% $XX.X average loss XXXX debt of the notes. rates early of at debt to extinguishment the of to the lower extinguishing of was interest other of Interest $X.X result a primarily borrowings, the end repayment

for expenditures quarter. year $XX.X the year. totaled $XXX.X of $XXX.X totaled prior million in the million million third XXXX Year-to-date the in with prior $XX.X versus quarter Capital expenditures million capital compared

Additionally, September $XX.X quarterly of On cost the we paid of dividend a million. million. per share $XX.X year-to-date $X.XX cash in total basis, cash totaled for dividends a

translation primarily costs, material approximately the partially pass-through $X of other of around can, versus prior lower sales the metal by net This of the increase of and the increase X.X% offset each specifics manufacturing container impact $XXX.X the for business recorded on sales pack-related XXXX, of and is million result quarter of of quarter. million. raw of $XX.X third the businesses, unfavorable or Moving million the foreign larger higher year currency an to of

customers the other versus with volumes offset flat pet were prior gains including year customers were pack as volume lower by food. volumes with Unit

quarter of and XXXX period business in the for the sales. of in lower due cans, higher efficiencies to goods $XX.X finished charges, income due U.S., income year-ago. pension Segment same higher challenging the was to tax-related production the in by the higher inventory a The container offset sales in metal rationalization decrease income economic larger in anticipation in produced part segment $XX.X million was partially of million in lower quarter versus conditions Europe, primarily pack in third

less approximately impact in was of lower by to compared currency unfavorable volumes sales due of as Net were the U.S. million the volumes closures volume flat international favorable to as a foreign in $X.X prior year mix the in the from business translation for Unit higher quarter, and offset sold. beverage million the decreased demand largely million the quarter primarily $XXX.X markets. the in to $X product market

lower in $XX.X down the for in net the third of decline resin closures. sales period. of business in impact unfavorable compared lower income quarter. was year $X.X metal period versus beverage partially prior current higher was and plastic pension closures XXXX million, by to offset in light in costs the and the result prior impact the the in as year closures pass-through conditions million a the the economic income of Segment of favorable the quarter pack-related Challenging decrease Europe a costs from primarily This higher impact of resin

$XXX.X to the of costs million raw $X.X third in the quarter containers the the largely by million Fort decrease volumes, the of Arkansas. lower year prior was to of in sales business a material plastic growth partially XXXX, Smith, pass-through in Net decrease were due quarter. versus improvement related X% for container plastic offset This primarily

the year costs income by partially to offset operating higher associated increased quarter million volumes, with start-up million was of impact of in attributable pension facility lower the $X.X and increase Segment $XX.X strong Fort XXXX. prior unfavorable primarily income. for performance, third This the to Arkansas Smith, the

for to tightening $X.XX estimate quarter, is our we season, the we turn a smaller the remainder range. to are now As the for of of range outlook the fourth XXXX, typical as

which estimate As $X.XX year-to-date the of the we’re range impact a an the result, net per the remains for of the estimate certain our outlook the on remainder estimate. outlined excludes in and the Table from based press year, This to $X.XX adjusted in release. B adjustments with of midpoint our and share income providing original of of performance diluted consistent

an range early This of vegetable net $X.XX and a which which from metal fourth earnings the $X.XX quarter compares of includes pension to ahead diluted strong $X.XX income in a also $X.XX per pre-buy of estimate end abrupt the per to XXXX, containers unfavorable in impact the fourth diluted benefited significant quarter of We're of the to of steel record share, per estimate inflation. a and providing in share, approximately adjusted non-cash fruit adjusted in XXXX diluted share October. pack reflects

$XXX cash be continue we estimate approximately year. the to for addition, In free million flows to

prepared comments, like to Q&A. one everyone their once ask to questions I'd follow-up. keep for it up again, can to our And we concludes That open question so and one

Chloe, provide for With can it directions to over who Q&A session. that, I'll turn the

Operator

Thank you. Instructions]. [Operator

We take first our Anthony from Citi. will question Pettinari now from

Anthony Pettinari

In pack market. being of metal containers around came excess and was Good impact then bad a article up could negatively maybe historically morning. cans capacity Wall to out vegetable Journal that generating the Street during maybe the that million the there quarter a

excess of weakness some more this the weakness supply if create or in price. knock system on comments. wondering the on seeing referenced in just competitors But effects terms You I'm kind of in getting aggressive maybe your you're

this Just pack. you there's on can difficult color after provide wondering if any competitive the environment

Tony Allott

little Tony, it’s all can't I'll of really reconcile I Anthony, the there. Hi, point a try it, bit

little time the our As period. see pack the we was over of expectations, volumes as flat you our shy were said can a

case, inventories veg, even visibility In a I'm you now our between know and about to again, are when for veg, So a this inventory complete bit got difference what got talking in little what customer. look filled so have at sizable we shifted. we unfilled, and food there's of the correction

of to volume we period. piece So have good that visibility in this

think it's billion a cannot is cans. incorrect cans to from What has it that filled really the I is more I’m coming I data. where So with just explain do sorry, likely the steel is probably

of basic et do no is of think in that from the pricing on do the in example, I think in versus I has of has import so and a that, way, like But But more steel. our to fundamentals steel your billion system the the steel damaged any pricing market there that the is steel I and question. for impact the of to and cans out industry rest of because think the what's domestic coming don't therefore, happening probably cetera. anything with

Anthony Pettinari

of Okay, food volumes. could night that's shipments your the down flat you what X%. I'm really you pet comp I very with helpful. CMI shifts, for seem if the there? quarter? kind again, saw food. you And about in pet a XQ, that showed color any talk it data out tough last just doesn't any seeing Was tie to came inventory think that And Are for then wondering

Adam Greenlee

take the to about maybe it’s step food back talk Adam, and pet general. quick a market Anthony in Sure.

go a is you our year. look versus you our and X% up prior year-to-date about to at volume, volume If basis

than you what even stronger maybe summer. this initially little signaled to So we a had earlier folks

position we about the really but growth So future only prospects not as well. for market, feel continued in our good the

significantly investing the volume was for food, that support in our growth our and thing our When back customers quarter have third that one been pet the you customers to flat get to with happened quarter certainly essentially their forward. going but

we down increase in situation where were customers QX a taken had our their them filling in to So rework lines to capacity.

existing seen for in in we've the new and the of So operating both in products investments pet lines, of lines, new addition addition food. the reworking facilities of some significant cases, our

X% think of customer these level. that, some make our capacity shutting of volume enhancements in maybe pull-forward lines of those results for year-to-date the advance So the to little a a we bit of down was at

we view year So it, in of for position, really feel customers we're the excited our good market our we our really feel the for in rest and are great about nothing's and XXXX. the winning nor about changed

Operator

Instructions]. [Operator

take from Vertical We Dillon Chip Research. next will our question from now

Chip Dillon

I fully I and we the a sell-off XXXX. Tony details. question likely, And of through at morning, of Bob, appreciate in now the we've good lower case $X.XX and Kim, the this equity could appreciate stays that all my seen is income the end the year, if or and saw Yes, back all recovered year-end, -- huge markets pretty next guess I we that first year. much away went see pension this that come

Bob Lewis

Bob. Yes, Chip it’s

have the gains a there's your year. to terms suffered last that and that time go. they I Right, pretty of lot accurate to in point that still question the the is, is recovered so think markets in nicely

that a return gain a is base against perspective. from However, lower

prior the of year you make that up need all So to outperform significantly to gain.

on equation the piece to the that then what shrinks. folks to tend how discount the of or look And right. that is import what And grows rate, to at have liability that other happens want will

the the of this fact pension -- shakes where the the But suffering. know discount So measured been won't $X.XX point was accounting we've we it, last today, is until very think rate year. we we say the we out works. way day matter That's the the that benefit for of would here the have if some against that certainly time would if as I you that headwind in sit

So a sit it we depending will either way upon which that bit. moves erode or improve that where could today,

see we're play optimistic, say, it longwinded out answer it the got ends the to end let where to a at year. and but we of So look, exactly

Chip Dillon

little helpful. quickly, super can types how And can of food just could business you that's other then bit or pet Okay, the usages? is going sector talk about the food a versus

Adam Greenlee

Sure, Chip it’s Adam.

a to communicated continue pet I I think we bit previously through market, detail we’ve little but I pet just the expect on went again, what to food would say that food can was of to win in We've pretty We're our in at level. grow the overweight share. to continue market pet customers space food. got that sizable our into retail space. a are And continuing

QX up repeat, X% our I year-to-date, we're to say flat. Just was

for in range the year, the we growth in essentially of exactly it for pet and as X-ish, up will food. year the would, Our is out X.X% be kind to thought going the play

Operator

our from from Mark take Wilde of question We Bank will next Montreal.

Mark Wilde

of talked business, on issues wondered business? little also in a guys the issues I Adam, mix and can food mix if caps sort could you the more plastics have closures you the and in put in about color

Adam Greenlee

Sure.

I see plastic did beverages in primarily nice, we in start was growth United begin closures with with, caps States. and for the you think closures what when to our nice

possible the kind that's volume we've So of old talking been about. historic that

as So good growth expected there.

weakness saw products. around most in I would closures of and some that say was was weakness we pack-related Where and items pack-related metal

with go et jellies, then metal like glass fruit they closures. packaging created like and things the vegetable juices, fruit harvest, from So things the and in themselves jams are which vegetables juices, cetera

So of a outside think across you then side closures, and lines, got obviously plastic the well that variation performs mental product the those outside main closures, business, mix of fairly dispensing systems three three. you've pack-related of systems items. really metal in And everything those dispensing there's and so about

products was And dispensing being closures. dispensing could very we market we see were the our other in mix is when metal favorable is up, amongst volumes dispensing was but that some to systems favorable mix Therefore really and up, And being then a line, systems that around metal fragrance in engineered the softness volume battle of product plastic that a with us. very take in essentially offset and up particular, of is markets, is Europe flat highly to product our some mix systems. also in less of So down for set lines up. are plastics that core the in the

Mark Wilde

-- plastic and metal Okay,

Adam Greenlee

Mark related growth is then the jump Bob pet over just plastics to And most that to and quickly. primarily plant And to Fort to of as our has was related growth Smith said food. new

those favorable product a are and business standpoint are traditional for overall little the smaller packages a plastics from typically So mix less that line.

Mark Wilde

the perspective major didn't sell just recent follow-on, All I there it and like a -- a they entire any note just Okay. then a caps I was as that seems had and sale of also, business. I if you closures, sale? competitor on And right, in that wondered

are a to So franchise could point. that at that interest I you of wonder pieces be if of there

Adam Greenlee

I referring assume I to. what you're Sure, know

was it sold market business that’s that in business the market. closures beverage So for single-serve primarily a that is

As us picked you this in a area us. on have that's from call, interest the probably not past, for high up

on it same particularly assets around that could may that. case. So that be sell might was out any that The for they us said not in suited be still businesses that

side. So point huge I don't on direct think that to is us a either

Tony Allott

think carbonated single-serve, water to I mentioned You that more directed drinks. soft and was

Adam Greenlee

yes. correct, That’s

Operator

next from And we Bank. Deutsche will from Debbie take our question Jones

Debbie Jones

don't the can sense they're food up a are about whether I My then of give first demand you is for disclose weak materially your total global kind down forward, of know I could wanted but needs they capital going the year-over-year, business of the cash? if and question, margins, how or European you you to for ask or business question optimization just impacting the us margin, run

Tony Allott

Debbie the and of are cans those All business to clarity. related for European

Debbie Jones

I sorry cutoff. if Yes,

Tony Allott

Okay.

think in in very expecting the profitability that, packs of for year a year. we cans, the off this previous I very strong pack were have we European just So is challenge four

year, but we the what pack was expected. prior nearly not the than better So

results the think I a So little disappointing. were

So expecting margins what to expectations. they were be, below were we quite were them our not

are we we of overall really the capital there the go business for As of impactful forward, needs spend not, the the balance capital that the to it’s business.

and as change challenges some look well committed as all Europe food going forward, real volume for chain some at We've we forward. with opportunities no including then broad the in the the So going for units customers do growth. see specific some growth our businesses, and of but we got

Debbie Jones

a materially But your that, noted the mentioned softening like call; how things the would you you hope softening isolate QX? you discussed you are care bit kind were things on things in QX same certain much here. of you about markets some of weather, of more Are just or I kind of in you quarter Okay. it different like if personal markets last specifically, seeing trajectory of kind stabilized? similar say

Tony Allott

of that our businesses. in take I So all question

So clear, first I bit that just to a would around say be pack. the mentioned all, of you

food we So thought we very long-term in is close year. exactly beginning about guidance the thought is the as our of from the to can full-year everything year, where

highlighted other we chance sit here But my looks than we as past foods the some So in I’m year, comments pet this in that's can, the expected it disappointment that about because out amazingly, get good. was. thus today areas, little stronger better like that as food feel I in laid talking far maybe everything it read we're a there's exactly going about bit despite of to we we

other Back on briefly to that. question your

the demand in But the still back. ultimately both the in market to same so in U.S. for that the come and level And your expectation Europe past will has

can't broadly, just like maybe slowing certainly seen to some path. I business, have the areas. see some on that particularly But unusual personal back we point, care to it now if it's restaurant so And branded would this at you talk you so think seem side, the around

think a which little And then seems bit our this over be every of abruptly carefully. been to that already year. And just And we're seeing the to watching Adam seems in wouldn't anything that's feels alluded second to, to we're be the so is say a in little more. I occurred weaker that course us of probably a trend I that happening one trend one kind quarter, a but Europe of the businesses.

another we’re Well for one. ready

Operator

from Josephson KeyBanc. from next take We will Adam our question

Adam Josephson

Hey guys, are just about Adam or think me wrong systems, correct if there. year-to-date one dispensing Tony Adam I'm just said on volumes and I flat

I think was when January deal you I it XX. announced the think

business were has seen developed I'm the the growth talked of year-to-date context as to of what You this growth you profile if you three-ish, what you the at think been of in volume the but some mistaken. markets was being up a saying business wise time to or is emerging what you being two, in you closures that I think they're what in so time for what the just the late? you've sense about think the of at mature volume profile were is business expecting How I'm deal? I markets, that trying opportunities compare of would not that the get flattish

Adam Greenlee

talk systems. think if dispensing clarity, I in about or you growth full-year expectation, we the expecting are just year-to-date basis, for Sure,

products as large good quite quarters you'll lumpiness But over between feel customers maybe not time much. very promoting think core CPG as about. markets the we some I promoting are So our or still have

a but other you going forward. of if we we lot about is and calls saw that which these on our and growth, business, see business, at growth nice one we expect I to continued about think the QX discussion have conversations So trigger look specifically,

garden Items quarter. up fragrance, were all lawn in like and the

good feel So those. we about

may think one market. Europe Europe in impacted a business dispensing about earlier, the specific else. in again, really than quarter conversation what point in anything was broader be And to any I than the Tony’s systems more softness it just it's

about business. as the But say sit I feel I here great today, we

plays growth Our year. we exactly expectations quarter but this to growth growth expect here will in see have changed; fourth year. haven't out X% We'll have And X% the we'll we next will year-over-year. that what again

Tony Allott

pipeline, Adam, development it that feel so are have hope is because a that's and aspect And where of to coming about there's this beyond other we're basically the pipeline the a an we that half really what and reason just et we a product of efforts good cetera. on saying products very line engineered there's robust

of we don’t to personal kind So customers down, along continued business right efficient, grow care and have have of existing et what Europe sit offset some expect that they the we solid that the we base business. know but while just cetera, the regular the path

very feel good still we prospects. about the So

Adam Josephson

follow-up one and by for on just answer that thanks that And way. Tony the

to to flat wise, I expect -- in down closures dispensing again, down growth going are expect is What closures volume for be or me you for dispensing? help if years? the be the last full-year exactly up do So you the case as think to if volume what just you of year, offset for the couple can year the was slightly that with wise,

Tony Allott

So all, to of had scale Analyst you we of more remember the it. content when Meeting, a let's first gave our bit little we

up business, that than have top of So X% in we business more small a the the it could that the other overwhelm relatively would dispensing serve X% be markets decline and volumes part of of the terms could and you dispensing closure is so in of either system. systems flat volumes,

Bob Lewis

on profit a or On base not volume revenue base. a

Tony Allott

correct. Correct,

this nick is think again -- necessarily. going part evolve to much what we why volume end that's dispensing clear to not or an becomes where the not So of the how be view topic more talk future we're the on our important year, of saying and And by about I'm that's so side. about

conversation. could get it Bob’s really overtake saying that's but a over time positive. good volume could trend margin, point of that for high just To pack than business to get all season line more on the see a we it are We ought by overwhelmed also us, just

Operator

America now Please ahead. Staphos go will Lynch. from George next of from take Bank our We Merrill question

Molly Baum

question metal will bridge Hi, of amount puts fourth on various for goods first George. actually finished larger the you the more kind us you Molly for the of this specifically is can specifically press in talk My and inventory. Baum help be what containers, quarter on and release, about takes

from So absorption. see expect XQ have of would of XXXX, talk fourth $XX Thank we in be Should an unfavorable to in any XXXX impact you you helpful? negative that about there thoughts million the you. quarter any

Adam Greenlee

prior to I will get Sure, think comparison versus volume I about year. started; the talk just

that are XXXX. you to from fourth cycling So of have recall we over a fairly quarter significant pre-buys

So, as to volume kind the going said, is what's expected communicated to fourth be Tony we've quarter. of all in year throughout as down considerably that's happen

the And of largest essentially these finished QX the our as carrying being at we're the goods the end end far we out cans QX to as have of of pack. at that related sold into pack; were the the pack,

the the late, our ready when be customers. pack goes to QX, So filled or pack be moves those need to for into cans

end the quarter, the inventory in materialize then the already We to the cans of those an some did of cans of standpoint. doesn't volume larger into the from QX due those made pack. and abruptness we've So carry

Tony Allott

of year if half range ended some So is $XX negative million in did quarter. year. last some impact we other the on quarter of being the P&L the in all did fourth the effects That which up -- major recall of that was that you reduction last fourth we

year. year. bad some this what just to we're do The going production this good the said news, having benefit news not Adam that So get now is we is the of

volume the for of inventory at increment on looks $XX more enough you to roughly million, that compensate a an about flattish kind more bit And getting I'm million, increment is that's the bit on of of instead look $XX than range that down more why a then of So that. quarter. what alone, and in to that the looks talking

Molly Baum

customers a it, got pack Trade Yes, you. And Yes, Press talked that. got recent it. just you. perhaps reducing then has follow-up, footprint. about so, Appreciate their thank Thank some

plans how extent XXXX? the this Thank XXXX? on you to effect impact in might what your for Or can you. comment, have business So might that

Adam Greenlee

been there some Sure, has of that.

to and the about the the think is requirements who's demand really fulfill question demand. I market more going to that what

that ends It And today, who up don't with have we so, sit as we capacity. we depend necessarily impact. here exactly see does

so answers And I have for don't all you. the

indicate as of But market it and got share position supplying, off, that would cetera. what we a our get the things that sold on got rule, sense way et we've sort a we contracts we're of depends we've meaningful require so some have keep in a that, that

as again, today, too would like feel have not here any the So meaningful we all sit without we that answers, impact.

Operator

from And we our Ghansham take next Panjabi Baird. from will question

Ghansham Panjabi

very from difficult Hey the I that, you of how down, last imagine you the that related the down to in industrial versus have do as guess to a apart XXXX, a first is you of morning. follow-up then sort about fourth seems quarter? your tinplate off like Tony, is guys, good are are would see and question, most tinplate XXXX thinking it risk destocking by customers steel I comp into for going XXXX commodities

Adam Greenlee

Adam Sure, you're Ghansham it’s and right.

our a coaster this a of customers. from for bit So a steel roller has been pricing standpoint

at base. this pre-buy their brought to anything So understand our point as not XXXX the customer on the significant inflation invoke worked we try We're what our very end are. at did closely destocking to customers year far from exact planning XXXX of requirements as the a into with for that and we all of

in QX as anything into material we So here we pushed today. see QX don't sit

look think as XXXX steel at out pricing. we I

we're of First the throes negotiations those now. of all, right in

to single that passed to through our benefit maximum get we're our day customers for very every So we've hard the contracts. working

We're in single-digits something But the we basis. see nearly looking deflation, expecting at the not I'm not maybe that low upper will percentage deflation inflation, nearly we in sorry, a to on suffer. XXXX double-digits the inflation level of we're to

Ghansham Panjabi

Thank of coming renewal for volumes Silgan helpful. that's of you. U.S., we for the the into more for do up broadly, just just in XXXX? or in think for at you And various this any the have year about end big year how can business segments then contracts should the going across Okay, food terms in next metal And XXXX XXXX.

Tony Allott

Sure.

unusual the it typical -- on the So coming year particularly I contracts. yes, nothing year a call would in

Adam So have through volumes, our impact. steel as have some all, we which gone of budgeting not first we don't process, said, have would meltdown just

I far. is know nothing based we can more give on of directionally so what And we're where you going a than so sort what sense

a think very our by said, pack that later a was abruptly expectation pack, it modest real Europe, would we The way again we And get to ended so or a the will I this year. get fair driven which like pack. by food expect pack going we but cans, it could was terrible be not sooner it be U.S. in you're our not was improvement just

could be a better, bit So that I little suppose. but

As I that you inventory and get expect Adam that reduction expect the then we markets of talked food customer packed the supermarket some vagaries in just growth improvement one and and as would we have -- to we stuff. that. a which we about said before, at against have what of happened are some know particular on other the we all

that and would similarly of systems expect on from the Yes, have a Closures side. well. to in on growth to the closure see again flat expect it benefit we as would said pick we as you packed growth we on answer modestly better, can of can kind our food food dispensing beverage here side, your side lot we we on

there. so continue And us. then And has the so growing grow expect been would model to help to we that plastic and that that to ought

Operator

take Fargo from Gabe our question Wells from next will Securities. We Hajde

Gabe Hajde

for Good morning, taking the question. thanks gentlemen,

what I costs pass-through that next the are healthcare general, a food some talked in slightly it contracts may that Bob, heard is contractual and typically, and think often steel, before have to knowing business for think or discussion, terms what environment can deflationary was of pass-throughs go me clear inflationary I you've about you? I in wasn't up. there pay specific raises year, to better

So profitability you're guess of curious, I'm kind would down or year or to metal volumes that directionally Ghansham’s speaking, just about about? piggyback expect you off to next up flat inflationary talking questions be given I of food comments

Tony Allott

Okay, parts that question. that to of says a lot

will expect which our We part conversation, metal is, were talking tight. inflationary So now, deflationary. easier expect would of labor are let me know be which things with right start is as about that in we labor side you the like very certainly previous the we

so generally little costs, we question, takes which in is those is hurt in inflation it on. periods we -- bit to And way the you the delay because get we would of what the patenting started a say that other you of

have accelerating for until instance if So through you and inflation but will of not can our a labor contract, year-out. pass we that

have pass-through So in it, labor of and that our on would bit can us inflation. little we business of a actually that’s headwind most of I and business, other that's don't our for say

think of bit I headwind lot is industry than So a a us for for of that a next year.

see the beyond the then larger some just competitive capacity moves little aggressive of we’ve activities about volatile on makes And some I little the U.S. and in side, we in more confusing. and with a you been excess with talked a market So cost say bit the from in would which is to players there's probably a frankly, of steel more that amount Europe. market continue that, then that container seeing volume what Europe,

the you're Ghansham against margin assume if going continue, to talked I that the those And about submitted improvement so side. volume with just get you on

Gabe Hajde

the investments warrant were adjustments I capacity? that some to of optimism the additional my as then of in for pet you've guys Might say, thanks. recently that couple food Or Okay, have I for sense or commented of enough should compensate that? towards a And effect. made guess business, investments out to that

Adam Greenlee

nice a been correctly. the It's this continue with investing for Sure. going to our customers for cycle hot all There's optimism projects expect going increase us got We've also right Yes, been increase capacity, throughout can underway market forward. I of our grow to some now food variety our growth it capacity think we capacity you growth to we've capital and in side. as read a pet additional well. on overall to our

or of as bit what enhancements I'd increase the capacity term. or, at looking but little plans, a it's new to both, in no nothing say as near significant we're So like our far that, anything

Tony Allott

And me just comments. and the go Gabe, previous let finish back

I food then then to two able we the really is for free business. have on the didn't lever and third I and one And we that had them ought Meeting run of to to side, Analysts whole well, we is, cash. finish to be the businesses I our we a been Same floaters and past. volume thing pull said deploy So got profitability as we thing to improve to up, about levers trying can of that done second is one we've lot have plastics, reason talk of our lever free really continue of think we will I the sort our these in business, cash kind run which we got I and the think franchise

the I mid-point and the And you about leverage remind if are food business, the of end of next would comments about for can by so year year, of example, you the now back I range made about metal just we our the the think that level. business, container kind think container into roughly you

be levers, deployment so our little next that a it year is own lever, And the between view two might more cash side. the bit

Gabe Hajde

one If you last I XX%, or? in a for to in the lower. sneak could Thank little Bob, Are guiding came tax bit still one you. XX% rate

Bob Lewis

rate Yes, think a quarter I full-year. of that the on benefit probably, obviously impact bit an we did well, the the have bit a as see a against more will although full-year in muted we'll

be QX we wouldn't better a kind different. good carryover just full-year think think We little -- this hair I kind a given it'd forward it. maybe that could seasonally that'll benefit probably in year, bit meaningfully the I the of I but range as as of looking wouldn't saw do that that that to if XX% I on is the the probably for we're full-year, larger than get

Operator

question RBC. Arun next our go take ahead. Viswanathan We'll from Please from

David Page

Page Arun. this is Hi, David for on

Tony Allott

Hi David.

David Page

you to see the think metal Hi, stabilizing soup mentioned in growth know is segment discussed, category I your future containers you category? where wanted soup you I do and the in general soup want you to in just increasing. if volumes

Adam Greenlee

question. good Sure,

quarter when last year the I category we soup at in year, think I the look the think for starters, it third was quarter. a in difficult

we for saw and the at today, some we are -- good pretty we're feel and where business soup year-over-year So now right part happening what's activity early been soup market, the in the focus But been the us. good good and we the has it's soup on think filling soup. the the think promotional about growth season, we products, can nice for of in but activity, I

going. we is feel So it where about good

Operator

from And we'll take question Sachs. Maguire next our Brian Goldman from

Brian Maguire

late. question. good a bit Thanks Hey, little for found morning. taking I my have

you're the wondered could you environment already on Europe So just in pricing is but asked, metal over in I comment what if this the apologize side? if seeing I can in

Tony Allott

saw to to We about it competitive this not certainly hard really this the I volume. Sure, past. saw the more for recovery saw little to alluded stage, a Europe really us like in happening was going And We little at we've but we what was were activity players a wanting is in seen XXXX working bit. didn't than who a big be side. of getting full some steel it on seem cost comment

about some it of there. clearly we change -- beginning takes some negotiations year, that to XXXX happens you won't but hopeful you a the get get the we into certainly had until quarter, we're goes know cost change that in that'll the have first that that'll a European So to continued we so has into that bit, in dynamic while

Brian Maguire

half how term about is there way any by And kind half much impacted to a recent contracts annually weakness? of the the roughly it that -- think resets mix contracts is like of and it locker of ton

Tony Allott

on guess no something like like if is XX% probably a here, but I’d negotiations. little under less multi-year right it bit XX% annual our contract and probably contract, Yes, more

Brian Maguire

following be kind being And last just in me range comments helps. for It on the to okay. back around in. your the it, Got Tony, then leverage of you wanted

between any comment your and in value M&A doing can you you if sit general that trade-off the thoughts there's just of past could multiple are fair there and And being have about other on that versus parts of past. you talked you active a you where know any been think some to specific and the dispensing the still buybacks looking is that Or in can, comment M&A room market kind of a the pretty portfolio that fragmented the is Maybe pursue where you as arenas at? wonder both on M&A. Just environment, think you're parts portfolio. case? in I the

Bob Lewis

Look capital a M&A we've that strategy back of us is our into right interest quite we we're flexibility time where at toward Brian, range said, Yes capital. lot in from desire this kind that of Bob as speaking. a and to been around square Tony that some difference gives activity. allocate first is deployment how deploy for No

look would were will. a ways talk the the opportunities out little things around given and the you if we find side closure the to be continue in that, but obviously around of we through interesting segment to there if particularly us, perhaps that operate as can in, to that love to think out I segments the challenging to market dispending build business share, would build system we more

line in And has have with nicely, then, corner we expected right over time. happened business turned plastics look to the the what have would

not the opportunity but table. that, -- hard So it after the there. that some but is to the not signal there deployment has we're least off thinking be allocated about see the something at I'm there's earned team that could we idea to capital us capital trying certainly for going

All of there, that of what capital of a in of to historically side of Silgan forward on and that and the put return those kind on at shareholders. returns that discipline the we'll the the drop has if backdrop then cash same is against from look not the M&A back options happens are cash all

quite and into we frankly, capital the benefit at said, one So forward the rule other pretty the is I of look off all Tony allocating remains will the as or not that high idea of and XXXX, to would it as as table, those year.

Operator

Chip from from we Research. take Vertical Please next Dillon ahead. question go And will our

Chip Dillon

plastics on important an we but but involved closures thank containers, main you involving question, some that? and two, ban one know wide to plastics for this question is you but just kind various food is that the about both continue and are you to you hear on can that there some taking about Yes, of is, investigation you other any very counteract going in way? is I out secondly, follow-up. my don't moves all and more that's about certainly places, and and and all, nothing in broad there to market a taking and of of containers single-used a do I plastic there's know that maybe us very at can My I any, And business update think much are and of the kind an that's then have tell the update try Europe PR scale more any others anything for the

Tony Allott

the in. everybody the all in the we basically is who and already of in in can can jurisdiction, business -- business that Europe First got pulled

part So of to we that have updates there's we to offer. are that, no And which disclosed. really

On the a there’s plastics side, there. lot

I asking the you're question. right think

we why is of dealers speak. plastics, of does I a and So and as all think make there's I heightened and water ask a out, lot around issue there is that sense. single-used we which around do know there's things think this whole it as for like -- perception Adam is one that single-used themselves particularly applications, awareness primarily still pointed

that I think percolate. so And continues to that

And watch very carefully. it we so

in I your can fairly pointed come very segment question was us, more that particularly think are little bans to in bans important because Again, that moved quickly. slowly;

so that. watch And we do

where that you've most seen think it straws. on likely I

just tied fact, the the around it needs that’s ban, but to see closure be tethered somehow that and the to may You bottle. or not the

You're probably you're Europe, think in And I certainly in jurisdictions. seeing seen you've that. other

call We've come we to that thing work capabilities, being a it. And not on solution spot for with our cetera. customers to to in we're that really before et is feel on we scale good this good bad done the that necessarily the us things are that a development that

And content so to engineering that'll add will. and the you and if complexity some closure,

address don't on that challenges are there do band the how So of right of product we're and the real is focused now. we us up out entire help those there you that end are a where the kind with moves

that that X% beverage what we single-serve less you the remind of the fact than I'll are. -- is

a not point case. So it's big any in

around know is cetera. you Our businesses care, as primarily bottle et household plastic use, healthcare, personal

are those are in bathrooms. home, multi-used applications the kitchens, that So the

imagine class or little to So the hard just changes. it's a to any other, major idea of moving

need our through whether We we belief be whole it in responsible on keep an that there's biodegradable we of will post-consumer are that bioresins a on. it's fine variety resin are looking that this, of needs working part to which is to and solution. a working area our that So products, an is be so at all

heart the around all water that areas. So I this probably think around it. single-serve of of we're single-serve doing more really problem to particularly But is be

Chip Dillon

X%. That's very is again, you. which helpful. less Okay, Thank than

Tony Allott

That’s correct, thanks.

Operator

will Wilde Bank We Montreal. from take another question of from Mark

Mark Wilde

to wanted actually I the plastics. follow-on, Tony just Yes, on

in So first your of EBITDA can give the us all, plastics margin third you in quarter?

Tony Allott

Yes, I me the -- is up looks Kim way. did think from How to get? like it's XX.X% memory. XX%, by if but just you somebody's giving thumbs going or it up look

the you XX.X% do against think I your doing the you had how XX%. so think are So we’re I is to obvious doing, -- question how

you just put above at back or on the the XX% the above pension If XX%. -- you’re

that the we view to what a got correctly, guessing hurdle, are the growth less kind that business hurdle So to I'm where if the do back sustainable we at achieved is that you topic, prospects or level, is what we go. we first more think of which is level, that we two

Mark Wilde

about you do what think And that?

Tony Allott

now. business the We're working; you're in growth seeing

better are. how we So about I think to gotten team it. We we're they've feeling about feel a the where good and little us really bit

going can on before going space. that So, clear keep of the in, kind to pushing we declare try necessarily to little where business more, in to and all pipeline develop, the to we're bit see we're a watch the market we're going

thing other of players. consolidation supplier is said have to the are plastic the bottle we a in there we needs lot think happen community, And

be to an And important it. so I think, it’s going to aspect

what the process, we around we at the long-term. finish thought And to we watch least so process to want us before we need on like, or feel that happen that can to be of either part

Mark Wilde

you a you're just also XX% what's much basically sense the in it is some there runway how have footprint? right might of upside get volume since be to Okay, of possible kind to Tony now? And margin your existing

Tony Allott

is things that But bit yes, always that little do higher, within that businesses obviously, so of it is can are higher, you Yes, always there businesses at are that a that will true. look always room XX% better. can be lower, you

And so it. thinking we really are about

look if XX% you return can spot, way a you take right level. we If capital that markets today the at serve get you on and the did we ran at, good those serve the about that markets, we and

we capacity fill amount therefore is kind part drive a can that's stands. that read we that And that you as I number that it of don't have also So exactly capacity And kind we level, could to doing to up, that think some of et where there huge at this of XX% big why got right to working cetera. it's we've by enough to bottle that of that's be a improved not and but the number. are move

Mark Wilde

That's right. all really the fourth through Okay, year. and helpful. Good luck in quarter the

Bob Lewis

Thanks.

Tony Allott

Mark. you, Thank

Operator

our question We from will Josephson take Adam next KeyBanc. from

Adam Josephson

just Yes, you Tony, everyone. thanks, sustainability. follow-up for on one back

isn't investors And competitors because paper and have of a can have of starved mind to and been packaging obviously itself show bump to about for multiples they that and nice are months been part volume the tied seeing of group asked growth their in obviously growth Analyst So for bit. that some and growth discount you days? volume in we're ago, your how stories. subject I multiples do sector volume getting a to and quite in a beyond the the these relationship in sustainability, Bearing talking large that and extent growth? Day is I think and talked a volume all, about because had about think few and between the you reason your the multiple that growth you

Tony Allott

Yes.

organic understand the flow keep is a cash doubt. free and you've deployer it raise linked to fully we where trying hopeful cash about always that Not disciplined company And growth seems that'll would the say The ultimately rewarded we deployment at be that that if that. I we that So market this multiple somewhat really at incredibly got and every say ought lot in the to will as growth time. of But without cash to important. but above we free to a a a point moment history over is it public the fade people like little flow over time seem and high a point think is you're of reward and now that, do right. has and level Silgan, we’re start to of being

question. a that's big answer So your to

value that that drum that. But that. is of course, a if yes, is And nobody a than we organic yes, can there from which play we story have not because can, do some, a growth, part as right. ironic steel loudly better benefit as more beat has perhaps And probably you're sustainability a of right

it’s guess the I it magnetically recycle than recyclable, Yes, more stream. of fully out pulled else, waste anything

packaging. actual have talk are it The great there's been that we that, not the long a tell lead But of and a can waste far steel we bunch us So of talking for a whole will reason we've gets so lot to low processors until all really aluminum where the of to customers sales to and energy got quieter like preferred by just it, when recycle of we'll it's from a little time promise it are wait like that. is about on actually just you story. only a and that, ideas we who in different up numbers it's so us

Adam Josephson

good aluminum footprint bauxite relative into mining story, plastic much intensive a converting a just one that carbon Tony story energy recycling steel to PET. obviously better has follow-up incredibly obviously have on and because aluminum is

do or or plastic of the how environmental say So actual PET cans? you think impact about steel bottles aluminum versus single-serve

Tony Allott

question. Hey, great it's a

but the so gets not it have same entirely; energy because think a so than is it is more I bauxite energy, animal different it does recycled. that plastic, can steel more not a lot

recycling You address have that to content.

you and can And get round so essentially steel round. the

so going once lower point, you order when ship over in the on in cycling recycle, to thing energy is to of place forget plastic recycles, consider And it's we you et even I that to way cetera. And consider you the believe order of therefore that it, with better. fact. all just it’s to got The straight that it it's there wherever use plastic to

So as and gets there's well. process energy of cost consumed that that a in lot

way, is a on so with plastic sure I'm quickly I more with than And plastic going there argument is this by an is anything, side. the think not issue waste to that that the be problem The and solved.

Operator

up Chief and are I'd that Executive no session there turn for conference to further for Allott, to closing the appears It this At our Officer over question-and-answer ends President time, remarks. like and Tony any questions today.

Tony Allott

we and about look results everyone talking you to late Thank Chloe. you, you in our forward year-end to Thank January.

Operator

the you teleconference. concludes Thank your This for participation.

Silgan (SLGN) 23 Oct 192019 Q3 Earnings call transcript