SLGN - Earnings call transcript Q4 2021

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Operator

Good day, everyone, and thank you for joining the Silgan Holdings' Fourth Quarter and Year-End 2021 Earnings Results Call. Today's conference is being recorded. At this time, I would like to turn the call over to Kim Ulmer, Senior Vice President, Finance and Treasurer. Thank you. Please go ahead, ma'am.

Kim Ulmer

you. Thank

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

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

Adam Greenlee

and the achieved Kim, highlights, the to XXXX and our pandemic, Silgan's would questions. I'd the and around any our the supply the full-year point want an Bob employees of complexities you, a including my And versus achieved what quarter improved increase growth brief annual of first Silgan preview also we XXXX, XX% a per employees of demonstrated and review With eye for fourth importantly, of rate XXXX adjusted continued We've entire performance an a strength of rearview, delivering more in our pleased express in gratitude commitment of Afterwards, unprecedented team, and earnings thank the details growth, our be a EPS team XXXX having then most together, future, provide answer and then thank our fourth record in inflation possible in and prior have and the have repeatedly over for supply the financial XXXX. year timely, our call. like performance Bob and XXXX. conference to the will as EPS outlook. culture, continually welcome provide I to a complete chain managed and XX-year adjusted quarter, the XXXX power efficient, everything of compounded Great, to entire to earnings Silgan navigated manner. year-end to done adjusted XX%. ensure respect disruptions, their for to out as the double-digit another I for everyone we've ability share few accomplished have customers our performance-based accomplished this and year and

in As to achieve and a important milestones in result, for are able further well-positioned XXXX, several growth we are XXXX.

the saw the release, press year in As XXXX an you exceptional for company. was

performance, to record per per our year, record the versus to company, facilitate opportunities. growth capital of diluted cash including $X.XX record include financial select billion, prior further adjusted new structure by And volumes, strong achieving the of $X.X share for following. $XXX $X.XX, share, XX% or diluted each million would improved Revenue improved some flow a driven highlights the net income up free

increased we our addition, for year. consecutive the In cash dividend XXth

out, expanding in operational for the Gateway, in well cost improvements for service which major completing us strategic Eastern customer food We also commercial future, expansion and improve acquisitions growth and Europe, customer invested to several levels. the Unicep, in drive positions of a Easytech, initiatives pet supply investing

to the $X.XX record per a range of midpoint increase share the customers, XXXX. of and growth XX% for invest for range guidance continue diluted alongside represents we full-year are improve Our share. new as earnings we in the operational this detail, diluted adjusted business franchises in integrated excellence. are poised over Therefore, more our upon per discuss The core XXXX to $X.XX in performance Bob as providing acquisitions, will further in

flow expected as turn capital more expenditures higher capital, be anticipate core than provided. we that, for earnings increased cash growth over taxes higher working growth With offset is $XXX free customers, the it to million I'll approximately to and Bob. to cash Our investments with

Bob Lewis

Thank Good Adam. you, morning, everyone.

demand products saw As remain Containers we strong in Adam improvement as year-over-year highlighted, Specialty Metal segments. our Closures for Dispensing and our volume and

unprecedented significant an As outstanding our importantly, cost improvement, businesses. and yielding reductions of through unwavering each across businesses inflation operational did job discipline price the managing

on and acquisitions progress integration. In addition, making are we their completed three strategic good

$XX.X a $XX for of each As X% the recovery taxes an XXXX, losses pass-through higher raw higher share the businesses, translation approximately before benefits a the of with million lag were net million, across million] sales supply was full-year per $XXX offset significant $X.X of operating over we our prior-year including the challenges Adjusted by million other by and of approximately the after of the lower performance income and effect as partially Adjusted million favorable net write-up million by metal an XXXX was Dispensing and later as $XXX was Highlights and containers a inclusion volume the of higher higher to with of or higher completed lower the million. $XXX.X cash net favorable $XX [Ph], Specialty costs small prior the in business, in versus This and $XX On after segment XXXX the labor of more labor attributable income, associated purchase XXXX. year primarily of result Metal less accounts. by to from losses. supply $X.X accounting Container from impact challenges, lag operating cost unit $X.XX; a and rationalization higher Specialty and products Metal chain of strong Closures of of for of approximately of net increased XXXX completed and million pass-through costs costs and increase unit for material approximately Container adjusted the follows: write-up were of operating segment $XXX.X foreign strong acquisitions, increase the volumes of of prior-year. announced delivered products partially segment to acquisition associated increase and increase $XX.X the Albéa for into and these costs segment million converted pension control of increased of costs the increases. impact and operational year income cost products for across containers. more acquisitions, favorable earnings X% of approximately supply other million in prior-year XX.X% adjusted across interest basis, volumes each for $XXX.X mix in accounting sold for the were the $XXX.X sold, higher benefits of and announced year. challenges, X.X% segment $X.X of in each chain a The recent segments for labor from attributable as pass-through diluted in higher Dispensing growth, XXXX, impact charges, $XX in result volumes of $X unfavorable and currency segment of resin full-year performance, record million a million acquisitions, $X.X of million of was acquisitions in prior to We partially XXXX. including Closures, significantly increase negative and pass-through adjustments in million income to in the was currency delivered Containers, price offset adjustments and and The our income a in or pandemic raw of pension the volumes income primarily benefit with higher the businesses, in unfavorable primarily attributable and inventory mix million. full-year the rationalization sales of currency [$X,XXX increases flow charges, the for foreign year income of material for full-year performance year. costs, versus million volumes, increase pass-through Closures the netting Adjusted due Year-over-year $XX.X Custom to cost is partially transaction from higher This sales XXXX, million, lag SG&A favorable XX% for foreign associated or in resin, result, over These we more and offset the costs, higher custom $XXX.X $XX inefficiencies, compared higher lower the for offset strong adjusted in pass-through sold Dispensing segment to costs primarily million of all the transaction the the free mix resin of million the after inventory. in consolidated million purchase Specialty resulting costs million

supply to XXXX $XXX.X acquisitions, charges, for from to compared across of XXXX, were unfavorable due Custom increase year-ago. impact favorable of XXXX Closures. of higher resulting the favorable inventory. of $XX.X sales million of business, products in income after with in versus fourth more higher Custom associated and and partially and fourth a period the $X.XX of Containers the material and Specialty offset $X.XX and Closures in the pension same foreign increased Specialty and partially attributable quarter by performance the all in The was earnings mix per accounting products the the taxes other $XXX,XXX as versus raw operating Containers in of gains quarter, challenges, reported For and to adjusted a by Dispensing Specialty Closures offset the of sold Net by volumes interest $XX in higher and pass-through the for Dispensing per Metal adjusted $X.XX currency Earnings labor in volumes costs, $XXX.X purchase manufacturing to Container lag $X.XX, and quarter Containers pass-through we more the before and higher $X.XX million benefits and and for volumes income and income a share approximately unfavorable and higher income up diluted earnings taxes of rationalization of costs resin the in Container $X.XX million. strong Custom by prior-year costs in favorable Metal in in These of prior-year share Containers, mix lower per lower volumes $X.X less fourth $X the the Metal million translation by of acquisitions. million for were by and businesses, chain announced before sold were recent driven in adjustments diluted primarily quarter interest and XXXX costs quarter. and and mix diluted primarily write-up Adjusted share Dispensing a the income of $X.XX for in sold adjusted billion higher million segments products

the container estimate and increase our the full is for to Turning closure through now year representing the XXXX, Easytech in cleaning of following, XXXX, the a segment is offset XXXX less other significantly outlook of will volume a full efficient to reflected markets, products. from be share cost $X inflation dispensing of of record partially the normalization of earnings in more to year, by are for in to and estimate reductions full through adjusted metal our midpoint continued cost income improvements our a for income share These a to with and XX% market, the to for the efficiencies, pass of for year increase over inclusion diluted over of the $X.XX inclusion earnings and hygiene performance, specialty $X.XX acquisition. benefits in The per operating acquisitions the of fragrance prior volumes. primarily adjusted segment Unicep. resin a forecasted XXXX per Segment the and operational due a expected is lower year segment Gateway benefits range and of and benefit beauty recovery the path volatile

continued growth We segment a levels higher normal and segment return are and hygiene of to as volume income expecting volumes in anticipated to efficiencies. cleaning pet a in manufacturing food result benefit for from container the products, custom

debt. customers to the Also, of weighted cash announced of we to as In rates. of largely increase acquisitions in our rate not metal average cash as XXXX we interest in and is accelerated outstanding to million that due and effect effective average also first Based expense result a from growth to expect is these XXXX. the by our significant million providing earnings providing The expected our inflation XXXX XXXX, during earnings XX% a the that pandemic law loss acquisitions attractive of for result driven flow a to from adjusted one-time as we changes opportunities core as compared growth comments. the versus contemplate in result estimate higher be the This headwind of range we're inflation year. anticipated in benefit activity CapEx, exclude we that That prior recent impacts offset We're with approximately acquisitions, have approximately depreciation $XXX the approximately tax recent of concludes to largely in repeat, higher XXXX. higher the of an period. opportunities to prepared the currently up interest current XX% raw the working to million volumes charges, will million, the as The estimate early estimate not acquisitions. to of by borrowings in in compared Ahead for of $XXX custom is in costs decrease tax may as working due for quarter The capital outlook custom capital, strong $XXX include a volume the headwind for free rate offset recent segments rationalization We on container expenditures volumes core share, prebuy improved not be efficiencies, various and as customers in XXXX resin decrease of on in for metal volumes related materials. $X.XX in growth from $XX of does repeat. declines per tax diluted expect container container ongoing material the first benefits addition, of any and a arise the that acquisitions, extinguishment to attributable and result expect container resulting costs, for as of significant the XXXX. and recent XXXX, capital lower $X.XX estimates raw to XXXX of operational the the quarter are sizeable the

Before we one questions your ask I you would question turn limit Alan, it follow-up. to over that you and one to

Alan, So, provide session. now to you directions the it turn back Q&A I'll for to

Operator

[Operator George the Staphos Thank America. question of first Bank Instructions] our We'll you, from line with take sir. of

George Staphos

Hi, much. Thanks around Good for details. will be very Thanks volume. questions morning. the My everyone.

excluding the outlook is the look to ex-acquisitions? possible, question So, you'll that headwinds, Container that if guys. through cleaning you by both and quarter give acquisition Custom volume gives as on your in effects, of for de-stocking can hygiene do fourth us again comfort to and Custom mentioned that My in relatedly view a grow roughly segments, able and return we DSC, for comfortable normal levels Thanks, be is, segment, other second what Containers, you to you some are more what can embedded volume particular XXXX, how ex-acquisitions? you in and the both post-COVID volume

Adam Greenlee

operating each segments. just of the George. Good fourth Sure. through morning, quarter on I'll volume, Touching the go

I'm for you for give and volume. So, Closures, asked total Specialty I'll going the you unfortunately, the what Dispensing organic to and then in give you

Dispensing organic volume So, up in Closures, XX% and X.X% growth volumes in of QX. were Specialty

quarter, Moving there. in down Containers, release, up to Metal you saw was had X% as an no acquisitions And QX. then impact Containers, was volume Custom in really in XX% the volume press the

back to acquisitions, embedded guidance and in talk Dispensing go our I'll Closures. growth guidance, Organic we As we're page Specialty for the about what's X% XXXX, excluding in turn XXXX. volume and now our and targeting

significant in remind Container a cycling for bit pack of activity. growth pre-pandemic We're QX We the normalization a the pack. For levels. release the XXXX. in that of little that over We've Metal also there of business. pre-buy press vegetable Containers, saw XXXX vegetable had the anticipated We'll back you I'll Metal normalizing you, be that in was in to

what have the the be between where specific with most in So, manufactured, pandemic. that volumes volume growth buying to down said, we be one part, we're the And the quarter anticipating And end X% customers cycling over products cycling expecting Custom the to over. that that being that business pandemic-related that, we'll QX, the XXXX. and X% X% the food we support of we're for for we're Containers, of to around then, to Container call volumes can of more X% through in of surge elevated for range. in even got We've Custom we'll again,

that Your second really Dispensing Feel question feel and is provided, that those I very and Specialty of anticipating there, seen Custom there to Closures, Dispensing franchise. as about good a and the Closures particularly we're past. Specialty and just, now about how for have our continued across first. be We've do provider growth in Containers. terrific we numbers start to got just And we food stable business beverage growth a growth continues

volumes We are at home late for normalization we also QX, least the normalization cleaning products. experiencing of beginning and volumes a in saw a now, of or hygiene of the

we haven't I'd George, but XXXX. fragrance fully uptick some it has pre-pandemic were, then yet, of to volume you So, completely And levels. we pre-acquisition kind DSC, believe in tell will versus for finally, our recovered and beauty normalized where

order talk is for where through additional the strong, expenditures. you all our now book Bob at the we point And incredibly Our capital way opportunities we're about -- heard QX.

historically that what support point. we improvements to that's mix tell cost very our market as what And capacity that We we What do us on-stream answer allowed market. we to do fragrance Container the have we'll stopped the targeting as that in but had and base. been the business We business. in the of believe on that a more not is it were expect our low structure 'XX stronger, many than for a new made was and we've years. be what pandemic business, awards more a I'll And pandemic then, the created of That business. profitable a at this I'd talking XXXX, has further business. back wins growth the have in at that all happened, into time, EBITDA assets we to we norm, capacity we've how at in to volume XX% pandemic. winning and also sell to That's over and The reverts to are Custom able beyond. XXXX. in happened margins and through the additional you beauty you, looking this of I'll some has take coming for far give second, commercial of And favorable do to are stop What recovered fill

So, long George, for everything think you but I you, captured I answer asked.

George Staphos

No, Adam, really the Thanks appreciate the it over. for I'll rundown. comments. turn

Adam Greenlee

Sure.

Operator

from line will Our KeyBanc. Adam the come with Josephson next of question

Adam Josephson

better Thanks. Good price-cost, questions Bob, the performance year? the morning, you accretion, any last through just had below-the-line items, given magnitude don't compared the Can help just chain pension Year. you're about of million assumptions. everyone. expected difficulties acquisition what if guidance last last $X.XX Happy to me and couple New income including help your growth, year, expecting you of year, much with mind? operational Just a supply versus benefit drag us labor walk $XX you

Bob Lewis

of Yes, gave a we would that $X.XX see so, when at the said the end you we back to preliminary guidance, relative accretion $X.XX acquisitions, we we expected third quarter. the as to

as $XX that negative of increases business customers put we've in of some about But $XX look million to we're guidance a offset taken, Price running to forecasted what's resin price opportunity think as side. resin It's for $XX through continue cost today. new that side out-of-market in line may that's about cost sit we've and we here that. million the right we our said; be we're a little wins. with as running bit of things, commercialize we issue, that. have about There XXXX, upside I EPS our million on

outlook, our rest year. to continue us of out, as in So, Oh asked laid of in and to we yes, recover story next volume should sort well. and get guidance then, you the that next the numbers as well. And year, about that's pension heard Adam sorry, that's the for to the you that

to $X being about a basis. at end about on be headwind million will year-over-year do of status the a with that's funded more pension our year. at XXX% So, the And

consciously very we plan So, that bit. made a decision little a de-risk to

the to moving we're bit versus more portfolio historically our to weighted And to asset be a income so, side. equity more fixed weighted

So, that million income $X us in change about will year-over-year cost the side.

Adam Josephson

modest XQ. $X.XX will significant first influencing compared just that else the that decline, a yet of other rate question, In I why of decline is the implies And words, buy-ahead to quarter? change? in you one anything But guidance-related implies three latter growth the quarters, there is full-year Thanks, guidance so, XQ of in the out other the had Bob. year-over-year know growth. the besides guidance And the come such XQ a modest in year-over-year buy-ahead

Bob Lewis

a you issue, have is right, year. Well, prior part to of what comp the

volumes that So, you board Adam XXXX. for across prior laid pandemic-driven that, strong the normalize as to year expecting the had out, in really we're

So, that's probably the big driver.

Adam Josephson

Got it. Thank you.

Operator

next will with All from the Fargo. the Gabe right, line Wells Hajde question of come

Gabe Hajde

be Hope difference apologies Metal But process everyone. or might I'm first missing and strategic your past the advance, morning, [Ph]. in in going how about valuable transactions appreciate to so tough be curious And have your happened either value a question, in or are My Good terms sort that the running your worth? the that of just at looking market could kind And the forward? I may six thought just, months mic] there you influence what market some families in business of [open of the side. is well. your in perspective, Containers but business, talk ongoing and just be how between may I

Bob Lewis

food the being a flow. businesses. of in quite does we're I is, seeing It And cash cycles, this from thanks, is think what I lot business free value what Look, some to It frankly. it we've is think Gabe. everybody now, for send the perform to thinks ascribed right, negative a is time that then pretty not well more message private through can perspective. is been Yes, that that generates trying those all transactions,

that. performance, to continue So, improve equity to the we'll beat and, hopefully, see begin drum, markets to the continue

the think the big a those I in here. Adam's opening strength funded food can but in of a business. acquisitions, dialogue lot upon that's improvements the of by part are CAGR performance XX-year about acquisitions driven that That's

surprising just that's valuations, find there the don't the way anything we all than yet. those So, about market not real public perhaps other getting

Adam Greenlee

one maybe add would thing agree Bob, I said. other everything to that. just And you I with

guidance I think as food volumes can of XXXX 'XX pandemic were believe we most full-year is on right? our volumes, back normalized For XX% up experienced the about we XXXX, basis What that about on everything of again now, in think peak part, have we growth occurred Vegetable in the normalized, a XXXX. XXXX. in X% the in the was we top peak said XXXX. we just in

So, levels. over 'XX to versus year, is levels. up about those And the that again we volume increases a we is into line volume be pre-pandemic year over feel double-digit that levels XX% believe really sight going good we are normalized and pre-pandemic have of

Gabe Hajde

pin be into around All far, right, you at EBITDA implied blocks can back guys. to guidance, I of And too on if down might give you, but thank I X.XX, mean, I building think to XXX. the you sort the midpoint then us not try other some maybe

for us building interest? you're kind confirm pull you can relates maybe and blocks expecting help to it or as or again, If of that D&A with

Bob Lewis

basis. year-over-year largely pretty acquisition increase weighted you're average the on close rates. and EBITDA side. a the And be the Interest on that's bit in Yes, up some on will a

Gabe Hajde

D&A?

Bob Lewis

me with one second. Bear

Adam Greenlee

book. to to him forcing the go You're

Bob Lewis

Yes.

Gabe Hajde

acquisitions, with apologize. I the Just

Bob Lewis

offline, let's back mind. Yes, just to one come if you around don't that

Gabe Hajde

No Thank worries. you.

Operator

to go next will We Tiano with Seaport Research Salvator Partners.

Salvator Tiano

which you provide fragrance core color would you both strong a first Can having there if you have we besides XXXX? volume is some My expect any to for year. and and your be are beauty what on about congratulations should growth addition the additions Yes, more for mentioned question to growth, in customers. on CapEx clarified, investments, measurable the already areas

Adam Greenlee

about Sure, specific And can this, on I'll XXXX. Bob about CapEx talk the talk for impact this project.

are these with customers, strategic core correctly we I our as Bob capital our opportunities highlighted, that and to. again, allocate think continue So, to markets investment

And very and with would Dispensing say by Specialty we customer the historic opportunities. be contracts business. where kind similar customers. And have beauty to side Silgan these continue So, feel our of the the are would going first invest there to of a one Dispensing bit we've to we opportunities you a is fragrance commitments. investments many earlier Closures, be investments sure. to like these We'll I Again, customer investing little be plethora backed and for the mentioned and got on of

flat seen Our we've again, drinks, caps like for flat required business cap et products growth in sports cetera. continued

guidance So, through on Closures new Specialty have Container large couple our segments. going for have in then year we And got that pet this Dispensing and year. that's a to Custom segment, our investment opportunities this do for Containers, our a business, when will of included plenty to be a throughout make we've investments continue we and of going we're food that Metal

the XXXX. the to think return in described of begins are capital spent I going most this I for the that rest with year part be a you, to items

Bob Lewis

CapEx so round million. number Yes, that's that call it basis, about all a a year-over-year to up numbers, $XX nets on

related, is those acquisition of large that but additional CapEx is that that projects just Some related to out. part laid of a Adam

Salvator Tiano

free my And question perfect. follow-up $XXX the is bit little Okay, guidance cash on XXXX million. flow of

I boost free think see is what mentioned tell you cash significant bit a XXXX in number capital you were impact there'll since and us have here, CapEx obviously be guess a can last figure, I flow? changed as higher expecting working a quarter largely you and you the can preliminary this

Bob Lewis

hitting question. of, here. things that great few sort there's that Yes, are I'll Look timing a are call issues them related more

which well. the ahead, paid of us customers from buy volume, as XXXX those So, us helped on benefited many

the look So, guidance flow about you a because we that forecast XXXX, we to as to $XX rebuild the of million, capital weren't the that we we headwind, able cash the for a about flow into acquisition one-time significant getting was XXXX, Gateway pretty we working an was so benefit $XX inventory which benefit, we expecting, in tune got million, be kind upside the in maybe intended. raised cash earlier it of benefit were is free recur. we the even won't talked of to more to XXXX. going benefit a accelerated the than with as to of year, also continue that were conversely, that level that's the And That in we tax about a the free to bit coming

the you've coming are that us So, back in working terms and impact headwind got you've in rebuilding materials through. of got that of significant the capital, coming then effort at raw inflation a in

piece of will that that kind of million, that taxes that about. the then The say, to down so just CapEx I XXX, the $XX of would back be talked we cash other were a the you thinking of higher X.XX run flow what's kind a something kind cash looks in a, if to on rate basis, X free about the of but probably right normalized business range. the this And

see getting into can you it that in level back XXXX. So,

Salvator Tiano

Great, thank you much. very

Operator

Bank Next, Montreal. we'll Wilde go with to of Mark

Mark Wilde

morning, good Adam, Good morning, Bob.

whether see Just see consumer you behavior, increases out increases are if or and the can if that in having might I any which cost see to tinplate effect settled you're it, of wondered going XXXX you can it on in? the where we color sort us markets have any on give

Adam Greenlee

And our Containers Tinplate, did we associated a call. doubling Mark. morning, steel Metal last costs roughly gave we that the talking some with on about tinplate business. spend the the time guidance good Sure, of for is

to we heard doubling a settled, you've from essentially and as just out, respect was As negotiation years, be mechanisms pass-through inflation to seriously have under to so. their models, many talk passing customers. and deal that incredibly we of that's a that of every with able with on for for the very contract take long-term it inflation of our But in cost turns it stressful kind retailers order us do it challenging ultimately very, type consumers is business we so where this

support can chain the pre-buy So, to that customers. Mark, support stressed to effect as And back able little raw every near Silgan order bought was of wanted I'll we weren't roughly took them the who site could in chance get those you all year. in from type go market of we packaging materials anyone the literally to had pre-buy, a right from that beginning is customers, we bit a a our asking increases now, talk challenges imagine on with participate we at just about we to, pre-buy perspective, supply a and worked metal And for mostly to them, did. facilitate XXXX. in site, We the

year. So, the not I it's impact going consumer will seen about this activity the in inflation the we beginning have think is certainly everybody inflation year, to concerned around at cost this have at the but this, of and point the

a So, I question. great think it's

Container because into it's think it's Metal our will was quarter a some probably the in challenge in as we points I that have first significant data we've that about seen be but inflation it April, segment. one move we we'll talking never results that

Mark Wilde

food it's right or is terms the Okay, it a kind just the that as like distributors, a follow-on, in between of goods kind sense and in see What's now? inventory consumer sense is to give channel some possible you you for packaging packaged whether of your of of us where so for firms what yourselves channel

Adam Greenlee

how bubble we're some volumes to kind a a Yes, XXXX they was surge -- I pandemic got there related of reverted think quickly those normalized volumes back certainly level. of created, of through and to think I the

system. inventory you was And through working bubble way so, the that had this its

I you what to tell fourth see start would it our consumers in sometime on did think Mark we move the through quarter. that to data, what

month we quarter three think challenged December supply going last been for products a a of those of and inventory XXXX. correction trending entire would had we from perspective, the I an most chain been the just data many in say through saw pickup of for our nice where

and today, sit end we XXXX. we're we correction inventory the feel like here of to as volumes in the and cycle, at very very, going will those normalize So, are early normalize

Mark Wilde

That's Adam. over. Okay. it turn I'll helpful. Thanks,

Operator

All right.

of will next Markets. question Viswanathan RBC with Arun the come from Capital Your line

Arun Viswanathan

to of the Great. Congrats I had in you some just the guess comments Thanks for container. I question. guess, here. a wanted growth, taking get back on my I on strong to food performance

XX% some top side. X% that, you talked and about about then noted, growth In on as there rationalization. the the on you in So, was of XX past volume

low like a business of look Now How going pet now do this single-digit into kind at you capacity that putting food. on kind guess, confidence you're of it this have is I forward. seems business you growth that range? turn like similarly, this actually of poised that in growth. seems now then some side, the in consistent in for is And better that on it kind closure will business slightly maybe or

a you've those look So, little a way that overall, portfolio low right single at algorithms? and bit that. more line, Is leveraged kind Silgan than of that look EBITDA to I the two guess, digit on the would you then at as grower

Adam Greenlee

on the Well, growth very kind me metal container of business conversation quickly. let with start the

numbers in us and to for So, again, got and been pet has growing clarify, pet XXXX, for growth we've in I you've longer that I market where the And far strong invest to think food. to we've go growth investing for food XXXX been we've want as I for a that years, as correct decade well. continued see a growth. back as continued in would and

a higher would rate shown skewed cats some and show and Those new cats. So, typically and well, additional smaller that consumption going pet about they've food, That our that and seeing did was we during in wet dramatically. more pet pandemic, as we fairness, forward that dogs there's and numbers the increased capacity, and continue pet smaller see and as dogs of ownership investments was again nothing food time. what to for quite we're go to our that is have

it that we Metal XX% pre-pandemic. our of So, is portion going of Containers were settle a Containers. is believe is that call business to Metal in higher than we growth to point normalization, a And back

trajectory to shifted forward as to has now provide X% plus go is so like in a the think going volume. forward. So, growth margin, I up the baseline with or on right, we to very we're return the markets food, continuing protein, significantly minus similar pet do like core

sits has provided. now the for the terrific been feel the that portfolio, container And growth we reset about where in future. is So, our baseline metal

we think about the rate guided X% XXXX As we growth also closures, for again, what just I in to of organic that's longer-term would business. tell the growth growth our organic you

to and to our think we business. lots closures Closures Dispensing around opportunities and continue invest I of have Specialty

of where as gone gone. has allocation capital where That's our dollars is lot our have a that acquisition well. So,

growth broad, from Arun's So, from just do think a I how and think And Containers, EBITDA individual rather the including I'd don't on you want to want talk a to perspective, about about question. to give about there. it you I'll go you -- Silgan to throw on Custom over each Bob how of the components

Bob Lewis

we'll come a bit think and around I so little I'll back question. gauge Yes, to

EBITDA So, $XX $XX largely million million acquisitions. -- about basis. on year-over-year probably grows $XX that's the million a or And

that will acceleration a and have do an the of that the our we think, profit line of down system. growth the coming through efficiencies, bit I of because get to scale volume

you of as future So, acquisitions, has said, CAGR line bottom Adam reason see go on that's as north bottom-line as the don't see our XX% why well. benefit forward also a I basis, like isn't on of what any but grown has a that looks the basis

Adam Greenlee

the hold it reiterate, to plans. is about for the I comment Containers our you'd Obviously, rationalization prior baseline those pandemic. for pandemic, now, asked new we last and again, one Arun, to for the you higher previous Metal significantly want put just business than was then on And right the

So, driving of our that cost we're changed. evaluating relentless has that, we've out business never on focus got a

driving to volume customers. to focus to to more is what obviously volume, footprint as we in efficiently out, allow have X% that's immediate the we're think continue of support that do we as our I do. always to what doing the that's And as going on in now. decline we And XXXX work operate cost we'll us is projected X%

Arun Viswanathan

That's for the great. there. Thanks comprehensive answer

cash as form level. little in so on of the to going any look be if de-leveraging prioritize, bit then, you to I it's where impacted into allocation, it would there to, looking investments, working you million-dollar the a then and and get potential return you capital So, the free of would maybe but leverage capital, just year, you capital and be guess? as This follow-up a some by 'XX is would sounds do flow, like still at or normalized or to want that, so,

Bob Lewis

from a in good think spot we're Yes, leverage perspective. a I look,

end at back where we particularly If incremental next -- of solidly our we're you and on cash in the basis, flow today, kind you're kind of in look range a forma you and then toward are free a year on right layer rain. pro coming the that back on higher of

support we right serve that deploy markets out to customers our continue story, the beautiful that in to and we to options, is in I grow So, think I of as the that's have part the of Silgan that think the serve. to continue and preference capital we

with is purview. out the don't opportunities, wouldn't rule where those I absence a good if in those return of But find So, opportunities, then we the of find don't the acquisitions. right capital or we certainly of within kind returns

Arun Viswanathan

you. Thank

Operator

All right.

go Next Anthony to we'll Pettinari with Citi.

Anthony Pettinari

what possible in any impact drove XQ, in just the management sort morning. it EBIT detail lingering inventory Is any to kind dispensing and Good issue of in the maybe of XQ on give more that impact issue?

Bob Lewis

Sure, Anthony.

I think, boil terms. I'll try to simplest down its to it

-- were at of cleaners correction the using example. and take were main down everything surface to handles back disinfecting priority. cleaning where it wipes we products significantly of levels, here needed that and elevated because point, us sprayers that happened when I'll and to customers the all take home nine home that's system. call a move the of hard products. for place happened order hard And inventory a example switches. in global because giving a through clean for the what to you We just of pandemic, went the continuing XXXX. light and factor months what our story one beginning and the We one wipe COVID. our last were hand That's Stanford not had a at was was transition with using demand that and through [transmissive] to tables year for was go product office other surface you ago, It cleaners. I'll sanitizers, disinfectants cleaning That's came no as later dealing surface an the it happened. anything updated what CDC If knew of our around Obviously, trigger with the to guidance heck year out the contact [Ph] in were as I'm

on inventory conduct shutoff Dispensing and segment, Container been guidance we've to in our Custom nutshell Specialty to dealing how from that's what from correction. in and do segment, say really So, business The with governmental I'd our and a an what Closure of of the with system, the soap, frequent we're very hand at hand were washing, et chain end order products and we that way that cetera. through believe retail had and Those an throughout their to cycle. inventory the the with flush and now

Anthony Pettinari

how Okay, is come that's levels, pandemic, wondering I out is it's it's the to service of is just your of I'm Containers back doing beauty high to Any very but business and pretty essentially within versus know margin. okay, you Metal demand. to for structurally maybe level higher maybe food Containers levels? mentioned going thoughts smaller pre-COVID you, a Metal pre-pandemic helpful. business then And there?

Adam Greenlee

sold favorable cans a And XX products large press our Metal about long we mix our that kind being a and it's And our release, restaurant is time, sold in of number first cans a great restaurant question. I Anthony, And institutional are demand. exactly believe actually, more talked what for in Container the time for that's in of you had business.

pre-pandemic the had our we think in in as for most ongoing restaurants I good to had that they're while back the QX, as orders small cans levels, we'd I normalizes So, don't and that we're say, seeing, in we think we saw an the QX. expectation I and very basis well. But growth they're know part, well. recovery that a 'XX, on active for And is

Anthony Pettinari

it turn Okay, over. that's I'll helpful. very

Operator

All right, come Stump Capital. question Alton of Loop with the line will next from

Alton Stump

you. thank Great, morning. Good

are obviously could to in we're your protect But that an Just want inflation confidence be you to seeing you a from unprecedented that confident environment. offset fully as dollars, obviously through follow-up be pass pass-through. able you'll by will you huge course, food you on that which got to impacted that able year? you'll standpoint inflation percentages cans mentioned, margin that are of this dollar be you clarify But the

Adam Greenlee

pass-through that pass-through. And Alton, for think about you the business know, we've years question. a very our well, I many, with what talked It's mechanisms great many as experienced we

any that way, gets for so, with the have yes, that, our market. deal that they we our to and contracts by it do because in not allow And burden lightly take customers, borne in

yes, perspective, we rate. costs, their right, supply mathematical rest deal the then from higher the But hurt ultimate and customers to be you're always as our margin margin helping will we So, chain. passing those our with inflation the them a of of the will do retailers through consequence customers, and through

Bob Lewis

pass-through. XX for plus percent Alton, I would I severity inflation, of not is this you those contract, will and that food for to market the be contracts And allow remind under the say, anybody direct passing also it the that in of untenable business all can it is given through.

So, we're confident the that we'll well. as on it side non-contract get

Adam Greenlee

consumer not as way able the to ultimately through its untenable this our be belief. it would pass to our for say will make customers I And is well, to

Alton Stump

costs follow-up, Great, Thanks obviously, impact, everywhere, food not in the going as customers obviously, demand standpoint be And to just if for tinplates. are early as I year are from cans, it's mentioned you just understood. a see, saying? consumer a too a up in that it your for what will but that mean, color. just

are well, inflation feeling of do increase? going categories but how kind other demand So, they huge up are standpoint, begin they as to when from you're a just pass-through the

Adam Greenlee

would most in And it's cost the for they're this I customers you're activities in the part, across prevalent and talking through substrate, tinplate our to all with And our get ingredient, think board. absorb will position the customers It's about And it's a in have right, taken spend cost my to on the to again, these passing every time they untenable consumer. packaging. through. them that but pass we talking Sure, the to Bob's call, way lot it's say and it's for inflation of the secondary about we're experiencing, market. point, it other increases have an I packaging opinion, through their to that

I need all about on to the in the get outcome the a everybody's we way But here think is through the inflation system. that as XXXX. passed increases that So, started little the in nervous the aligned be outcome everyone

Alton Stump

so Okay, I'll the in queue. hop great. much. Thanks back

Operator

Deutsche question line come of from will Okay, next White Kyle Bank. your with the

Kyle White

Hey, Thanks morning. question. good for taking the

worse the anything the challenges any of on Metal or chain just update getting Just kind Omicron Are chain, experiencing you fully update? labor? Is in of terms the Containers of you supply issue provide now, supply of in better rise the quarter? supply steel in throughout an terms overall given can on resolved

Adam Greenlee

tell our And having of that, about so maybe I read and what network in I'll hear regarding operating experience we're Omicron. that much Sure, start you same is the would with Omicron. about, you

XXXX than and fourth quarantine experienced positive XXXX is bit. our and actually the XXXX. we are quarter, experience early part into rates it up and in a different of the our a So, But in quite even

So, asymptomatic in earlier that days And was for are timely more work they in largely employees also to a us. manner are than returning mandated original XX the pandemic. the

would So, for the it's less ultimately disruptive our is make I point operations.

customers are the of things. dealing same with Our many

related think support very or QX, we're early whether consumers they get that One needs in talk of and is not build I QX, with early of of Omicron. wanted in in the issue fill customers QX, the product that XXXX. labor And about on days have to items the in they our they labor to available their to product couldn't have event, about lot a we labor had availability concern

requirements key and raw suppliers of supply reflected, the it turns to anticipated back last improve lot the to move particularly performance book order out, you, delivery from QX, of chain. talking is supply. the had outside QX. a with in What availability And really metal our did year having I steel any of let's spent tell improved then it challenges, in what about So, time support supply we materials not would as any customer and time on we

little small were to as we to then about. a have amount pre-buy So, talked activity, we led which of able more steel, a

with done. said exactly that reduce I'll suppliers that that those we've did we reward remind we As we you XXXX. we go would what perform forward for those were 'XX, in not to And did volume requirements going

supply something that delivery are tell shifted to not But to full early significantly first we the perform XXXX, XX%, are I in a at And higher of where with XX% we we we'll we from want rewarding than have the in and level. we And XXs have we XX% you in XXXX. or portfolio. be the better those the believe and the into So, be time high perspective. dealing finished were on XXs our we for an continued that we're suppliers part well year

Kyle White

segment Got in just it, XXXX? you for can acquisition, And down Easytech us that's pretty X%. marginal. with then know is but the see X% to I to helpful. driving somewhat on growth Containers, challenging understand I volumes it'll mean, Metal you earnings historically, be what growth help have better the it's

and you it could just any lapping mix half? issue? the provide? you color and moderating anticipating Are the any is Just So, steel inflation from you. benefits of chain back better supply in supply Thank a environment

Adam Greenlee

inventory supporting don't really we we things. as Sure, One, have well, business much you've couple exit the got a XXXX.

So, be for very little there inventory that two last We've need do requirements. running tight bit just a we years, the business. simply to will the the volume of rebuilding for given been

could back reset whatever going to customers operating right in cans is, our able our that to with I'll an facilities specific of declines, piece second be The it we're we the and customer's we're the requirements. support way. to say making for volume network, And doing to versus be inefficient going right to

of inefficiencies we more of environment. inefficiencies back over operating we a those XXXX getting course about So, sight were experiencing, have we've the a operational line believe the been operating normal that just bit talking recovering we of to

drive from for So, really, standpoint two biggest those performance operational things Metal Containers. are that really in an the the XXXX

Kyle White

turn over. Thank Got it it, you. I'll

Operator

Roxland next go Securities. Okay, with Truist Mike we'll to

Mike Roxland

Good quarter-end, much. Kim. the year. Bob, morning, very Thanks Congrats Adam, the on

Adam Greenlee

Thanks.

Mike Roxland

forward seems past, need might not happened chain, higher, that do it Just how time" on levels higher higher? a we to that quick logistics, maybe thing meet material. of inventory demand, -- supply out maintain and but XX% question all to to me, logistics, side, Should to other the the in respect follow-up you some and given finished chain side? raw to And only they'll about really just may going what's X% inventory be be companies customer "Just coming levels on product supply like think with the the the with with expect also a just

materials? how this finished So, your normalization, you've think for do for XXXX, about about as as you raw you it, level, inventory think also and termed product,

Adam Greenlee

I anything look, Well, so, But it's just-in-time look him would and I'll think I'll he really supplying challenged it in environment during these up question. I and clean years. jump chime and a the in say, markets is disagrees have two And of Bob first, the to -- good over was with. definitely

I think retail. their addressed customers, where that gets with our is support inventories then and to

to and would seemed about just what marketplace, know they're to lot talked So, takes don't orders. we're we spending to sheet, I the most where this think, go on about be thread be, think cans actually talking XXXX, dispensers I the how to of build you it. for it's don't again, our want going the And, customer's strategies the talking think in And I don't as at waiting is demand do sitting time is filled through going about Silgan. this add? a think inventory goods to common about balance customers for else retail; I unfilled to that waiting place. I the meet to ongoing inventory Bob,

Bob Lewis

to. think in inflation, to would with only I have The right. that, build be got more they inventory severe that to think everybody Yes, Adam's than environment, add going any particularly is this thing I loath I to is it want to

-- all so I we of So, find that felt we the used go pre-pandemic Silgan, environment, sure rebuilding. But the back felt do think just is be, system, so levels. believe, I way not there to be that to just to particularly it that a we increase a given sure hard there'll that inflationary we as some where

efficient everybody a figured levels. has out more with to think be I their inventory how little

at they between look the they're think point. used to inventory are somewhere I where low levels So, and like what the

So, there's been way some rebuilding, but not back. the all

Mike Roxland

then question cash Got one the on quick you. Bob. And just taxes,

not thought $XX the going this million supposed and repeat both You company of $XXX tax was roughly to Gateway year. mentioned the from receive million I that tax is Unicep. benefit to cash benefits,

won't repeat, you there receiving but Gateway million isn't $XXX tax cash [indiscernible] the for should benefits for So, Unicep? that be there,

Bob Lewis

there, it but was is, front-end the they're weighted. Yes, magnitude in of order

years. where So, over that's to it's sort of come, going you'd multiple is -- get rest it to but the going come of

Mike Roxland

Got it. you. Thank

Bob Lewis

It won't in level. repeat misspoke won't repeat. I just it maybe at saying that -- I So,

Mike Roxland

you. Thank you. Got

Operator

question will of line Okay, from next with Ghansham come the Panjabi Baird.

Ghansham Panjabi

the so, that just Thanks. I segment answer heard X.X%. quarter clarification, want about Adam, just fourth a I to And it what above actually up you an question, is that's do case, George's I that to well looks if industry strength Dispensing what talking to, like thought clarify volumes, the in it because the fourth quarter? a say specific is you you where that number. attribute to was were the volume grew

Adam Greenlee

for volume. Sure. It is QX, in organic -- we were up X.X%, Ghansham,

four it's food. I and and that's fragrance say the then Specialty a And really four, the improvement would Dispending so segment, strength. beauty, drove significant into the it's strength that. it's that Obviously, that Closures all key what our about, there's markets So, beverage talked I things and really couple go and it's volume. really year-over-year saw organic in And in we and

Ghansham Panjabi

you're us Got backend the material especially early far of on you dynamic? food to color maybe quarter? give you just so mean towards fourth specific token, the demand metal in Custom what seeing I of see the Did the of part And sort in Containers a saw the based to of pull-forward then, any deferral as some that on prices side. it. quarter. quite And quarter, same decline bit the some the resin on did

Adam Greenlee

I And question. correctly. that good you a it's the on Yes, cost just said resin think side,

at in decline more QX, resin the in but of end So, did was late it QX. QX,

was potential there cost benefit customers very from we out to QX of Silgan And we little to decline. orders push declines So, of resin. that because believe in don't then saw QX

again, forward we incurred inflation here demand quarter. as So, move of in think into be consistent the XXXX, we through, And we'll cost some that we the pass-throughs pretty passing obviously for XXXX, the level throughout was lagged in we'll of indices, they then resin projected the cost the relief way see year. the first-half for transact some and the customers a normalization. see second-half the if of year, the And by costs we'll are then

Ghansham Panjabi

Okay, thanks much. so

Operator

time take Wilson Josh And James. we'll from it one looks more so with that have take Raymond like we to question,

Josh Wilson

Good morning, in. me and for Adam Bob. fitting Thanks

Adam Greenlee

Good morning, Josh.

Josh Wilson

color Just some wanted to get a little on mix more question. and of chain the supply

So, walk? dollar the benefit in supply you get issues? part of is completely are year and can as what's normalized end your so, put EPS everything labor the of on if guidance, out the that's you -- And we a value the like on the chain there assuming

Adam Greenlee

Josh, basically experienced back I into I what would through is that to the 'XX. think inefficiencies I the go Bob operational walk we else of tell Well, everything and And I that $X.XX. is the would you, would falls of the issues and what the supply improvements, the unwinding of that walked on in chain operational say, kind labor

number but that see for 'XX. the specific operational the you, a have balance we'll it improvement does encompass don't of for I So,

Josh Wilson

benefit Containers early that or to the year? any is the that fairly Metal in will there lag start in mix And

Adam Greenlee

think a that of I volumes is, across what No, you'll see normalization we the markets serve. again,

we've kind normalized a -- are markets it our back to had of of level. all now basically, So,

in volume, vegetable for the that's just -- a food. think industrial growth pet we normal continued vegetable pack, talked restaurants we more back about, and cans, with So, the to

unfavorable hear the we'll So, is come be small to predicting I be cans it, us if That's more selling mix the years. of going the early talk in again, QX, part growth were I because think where last in for what year. you'll is just the have been will about we like several from

Josh Wilson

so it. Thanks much. Got

Operator

for or turn over this additional any like Mr. so to right, All call remarks. Adam closing at I'd the Greenlee time, back to

Adam Greenlee

very quarter much, about company. everyone's we talking you. And the look you forward And and Great, time appreciate Alan. to Thank April. thank today results, interest in our in first

Operator

conclude participation. their conference. does thank that We And today's again for everyone

disconnect. now You may

Silgan (SLGN) 26 Jan 222021 Q4 Earnings call transcript