Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the Silgan Holdings First Quarter 2023 Earnings Call. Today's call is being recorded.

I would now like to turn the conference over to Alex Hutter, Vice President, Investor Relations. Please go ahead.

Alex Hutter

Thank you, and good morning.

call EVP, Adam and Corporate SVP, and the CEO; President Kim on CFO Lewis, Bob Development Treasurer. me today Greenlee, are and Ulmer, Joining and Administration;

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

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

let that, With Adam. to turn over me it

Adam Greenlee

Ulmer welcome Thank to congratulating I'd to like start everyone today's Earnings their the Silgan's company. First Kim Bob you, we'd by Call. Alex, of XXXX new roles like and and call at Lewis on to Quarter both

at the culture look performance and is people, our proud rewarding am of continued hallmarks Silgan incredibly of their successes their to I accomplishments of forward of and the One Silgan. the

of Once back the pandemic strong as good to moving our strong generated through quarter to the XXXX. momentum quarter performance. the performance leverage first we year continue Now the with in and the again, operating businesses of each and second advance enter

shareholders. highly to significant markets remain and focused our we and continues the our drive creation businesses Our in which executing for value strategic outperformance near-term long-term on our priorities, serve

in Overall, staple believe in operations from market our continue set positioning, apart our challenges intimacy end the and with competition. and that navigating our to did teams first our alongside the expertise consumer agility Our customers, the excellent markets, combined market our customer us resilient job again we quarter. an

Specialty solid and for foreign the remain portfolio currency. early since headwinds as we we evolution results our XXXX advancing we to the year the with perform first segment and products, quarter XXXX quarter, quarter. In momentum despite and strategic confident beyond. business in saw Dispensing envisioned, exited prospects delivered we the as Closures significant and improving The in were continues volumes the With and Dispensing on building in our from the resin our

and first marketplace, that Our management growth products posting the high-end in as products in quarter many to first and improvement for to in the fragrance year-over-year from headwinds the quarter markets end experienced double-digit with exited trend inventory the see beauty volume XXXX in win the the accelerating of continue Dispensing quarter. had began we

impact impacts second and to positive beverage customer by in April segment these the expecting are first strong, volumes of trends are quarter. for food the for the While orders quarter, timing in we in closures offset and the were positively

Our and EBIT. execute metal posting business continues containers extremely adjusted to well, record net sales

of the now our pandemic is With driving growth performance. platform, the combined efficient with impact volume operating organic our behind us,

volumes for markets behind to result, pet containers mid-single And challenges in our The customers digits experienced in pet XXXX several appear as in up be the our food were largely us. quarter. food a that

with Our early performance our vegetable indications and for to the the in drive are segment pack operating strong profit quarter improvement in consistent the preliminary continued our expectations.

did well year in unanticipated hurdles quarter. in awards decision to contract not as that segment, to not our reinvestment the in to meet the actions timing of resin mismatch commercialization renew of take a Containers of from mitigate continue rapidly as rising In headwinds the impact the new costs Custom teams the our business our

of operating second quarter we've with winding and to second activities impact we the the expecting are shipments recovered cost quarter items also and down nonrenewal forward, That said, as we as XXXX. we're in associated comparisons the look these

The XXXX continue also is to second experience of resin higher quarter to expected costs.

is business based evident positioned new Therefore, levels. which profit will to slightly below as be Custom unique customer-focused continues first we believe We more XXXX. to on be well our model, quarter win Containers in remains business expected the operating second in this quarter market and exit

Overall, a remainder very in the feel XXXX we're off year. to outlook confident our for strong in and the start of

recognize I I financial additional and provide earnings the it to the founders, legacy want of our lasting over moment Before cover X our to our Phil for and Silver the of take turn around Greg estimates, to Kim specifics to color a results quarter to and Oregon. impact

and focused XX on that markets vision purpose Phil a winning ago competing to do. they years company company with Greg the So any best served a in being at and by started create clear unlike other what and this purely was the

Silgan the and Proving with success has and of contributions behalf a entire wisdom thank On development. leader to you principles that creating around for embrace grown company sales devotion industry XX,XXX our $X.X personal to billion our nearly Silgan a customers global packaging to special lifelong of all shareholders, in envisioned. the team, world become enduring who your and Greg success and for your and Phil the vision, of such XXXX the the its for employees

Silgan. We be the future and incredibly to of proud are past, all present part honored of and

our quarter take through and that, and will the With full for financials year. for Kim quarter estimates second you the the

Kim Ulmer

Thank you, Adam.

first $X.X the currency first to the foreign were quarter billion. per Sales sales for a earnings of approximately continued quarter sales a Russia in level the quarter execute were and XXXX of excluding X% share. quarter, diluted XXXX. of comparable of quarter adjusted the in of and headwind strong and high business approximately sales the $X.X adjusted the prior first quarter to first of in highlighted, Net delivering Adam XXXX, XXXX with year associated million EBIT As first at

volumes segment in Custom First by offset volumes EBIT Specialty Dispensing in adjusted performance Specialty in quarter lower Total on driven EBIT for the strong Metal Container increased basis and and which EBIT the XXXX Closures Containers, by Dispensing X% million over offsetting sales expected $XXX.X Metal adjusted was the adjusted was and segment. a higher Closures segments. and with quarter lower year-over-year the Custom Container of Container in

share net declined headwind per and the nonoperating $X.XX recover approximately interest the half first of currency headwinds quarter, the lag costs resin. foreign second would earnings to XXXX with from quarter $X.XX Adjusted of pass-through higher which driving diluted from to the expect of expense income and in $X.XX resin of we in related

percentage. Excluding have operating our these higher adjusted driven would strong double-digit items, a by EPS performance

and Turning Russia to excluding a versus the our Closures impact X% the were sales foreign to Specialty year, segment and headwind from comparable Dispensing segments. a from currency year. prior prior X%

in lower by volume/mix. improvement X% a offset was As price

Closures a versus million year lower the year-over-year management year-over-year benefit prior inventory from program. from and of with changes XXXX resulting Specialty adjusted of trends the costs comparisons EBIT an as prior year quarter volume mix period, First lagged $XX.X pass-through cost comparative result difficult decreased Dispensing and and the but improving resin

improved Volume/mix the quarter dispensing in the products latter throughout the our with strengthening in of growth quarter. part

costs the not our segment delivered offset expectations, trend second more overshadowed quarter Closures customer resin in was the first food expecting and normal timing during operating did in and the quarter While in the foreign to from markets to the Specialty and of the trend orders quarter, higher revert of a beverage by this unfavorable but performance the strong Relative Dispensing are currency. headwinds significant those products XXXX. we to

the vegetable contain longer in second our later the performance grew expect growth excluding contractual Metal and associated impact costs resin in are expected with of and was impact driven in segment currency, our of contracts our Dispensing team's likely demand from with and recovering Specialty other Closures to pet a segment, lag impacts Russia this the for pass-through foreign but In abate. results quarter generally ultimately will resin to weigh quarter, by food, in exceptional year the businesses, year Containers the As quarter. as our strong on costs we the prior sales continue X% in X%, containers, volume

adjusted incremental strong business the operating single-digit The While margins. inflation positioned XX% quarter and continued the the quarters, low smaller year one the prior mid-single-digit started cost deliver is growth XXXX. from leverage strong volumes contractually our as quarter to recover EBIT year volume EBIT and growth is and first the nearly to of seasonally business higher well increased adjusted of drove for

Containers a Custom foreign currency business coupled partially lower and the pace sales which, prior contractual these but year-over-year segment by lower first of costs lower of year XX% EBIT is our operational with XX% the are and nonrenewal line volumes adjusted in quarter. impacted Despite to piece offset of resin year-over-year able a Joe of XXXX, impact on the volumes challenges, cost unfavorable In performance, are first timing below increases in the the through business top quarter translation of resin the in drove basis period.

XXXX, costs the first year headwind the the of expecting the as on we continue new in a adjusted second EBIT expect lower In exited We are from weigh year. but recover second offset half in resin to basis business in half of commercialize business later sales we back to the to quarter, in the on we the year-over-year of the half XXXX.

also in result, slightly second Custom due As are in adjusted pass-through expecting part the we of quarter the cost lag be XXXX quarter resin first to of a the impact below levels escalation. Containers will EBIT

basis. in As the expect to a the on year-over-year the year, each volume of we we improve into second half sequential trend move quarter

the are quarter range we second $X.XX net income ahead, adjusted XXXX. in of to per $X.XX the of diluted share Looking in estimating

lag We from a for share decline of the record per second the first And $X.XX associated quarter year-over-year the share coupled the higher $X.XX resin the continued of from of pass-through $X.XX in quarter, the expense costs impact are XXXX. $X.XX and interest this all expecting of with accounts higher Russia. nearly per of impact with

than EBIT prior adjusted year Specialty year Metal Closures higher in On a to Containers, Custom segment year the to prior prior in and comparable the the level, expected lower Containers. be Dispensing in is than and

single expect full the adjusted increase prior EBIT we year. to mid- total to continue high by to compared digits XXXX, the as to year For

in expect press XX% adjusted our As interest are the share of net be $X.XX of a a which to of release. per we XX%. These share our expense, adjustments to million $X.XX, year-over-year confirming $X.XX for of outlined income to which rate approximately continue headwind to exclude C a Table approximately of $XXX diluted result, we and from impact certain per outlook tax includes estimates

our million earnings of current our confirming concludes outlook and for XXXX, in and CapEx flow free we we'll of approximately also XXXX. approximately call our $XXX are for million of prepared on remarks, the estimate Based cash open That questions. $XXX

would kindly session. question-and-answer the provide the you directions for Operator,

Operator

take of from America. question George We'll [Operator our first with Instructions] Staphos Bank

George Staphos

X queue. guess it over, go to to try questions to and turn or it keep I X I'll back

for correctly, you you for January DSC and you Metal you to these bit you a are expect strength? the would have of expected, dig would say, XQ. earnings couple per little Containers segment at you really I if if expected us be Custom Relative or for where a heard particular, into on can had you And gave your to months the more Or basis, obviously in and whenever guidance gave might we ago? So seeing X flat year, in right guide where Kim, you underperformance, where be have to quarter. you share weakness up what all? earnings, a are follow-ons. be be in lower then And and February, mentioned seeing to the I on relative

Adam Greenlee

really, with -- strong any Adam. it's all the performance Kim in and first about feel us, I'll additional our let it X for and Bob expectations. was in I'll a we quarter, segments jump good operational versus and in really George, Maybe But come comments. just

tough year each and comp segment, So around Dispensing that obviously previous comments. when reasons versus outlined prior Kim for operating a Closures, had Specialty the her go you the it's in

bit it and as garden, as what through fairness expectations our was Containers is year. of inventory is And expectations. distribution, side into then the really, sat maybe we through working the to really, of little well, just close the et expected bottle just through cetera. just above a here line with we still coming that's business very Containers in some But Metal that's our Custom probably slightly right our lawn And behind. and

So about good we're things. feeling pretty

with line As we at I QX look our right in think expectations. guide, it's our really

George, with closures, and history start Specialty food and of We food lot really, and mentioned our a beverage I'll first cetera, looks quarter of et of really again. So Dispensing book beverage like timing XXXX those seen. filling because order ready-to-drink drinks, second back in for early season quarter, that's products the and the sports what does the teas, iced we've to start

for up food expecting be to still beverage closures we're the So and year.

or had just we line real through containers our entire our look, it's been growth We've vegetables. with much for driving talking we've the We've maybe than Containers, seen X I'll really quick, with George. pet timing maybe right perspective. good, the are as in seen about protein in that in it's finish years more pandemic normal what now What and So Metal segments second X segment. for a growing for food Metal seen category markets the from expectations. well. quarter the strong business soup volumes in stability

So right roughly Metal is line. Containers in

You get year the the ago, I Containers, chose renew one specifically to George, because finish and the business we to Custom that in wanted a have not we XXXX. it's did on,

exit that for. some requirements only we we QX the reimbursed last did not year, contract, associated that inventory. with normal did costs the the have have of So at fully we through volume end did sell were of were the We

look as lot So of as should we think days QX profit QX ago, QX. did the profit XX at a look we the we XX, now, in XX, like

now little that's In of resin a got headwind, really addition, bit difference Custom we've Containers. in the

So Russia comparison year-over-year as in businesses was today, our known this line. roughly are is here really think we known. performing Interest was I well. expense The and sit

maybe George in. think I back So

George Staphos

what Yes. Maybe you appreciate No, just said. to it, I Adam. follow-on a just

So earnings that your Specialty in Dispensing outlook. a guiding versus volume took yet up flat XQ you Closures, in should I and be XQ sort you're comments of

performing operating you that's like? a where if, the if is fact, are as both So you the will, correct, business in is statement, lost if then the those of correct leverage

if And come quickly, down XQ your is to the half? how of it risk you the and in through what can then XQ and in get And why resin effect you resin just go expect was back back? guidance doesn't much a

Adam Greenlee

Thanks, Okay. George.

the we sprayers. We as of market garden be the are So with second the again, to volumes Number really business. quarter. trigger a home kind really, and our the fragrance clear, We've the and want through a and Dispensing And saw talked the there. quarter. recover care in Certainly the volumes inventory couple of lawn markets side quarter first on the in I one, Dispensing fully things lot really sequential strong in QX, trigger enter improvement about sprayers. and business. our correction of we beauty

have closure time business now we've as of and strong food volume then we And typically got would year. in our beverage this

good then the different, Volume And what's is really you you've think in So of resin. got that it's about right. about both sides business.

No So escalation of it the timing secret. was and the pace resin through the first quarter.

the was The creates in highest in us longest have for this than Silgan increase again, March. the businesses. lag where, slightly other longer lag the of business a we month That typically,

think So it's I resin. And right. mostly around you're really

share escalating the tell If was I'd what you think about with impact $X.XX the you, the what in occurred QX QX of first quarter resin impact, costs profit. a about of

and we inflation George, back protect tried that do, do remember expect to I QX year. impact And our well. we of true that we to done that the $X.XX pass-through raw the recover And we a in that. haven't as as where call our experienced half those we we in business, to to that Silgan's really time the with in from and certainly recover discrete say, QX, materials, mechanisms would the of I can't the it have increases is, $X.XX QX turn forecast,

Operator

Wells with Fargo Hajde Gabe from question next our take We'll Securities.

Gabe Hajde

it that's year actually point tick what recovery One than performing I and thinking, might earlier -- it but what to was a side, expected? than Adam, if don't you have about too maybe QX you a volumes like on I better better sooner the or know put curious, not talked seems coming maybe Metal Container. out, bit things little that just cost in in might you're be maybe on the in finer

Adam Greenlee

talking question, volume last Really, is been for years. couple for right Great Gabe. us, really Yes. we've the where about of

surprise So really no there.

we expectation on think exceeded the where I really own side. our cost was

a first had the year standpoint still cost the year were number with think some year-over-year, quarter. a we dealing ago Omicron inefficiencies. variant as the about you one, We So ago, in

year, got course to through the the the containers our the for X really As pandemic last to doing around as recall, inefficiencies we get last best at you'll world created the had quarters and for world. nutrition were we of the consumers that out

have terrific It in of recall, is a basis. you manufacturing the our months drove really, top one X last pass-through lag this of performance mechanisms cost you'll Container the that of continuation the first last Metal So as the had that of other that year costs. kind the in that, of the of On on we year business is performance quarter year.

XXXX a and in experiencing. experienced reminder, manufacturing the P&L XXXX's inflation through against and that costs we're as we're we're we last inflation year and passing So other that

So driven cost And second as of in what's there in and recovery inflation. year of business. is lower Metal the really as a we've outperformance cost in really the well. is inefficiencies this out a quarter the bit quarter those our first the Again, our that's Containers driving

Gabe Hajde

I embedded don't what guiding then for you the upside Is the but sprayers. growth or in beauty that in to talked the sitting maybe there's effect channels, Or Dispensing if sometime then know know call what your outlook? through distributor about and higher-end you a fragrance restock today? DSC, destock year? exactly it during et so, guess it's potential tough, cetera, And and to seemingly, trigger you're the would add And what's is in represent that in Okay. there having double-digit for worked I value I'll

Adam Greenlee

Yes, we Number I it it's here question. forecast. our think one, debate is in included internally. not And that's a X great

supply that And going got the not just some destocking of of been supply that everybody there that make may have exactly adjustment all and right. too in for effort There to an much components cases, was assume I'll drawdown really I'm the various Gabe, it chain chain. the clear. levels at So such this

upside is we the think us. To it is So point, potential It's destocking now forecast. do a our in your us. for not behind

those Our been order QX has is strong for items book long. all very the for strong. order in book QX fairness, And year

of customers we were by in be activities. the knew our smaller some that the So impacted demand going to replenish destocking was returning to QX

Operator

Roxland question with We'll next Mike take Securities. from our Truist

Mike Roxland

color how pack. the good in inclement a witness volatility far. looking things around impact on even question the And talk simply the the any the you about you bit pack West okay. mentioned for Coast, just -- performance Congrats up? One quick more thus Adam, from Can that's weather? shaping little the

Adam Greenlee

a of you been when And It's a really, Sure. talking there's and couple products, great the impacted sweet we've U.S. our really, question. of on phenomenon peas things hasn't And think are business, in vegetables core weather more upper that's our been about really, of about West the and that some think that pack corn the bean you Silgan's Midwest us. for by Coast. primarily

When our the West little us bit you little about tomato as for about get it's to well. a more Coast, business, fruit a bit

business conditions the in we've on with has what Coast, been at acreage West earlier been the where So year. the look, that's our contacted consistent been tomato

think X I X the plantings might be delayed weeks. to

of really our some is So or and pack fine business Most I there's move about fine. When of Southern of it's -- be a in Europe Northern unions necessarily pack this are you the might think Mediterranean perspective. that in a products nothing be X. Europe, week at think don't to the from significant aware to that's Italy something just but point, there material. some there Italy, for

well. Metal expectations line So Europe we're right Containers like in and for feel with as in our closures business

Unidentified Company Representative

pack -- in as about thing you and where around food is, add is. That's the the think also try you to of allocate as of some that maybe X volatility pack, they the about to if and as before tend that I'll to is flex portion can Mike, the that premium elsewhere. as they tomatoes can the can much think being they particular,

the big like. might business can as look an as translate food impact on So it pack what doesn't of a to necessarily itself

Mike Roxland

in clear. very then was demand quick pet That's it. the Got on color pretty X strong XQ. And Obviously, just food.

The some a demand normalizing of after Just have accelerating wanted been pet last on growth out get your years. to few calling demand thoughts food the trends. period

there the pets think out conference was I mentioned was has in of that survey with percentage a that a XXXX. XX% declined to households out there

so think XXXX. it in XX% or I was

the I from food still a to of get I recently? there? is just food realize still like you're to of sense pet you part When market. that where around to seeing relative noise want of the unique do expect the is what in trajectory a the participates what some pet it But growth just continue

Adam Greenlee

inconsistent I dogs primarily very the segments that wet food think, and what Mike, we our referencing fairness, In market. that with sharing data kind we're data we and for are look, pet on and us. food market, what look And as in positive particularly the and the a are customers of I small at with cats think data the you is Sure. pet participate little

making our and acceptable is lot We food about So challenges lot wet again point. clarity, investments were to our and a that rates a capacity up for the in bringing of we in area utilization for the for that capacity customers the last significant pet serve, markets talked year-over-year. business last additions getting year an the mid-single-digit that up year

as capacity the quarter having quarter I of of they first first is, our that us in in brought the behind is by new the our now customers really 'XX. news think online growth great better volume The utilization supported is

wet pet as markets as food really we has month a So go our good well. for forward, April been

talk of dog And I do see bag think because, careful component can can, down or a the rationalization again, think I those we'll of think cat broad dry products some about buy food. of you for X-ounce X X-ounce a studies purchases. be that significantly food different volume XX-pound is looking we the you a we about have that really market to at second, again, make,

in simply our seen it just not We have segments.

retail of Meaning, the orders still not desire their to provide are to with certain customers their you. rates back that stock out retail. that our products our those would have service we displeased component. are Our they And not know they products customers have points in segments orders are X seen for stock-outs less wet largest for pet to the again that fulfill they we that rate also of food. there to We fulfilling the at in data know it in

feel pet look, food. growth XX food about this high The good been keep we been, exactly it's and really Silgan. always is So that we've years I'll food 'XX. saying we a degree doing the at have for line confidence Metal pet pet for segment trend thus of projections very where in and our we'll Container in deliver wet

Operator

our take question Citi. Anthony from next with We'll Pettinari

Anthony Pettinari

or In that to I'm Custom of the is late you if volumes of in on. I'm if any there's some very that those terms the there's are way don't Containers, now any the risk that in half stage step-up you're or kind just half. based contracts kind add or of just expect any that wondering we in color materialize to that signed driving wondering, second pickup? that kind that there's XQ activities of quantify can on of kind you've get you second confidence if and LOIs the the maybe of

Adam Greenlee

of what and you them spectrum And about about full we those won't described. of have conversations, But in the sure. we particular. talk think would I any you sort agreements say Yes, of

We have agreements.

have We agreements. verbal

through commercialize. to We've LOIs. are have a broad we business got awards spectrum We working new of that

customers we in and be resource coming procurement business of under they seems these a they just to ability think have having technical the we realized new that and wins teams as whether challenges, is our pandemic, some what dealing to be bit. commercialize are some commercial or pressure I of their some be the with we're exit whether

for later very we to year. in commercialize able think to through before, whether little showed we that when with customers pandemic, a think, hit. do said a start-up the standpoint, in later will fairness, constraints to their impact that wins now in commercializations our We that would the obviously, thing costs we're probably now now. In we of for had those bit ready to are commercialize be those we a nicely back we the the certain little are on in got be associated is softened we language resource half new will So as through profit talked current more end to year areas, ready at working we're But the from the us you've I be volume I the of the as Silgan that's really what back about our really commercialize. half think rates exciting what track the then previously. dampen the it's looking some bit, said And a run with year,

Anthony Pettinari

Okay.

food Okay. to That's on that quality competitor very with a to I And were Containers, food want I situation. Metal comment business. they ask helpful. think cans. And you out And a specifically there that is large your seeing a company then on don't called don't issues that's comment on

challenges of up any Or just able cans know if tightening of maybe maybe to I'm of industry bringing there anything being terms that industry indirect terms the demand? Silgan just But to the had in is But of or wondering, sell if of in sort maybe capacity. has comment the few you'd -- general a could impact I new on know some you supply on there's add sort more I there. don't don't you

Adam Greenlee

in that think X I read-through Anthony. whole a on for there's lot us particular, of don't

provide willing needed effort cans the again, I when and We're nutrition. who up supply. they're as step think, to to those an to nutrition in of we particularly cost pandemic, in lowest need the the able when showed others means and consumers to get through aren't market

there. we've what the you of happened described been not in participating what during So outside any activity pandemic, of sort other

So not a lot of read-through from us.

for still fantastic feeling quality I surety to set that's we the Metal great many that marketplace. Containers think been X of supply that I think bring got our the has and and table does many, we're in And a the thing competitive years. advantage the in about still apart

Operator

We'll take our Capital RBC Viswanathan from with Markets. question Arun next

Arun Viswanathan

wrong. guess, this I the DSC performance, quarters, kind one we of is I the it guess got where regarding of

exactly through volume price resins understand what's it is kind that. the is for I guess going bit those start Or of movements to And a wanted I'll just environment? has I that to that of here. a little function flow it business? the with longer taking function case maybe of a to lags? So this changed is really Is on nothing that

Adam Greenlee

Well, and that And through the mean in the for Sure. typically And index longest what occurred the first will you to cost again, escalating of for mechanisms pass-through the does other we I'll on What are, month absolutely the again, inflation. of the did really primary occurred of that for changed. change our the There's in quarter. a resins it lag else But in here also nothing's sit run through tremendous largest of nothing we lagged look, recovery really pass we confidence that recover quarter company. tried we basis. I had happened the with create resin than history the is during quarter quarter have March. say, that again, inflation. increase in and resin first the I And true utilize. that the the

Unidentified Company Representative

This And I'll the where business lagged this remind X rest might the that acquisitions. has recent pass-through in kind the of just part business. Yes. that right? relative of Arun, come what is of I comes the parts, the mechanisms to more are everybody from call, business

contracts business, the higher as haven't we well is had as right? with time as it much those margin So

more profile given business. of that bit deal the a a lag to there's of tolerance margin the So perhaps with

that it's that chase what It's happened time. of new a as you in all Adam happened for just and So spike with period about there's nothing resin. the the earlier, said in quarter resin the cadence has about

Arun Viswanathan

think about the essentially would then, when are EBIT the so full dollars in that QX have that as QX come year is come it And note you case your mechanisms guidance, that QX on those in and enacted? pass-through would

Adam Greenlee

Yes, I got think right, exactly Arun. you've it

half right. mean of second approximately $X.XX the be I in So in That's about the recovered will cost the think year of like something half first the of year.

Arun Viswanathan

similarly, China several a of Container those other still curious food some of and a Metal markets side Custom you've affecting that's then businesses? of what I Okay. Container weaker through thoughts obviously, market And -- been that but the run are some then both that seeing on Perfect. could longer. of are verticals we've you subsided? what little the DSC across there some and and I'm your the And there. if just you verticals in in side, Container, been on there's bit seeing pet taking on the Or side, because thoughts, of mobility maybe destocking and Has if in already hearing, Custom seeing you're quick and the the get trends in fragrance couple categories.

Adam Greenlee

Sure.

look maybe earlier, and trajectory Specialty in So as Again, said and we change double-digit as with products, starting first. think that I growth no Closures the business. forward in Dispensing we really beauty in fragrance

As expecting win marketplace. that Kim mentioned win we to in And in to her marketplace. in we're comments continue earlier, to continue that

and Specialty part So our of the is continued of products garden beauty sprayers nice for specifically, about. segment, home growth talking and big we've which fragrance lawn in are in Dispensing the trigger Closures a kind been and and recovery those us for dispenser

slightly bottles we've it garden a teas. is lawn it's we for us. about the sports looks is And like products food and our has different to of lot ready-to-drink Custom lawn and move So story do in drinks garden timing same seen Containers, talked business much of a of normal to normal filling and and a and our which there. to containers the Dispensing, the more of done destocking that quite When for shown beverage, we Specialty you then business, beverage on because the not recovery degree and that kind Closures side sell

typically pipeline also as well. retail as customers' only works but our little bit inventory through separation There's not of through a

then Custom to first seeing we think and be second quarter. in over the second we're earnings going obviously, Containers, in had contract. cycling about just as recovery of little bit quarter, the to in It see And nonrenewal market materialize. mentioned, that, the I little we're didn't that green We're a quarter I shoots bit distribution of that beyond of softness talking call the in So as it's expected a well. for some something the

Arun Viswanathan

buy? just polyethylene of and that both polypropylene it to to was polypropylene resin -- the was just spike? I'm on really And you all kind that and side, Or resins the the reiterate related sorry,

Adam Greenlee

Yes.

-- by the buy, Bob were that that X really were impacted X both primary were it alluded resins polyethylene. So we largest and impacted Those the resins that polypropylene are and spike to.

Operator

Ghansham We'll Baird. take with Panjabi from question next our

Ghansham Panjabi

of visualize question at point? of for positive, maybe impacting a go can your on spending negative, you through How consumer a based component know that that Adam, neutral-ish we you environment what U.S. business? the food do to off. protracted food start this the you pet metal a If Is sort period of in of sort diminished

Adam Greenlee

was end Yes. get Well, feel the in that in going broadly pretty market. I consumer mean, food. confident But staple representation I'll pet we and first, answer I to to have we

So to tighter end given consumer talking to does presence on as our the products spend, customers, consumer in the just about we that our dollars move supply typically, get markets. we're staple it that

how pet spent performs think lot it food we a time economic I cycles. about of and various talking through

is I Ghansham, that of wet small the tend circumstances to for under thing does to a during Typically, economic degree our dog. business very portion pressure back to that some So food and convert is product first is is a would dry. tough large pet say, in

every cycle. dry a many, about pet of little many, every and food a markets and economic our of lines got for humanization food XX-ounce to years, many have dog the dog of trend get and kind economics the bag wet XXX-pound again, servings a we through versus or labrador pets a cat, core seen are when of small of seen there And can we've different you XX-pound day. When just you've these for Kimble retriever wet X

to years, market. we've XX last been the requirement For suppliers this

negative. cycle, what's see So but into business. least in over and see as driven neutral ownership dog it smaller as it with really a we economic time ownership pet seeing at the the categories. cat growth same don't a the of That's shift the we're time, We the at

look of we confidence you, same quarter rates those of first just agreements I'd the the and that going we amount got to in growth in tell again, wet do second at gives in in of are that growth delivered look we a us worth how quarter. decades go-forward we've pet mid-single-digit And on at the also tremendous food. a requirements the basis

Unidentified Company Representative

is add time supports to dogs. would exactly I primarily is away, And XXXX, at animal small the what pet what the think that that XXXX, frame. at and just It we data more you what that I it, saw was now. far Adam more animal described, that primarily Ghansham, migrate large away the from weighted much than in prior and call cat so I'll profile if consumer look to far our time food

Ghansham Panjabi

as sort on increase and Okay. volume you. and do for just Got unit secondly, think momentum? in a line operating relates then closures beauty, it last terms original is seem Dispensing way restocking business? leverage, with to And you playing reopens, will you relates that expectations long out high-margin the to your what of do -- et those How cetera? came how much in the as then be fragrance of And from -- in it think China that to as

Adam Greenlee

products, came think and guide Dispensing I year for our fragrance beauty. into Again, we with double-digit year the growth Yes. certain in the particularly for when

We pull-through if good line in right continued through No really expectations. the with season. you will, Ghansham. our So saw just restocking, holiday

quarter Valentine's for first period good Day was in a fragrance. the

a that no fragrance sales. benefit our I and really beauty also the holidays couple of here original second change expectation was. you've think got will what through well versus quarter as But

small the think of are pickup just our to I issue. free base stores consumers our for these benefiting customers But related mobility China products. around little from and We duty the for in is think a do world the demand a traveling a more business good of bit really portion products.

be that's The was product during year from pandemic. talked product before, very going we limited a I to perspective. And launch true. were new think elevated launches an 'XX as the

seen many And so -- our good products market, and successful for have the in not largest staples the traction product to new only but new the been we've launches in for that customers. and going are years

Operator

next We'll with from Rizzo take Daniel Jefferies. our question

Daniel Rizzo

polyethylene mentioned a or relying if is on like resin guys can in kind point polypropylene resin something up to. specific just March. wondering or more there's costs Are you was going You different? I it of you

Adam Greenlee

Yes, really, it's those X.

X resins saw primary we -- in the that it's significant first month in quarter. are we've X largest and So polypropylene the jump the a polyethylene, really both got ,

Daniel Rizzo

wondering what of you that evolution. I to. the at beginning I portfolio the Okay. don't a evolution know if discussed but was referred the mentioned steps kind And you then next you've think prepared are about this, of of portfolio remarks, the kind in I

Unidentified Company Representative

long around Yes. in and back think started Closures, entrance had we cap in We've growth to Look, the about that's side business I or the Specialty continued closures right? grow that and Dispensing flat a all business. the XXXX,

is And and the be to And that. really to find the of that that's and ways to are supporting the the so is think or business, segment that out growth customers effort in we it through acquisitions. is front opportunities of that that supporting service continue to us grow whether investment organically those

Operator

from Zekauskas Jeff question JPMorgan. We'll take next our with

Jeff Zekauskas

Of the you how had it And polyethylene? and the to our Containers $X.XX penalty Custom from Dispensing if would from to in resins, $X.XX came how allocate you much much business, allocate How polypropylene? came penalty?

Adam Greenlee

the $X.XX Well, well. included as items about other talked think that I we

the you experienced. from Closures and XXXX, think you drove Specialty say that Polypropylene of about these when think I'd polyethylene, polypropylene half look, first the changes I the Dispensing predominantly changes we of of the and it's in business. probably impact largest X So negative our

and than but So it impacts both our segments. of impacted Dispensing Closures custom those it segment more Specialty containers,

Jeff Zekauskas

of your year? really lifts this fourth Okay. first year to paying $XXX Also, some? this Can year the look your and How accounts down you dropped are are payables that often payable in quarter in payables the line million. the payable quarter about why in talk the to

Kim Ulmer

inventory we business. our as the accounts payable, in generally, containers the the we build as first for So go X year quarters purchases of higher we are in through

So quarter. our drop through the in that payables will build fourth have then and period

fourth see on big first the we continue quarter usually that. to build between you So move the quarter as a and

Adam Greenlee

full pack food the for roughly just vegetable a really, that's can year. to long Silgan, that very and of business food X all within we knowing We've XX-day how the the window that's fruit And well from beginning elected the they make built during sell quarter cans year of model.

time change. change. through of anticipate the line, side The absolute of don't we about going fundamentally would changed much Jeff, So that balance last the a as on as year over you it's us. be But it we've the And think has given may say, outside shouldn't inflation of a particularly for I that, have it business. metal much of that seen forward, payables been

Operator

We'll take from with question next Deutsche our Bank. White Kyle

Kyle White

been clarity. know about I Sorry to talked it's the resin. just to back a go but of a point lot,

in projections resin impact. assume current flat? it the be could from are $X.XX using that and holding falling. you quarter, $X.XX that think it prices have Or forward to some contract you the Does curve mentioned second I a organizations resin

and Just is trying to are in Or to understand this? May, your assuming that of April if you contracted decline here a source outlook? already upside prices resin

Adam Greenlee

Sure.

and quarter, expected CDI So is what that's that back from IHS do half forecast forecast Kyle, or looked in what flow we -- at take is then those for the year through the what's the resins. we in a for recovery do of P&Ls forecast the this same what we've the perspective, the for really included the And businesses. we

Kyle White

Would low to it. you're interest to Or end those targeted excess given environment, the the ranges makes of or acquisitions? lower uncertainty? just allocation. rate to environment used cash you just -- to then you'll about capital your That in want sense. leverage any year. And buybacks kind thinking how the at shifting end this even should be range and for expect your potential closer capital go Curious allocation below Got this we of of be

Unidentified Company Representative

Yes.

here the cash Kyle. going term. think XXXX, landscape end free it as got the in It's million through to we near pushed how get the We'll to right, continues upon markets upon you think I down that low range the sort flow $XXX like. on depend of perform the given M&A projection. of be right Look, the what I credit look depends

We've Obviously, done. integration in We've fully the we've as got got we the captured would we have acquisitions the hand. think we've expected. that synergy digested

the certainly itself, presents in opportunity the we put work where reason objective could to which So here. if within to participate to that the be we'd business, grow capital is happy to

In down we pay then return opportunities, the a probably that manage versus think I debt air conservative bit those particular of think basis. the a meaning capital absence more case. would balance a sheet on that I in on of we'd

Operator

Staphos follow-up We question have of with from America. George a Bank

George Staphos

some follow-ons Just here.

of First to to this. all, back go on resin, just

one and in the had I the $X.XX $X.XX penalty hand, also So heard a $X.XX headwind we on first then a half. to there's I heard

doing some than that then it of missing probably inventory things, So be me resin circle, maybe that but I'm were inventories lower? the you your normally anything differently in a little spike that if such caught could managing you great. if And terms would help square of would bit more your you you're perhaps

some is, the of price behind normally, kind question protection. there's that And

days hit hike it's resin, be XX it with price So in XX, get you even starts up. going to to if before show a

be So on that just would great. some thoughts

Adam Greenlee

Sure.

that let try clarify So item. to $X.XX me

there things. a earlier, in year component So is prior in impact remarks the X $X.XX of prior headwind made had a resin currency, up first I interest and she quarter, of expense. the referenced foreign versus versus It's the Kim's and think It's the year. that's

what And is what our we is is in pass-through versus component this happened what range, through year. in half is results last of pass year discretely happening will much mechanisms it's that year. that prior that's normal kind in happened that first XXXX our George. Reference impacting about the half than second And year. $X.XX the prior resin the of is -- a frankly, That versus more year comparison of the it's more

there I'll maybe – So and.. pause

Q –George Staphos

makes that sense. perfect No,

Okay.

about discrete not managing Now your you normally thoughts what talking protection, of there? are terms inventory in or and and the are effects your whether price

A –Adam Greenlee

how how hand, we obviously, on of to I parts lot resin, mean, Yes. moving our a cetera. we buy et days resin, manage

and in of lot we’ve term detail out been really the over resin quarter any say that there I’d was the talking about. that, just our I but So a purchases nothing of first won’t about into near ordinary of on the get

whatever resin, with have you’d that really versus we Silgan, things terms advantage like I creating about. customer resin we components agreements into of half market would I to that purchase a think, got about we’ve conditions customers, standpoint, suppliers it’s the we’re those the say George, nothing’s agreements and first effect assume how from at you think it’s go how just kind can back much half, an lag the we more about are of transition and changed our there. do we passing costs what talking through that those the and changes and that in

Q –George Staphos

And I’ll It’s your all strong talk that Can guidance expectation year. Okay. is over. can launches, in the it last be or backdrop? How of driven mindful to we anything much then a be economic sensitivity of, given you Custom what And terms X, products of shoots in by half new back One, you’re bit turn year the on would I appreciate should being a that. of that? to at very DSC? in of guidance and the there And that beginning green you mentioned still terms for? more the some comment see in Container. the an my you

Adam Greenlee

Thanks, Sure. George.

growing So DSC. guide have we a pretty on it’s that in DSC, business for the stable look,

and of more I as about today, we – that. sight good being we of normal portions sit of food beverage So line a the year, got really just talk Again, about good pretty business. consumer of staples we’ve feel that here we’ll

we’re premium the continued care it’s dispensers. Dispensing, of and those as the our sprayers strong and and home in And in strong our demand rebound products fragrance lawn seeing As other see and again, importantly, trigger beauty. far that care segments we

around a think don’t lot I So there’s George. that, whole sensitivity of

supply care care was in lawn The line. the of really chain home and depleted inventory, those segments product

books books we’ll for we And lead us to now figure our times that. when really, we’ll fourth it, look quarter the out really right order sit allow here. next as order good X quarters So do call

shoots, On part seeing for front, activity first by the a sign driven distribution, more good is commercial the in that’s Container of the kind Custom point. we’re green us. which That’s

right are activity as now. distribution can You in lot we recovery immediate a activity distribution see through picks when a up, of market seeing and

too. fairly distribution We’re a represented

segment. feel core in Custom for a our that the is good So products Container like we sign other

base broad that So a really, about. the it’s we’re talking market in distribution

So that’s I the shoot green earlier. mentioned

Operator

That Adam over does conclude call Greenlee, the closing for I'd question-and-answer the turn President to back like to and CEO, session. comments.

Adam Greenlee

in and look July. your everyone. second you, appreciate earnings Thank forward you, quarter We thank our Lisa, the to and company in reviewing Great. interest

Operator

does That your Thank you. Thank conclude you may for today's disconnect. now you and participation, presentation.

Silgan (SLGN) 26 Apr 232023 Q1 Earnings call transcript