SLGN - Earnings call transcript Q1 2020

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Operator

Thank you for joining the Silgan Holdings First Quarter 2020 Earnings Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Kim Ulmer, Vice President, Finance and Treasurer. Please go ahead.

Kim Ulmer

Thank you.

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

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

turn I'll that, it Tony. With to over

Tony Allott

Kim. start in telling with Thank middle are and you, for unprecedented be of We'd successfully strange that crisis. a well for weathering to times. offering company health all our bit sincere by trying like today us you well It's this how being doing hope today. us economic our and you, Thank is you all these to the

our in ensure times proud to of and by However, our delivery products are have we're knowledge demands. the done that these consoled desperately the so our on many needed of employees these work continued

and record in release, to all hotspots the continue around in seen run our many output press facilities our world, As having despite in factories indicated many. of we have

our and ever-changing to communities stay and ahead continue to keep deliver this to We are our continue committed our of customers proactively to for crisis. employees to safe

Homeland in the the of all We as to in essential operate, we by been designated geographies Department of including Security. which have business an are proud

proactive pandemic We during the quarter. took steps several the in of light

as important almost actions. were responded. when the learned, our We you later as we responded characteristically the as conservative how Fortunately, COVID-XX was in you

and As into sanitizing the initial January our sharing began protocols in distancing facility businesses. we employee February, our across outbreak was impacting China and

reported travel Then, we Western locations international before non-Silgan in to governments Western as our visitation to so. and began began any to restricted weeks banned of contaminations severely be markets, do

Later to as markets credit we maturities. our have began near-term even drew credit the though proactively facility upon tighten, no revolving we

result, well. are a As our running businesses

significant are employees, Through liquidity storm. have our a position believe of the Strong. weather We and truly in the we we're good dedication Silgan to current

about Bob thoughts first With of about and that provide Bob, be the Adam any take our will details. some questions. remainder And comments the said, quarter few then and I'll I the to a year. make will pleased then further

this ahead expectations seen per significantly previous share. per press income. than our segment gains Each diluted of morning's strong the first record of in better As share of release, businesses reported you've earnings first quarter $X.XX well and posted XXXX record diluted volume we quarter and $X.XX our of

note our stocking our positive us to sales, the begin currently experiencing these the initial retail outlet are lift expected it April. did sales on we of of impact more the While consumer a customers which stock first our quarter, in buying occur each of the is levels. second depleted the impact of pantry to rebuilding is our consumer in in Therefore, part when from businesses, lagged March purchases important only have impacting

plant did for employees. well each. the the We strong operated Each to of incur profit levels situation, costs of our COVID-XX incentive businesses associated with resulting payments including additional some also in COVID-XX, despite one-time very challenges our

point. to have the of remainder ability stage at meet demand our core and year, for this are some this of of we products there many this our While indication levels those for uncertainties needs many at

at due our guidance health in in than likely declines. As to intended the in for products, sports is stuffing This as demand one as normal of first the many of second purchased the unprecedented nearly beverage range products, generally we of systems. for replenishment $X.XX shift of bottles quarter This seeing restaurants, most food is products in larger in quarter This the $X.XX use, our products pantry XX% during in strong reasons demand products food, to and soap a such particularly drinks reflects XXXX. sanitizer $X.XX some in other consumer Western beauty and gallon, see such the stay-at-home dispensing volume increase have cans of Certain as result, provided estimates. midpoint compared will the not markets. demand the current for to and and we're March for

the in the demand temporary For reflects will pantry raised to that we've our year, per been stocking guidance that may $X.XX improved estimate and quarter to reduce of year $X.XX later to $X.XX This first volume diluted some of $X.XX full that have from periods. an share. considers

in-home as the do we that to and entertain eat in health products experience of continue and their more However, such increase people products demand for should consumer a in use groups for food increase sustained some as our believe in homes. in small volume

help formats they to food cooking, working and benefits Additionally, we're such understand new with or customers hard once so crisis these nutritional using many staying cans. returning as comfortable are them has the passed. products for this product feel convenience our And

that, With turn over I'll Bob. to

Bob Lewis

adjusting the our I Good staying safe to you're you, COVID-XX. to Thank do all we part stem everyone. morning, the spread of normal all trust as new Tony. and

prior our per compared share of of nearly favorably an our increase as $X.XX, estimates period and estimates. the significantly quarter of diluted and prior XX% strong delivered our year versus results. the We year outpaced to delivered our $X.XX earnings adjusted Overall, $X.XX results for businesses first the of XXXX each to

top On net first $X.X prior businesses XXXX improvement. as a consolidated our the versus for line the billion basis, year of of increased million quarter sales $X.XXX each delivered

in Cobra contributed $X.X by to of volumes million higher offset the inclusion the partially result in declines the Plastics each newly the which largely euro. and unfavorable of foreign were increases $X approximately business, business primarily million, currency translation These acquired related of

income before We including interest primarily quarter million each in converted our quarter versus charges rationalization a income year higher businesses, sales $XXX.X $XX.X these of taxes for result million offset in of the expenses. as corporate of the and prior lower to higher partially by

incentive approximately corporate of and announced were losses of million, incentive of foreign with primarily expenses million, higher $X.X The plant associated transaction a in an increase acquisitions result inflation $X to payments largely costs one-time million. currency due $X approximately of compensation,

XXXX. weighted due million flow borrowings quarter. weighted year the expense interest debt outstanding $X.X the The to prior and lower outstanding average we rates used repay to other lower versus free end and declined as average Interest at was decrease primarily debt of cash

rates market to facility quarter. XXXX weighted notes the proactively Our approximately late rates result of redemption the and as adequate throughout were the liquidity borrow the quarter interest a million in during XXXX due third of lower ensure revolving all average We lower X.X% the senior outstanding quarter $XXX crisis. of did credit our on

which We due also the maturing issued X.XXX% notes outstanding $XXX term A. €XXX add-on proceeds million loan the a prepay denominated X.XX% notes million used to were of and June XXXX, senior to XXXX

the $X.X quarter. the recognized loss million a first consequence, we in on extinguishment debt As of early of

quarter XXXX changes XXXX tax timing rate deductions state XX.X% certain the of tax the benefited rate The tax quarter Our certain first XX.X%. was to from in recognized and XXXX rates. as of the compared in effective rate

million be expenditures to XXXX year million year. million approximately expect compared $XX.X expenditures the $XX.X this we in capital $XXX And quarter on as the full first in prior Capital prior and for of the basis, to million XXXX $XXX totaled to year. in compares a

Additionally, each follows, cost we year. the recorded metal that $XXX.X of up March. the $X.X And business prior dividend per the million a container total dividend The business for $X.XX of $XX.X sales versus paid was share details million. quarterly net of of in million, cash

to foreign approximately due by This partially unfavorable costs, increase and translation approximately lower million. currency of less of pass-through of $X mix X%, the volumes products offset was sold material unit higher raw of favorable primarily

fourth quarter a coronavirus higher from of advance of response crisis. in activity unit a of in XXXX quarter of spike the The the result March volumes consumer impact benefit first of in as and XXXX volumes in significant to steel growth primarily in the the demand pre-buy in was the inflation customer a the from in result XXXX

million Segment metal of in income the prior attributable operating currency million, $X.X higher performance, This income, an sold, and products foreign versus was favorable year. to increase losses. mix containers was primarily of and pension increase a rationalization partially a volumes, less record $XX.X stronger transaction offset by charges, higher unit higher

mix favorable million. increased raw foreign products pass-through partially $XXX.X due closures the in currency of material offset volumes primarily sales million Net of the business unit million, $X $X lower an and sold, of to a translation of costs, approximately less X%, increase by unfavorable were of

unit certain consumer demand increase personal spike due and to due for health response and March the was products in to beginning and in volume the to care in The primarily demand crisis. coronavirus products strong beverage food

steel the the volumes Lower of acquired volumes in the the result recently of anticipation XXXX XXXX as and pre-buy business. quarter a inflation of in Cobra first XXXX from Plastics

the year lower million XXXX, the in less the costs. first higher mix increased quarter from pension costs, Segment lower volumes, and by primarily million to closures $XX.X the of income, $X sold higher resin favorable of to in rationalization unit pass-through partially of income the in prior offset due business and delayed the products benefit

demand Net higher of increased favorable offset of starting to raw result as and sales consumer a customer less costs principally $XXX,XXX March improved container partially coronavirus crisis. the a as of for volumes of pass-through business a approximately to products the health lower in Volumes result million mix $XXX.X XXXX, the the and of in certain plastic X%, sold. due in by products primarily material -- food

increased to for materials, volumes including and quarter costs million million $XX pension raw largely $X.X income to lower attributable for the income. the manufacturing higher Segment higher

employees remain is to now question our communities. are customers, can that for to the needs quality times. unique unprecedented no There to XXXX. and our of meet We in our we doing committed outlook to products we to keep everything safe our safe, deliver Turning

our the an $X.XX increased declines our initial products, year offset our commitments, for products, first quarter demand and $X.XX and these health to earnings of XXXX guidance consumer partially of of we're $X.XX, the other certain full for by to outlook the in for on from certain increase $X.XX. year including the providing estimates results Based remainder range of food

in range of also income the quarter XXXX. share diluted compared per as of of second adjusted XXXX quarter per a of $X.XX to in net share to adjusted We're second the providing $X.XX estimate $X.XX earnings diluted

early from quarter of business extinguishment dispensing of to The Albea adjusted for the on the per year attributable income acquisitions, impact share the rationalization of excludes Group, announced net XXXX costs the debt. and acquisition of and diluted full estimates announced pending loss charges,

current Based maintaining liquidity anticipated guidance outlook earnings cash we around also approximately we we our on Notwithstanding in prepared are cash compared for increased million our Therefore, are this are flow $XXX to flow million guidance of in to our free $XXX volatility capital. working maintaining time. the for XXXX, driving free at globally as tight remain XXXX. improvement

That concludes our prepared comments.

turn it provide over to I'll to one limit it to everyone and we remind that, follow-up Q&A, please. Cassidy question to please directions. over turn As one Q&A With for it I'll

Operator

you. Thank Bank question Staphos of comes from First Instructions] of [Operator America. George

George Staphos

was prepared you're morning. your Good back want remarks for touched I guys. and doing employees -- record you it detail on all questions, and for your go everyone. Thanks for two for that and all COVID-XX first My to quarter. this thanks Hi a in the

this XXXX. a about -- your then, what talk the movement saw in seen moving container haven't better earnings can to a the of or do periods. intra-COVID in I in are football -- mix across relatedly, can terms world? think a is customers product How convincing down like And businesses And quarter the you more that We seemed your a in a is this be -- you since the negative then and viable post-COVID drop-off quarter. field a we metal the in all you convey having subsequent

some just should recognizing we this stocking the what of mix rest for changes the portfolio in can expect guys. Thanks up demand consumer what year? of of Given might the now across we're over kind the seeing be right

Adam Greenlee

touch on with Hey, Tony George, say jump will I corrections too. what to in it's Adam. I'll and good questions your any morning,

demand obviously cans of food was in couple a things, the strong So quarter. one, for

but we Tony both as we Bob to increased that of from pre-buy went the the heard XXXX, impact and you portion was through say was that As good part quarter. had a demand

our tell So you our the can It that coronavirus term business meaningful. I'd our impact in impact will in of second near is we're definitely for quarter. the fact second quarter, drives full.

is second books are full. consistent the order pretty And Our demand through quarter.

probably growth something single-digits looking the upper we're volume quarter. mid- at second in to So like

though. question than think that bigger was your I

let for that So me a on touch second.

sustainable how you the that So make do for future?

George Staphos

Correct.

Adam Greenlee

more at have consumers the cans launched think understand I that families. the of first provide those and through consumers engaging got consumers, cans time. in really try activities can because them social those to with we've can that of there to pantry to And how them for what manufacturing it's We've part that those and now around number for of which that cans are is is to our outlets value lot institute CMI and media it's their job think this a vast teach through point. use a reach the nutritious we the their

for time that on working been We've that. on working some now. we're So

going But proposition the proposition, now. over to encouraged the provides can out the our that because think and still right the play are behind consumer we're customers that outcome understand is quarters. to the nutrition I that several of value

of second for mix part question over The a your to second.

or right I gallon highlighted really volume think think number are a of now a think that I about described can, strong as well. goes you Tony tomato that can And in can of our not imagine. as sauce that I business we the portion to mean used you restaurants. is earlier support this restaurants XX there's tomatoes

with families of convert shelf that more sizes set use through And in reach we with to going and consumers a a way new country. to a in with good crops little we're their course for at The different what's some news we're home we harvest that as of associated year. to the those are of able the have products unsure circumstances dealing hopefully is happen the the

that? is you'd to Tony So I'll add like anything actually there to ask now

Tony Allott

No.

-- price -- mix think I a is on just really almost talking It's that's and we're it. often point. selling

per So as gallon said, Adam unit. a much can more is

as far unit just movement the So versus really reconcile revenue. trying we're to as the

George Staphos

Understood. will and I Thank Thanks. you. Tony over that. Adam to on turn

Adam Greenlee

Hey, thanks, George.

Operator

Wilde Bank of Our of next Mark comes from Montreal. question

Mark Wilde

Tom. Oh, morning, Good sorry, Adam, Bob. Tony,

Adam Greenlee

Hey, Mark.

Tony Allott

Mark. Hey,

Mark Wilde

Tony, maybe saw through three just the pickup weeks of with cadence moved three over I help of wondered how Adam as help then all you or can quarter the the that us in the us you April? first can so businesses has if carried and in you far

Adam Greenlee

food businesses. each Adam business. start it's We'll just Mark, go I'll Sure. again. through of our the with can

the about, talked and and February as we activity an we'll March, obviously, already from January, we expecting go in through were As increase January pre-buy February due XXXX. to

year-over-year say volume did good we was expected. would So growth but as that have I

past that coronavirus spike saw when moved demand in we is As to the we the actually that into activity. related March

business. really the impact for quarter. was our cadence through good was But the March about So all coronavirus food can clarity, for

definite good to we we business that of of, spike products. example, red a get fluid closures As fresh that to kind you're March picked our as closures similar move milk going some for of a Really food our bit with products, picked the up closures, for in was beverage dairy metal cadence little and up, flat utilized quarter, well. throughout a sauces as cap story, our for our

soaps, So I hand in call good this we those supporting our sizable for I products. a of products the it think sanitizers, ramp-up of say would hand pretty side dispensing quarter on hygiene earlier closures products. distribution a February business, personal say the kinds saw of

consistent was closures our pretty cadence So through quarter in business. the

same benefited, bottles, and business, our containers think products et and for And good growth of you products, It it that little plastics hand consumer products. we about cetera. food the health wipes, at was hygiene bit the as talked sanitizer X% personal In specifically was a the our really about.

pretty plastics February So up consistent picking cadence was for business. our in

as side feel As forward can a we just and about full we're I good to good turn guidance essentially in with said QX QX, again, just on provided. the cans the we really metal

QX. have closure side think a we'll really the nice I On the again, business, of

think by to in in personal We'll for expect product a late sprayers products what health our consumer have mix is offset bit growth our in food and pumps of lines in some normal I we beverage a and products that only experience March. really hygiene, for that beauty will closures the little of when idea dispensing we'll and products. decline a continued our QX started of kind sharper be I as of think

we happen coronavirus. the and then And the business, our QX into in business we we is throughout quarter. normal had what look anticipated plastics finally have our some again growth think solid plastics with good the will And impact volume cadence we from that then we as forward QX, our

beauty for Some of like things normal is products, volume that care personal products.

I think back be business those negatively food level are bottles to by be in good QX, expected trajectory our growth expecting with but associated products for coronavirus. going and impacted we're offset containers will QX. plastics And volume those to and our in

Mark Wilde

as And helpful. whole coming sense the might of the in had get to the first is resin you just portfolio? any have quarter down it That's from follow-on Okay. possible benefit a Adam, across

Adam Greenlee

Sure. Across I'll that of our couple unfavorable. the was whole say And a most million of portfolio, dollars just was closures it business. in

Mark Wilde

or Unfavorable favorable?

Adam Greenlee

again closures we why think the reason in because specific the resins is business. that And Unfavorable. our use of I

So business. much impact container half a our plastic couple back, unfavorable of our I million a step maybe a if closures to business not take in

Mark Wilde

All helpful. it right. Okay. That’s turn over. I’ll

Operator

Our next Citi. from question of comes Anthony Pettinari

Anthony Pettinari

morning. Good

the your from or part disruptions protein producers. which you plants in to seen ran saw is indicated customers some your disruptions I'm any of if on without wondering hear. the You great disruption quarter, We've just suppliers.

the about of big the of walls? chain customers, et your agricultural supply labor think thinking availability you pack How to about talk you Silgan's are maybe As cetera. food outside

Adam Greenlee

it's Good Adam again. question. Anthony

have our try clarify to did plants. We disruption in maybe I'll So it.

quarter, smooth necessarily through not would but plants expect you was our continued it sailing. of all to as So the run

an I needs maintaining think our meeting job and teams facilities our very, them trying a very of of did our outstanding keeping time. of in the customers operational

are plants open. all our So

all are open. offices Our

execute continue We to very well.

There's So certain it Several have instances with in the at some our hotspots restart care able that one been our which being customer's had point. personal shutdown their been the they that are operations side. on Really food and side filling been customers to depends situation impacted. on a we said customers of not where this is their have products. not where upon the

of or our some down up one So all been another. while there reason back come have been customers have that for shut outages have

facilities again have running. some the but disruptions, facility with I protocols place and we've minor think back and very we up put we've had we playbook execute And our employ get strong we that well to in that that a

Tony Allott

Yes.

this back started. for this fight is the our come where If is to suppliers mean customers. around our thing's over is Just for it I it's for Adam with. victory time. one And no until it it a - wants and obviously declare all is us

So control surprises when something it's got under what amazing think the here. that's you changes you've

feel think proactive. I we've like So we're -- we been

But We improve to going continue to continue do and to and to keep go ourselves that trying and as here. on and we assessing we're thinking it. challenge

Anthony Pettinari

Thanks for Okay. the the detail and all clarification.

you some there or timeline the environment? kind just that Just maybe to plan shrinking container is things can demand any mean and how current in you're potentially think now industry an out the on of think last running you you us is think footprint you When maybe flat that it the give you you're slightly quarter you last over indicated sort been full about color this out. the about I about of seeing that the of decade. on metal outlined pushing that's rationalization plan

Tony Allott

me stab – now. well, take this Sure. a I'll let at

we're on -- think container volumes got you now metal that The can on. is clearly just replacement we've had right and about one the what seeing more going I side. stuffing the pantry So of thing side

is The are second here in wave to that periods we time believe that of have going will happen people longer home.

period finally we time. when there a going be weak to of are out get Restaurants for

hard you So in to we as what a running going can break can that I'll And as minute. a in the is well clearly is the we're time. world our during if rationalization short but thinking get do food term that's

midterm be continue that If feeling is you our are to going look at restaurants weak unfortunately. to

home that And going it's to nutrition and be high be food will so because positive easy-to-cook there's more consumption for product. cans

so none for And to in thinking that. that benefit that of is how some be which of can interim from time us period long mind going our our the clearly is will know food

food Adam for as lot out more look that word and for is hope talked will to cetera. a time the exposed good about frankly further And the Then are getting how cook it. better lasting as of will realize that they that first to some a our lack how is it to is millennialls. convenient et again we're or you -- that permanence have it of And with people can for food

talked So through you what we're that's capacity do it. -- we as the that's with on I lens looking to about

What we're we're seeing right said all out. running now as Adam

see So shutdown? you we can't. if as is to we asked this get we that going -- shutdown this. the second wave things phase us were goes at the and We'll today one year of this happens said right The wave the we into through we moment what would answer

yet point At us it for be some year. do that this to may possible

to So it. we've no decisions on move to not made continue

the of long sense for we the cetera for that term make longer consumer we capacity continue if rationalization to enough had in much probably system in desires get us. I term will even think cans that in et growth some

that's a your So long answer to question.

Anthony Pettinari

I turn it helpful. That’s Okay. over. will

Operator

Thank you.

of from Panjabi Ghansham comes Baird. Our question next

Ghansham Panjabi

guys. Hey, Good morning.

Tony Allott

Hi.

Ghansham Panjabi

the of categories just that patterns on will. chunks stuffing pieces of from demand impacted a that flip restaurants the consumer portfolio some being shift size sort be fast maybe service are beauty in you now? trend right the discretionary the by could big Obviously, Tony of side? of impacted other of food you portfolio benefiting some are if the pantry Can the and

Tony Allott

Sure.

talking something So units to XX% range the But the get that side of could on we negatively again in that. XX%-ish about if range can that on I the be into look of at don't you food in you're impacted think there's components. profit of the -- individual the

dollar little impact. that the higher of through -- dollar higher than the drop terms and so it's probably more in Now a overall P&L

said But also again getting surge I getting you're other in as areas. you're

it's So taking element easy it. as that of not as

You're will lot give think they getting if more have those frankly And and a sell who a restaurant a would size bill probably to ways a about of size normally of a into can take. -- shelf pack that bit can shelf cans. customers to

it's a So you that giveaway don't even that's -- that necessarily know one-for-one side. on

you're personal beauty look be you going Dispensing to into Yes largest is If is, XX% care our to to -- and so Systems, the the that in it's largest Systems of somewhere the -- XX% business. sorry Dispensing our business. in going

If business. a go a target that through at of of here. be now right seems beauty look it period larger piece it's will going certainly to -- the downtime you like even And Albea,

demand. our look What's We're of good it in at was has sizable seeing it. beauty We're back -- been as spike China in when to see in there people you place is business. out came the shelter there reading

good pretty once So to start that back come healthy a there's that I ought think people to market manner. hope in fairly emerge that

Ghansham Panjabi

I you some you I of volumes quarter, -- guidance but just that but you us the thought then if I'd for gave full And segment? ask sorry year the anyway. what I'm have terms the for just Okay. missed embedded by Adam the second in mentioned do indication

Adam Greenlee

Yes.

benefit line the back think expecting we impact at the the half year. is of half And year. of the for then year with back the really full get of looking coronavirus I volume our kind to the we're first -- in expectations the going as of essentially the original for that, in we're year, what Ghansham we're

mid-single-digit cans about think year if be the of year. container in mid-single for will food our then we're the category. for business of mid-single-digit talking kind as growth plastic I'd low think to to well. of I entire low So the digits side And kind kind on say, closures about you growth that

Ghansham Panjabi

Thanks perfect. much. safe. Okay, so Stay

Adam Greenlee

Thank you.

Operator

comes question Kyle next Bank. Deutsche White of Our from

Kyle White

there doing the Thanks question. Hey are for guys. Hope well. taking all

questions. on some follow-up the a Just of

the typically given are just And and inventory now meeting your being to on to I in you levels uptick you pack season increase constraints right customers then demand while going enable this lot inventory now? looking how you any kind do they're of the a season? related the of how schedule for Given telling production foresee build is works this to into used assume production this the that your right pack

Adam Greenlee

it's Adam. in on at plans end of SKUs couple they A seeing lines. the and limit what current things. say, their increase we to the by changeovers looking environment Kyle, throughput talk customers through the we're and to of the maybe decreasing One QX specifically so I'll we'll Sure. QX run at, their are

capacity So they're up for those filling their trying for extended operations. biggest allow run moving in SKUs time their will and to set additional their with of lines period which

We're that very able to meet demand. We've working been closely with customers. our

in we're pack to support our position customers like And good well. are feel need. the talking as a we to very also pack We now

capacity at able to customers we're feel demand that be it year. talked we our we pack capacity that we'll for have call, And surge So as there's should about think about they normal and filling expecting confident the there that as year-end the another we arise. the meet for some

Kyle White

efforts given gravitating some related coronavirus the consumer that March? made brand by by being to of soup follow-up driven good soup surge owners quarter much another kind you like the a demand towards in particular. was from And I the in parts versus in you but just looks any had in on know the how industry do category a shift out, It with believe maybe data. just of

Adam Greenlee

question pretty versus performance year. on in It's good Kyle. -- a particular soup prior improved is its good now kind of They third of quarter

soup the yet. was not clearly line quite So say to I'm But coronavirus the going beneficiary impact. that trend makes of a

what definitely in So market. here in one soup happened QX, happens beneficiaries we'll of see the but of wait and what's the is

Kyle White

Thank you very much.

Operator

Viswanathan RBC Arun question Markets. next Capital of comes Our from

Arun Viswanathan

Did doing Thanks, you've good the for know provide you about I I mentioned but morning. wanted previous on that? first. XXXX. was this, everything And $XXX if guess COVID I guidance guess, you're just million front. the for don't ask updated number I flow thanks for cash an to free

Bob Lewis

Bob. is did again. but remarks, it this prepared review yeah, of sort in the Arun, I'll We

So, upside year. to around our the some a cash for million for of from standpoint. the opportunity we liquidity a on $XXX free eye the are what's holding potential keen taking earnings Obviously, estimate we've likewise flow are happening world but we got at side,

And foreseeable around be then so capital. some create expect we at might for working continues if that tight, it volatility the could which least that to future

read and kind our we And credit around factoring the better until into that least the so markets at a like. on of we're get what guidance be happening may

Arun Viswanathan

guess maybe are end Okay. you're And you $XX well at Thanks. year Thanks. the be this Albea, the where this just after through maybe you And can you months? then of consummating year? still to how leverage merger on and as next of at XX review synergies over I guess I looking want targeting million

Bob Lewis

Yeah. Sure.

doesn't all and desire on our view business change really. not Nothing that is opportunities of no ahead about in feel really fit it. space at So, abnormality expect, it at for did We opportunities that of synergies. all good demand our current the the the issue and still change about us an our of view but we market the of Obviously, ahead the us.

toward the a think bit of as were we still that to will multiple. business yeah, the demand. of deal the benchmark X.X leverage first times we be half, close our that than of the kind higher X.X -- times that's when longer-term to where because seasonal that particularly if Obviously, end So operate to consummate it or we leverage, want the to is the in

be our were a for On did the just and strength of that which where XXXX cash commensurate back as we the four, pro in still we it it it of basis way back very the cash deal of the into bit will be free the we above did of is level, four kind given flow we the will range quickly and of when leverage. pretty in think fine a can of when we kind low deal, the we free deal. the much the executed year-end kind It stability WestRock this get with flow business, forma WestRock

no… So,

Arun Viswanathan

Thanks. thanks. Bob, I’ll Thanks. Okay. turn just over.

Operator

comes of KeyBanc. question Adam Josephson from next Our

Adam Josephson

everyone. on you is that of well. Thanks. think that you Tony than Albea. Good A and XX% business. morning couple questions to mentioned more families Hope XX% I beauty your are of

you think and that than for to Dispensing XX% Systems said of XX% more I Albea.

market retail, fragrances, cetera? you the would care, any through skin of going exposures travel, et just beauty, So end mind

Tony Allott

Sure.

So business beauty of yeah, sure the is acquiring for that business. we're Albea dispensing predominantly a

pumps the it the So is it beauty fine areas. fragrance. -- of or predominantly for two lotion is It kind are -- main market the is

it. that so fragrance, on a of that go samples, is element an to actually there's e-commerce which Now in has subset sprayers which samples,

that to an more So people current outlets in used that's could that that other brands could imagine sell than to want one are time, interesting here be in home actually you these to at the they will sort find something over as be. world to of who benefiting

so beauty on that And could be a predominantly it, answer upside but is question, to business. an your it

Adam Josephson

so to been pretty Tony, high that growing rates. and -- And it's end, at been it's

categories. those of most across X% to X% have You

obvious be? of some you about or growth in just And business economic there's that in what that declines just to the -- So mind what a seem think you growth like now? this it obviously -- talk sensitivity think just phase bearing the heading we're that likely there. Can down would -- the is recession one, you in through what we're you rate down the in cycle are through the think

Tony Allott

I sure, completely. not mean, question. sure, I I'm I question can your your Sure. answer get

I extraordinary. think what seeing pretty we're now is

on looked we long resilient were recessions fragrance make quite and period or over recessions the a so through cetera, all market, America, because market actually had Asia, And up fast, that was at of look for et we it, economic in world normal you or covering if turns so when diligence example, the of over market, growing time an normal that did a that our would beauty some the another. South you it parts for particular

lot we right That's of customer now. France down a French are this different from example, markets. right for we Where is, are plants. where a shut now heavy is

plants more fully over France you've got shut severe that point, in are is at So this the having last down impact. month or

by you that I tell situation. to heavily an think impacted fairly is I that, So, this all be can the is going current is area

it normal but take means say, when right in our I near we'll recession, what looks which would that view our know But don't that perform I or something that pretty good, is to negative see that term, that's a, would in get the meaningful least. But a probably not will line that on now. definitely We It a where hit in we top are business. at well. own

slow more But to as is beauty products So our up. look definitely we March, they fine down beginning April. business through are significantly were -- our beauty to but

Adam Josephson

Thanks, Tony.

Tony Allott

Yes.

Operator

Daniel Jefferies. Our of from question next Rizzo comes

Daniel Rizzo

to just Hi, just very guys. was ongoing payments going -- was given wondering, if plant mean, the wondering Good incentive additional crisis? I I if there's morning. but the nice, I was be payments

Tony Allott

the understood -- what question. mean, I No.

employees one-time they to made to a meant And doing So to and of symbolic up it acknowledgment it during every as us we for running one-time was an that diligently were that quarter. that were a the plant but a show perform, is was payment payment. keep and really as really they what day incentive our just all so doing support

not are we further So anticipating of that. versions

Daniel Rizzo

And Okay. guess, changing just was kind of ever process I -- habits, nutritional food cans happened a mentioning take? is my consumer has before? you're journey seems of would very And value. -- just that the thought how opinion. wondering, and I like around I use then mean, It using or in and it long Why of arduous

Tony Allott

has happened It Yes. before.

cans, cetera, of with years a all was Cooking, until ago on but ago, recall, You up that called channels were communication we convey two through came cetera. Cans cooking from social working -- to trying was media, year we et the last cooking which the program through Get et So that you a over benefits about a project may

that industry already -- was association. infrastructure good through that So done place. the the the news CMI, in That was

So a what getting of customers up out Equally, issue communication cans. recipes to terms the lot is to are vehicles in of we today and that again. the are of push was being used have those are in hard so in place, same channels working of open that some that nutritional benefit

And so, you're right.

just out communicate your And good are good individuals a you pantry, turn a and wake to cans can. ton in to here's should whole you don't can now of a right ways recipes they one up, there way, these But you've day light say, to the family. buying everybody's know more bunch by for switch got your how are You use.

And that so, I think, And on idea we over make headway that has slowly the benefit will you is -- that. time.

Daniel Rizzo

much. very you Thank

Operator

Our Maguire of next question Goldman from comes Sachs. Brian

Brian Maguire

guys. morning, Good Hi.

capacity guess, like. metal in this really specifically XQ cans in on up, on I Just from in single food to the running again I digits operational mid-high the understand volumes these days. sort just April it sounds your and follow-up and for I of probably a utilization levels impacts you're guess, XXX% guidance

to Some little in of of seems be bit data that. a the retail scanner excess

So whole there. for year kind constrained. disconnect It's second now? more kind related supply this? to of If restock the And of half positive all it's if just expect why just adjust chain there to a tries if then of the is wondering, sort had capacity, demand wouldn't the and as to there's fact of I enough some it of you sort this you're into capacity the question continue of you limiting the that. is, of guess that And demand

Tony Allott

growth restock be sizable is are. to products period. I that those is That we clear, reasonable quarter. that in a second time let's to us mean, restock in in our demand expectation Well, period the so can

grown until right? tricks can food can't is that, with and be one harvested. finally So It's harvested change cans, not it when that, gets grown, the it you which remember, of you that have is

so happen we're firms vegetable third for filling have all our the certain quarter. to because cetera. that their capacity quarter market so it the many can't have the itself doesn't contracted And much So, There's customers et limits refill in amount of vegetables that of will a acreage. in second There's system.

what So, the is doing this what is basically that over replenish can we period. hearing everything you're to system it system the is see time

a is surge saying, that that okay, if amount but of won't we behind guidance was Our there was some know this that continue. pantry don't onetime

at So continue that's guidance more and year. their to consuming the that more the assume We home, -- to quarter eating continue they're going in to as then over don't to assume did stores we at stuff people to through at do our one that yes but that catching be in all home be pantry second And pace keep they'll at is not the -- buying surge we but we're replenish. same going they the March out a the March. up thing

Brian Maguire

Okay.

hoping look And want consumption. the at the on home just could in you just trends I regional you then on there So, just maybe depending a in how was little conservatism to trends, trends the at bit is other if behavior these just in the U.S. in different talk a the seeing businesses one of kind how you're about different region consumer little from Europe in versus days? to continued

Adam Greenlee

Sure Brian, its Adam.

We'll start where we'll Europe. impacted go our And let's first coronavirus. maybe start actually -- because as in think I first that's even east. Asia was in by further the business

ahead are of as they with the months the dealing world I the coronavirus. far rest think So, of as several

So, our what for alluded as products. seen demand to we have is Tony

shelter a limited their in time from where emerge wedge that to was orders the picked was quarter has begun up first demand in but nicely, of region kind they in As there good of place has been the and certainly.

deal on those France buying in U.S. were over you because of -- February. to in coronavirus. that did products. Spain As and the place in in activity. we a Europe, to the certain the to Europe to we than was kind the like earlier think bit It spike in we We similar extent Germany what and again countries about something some saw move the did a saw quarter was little U.S. we What was took panic demand U.S. in when see saw and increases Italy not We the begun with see

measured was surge bit a that really obviously time sell But March the then I the it what market. talking U.S. saw that spike getting of on into the for was quite European and we we demand about more So, in spent markets. the products we as much far as the in think spikes that

Brian Maguire

much. very it I'll over. Thanks Okay. turn

Operator

[Operator Instructions] of Our Gabe next Securities. question Hajde Fargo Wells comes from

Gabe Hajde

don't I I know it. did at remarks Good on Can and the first I but I more change your about XXXX. stay prepared target? anyone you plastics and year anything quarter what this way. comment going there mean XX% that of does I money Glad is doing everyone the know if than missed in odd made said it This hear in that boost you think I morning remarks you time the profitability? gentlemen. has the to is all? for think in in prepared and don't Bob, And/or XXXX EBITDA again that entire you asked to and expectations first well and guys hope

Adam Greenlee

Adam. plastics. quarter it's would the almost Look as in we good business. bit just talk an a quarter standpoint to. little plastics Gabe, Maybe about And Hey I from it about call perfect as a for performance it was execution really to get first a the could

for X% leverage And that lower start in operating those and filling corner first quarter. the with wanted been in costs, that we've quarter our what we lower that our volume some really at turn structure some footprint for happened really footprint the filling So, those talking getting growth now cost cost point, and to lowering business. And to we facilities for that about operating the business. time and rightsized were to the the assets going is

volume we that's operating for where anticipated leverage of we've the create was than trying So you that see to manifested really it itself QX. QX. kind been more But in

But and we'll It was same we our reset X% got So, we've our that cost our really QX. expectations of what got be the demand. structure to again place. year level. level not footprint saw of extraordinary QX we does happens feel we're see that with place kind in the to that It in But good in it. about not QX. We've in expecting rest for in

Gabe Hajde

something it should can deliver? call don't as Maybe then in single-digit something margins about that consistently back sounds it? guys the it low it you Is if call but a Okay. range I like think want reverts X% demand sort EBITDA that follow-up slam be to of I way guess or – to XX% fair a dunk to

Adam Greenlee

Yes. And question. excellent thank you an for the because that's follow-up

for EBITDA our at So the to income negative at full impact pension the plastics our were adjust year year, the from business. you out we when QX last really look XX% if back from margins you in QX you go if

to going So the have yes, plan we XX% margins us and we to claw as that a not QX. achieved sit business as that we're has above to think fight try that to head we that We're improve done. ahead into But and business. today we've continue of XX%. and here continue We're we

Gabe Hajde

that Okay. reason these A concerns collectibility not in this raising of pause? free quick is why restaurant maybe of cash one meaningful the and some is for to Bob. you're Any But from flow. customers, give terms enough you

Bob Lewis

are, our there. globe around Well, it's a with commentary right? across to pay broadly the of attention sort receivables that and we where look coupled liquidity us I collections – think obviously, with critical eye has my

importantly more the think as and I we think about demand function. receivables side increasing the

we're capacity timely. that making sure that our to day paying and are are us looking at that We customers every allocating

doing get the keep that. on risk we're keep yes, we to been think it capacity where eye and going an I getting try but that have paid we eye no there paid. thing. definitely on And understand That So there's doesn't prudent an allocate and and the we to mean we're

Gabe Hajde

you. Got Thank Good it. luck.

Operator

America. of question next Bank of comes Our George from Staphos

George Staphos

question. for taking the Thanks Hi, guys. follow-up

fill you more leverage. if or that? form can COVID or that and what just question seeing I advantages really? think, customers that had or better any and the you companies aseptic, a what sanitary in could what comment So do world the what filling all the recognizing is any to on around ultimately And consumer the thinks can processors on you track and any not resolves And we relative necessarily then for really not a are to seal

Tony Allott

Sure.

a think I question. great that's

that think talked always would as value secondly lowest-cost which stays it you are food So shelf are the of one, it's one is two. But nutritional to nutritional obvious I is the to. at probably high right? of I peak it there life we've foods. cans the value at is the One need ways as like packed think get its the and It's least long just about, one

people be the about who are get can way talk things a looking think it you that none about of – for there's near are you to anywhere low-cost when unfortunately a us, and economic could there so food to the nutrition. be of lot And opportunity of And prospect recessionary world a going same is. ahead

George Staphos

that it's customers your Tony? beginning I probably it's one say way imagine early – lean would way Are to to another? too Or or

Tony Allott

Yes.

they cetera, I been it's see promoting I our you but products, some would have mean anyhow. hard pretty their are a think little early. customers out can of et

strategies. can way know part customers the this the think And whether can. that forming the the think I that's get low-cost particular food. always to really our food don't very know So value of issue, of nutritional a I is their prospect and food I been that's of But

George Staphos

I degree, recall Okay. seasonal year. in to capital flow comes what On the then in leverage obviously limits the fourth and in But good way I weaving cash year over the just it the tighter with for XQ covenant looser quarter. of working and the nonetheless, later in as a think your at and relative and in get gets course to a your from covenant headroom XQ your tends say, some you Albea lot

leverage, from With Again head about our space like pretty luck you room even that adding have Silgan in Albea basis again, looks got on guys. covenants? conservative how feel do it analysis, your but Thanks do quarter on the coming hyper maybe you've and you'll would a headroom good for good you more always pre-emptive proactive that or give anything there? because yourself to and is

Bob Lewis

George. Thanks covenant. business against in the restrictions don't Albea have Sure. coming the look, all Bob. with we It's at any even Yeah

we're -- not of any So we at violating of feel risk very comfortable that covenant. a

I fact think balance of terms our coupled borrowed way the that of with what both sitting capacity, by more pre-emptively liquidity, revolver. plenty on in cash that got sheet we think what we've we revolver important on of against got is is our remaining capacity the we've because

capacity standpoint. a well about would pretty $X little that, peak inch to But numbers It from a our may here. we've I the way bit we're along round And working of billion capital today. say higher got

our come so. probably that down thereby moves free to seasonal and or flow borrowings up the And $X.X cash to start as billion we generate

and like risk no mentioned you stability real the here that free at And cash pointed the we all. of So ability. out to paramount flow is

George Staphos

comments. Thank guys. appreciate I Okay. the you,

Bob Lewis

Adithya. Thanks,

Operator

next mute. comes question of is please from line on KeyBanc. Adam Sir, sure Our Josephson make

Adam Josephson

me Can okay? you Sorry that. about hear

Bob Lewis

Perfect.

Adam Josephson

Tony the then, Very on businesses I just food sorry about on dependent extent lesser those the on event are? the that, to surge soup a a veggie I'm the in of can just And guess side. crop sustained business how side, wondering

like it's on obviously they what the the for accommodating the in surge in soup supply depending once year in words can given other cans that In food and how on a terms vegetables matter sustained and side is annual you're that cans a turns of harvest? the weather are harvest out. the how -- dependent just on and and Is chain

Tony Allott

Yeah.

in available I et soup the but there would quantity just say, I is mean, very on that. there got out I world. exposure yes to veggies small against what's mean So, you've are the cetera going little

side, vegetable dependent the and you fruit the on vegetable are primarily So, on crop.

Now happens economics packing. that usually start weaken stopped down the for as yields is your what go and what are crops to you

normal so, go year. And further a want if you to you you might can pack in really than

that. So there's the flexibility of around edge

And room. so there's some

also does this. ends in season turning how have you come thing and your need of by to that one harvest the labor up field yes, call, up all But growing do harvest way mention it. the the to to season out you how is didn't matter the in out And

sure think need eye out workers one and think here keep go And harvest we do there I Europe. important as on so that in to And are do and thing to an part that well. We happen. able being an is that's will it who are both

We expectation food our so out we've that work item to see going that's that got on. will is importance of every but government another that focused is getting to stay the think just

Adam Greenlee

Adam to market. would you about supports addition in And that, footprint the that, then, soup think a surges got I say soup that we've in

thing with surges footprint about food pet and foods that well. same a the as fruits vegetables think and pet supports market and got we've You

market surge in markets. So that vertical to a take kind each of we're prepared for segment, of those

Adam Josephson

that and Albea No. again. I on, appreciate one one last just

and can have surges So like the tax of offsets in basically demand and situation natural with beauty food this in it's extent heavily beauty. Albea to demand now portfolio that and the business your you a cans kind

the can would to are do beauty that then direction? thinking in Are them you or about normal Or you business that the way of opposite thinking about food you not it back think would way? -- that gets really business go kind good you the

Tony Allott

-- wouldn't well I you Well, overstated that.

may is still feeling food view stable generally all that now in kind these cans growing they would extraordinary cans be the of call Our we time. food while circumstances

each So I countercyclical with wouldn't thinking. you're call if them other what that's

that Food what that is love growth great us our future was mind stability the that the different are give can us But cash business. gives dispensing business on opportunities some than food can. beauty and We flow. great in

little a good But certainly business well. we more growth for long-term understand as the is that bit

through beauty. is was building of long-term with to And What to the so going us challenge thought of what meaningful. And this that that business. matters go not again, the the is that's it sort we're around fact short-term

Adam Josephson

Sure. And thanks Tony.

Tony Allott

Thanks, Adam.

Operator

further we And have this time, queue. questions in no at

Tony Allott

forward little we stays hope want Thank us We're Yes, that to in July. quarter more trying then. second And right, once Cassidy everyone you look All you. thank bit these talking hope everyone. again is we about to everything you. our And by just times. for a all you that normalized to set. during thank safe

Operator

Ladies you. and concludes Thank teleconference. this gentlemen, today's

You may disconnect. now

Silgan (SLGN) 22 Apr 202020 Q1 Earnings call transcript