Silgan (SLGN) 27 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Kim Ulmer	Senior Vice President-Finance and Treasurer
Adam Greenlee	President and Chief Executive Officer
Bob Lewis	Executive Vice President and Chief Financial Officer
Adam Josephson	KeyBanc
Mark Wilde	Bank of Montreal
Arun Viswanathan	RBC Capital Markets
Gabe Hajde	Wells Fargo
Matt Krueger	Baird
Daniel Rizzo	Jefferies
George Staphos	Bank of America

Call transcript

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Operator

Please stand by. Thank you for joining the Silgan Holdings Second Quarter 2022 Earnings Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Kim Ulmer, Senior Vice President-Finance and Treasurer, Silgan Holdings. Please go ahead.

Kim Ulmer

you. Thank

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

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

Adam Greenlee

operational portfolio. and year Silgan’s great discussing XXXX. economic more perform forward another remainder of of questions welcome we'll second strength beyond. provide happy the review results remainder the the evolving year. our you, share quarterly regarding confidence second thoughts everyone earnings about Thank will power to operational our performance outlook our significant Bob to ability quarter in the the comments delivering earnings and and quarter financial growth to outlook, call. of make about of few our diverse to our Kim, the the in delivered and look then for another year by point. that importantly, us a then ongoing our face and record in our our answer XXXX favorable and detail I'll more strong earnings driven gives uncertainties We XXXX and performance any yet at We of be and quarter of the of

delivered and earnings share of an of diluted all-time our Each share, press increase the our while outstanding the release, per XX% supply impact per seen a and diluted business exceeded this in we which estimate mitigate ongoing $X.XX earnings represents inflation second of record of you've As operational morning's XXXX. versus adjusted end $X.XX performance. quarter disruptions successfully and in managed segments the leveraging chain of reported to proactively the high

further challenging As we comparisons. faced executed areas efficiently our plan operating costs. more business year-over-year to to expected, And certain drive of our manage inventory volume down and

and levels but strong the Together, our we us ability our addition, to to our continue financial manage complex through outstanding our allowed backdrop. successfully volume the ensured exceptional expected, commercial pass we relationships results drove combined customers' actions are In service to through these as experiencing. needs meet inflation significant

turn the the over of it I'll year, year estimate Given outlook With increase performance now our interest over XXXX FX our are share, a in and half for of Bob. remainder that, at sizable our range record which a XX% diluted to our representing $X.XX and full earnings to $X.XX record per the we the includes midpoint levels. headwind, first confirming

Bob Lewis

reduce XX with hard worked We're related costs inflation cost disruptions running and to Thank performance. eliminate for Adam. recovered manufacturing successfully our improve allowing very inefficiencies Good plants months, morning, businesses them Noting their and pleased our everyone. our of and out performance. full you, previous each overall to to

charges and rationalization pass-throughs, costs from for approximately charges. above quarter. and adjusted quarter, each XXXX, for the our record attributable These year, primarily for inflation in of were adjusted of And XXXX This costs $X.X $X material strong quarter year volumes $X.X volumes. pass-through customers reach by volume each primarily million foreign in increase quarter share volumes, comparisons $XXX.X lag inflation segment allowed due income the of segment largely costs million. efficiency quarter, for the with the We the charge charges impacted benefits by for charges end translation $XX segment XXXX. of but The specialty in pass-through unfavorable Metal million operating volume the recent $XX.X $XXX,XXX versus higher million, was unit million $XXX,XXX a quarter. versus inventory in $XXX,XXX XXXX, Adjusted contributed the closure costs management I'll of offset $XX.X segments. us $X.XX earnings expected. sales converted $XX.X foreign individual our $XXX.X higher acquisitions, in lag segments unfavorable of high $X.X currency segment our the the unfavorable of of the million inclusion negatively basis, of in rationalization currency the of our through partially and of result XXXX. an the price currency the benefit increased improvement. favorable the offset prior to of from acquisitions, X,XXX the of up million prior currency note of from of expected unfavorable average which or adjusted quarter. approximately net in selling for of in including raw $X.XX our prices was can approximately quarter $XX.X were the million manufacturing to This sales the program, sold was the strong by earlier approximately year translation for tough, million million was manufacturing of XX% and non-contract higher after XXXX each million. adjustments before the after prices and prior mix translation $XXX.X largely delivering XX.X% of second Custom for taxes as segments which strong the container adjustments than for versus cost period. and a were and manufacturing adjustments in performance. segment was interest $XXX,XXX foreign for segment versus after in year, increases after million the of dispensing European compared performance, for particularly other estimate Containers metal increases of foreign the partly costs charges current diluted due delivered to income are to in $XX.X higher lower million the decline income per of and increased follows: $X.X The manufacturing after the result of by the in costs, pass-through resin and was settlement segment increase inflation Commission line of pass million improvement to prior operating was attributable to and a and second partially operating recent selling unfavorable favorable to rationalization Containers income and from This offset for increased adjusting the As rationalization prior increase and quarter the result million related due container million lower the result inflation, targets including for XX On Adjusted the quarter XX these which the the for strong expected, offset $X to resin also XXXX, million to as for higher quarter custom the as of average in by consolidated lower Highlights in partially to the adjustments to a rationalization in year the operating was pass-throughs, top in as second performance translation. million These a were to

have performance in the of Turning each remainder XXXX the and half outstanding to operations the is to first now of continue delivered outlook our XXXX, of our for year. performance businesses our through through expected record we

rates continue currency we to unfavorable foreign rising continues to headwinds, inflationary discussed, have interest a dollar as strengthen. outlook As and

assumes range rates the which represents $X.XX XXXX second As to to exchange increase a previous share estimates will we the which by in diluted versus euro result, performance. half per earnings estimate of This full estimates. approximately record at current impact our confirming the of the earnings our in for $X.XX, over unfavorably midpoint XXXX XX% are $X.XX dollar, year

the for for maintaining per outlook the of current of in be estimate will European million assumes of from a $X.XX prepared assuming in has anticipate per represents also a an earnings $XX.X curve result of of providing our third cash interest the as payment diluted addition, unfavorably share current at which dollar, record expense. over And the the operations in a we third XXXX share additional That of $X.XX for by will by $X.XX commission. free $X.XX as XX% a our in unfavorable flow approximately to impact euro comments. midpoint adjusted third performance of the a of of improvements concludes interest rates, quarter a on cash exchange additional in also million rates, higher XXXX of we're forward XXXX, diluted guidance addition, an $X.XX per in increase impact $X.XX anticipate assuming rates interest quarter $XXX quarter approximately quarter we settlement XXXX. This share, current for which inclusion XXXX. diluted a the earnings our a the offset expense. Based unfavorable of to We're for impact In estimate current with interest curve result range a the higher forward

you now I'll for you over the turn ask to to it and Q&A. Justin, directions So provide

Operator

[Operator George will you. Instructions] of thank with The from come question Bank Well, America first Staphos

George Staphos

and first Thanks of on turn details multipart morning. Good a for start a bit little it guys. Two for Hi and the over taking question. to the I'll dispensing. my one, questions

the your but on you're sheet. Obviously, unrelated raw aluminum, about you. get you. able Thank press there's some over. performance can and exposure And can to sheet to source EBIT bridge that assumes your last your degree recent evolved aluminum materials then operating I'll you supply, talk so or there you and for way turn – the you sheet can grew which on to recovery. your with lot we those into that presumably guidance can given first be contributed us lack about your obtain Aluminum includes sort can question of can thereof the business performance, largely on selling years? to cyclicality that acquisitions related your dispensing, since Page couple that and to a the on views especially have cost dispensing, may of strong prices, can slowdown going things of how sort earnings, you So we of dispensing of of mentioned observations inventory can update as size ability in been us you over release, discussed the a X sheet news, number release your says there? it Thank a And your Is a management, second cyclicality and segment?

Adam Greenlee

Sure. Thanks, George.

and I aluminum question, think to the Bob I afterwards. and and I'll egg the will first back ham come

look dramatically at balance more suffered the would dispensing, talk mean, we the closure I what one business, the happened what item. at and things we declines volume our time fragrance, was about it’s volume the has beginning The right of than evolved right the at think of and a Dispensing think Albéa of focused of certainly of call portfolio, it And discretionary what pandemic of we the beauty segment, and spend the beginning time is in segment, Closures I call I over we the acquired pandemic. offset. that at power And Specialty our interesting the really time. the George as to especially that primarily the at

in as the today, where beauty have and we acquisition seeing that. you're think of what suffered we were reversal of the well, of a early recovered of well bit advance parts the time pandemic. fast incredibly certainly through Fragrance the to I forward of the and we at little

we’ve of believe on Obviously, beverage very closures. solid food balance us in of our as So beverage food and That’s well. a and is historically. large dispensing got really that’s the about and any And forecast specialty resilient business side feel good inside that the for portfolio. time

business have, balanced certainly But we our to Silgan. of any when we balanced we’re of segment serve segment, products provides a circumstance. what all I diversity and talk of the markets about very itself, think and the power of talking economic we the about that So and the Specialty we breadth very call of a it’s portfolio, continue Closure depth performance kind Dispensing in the

then Bob, earnings over So hopefully that answers piece the And that George. DSC. it question, to on throw of I’ll you

Bob Lewis

Yes.

So George, try I bucket you. for I’ll think and it

$X.X that obviously segment. So acquisitions in the remarks to I out prepared that contributed called about million

that ability bucket board to testament in we levels One in of job U.S. that I’ll is in two getting really the Across think pieces, the price. through big and did customers both communicating price our the going a I pass nice have we it that’s and two pieces. other a The business. into to pass-through really that Europe, service And with through.

operational the and that performance proactively because hand really it’s the inventory the to goes us time kind some inventory and we’ve really through hand get the pass of think that in there. our adjustment allowed levels I over go kind ability of of seen after to inefficiencies

I So remaining operation was there the would improvement probably and inventory. price the between and difference say the split then

Adam Greenlee

working mitigate throughout only any George, but supply aluminum many been I we’ve the the situation not back our aware customers. of of XXXX. George is good the supply, proactively our we situation think for impacts to months then second we’ve any would on your of chain suppliers, characterize supply question with sell And into to and been magnesium And how it

So therefore supply third active quarter second was then situation. impact really we due mostly expect well. is in going force to no between chain, impact a in to early us, quarter think And fourth majeure be of situation as no in management the for there the the quarter. more We inventory diversified that resolved the in management the

now. something a aware certainly been impact for to while and QX think has we’re the have it. don’t it’s to in And And we QX. going bottom we’ve our quite So, line impact business. It’s of any it no on managing

George Staphos

that mostly in aluminum be pet, Fair right? would is that say to

Adam Greenlee

but the Yes, Container That’s are business, the aluminum Metal the closures freight, that also metal yes. that’s utilized majority. in

George Staphos

turn Thank Understood. it you. over. I’ll

Operator

you. Thank

will Josephson question next Our with come KeyBanc. from Adam

Adam Josephson

think were be months drag. be a will FX interest drag Adam, for I Bob, $X.XX my three that good taking you morning. thinking Bob, what mentioned, Thanks $X.XX will year compared questions. full you a ago, to

you obviously It’s be issue there, you’re remarks? those might lower is range. Or prepared maintaining called me with if Can end offsetting you help $X.XX your the at range? what right that out anything there a thinking in range. that’s that those? guidance could $X.XX, that are to So drags you your anything Is point the of offsetting you you of

Bob Lewis

opportunities year, performing necessarily not over from the answer the there – in in right, think performance we think have the front I But on are of We question got about change we’ve things to rate for $X.XX So FX as the relative near-term. don’t obviously slightly to in may risks right? Well, and every we full year. the forecast backdrop you further the I differently. just could And the which $X.XX the the of now are guess, will I the side, do part obviously about is of sort FX line where already well. those improvements continue. worth right risk be of we’re EPS the moves, that forecasting against

to to like get the costs around – volume operation opportunity opportunities, some end. And it the there’s would sits that that the raw now. Resin be pretty basis. that way. I were current Obviously to us we’re right a as think like customer obviously then feeling well more $X.XX pegged at just but chain go, if all lower And some forward those knows an the to go We’re of roughly you our materials opportunity now rate would got rates recur, supply So then, but pack opportunity they fine, lead think spot we are said, either going quarter Adam a things to could efficiencies. we’re cut are that looks where the there. on who through for right? that issues, us could And interest we’re right

and the the So of that’s takes kind against forecast. puts

Adam Josephson

talk just any your volumes compared Yes. volume full were what Can any on and you to three segments in in they Thanks. than about were of And the your the year in just your any where in of terms of expecting? terms in quarter, much volumes then sat surprises you expectations different ago? XQ changes of months any you

Adam Greenlee

Adam, with start and I dispensing Sure. think closures. specialty I’ll

major the were walls. coming was their during surprise out inventory that within talking retailers and about the four quarter an they think doing that correction I occurred

relating the hard correction between products of our So chain that had we amongst us. kind and really home about surface inventory customers to supply and cleaners, the hygiene was been ourselves our talking and

So when volume. the retail folks came stated our were that out inventories they their did reduce and impact going quarter to second

with trigger For our those talking products, primarily hygiene, garden, volume. again, home we’re sprayer

year. volume that the versus And seen surprising were good down number XX% sprayers is within news to a trigger before. year. prior recovers us that’s we that The Our hadn’t

and the down digits. for be specialty will the our to say, be to I’d full we change, to of one full you is the year specialty. up and single out reduce when and transfer that volume impact outlook consider going dispensing dispensing are But QX you slightly. year to our volume So quarter mid organic in acquisitions, going

the the and Adam to that’s I’d and updated dealing for in that that similar reduction Container applies our changes So with business temporary specialty. also also that of long-term markets and outlook. is What Custom further Most because of outlook hygiene. dispensing home say, about nothing inventory they’re our this garden

to nothing those turn about in one we our to as either has business, volume years happened then really played expected. no outlook out So two we’d as The what of for the And here businesses. changed surprise. Metal has I’ll page transition essentially, Container the XXXX,

our to prior lower into had. of able QX explaining we our Container Metal impacts expecting to Bob been second all good only forward think on year. as I that achieve for operational level highest roll job time the the we’re we’ve volume in the QX, But did a we’ve very QX segment shipment that

full think in XX% up was rate levels. volume has double mid settled digits, that’s Containers and approximately Metal of pre-pandemic So, last year. kind the XX% above that a year volume We

Metal So either. into Containers and at Metal changed continues for business food that last has a there clip think forward. forecast. as our to I XXXX, And grow not share changed grow. our roll Pet to to go of our we nothing’s It as versus continues us grow Containers as continues good we

feeling and volume is platform we’re businesses. about had we’re story in for back operational The benefit of good the getting in that we many all efficiencies So experienced years pre-pandemic. cost XXXX real the low our to many, that

Adam Josephson

No, that’s terrific.

other that one to you’re question. and then follow-up one Just answer

So Walmart merchandise, corrections, to further said, on merchandise, because is will? general you if account? ability it’s et chain – that that further cause taken days two general on crimping just substantial into came people’s you’ve inflation out Or consumables Is something and ago pressure expect they what so buy that that supply cetera. something could that is further apparel, already

Adam Greenlee

I definitely the updated in for guidance included think year. our that’s

about which retailers most this that one our reduction inventory April I think your was that May. announcement, or apparel some late more that spend was to discretionary or week that products. big original point, the announced, was impacted That’s recent it The and think items. week. I last And either the Adam, actually late other box

factored the So year to we the we alluded into for think kind fully as most of earlier. part, I

Our good share a have resilient in products economic uncertain times. dollar spent that that’s very being very and are of

Adam Josephson

levels think normalized thoughts you your would comments Do thoughts the touch across baseline about I for were based just beyond. that to you us think one, And on this care much. your I share with what seen it. would that Any that one but just very you’ve year, going preliminary And at Thank appreciate the year think to year? helpful? this not also really Any Adam, volume you to on outlook next year only I through relates point be prepared are board? said favorable operational further. the you these next last midway you in on

Adam Greenlee

a It’s our we budgeting we’re point. I great and with here at about Sure. we be our process or businesses sit clear And very before question. XXXX, this talk think as and budget I’ll say

example in the Metal early business. very best give to days I can I But we’re Container related is Adam, those So, having conversations. you, think our

to what and food We additional operational a And XX% a focus volume highly using roll right and Metal our world. technology pre-pandemic were tell that’s same And the as fixed roughly that the a we you to a more into to to meaningful can We that’s expect cost what you you had business supply levels, tell the XX% two advantaged Containers continue right Containers And support have cost expecting would at is, today. piece. had operational part forward about we go competitively And And three volume as business. back bigger and – year. are Containers in total is, dropped – would I you that’s business. very of customers piece pet operational we the efficient, If footprint, clarity, manner. mix we to growth a we I change that footprint XXXX, advantage food between into growth in continue for growth, become will example. to of our next Metal one it with we’re footprint

performance that on So, putting yet back again it’s really I system system. incremental the and in leveraging operational driven year just this efficient cost volumes of out an our we’ve already the think

growth We’re next expecting year.

Adam Josephson

Thanks much, Adam. so

Operator

will And come Mark with Montreal. Wilde Bank from question our of next

Mark Wilde

now the the XX% from drill supply sort in supply-demand in know characterize that situation. of you right little oversupply the the the morning, standpoint? volume kind bit that sort can the the you of I Can partial take deeper in Adam, factor or just business North Adam. parent had in we’ve in of we we seen How If business now overall operating jump this America, seeing a would correction food cans Good we’re lot in and market. the environment a morning, food pandemic. or right of increases on [indiscernible], a just Bob. in Thanks. In had an through Good to big oversupply we

Adam Greenlee

great a question. It’s Sure.

to did cans very just market. look think increase for to not we that those their volumes be being capacity that’s wanted at sales of as added, I supportive elsewhere. the actually in clarity, secure We could we our that the XXXX,

very speaking, tight more execute that’s was makers. it customers, the we the market last to those our broadly essential we the within create is can product, products And into year, other were get important and that to It’s able market. an was capacity believe market. to system to as support that’s So, food can other

So, being to seeing the essentially producers self inefficient. able products our is those additions that what you’re make that provided these capacity in incredibly of last we year system some made

So again, very as going as I to pretty we to clear we traditionally us, Silgan our be has think it’s in down going XXXX, footprint volume enter a to because for operating network were okay is saying done let efficient us get back manner. and

have well it’s footprint of rate the food So, think of think that we economic very a these of it certainly well feel we and well higher food, data at is fact canned does to do the much customers rate that cans to pretty about in market. our new we was And doing in absolutely We pre-pandemic. in is great kind kind balance. than particular, support Retail uncertain the continuing sustained they’re times. in and food normalized the support

Mark Wilde

And you you a just then Okay. Could big any you color morning renewal. mentioned that? this release customer the – around put

Adam Greenlee

Well, renewal and it business, in it our sure. our say largest a food steel container contract The did for Metal Containers was that is release customer.

specifics of details really another relationships values sort very consistent with to how just We of create customer customer commercial into the talk market it’s but going is success in of this me, and partnerships done what any To aren’t renewal to our with any both of we’ve intimate agreement, to go contracts. our for long-term parties. of example the renewals and prior marked

like Container do Food renewed have It our to for typically contract. would that excited a we’re term, So, business. we is in just long

Mark Wilde

just then last one me. And one for Right.

inventory see more swings inventory you Custom And those that Containers. when of going distribution multistep on have effect in you in complicated that making over amount that sharper? sort impact and is business, any any through of market, – does on fair I move in in distributors. terms a the or brokers of have – volume does these swings that wondered, just Just more know I I

Adam Greenlee

Sure.

someone think you is it’s When supply that else certainly a that be inherently chain, inventory bit have has little work muted, impact. I an to bring but to it you going there more through. into

So there’s where – got part it’s business. providing of customers through a set they’re an real relationships We’ve end solutions value to We think of our distribution. good at important a the But time to bit we’re on day. these for does hygiene a the working more resolve issues of inventory create home the that through clarity, it some of little particularly products. and

Mark Wilde

I’ll it Adam. Okay, very good. Thanks, turn over.

Adam Greenlee

Thank you.

Operator

our Viswanathan question with RBC from comes next Markets. And Arun Capital

Arun Viswanathan

Thanks for taking my Apologies for that. Yes. question.

period So, we guess, and I pack, been we that wetter just fruit about vegetable go you I kind reports What the QX and if earlier of guess, there’s year. some off, first are the think of I into now? guess weather right in as Thanks. expecting,

Adam Greenlee

we Arun, Hey, do pack. expect a good

more normalized as So, we expecting pack. came into the were a we year,

up QX quite strong year, part, XX% as pack large reminder, Just last Metal our year. were in last volumes in the Containers as vegetable was a

good a We’re anticipating very pack.

volumes our Containers. So reflect Metal in that

our And good. reasonable to That’s Upper at in to is Pack our P particular pack business. West [ph] The be sort core we’re And so off good, a very are on overall of looks Coast levels Corn us. percent start. of record very veg tomatoes be remember, for is far, a good most to Midwest. of expected products, the our

are Midwest little then majority, of West irrigated. some not of all, a that the our if tomato working actually the Coast, that crops on was of XXX-degree through the out the vast week. last of bit weather range So And

we’re in issue it while irrigation an crop. of able our the for that is water, get to So California,

good sit the back. about we as here feeling So, today vegetable and quarter we’re into month the one pretty

Arun Viswanathan

last negative. resin year, for which about I that. Thanks And then costs, just Okay. definitely if ask could a we’re

recovery? We margin about polyethylene gap, How though. recently your we seen spot and if is and some there in any, exposure have there Thanks. rolling potential price/cost should over think

Adam Greenlee

Sure.

really resin, it’s the as it’s So And for been you first the of volatile year. six us, months said, inflationary. for been

So, for to costs really the customers. on mechanisms and good market we those to passing have

got about businesses, our across go lot. mechanisms. They’ve talked a pass-through custom You containers very we tight

resin, mix of moves more Dispensing exposure. business the little pass-through to limited Closures pretty is and exposure a mechanisms, a more their has So of of Specialty

of for for now what balance take it year, right flat forecast hold we – know what year. the we Our essentially resin we and about have the the we

So that our We’ve forecasting of as Bob of the resin alluded And as of couple out more got to, of forward not plays us. the you are pretty There’s for if I sit think indices probably a essentially indices the sure forecasting it indices this million to at I’m at just million a sort there’s point. we the favorability some create challenges go into we here to built I’ll our hurricane a the hurricane probably correct. upside chain supply couple season. are way to forecast. forecast of if remind are start

I think really resin this with we are point. where at that’s So,

Arun Viswanathan

Thanks.

Operator

And will Wells Gabe our Fargo. with Hajde come next from question

Gabe Hajde

area. took about a are of like that and was this the of revisit would if had advocate Dispensing acquired like you know diversified component, pandemic, that things feels summarize offset piggyback of of Adam, good of a you feel it maybe But we’ve Bob, a that beverage during you and innovation fact what are hey, kind there’s maintain business? surface kind So proactive bit that? mean we little not said, season appreciating then you loaded should And slowdown, of kind portfolio cetera, introductions, to question. like some of XXXX, – your And – a customers guys for appreciate you for response, in We cleaners, for when got do your the but levels again, cosmetic my fragrance right? beauty and discretionary there Again, food et I was of summary piece be here. I cost-out fairly some it lot play product of morning. discretionary will from in selling at do But a to more the to items be within profit into new product and was pandemic George $XXX that holiday feeling a the fine. there also, Adam, downturn? double maybe I there hit. I asking. the I and initiatives, I I million taking segment Thanks which appreciate, the How about are mean, switch. launches be pipeline, the will wanted of locked go that the flash off and think kind asleep guys

Adam Greenlee

Yes. done job end of there, that's of I’ll a And Silgan. all a of start driving We’ve businesses. cost heck out three the across Gabe. hallmark of at a our

operate We improvement low find facilities and cost operations. do operators. ways to throughout do continuous are We provide our good we

of changed. none that's So

I'll innovation commentary pipeline. focus maybe think, really our point I in on was the your

Closures Specialty our As it's here been. for innovation I strong as sit pipeline Dispensing ever and as is today,

teams So the just terrific we in it of got clarity, place. it that beverage food, fragrance, be whether markets winning we really in whether are in, we've for all participate be

attributes is innovation for the pipeline to are and customers favorable the market. the attributes recognizing we've Our full. that our And products bring that got we

And can that is economic that pandemic, think impacted what happens diversified I portfolio to that just very we trying portfolio I our the what itself. Specialty us. Dispensing you're was of also It hypothetically a that, it like part one withstand comes play would negatively. the that? but Closure happened a So have give example one by with impacted that business. another got favorable the something think your diversified of and to was uncertainty portfolio probably a segment games of a of We right, impact at feel side segment during pandemic, speaks will we've I next and balanced any bunch for

Gabe Hajde

I I sounds like, winning the And is you're got marketplace. No. looking in are, what sounds I like of it business it guys which for, was some that. kind I you appreciate mean,

it. could business, food conflict The big hand color appreciate they're – one on quickly, I but, know a cans second if in little bit there's, I hand, not under pressure, can this obviously there It's Europe very again, they're at comment say, we and a over On you question the all. maybe does curious either any can, better. just the food consumer there? ongoing hey,

Adam Greenlee

states did of load the we in we cans quite particular here the event consumer the food that the and Europe really have They in in have America. done this consumer in same here have because year. broadly they and America. not business European pantries level that than in has European well the say our different I'd our, is mean, speaking have a North North little loading pantry I to Yeah. don't

to from been see our So multiple happened and categories, favorable in and the obviously again, as a in this is volume for outside that supply to across pet standpoint, market business – And The pack, cans vegetable XXXX. volume our been European we're Russia seeing can demand the food that's humanitarian some of to us. from there consistent very negative of has business inventory products, for continuing for good it's year including a continuing that vegetable what's Russia food very growing us the we're impact a market, essential but in year. particularly of piece

Gabe Hajde

you Thank luck. good And guys.

Operator

Thank our with question Ghansham Panjabi Baird. And from next will come you.

Matt Krueger

significant elasticity and Hi, that actually through case on businesses? how touch wanted the for of seen good everyone. consumer that just various Matt of business far? the really your focus across forward. is I might price morning, on Ghansham. in so This flowing that sitting impact How some your increases or are might businesses And elasticity kind in have impact the consumer to customer moving any be across on you

Adam Greenlee

Great Matt. question,

Closure impact way with segment, and it's its I the hasn't now. into of activity current I real data. about some think And our Dispensing consumer very our made of some starting consumers and think quite inflation, Specialty think, see you I that of commentary right the

to was So relates what is consumer products. our tell in I QX resilient you as the really it can

base did CPGs that the their are supply products inflation quite that to our us in incurred they've through So an passing from the well onto It's environment. inflationary clear consumers.

I again, Metal over Containers a move continue than and Metal our they and to segment the where pre-pandemic. business You very one would the that's resilient for it's rate higher procure say, to consumers us Containers a did at

really real and portfolio are done to that's significant our a quite at has I you that's packaging, think, segment inflationary dollars beverage as level. this through that think business, of as I and do retail got portion custom And tighter, feeling think beverage I and well packaging. there little there's the as food that well we've containers, food in get about benefit there that good food the the we're a a So our get And environment. overall business third

has from from to to inventory correction current home, know Again, the of that at discretionary a from up them a little yet. seems that spending we retail now the talked hygiene a beverage. that I don't garden perspective, just moving and think that about right bit I consumer those caught and be a dollars and food just information more those that's the towards that data putting are

Matt Krueger

wanted compare a I the we it really first on on for it. year? versus Got already, throughout half And saw into touched as in businesses? could roll that like, in does We maybe headwind level we tailwind of kind That's the what's might then half situation raw of little your the scenarios second the move if makes to what a That of And across the look year just the helpful. material price across likely you price costs does business focus versus resin sense. like lot raw your what beginning that but your budgeted look and of cost overall? then, bit. XXXX How material the inflation

Adam Greenlee

give a I anything Bob here. shot I'll miss Well, with that so and help maybe can me

think Metal We in So, segment. Container you raw about talked about our materials resin already.

of essentially Metal into the saying Container come So roughly in had cost steel, doubled. year we segment the the

in to customers. consumer. passed high-XX%, for you fight been pass that mitigate of We as going customers has to are those offset which know, on But the to through say the crazy and I unfortunately mechanisms they varying like and bullet very our work increases we brunt that, think I'll inflation. our onto proof, year-over-year. of low-XX% settle pass have, increase the well kind And that's to

roughly in with expectation been budget of change, was. line our And aluminum lot in think I there perspective, a an hasn't So staying from what whole Containers. that's Metal

some year. have on come of pressure that down aluminum the certainly through commodities, seen itself course the has You on ingot

So many again, with for us, that's almost pass-through our a cases. customers direct in

I'll what think raw we material perspective. pause benefit say, what prepared cost passing through experience pretty the we so repeat his as that, said tightly in far a as our want is remarks. I connected Bob price And what to and to from as customers we're

We the cost a has fantastic have bottom benefited operational operation for the do efficient so this done standpoint, of inefficiencies a from last products of And variety a really to to system. that's our continue where year. supplying out with driving three getting year back year-to-date our an and of the across all of everyone that's more our job of all line benefit businesses, balance year, cost the we'll

Bob Lewis

that cost fixed through components It's there. I scale of of the contract our price business add look, part a we little get under very pass-throughs, a which a where story is favorability because other consistent purchase that, obviously in volume enjoy that's benefit Matt, long-term on They kind And right? have different to us we they business our the a little Yeah, touched specific do cost. is the of of big system, the reason. the those and bit would thing metal that to more contractual We that that our of and power. not leverage allows Adam contracted for benefit are

the on we're from are are non-contract it it, sure we in inflation, capturing on so particularly businesses And that of making that parts the our of perspective business

Matt Krueger

Dispensing Custom impact, is tailwind there's any added resin around would for it on of price basically Is be Containers, cost there? centered top the – nothing and basically the

Adam Greenlee

price and as have Well, is similar Closures. of able Metal or to. Specialty the into side Bob those our and in Dispensing that metal what our do where Dispensing we've pockets a that pass very in I just recovered Container we have again, business. that were throughs to closures certain portion spots to, just pricing as component there got Closures of contract, And there's has think, well We a is of long-term fits on that non and some described alluded business power non-contract market we segment Specialty that we

Matt Krueger

you. Thank helpful. That's great. Okay,

Operator

next question from Kyle come our And White Deutsche will Bank. with

Kyle White

morning. good taking my Thanks question. Hey, for

wanted Just focus Metal Containers and on volumes to the there.

quite I declines year, turning bit targeted, You think, a below digit that. and single initially it's this mid

last since unchanged relative to quarter you levels. pre-pandemic remain point to to relatively seems commentary volumes when Your

will to this that of maybe So target be what's understand trying for better year, think you and target? to have a then kind difference you relative just what initial volumes the do new

Adam Greenlee

Sure.

same Containers roughly about feel we that into did the coming I think Metal the year. we

maybe we had the pre-buy was obviously, into our there. factored about impact and year think two the known So things well. One, about that as to on guidance

installed and who think our have the that had materials. food had and invested customers packaging supply the first maybe learning side ingredients in capacity, year, through we’ve additional is labor of in the half of other capacity the struggle additional I to Kyle, pet with that of continue who

ready are to go. cans Our

stockouts if The Our level. with to capacity communicate more they’re when more is reality they more. could pet and they sell continued us volume. ready able the that there for in to still fill that we are is they retail sell them food And could at believe

the find our So ingredients pet simply we assumption first greater customers a security had been what half materials. and volume other than in food and packaging because the by has for they delivered growth cannot labor

quarter So for QX year? how strong XXXX. that was going always very Our a QX be to the does volumes we knew full translate into volume

think perspective. So pack a that that to is be really good from nothing’s changed pack. We going

that pricing the we’re the was we I the for. XXXX, in higher they’ve food see with on what compared prior in next year into to through for certainly volume were back kind points anticipation And third itself quarters, we then as year. highest to fourth invested happens customer’s our expecting resolve wait the be into third And it’ll we go we’ve the that and quarter. and coming being that this, but think out second right fully mentioned shipment the planning We’ll of as of half against execute we’re resolved will we history a level of steel the into mid the our down plays our that go ability Kyle, course As year, because now, how had of year the beyond lack quarter. that just digits pet if company single probably couple of

Kyle White

lower related Got quarter. and you quick you to on closure it? two reasoning contract, margin of a the on the that then the just up typically, Containers, work the next on and for kind new, savings the follow-ups your contract life small the present Can way then during cost just that and headwind you new, the had Metal you it. year? historically And it a I And on about point renewal start as of through not any any productivity contract? does talk think

Bob Lewis

previously to about particular in that reduction plant a closure restructuring migrate filling in the take in one and the in other not back one capacity I’ll footprint continued of the kind to new, anything contract. It’s is had can our comment talked a Yes, their not Yes. we that’s have rationalization what’s geographies. Customers on time. then facility. around did of totality. to Adam a of the announce a and lion’s That’s been locations for really plants right? That’s we long that

capacity So to align ourselves where move are this if you will customers of with of just is filling. sort a

orbit as avoid kind we freight structure. years of ago, incidents we experienced and a out the where So to with were of few that cost

some there was of plant. the seasonality. particular layoffs So that out, plant, somewhere along Sacramento line, And That just the that’s year nothing routine than you more that. probably that noticed given year just in seasonality the then happens and in

Adam Greenlee

the And over contract then just Kyle, typical a to contract long-term renewal, it’s renewal.

as time, and customer the we over margin a about typically then make negotiation. during kind little that’s with operational gain improvements, of talked bit of as contract we’ve the and revisited operational improvements So through time over the

renewal. contract very a just typical So

Kyle White

Sounds Appreciate it. good.

Operator

Daniel with Jefferies. question from our And will Rizzo come next

Daniel Rizzo

you me – in fitting about your on effect in. you of thought would everyone. tell your what Europe of on energy be the customers? it production you for Could have Hi, Thank production the or could

Adam Greenlee

It’s a Dan. question, good

we believe we we manufacture again, in of beverage Europe, of our products A essential that humanitarian food Europe. As lot at in kind that products. we look our manufacture products, products are products

of European facilities, on we focused maintaining on specialty our So closure throughout operations dispensing some are side that There particularly and very the are about the feel our good community. fragrance.

would if end the mean as about to happy in we’ll and customers impact from we XXXX. don’t through would how are through of what just go where our conversations. And report now, this continue the sensitivity we We those our to energy really talk to to supply talking good related something at be plans we’ll year customers work we point, But any We have have there’s and mitigate plans the to we it about then. XXXX, of spent a feel of lot time about with to that. forward tighten those

Daniel Rizzo

then if capacity food was is Thank is second you my color. what expansions. and your mentioned and And cans what question, just just great. That’s a target? for in wondering current utilization your you there’s or capacity I goal the

Adam Greenlee

fully about, were Well, operating we if But I were an we the efficient utilized through the say think were where pandemic, in we again, you pandemic. manner. through would not

So our we pride necessarily kind internal business, not right were next making while and great of cans were given And our our customers. were the plant dialogue the to in plant, demands in greater, here, a volumes right take customer. we we is the making – a the can and right to next on which different

facilities, to very So run we’re our we the efficient. want way

to the talk was facility Bob utilized. But almost about we about. consumers. its closure have capacity of just calendar reach our We’re to typically would of incremental that that on making the ways quite year that volume travel There highly lion to is point the our shoulders a

very a normal under option So circumstances. we that’s don’t just think viable

So very plants, the to we’re want efficient. way we our run

give want number facilities it’s and each of don’t one businesses. utilization each We’re by our our highly utilized. one because different of to you I

most it’s and food tell just I’ll you, the So industry, going I’m worldwide. efficient the can manufacturing footprint say in to

Bob Lewis

forms, think of two against us run high those those our And I where where the the to Yes. we’ve have historically is also in different can right? which to efficiency you as been staffing very And want to sort Dan, plants, plants in been, of relatively get the think that’s rates important. utilization Adam gains said, way we allows rates about plants.

we at are that right? of way pandemic, ran short for albeit gave that their this most to really So least efficient the differential at – us sustainable sustainable, them getting us we changes XX During time, period plants that’s a a for is point. utilization But months. shift the were not the rate ability we had where of back

Daniel Rizzo

Thank Okay. much. very you

Operator

with our question from next And [ph] Securities. Lorenzo will Truist Alex come

Unidentified Analyst

Congrats stuff. Great Adam. Hey Bob. quarter. on Hey the

forward Looking any actually have were time. just answered, more I to questions don’t so this more, my at all

Adam Greenlee

you. Thank Great.

Bob Lewis

All right. Great. Thanks, Alex.

Operator

come question of And will next America. Staphos Bank from George our with

George Staphos

for guys. the follow Thanks on. Hi taking

time XXXX. to a to range The metal on last that quarter third So you EBIT was comment. had in be the was fair can $XXX we extent XXXX, of in or that the million excess

one the a volumes mix. hand In to very be driven, lower down on off it’s record. be going packed is be of to XQ, which Now tends will

after you over that be How where few quarter to business efficient get that about think However, can you during said, in you’re metal we haven’t million have Is if the operationally. where more going back should been this you $XXX comment? you a XQ? a years range

Adam Greenlee

giving are you maybe window we And it’s was question. very level. whether great volume is operating a it’s or above what is pre below, instead it think you numbers, of a The a than greater that Well, exact I into time. efficient XX% pandemic tell million I of $XXX

thinking a just So good about would say, we’re I George, quarter. really third

totality the versus at up prior you If for midpoint the guidance, look our at the is of our XX% year record. EPS QX

going volume that’s to on leverage metal container the business come cost our a and big base. the of And from chunk of so that fixed

George Staphos

related expectations and us something again on, European would’ve there. maybe into to don’t maybe much ultimately metal just relative guess, posterity, investigation discussion the how to appreciate but it? going too your to been really into the background remind thoughts up I Okay. want the and on and for wound you what get you We settlement the evolution could commission the

Bob Lewis

around with period was This Bob. particular. BPA that on prior It coincides [ph] group that, deals I'll back of essentially volume. is in the a some this work with George, employee doing to And Yes, where non-intent information everybody into that Germany the we of dates accused one obviously sharing time well of remind were amongst sales of trade periods. a lot kind in

desire It come activity to for German was it was there protect convert had trying in make So of Commission the years that there. we a able the of to find fruition, sort of that industry-wide authorities five for based sure didn't move at and the applied industry on as to years proceeding. got we – picked leniency then the German to number Be we it volume spend and ultimately money may, can. some time, food raised the believe there. we off spending just Ultimately, our And was fair didn't by Germany. and European we up that felt plus, there dropped and it best Fast it bit ultimately, knew forward on the on. to much shoe a Commission get everything an it

the worry settlement. get there What ultimately, the obviously, And because differential to there. think we that's didn't is was And why so leniency didn't that that's transpired, the about. we much

George Staphos

into Last obviously, have that, into thing, going manage year. I inflation on And half understandably a to lot the questions need against been you'll to Understood. that. Bob. next appreciate there of you second

structure, can Metal. labor side, can nonetheless, the how in in and specific raw talk of is into managing different about that bit the approaching that fixed quarter. terms particular talk next ways On might look portion any of items structure? in inflation your a the good against maybe the Thanks you or if just the luck in not are in seeing or But we're not line costs you And and biggest of playbook your it of cost And year? you in certainly XXXX? same to have it's that some cost the little fixed in

Bob Lewis

passed probably the on the it energy basis The on pass through. through lagged to the and is other wage inflationary be than George. of obviously, part – gets going item a perhaps contractually, index. we that Again, line Sure, as biggest

of recovery the least the business. there's coming, contractual in at So part

are generally, it I we to going pass enough everyone large it's think and have else to through. that

element just you is around so obviously, world. inflationary that just feel – the So another what's magnitude – the unfortunately, inflation. to consumer happening going the order can consequence of it's of look it's sizable It's of ultimately in and see

is to combined again sizable So energy to fairly going a next year. pass-through that add up with

George Staphos

through, And handle? where you how it's not passed

Bob Lewis

teams Yes. have particular, the have the been discipline right and customer the think Look, to is of we that, that I of through right on laser-focused back this all don't year comes the sort it where that in bearing brunt now. contracts, of

is sort as is, We understands think, to along has when everybody look, let's as get face party are of passed for high it it that through. it to I big because it, it's passing one And inflation too absorb.

George Staphos

Understood. Thank you, you, Bob. guys. Thank

Bob Lewis

Hey, Look, quarter. back to QX. to we and George, in I that back at go come question about I'll and Obviously, I'll that your we just QX year, some had last other – close were inefficiencies benchmark. think look pretty

thinking about million. that you're this everything this expecting is QX that in year, could break $XXX think well – we're a within I given be balance quarter the So that to could

George Staphos

That's what I was getting at. I appreciate it. Thanks guys.

Operator

Josephson Adam KeyBanc. our from And come next question with will

Adam Josephson

much or up. for This our is Adam very Thanks taking Bob. for follow

which you need seems range. lot to the you where we're Obviously, in, in leverage. carry about than want is up It and allocation you your within the target three your economic for acquisitions, like et the be that, are potential smacked how year environment But can more of a capital about on if the you'll end times, Just middle thinking to. large cetera? just given range, repurchases you leverage

Bob Lewis

Adam. we'll is, add this the would thinking that looking improves end. terms into we're Yes. that from right year, year. free had it $XXX where flow of cash I obviously, think next What Good forward Look, in I question, you million to

you headed the the end towards it of think if be now, will of about from – that's so XX sort low And range. months

that then handle flexibility start and perfect us, that leverage, the table. I it taken generation think does that us with sure. the because gives of I rattle If to can that for agree its what the – with So if you obviously, flow markets for off we've cash this really business, leverage

it. I we M&A do on would the still a So keen right think and we transaction, keep for the eye markets

think through our we so some got capacity bank of that the incremental facility. is to in our have quiver, arrows that we've I one other speak,

transaction which have to I'm we large markets, little in credit do absolutely go right deal. way. now for necessarily handle small don't But a we could that are do the we a order So disruptive tuck-ins, suggesting bit could very that. to a to modest not to

we'll market where of it continue sort abreast pull think to of any an of us keep share there the the consider. so And it as then I for M&A those ourselves the a So do capital, what's shareholder certainly to out I for So versus activities, the to speak? think So at and sense. for right? return trigger makes to us of for benchmark look in ultimately, acquisition we repurchases that's

– you saw that the in the you of quarter, $XXX the some I'll statements, sort in during given worth reset we bought million from probably can the of financial of of authorization. we $XX that see and the just You it previous shares. we more stock dislocation a saw about got back given up Board tell million to that's recently, for a reauthorization

utilization that of XX% of that's authorization. about So

grow capital think I to preference around allocation. which very levers and pull portfolio. the we – ways continue we try to opportunistic be Obviously, about the will our to continue is we how to So find

Adam Josephson

Bob. And will. Investor you to stock, years trying your I call, this, last one think, you is ago, the I as combat but the your yourselves I a recession Day mentioned last – three which really my were appreciate on Adam, for of perception just last that, if

here And so a it heading we're we recession. looks are, like into now

So into obviously, there of But recession. are merits I the have to a for it, company. I just owning environment. in you necessarily not type that's investors you going Silgan want perception own of that know the

what the company reality think what you of this investor So Adam, perhaps think point you perception of is? versus do the the at

Adam Greenlee

question. Great

I second of standpoint Metal from that say, do think profit my even – perspective, investors questions and would what in a on from a I today's largest lot call, about business our Containers.

very perception nature. that, defensive business and still and there is business I just a So think a can by we its are a

Our can can business we is wonderful. our It's powerhouse, cash-generating business. a and love

to competitively best But us. and We've for exciting trying we've business the lower we the the of actually been when to a deliver and the that faster last, of growing it's at we're at I that rate. growth years categories well. delivered. other point and think to that it, both GDP, provide have we believe at incredibly we kind And translates than categories and strong beverage. very beyond think for is did you advantaged in provided. actually And is and commercial business, our much perspective, a We've what seven proud to evolution backwards more product today our think to an message like a growth the a worlds. growth we got And years, some Adam, do have stable you ago. the than we would that's we you I the products business the that, of provide aspects us, we're and core done we've our growing. we as the delivered making when growing markets forward those seven five call talk that think take a itself got teams to portfolio five in performance positioned what in investor we've that's about then beyond look go growth and grow And to to our And rate what that performance that over of And we're are blend, market that or just we're the the market say relationships, faster when from power on that the operational have it's rate focused about categories. that food results and I

products the to about have excited we that market portfolio we're we day. every and So take that the

Adam Josephson

Thanks of Best Adam. much luck. so Absolutely.

Adam Greenlee

you. Thank

Operator

over the closing now question-and-answer additional any turn conference does Thank you. back I'll session. remarks. That conclude the you to for or

Adam Greenlee

and everyone, October. look results to late Silgan, discussing thanks, forward and Justin, for our in interest QX your we you, Thank in

Operator

excellent an your day. today's for Thank Have thank you. participation. you That conference. does do We conclude

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