SLGN - Earnings call 3 2023 | Silgan Holdings Inc.

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Operator

Good day, and welcome to the Silgan Holdings Third Quarter 2023 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Alex Hutter, Vice President of Investor Relations. Please go ahead, Sir.

Alexander Hutter

morning. good and you, Thank

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

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

call diluted press contain should to available and considered reconciliation free In similar in silganholdings.com. be addition, adjusted of net adjusted may can for and these Relations found metrics metrics, references be of financial Investor GAAP A commentary substitutes per certain at income metrics, cash today's adjusted EBITDA section flow not EBIT, including share. today's in which on the non-GAAP release our website

to it Adam. With that, me over turn let

Adam Greenlee

Earnings Call. we'd and Alex, like to Quarter welcome you, XXXX Silgan's Thank to everyone Third

proactively our softer-than-expected challenging our highest strong in as performance to conditions, quarterly quarter delivered consistent cost reported quarter. our volumes manage despite The was second their offset businesses the market third with expectations and we that continually earnings

plans have end a we cost program $XX announced structure our the quarter, cost improve finalized to During through our million reduction previously XXXX. of discussed the and

of and years. our each footprint the We achieve cost combination segments actions with through in reporting X these cost other of benefits reduction rationalizations expect over a to reductions next

the meet continue our and position will the unique compete the customers company in Additionally, and to these help improvements cost serve. believe win needs we to of we markets

process, of and $XXX $XXX balanced track year-to-date of a to during disciplined the worth repurchases repurchased $XXX we've the capital buybacks million putting over and Through through return and million stock on our company million allocation combination dividends in shareholders to quarter, bringing to our Silgan XXXX.

trends in to products segment. dispensing these during for business. in remained with for the drove improvement the Turning mid-single-digit that Specialty and significant Demand quarter products Dispensing closures for company our overall mix the the strong growth high-value

the year, organic to in continue The last growth We from benefited include of all second developed end experienced X during categories. dispensing as the across for products deepened grew destocking plans recovery to segments we adjacent third in strong see our in the consumer post-pandemic and fragrance quarter market. markets quarter, beverage products and near that saw the expanded and food these destocking prestige

their Importantly, continue level on their all robust. products levels value at market demand of levels are unit below and to show that in consumer the year-end. And focus our indications dollar systems we inventory have our levels absolute remains trending inventory customers' historic remains for

glass more Domestic adjusted of beverage was and our and Dispensing Turning the talked results end to beverage Closures, expectations, pronounced segments States adjusted in in with consistent offset our Specialty mid-single-digit Performance significant were United with EBIT and our beverage guidance. year-over-year than result the food more and comparable of of record in about packages. on Closures growth on a third the a headwinds increased volume premium our markets. anticipated International in each Metal flat products, volumes on were we food to the with in quarter dispensing and inflation remained for a levels driving a EBIT results. In for as as our our Containers highlight in prior growth Specialty customer mix volumes products mid-single-digit food year high-value and that volume benefit we've destocking record impact Dispensing than quarter had and challenged Metal levels. Closures, particular, the with

anticipating on mix to benefit already from North growth was delayed products, volumes, Greece. are the fruit destocking pet The fruit to Metal and performance and food, yields drove In and in the despite due American categories, reductions vegetable Europe the late to many that Containers, results again were segment management these expanded include we priorities headwinds in in targeting strong below to including planting this impact Despite strong customers we Dispensing categories delivered quarter. further these expectations inventory our volumes volume, lower record and in cost adjacent were customer pack for trends. appear flooding softer-than-expected and have of

shortfall cost Overall, effective quarter will will team be expectations the drove crop results our the only volume packed below the were fourth despite with that small our from XXXX perspective profit start. in a management volume of a as with consistent be Despite these our amount offset and headwinds, expectations. late

our In of the consistent year, in prior expectations business wins. new Custom with results impact the were of commercialization to Containers, delay customer due but below destocking, including

now our for and Turning the to year. expectations full quarter fourth the

disciplined customers unique to a which the taken more quarter Containers customer our the upon focusing the our continued for growth. volume lower We in to of dependent growth in have reflect on shareholders. below resulted strategic return estimate segments. meeting value we manage a proposition expect improve the XXXX, are year delivering for earnings fourth Metal deliver trending the a earnings And norms. earnings and manner, market our volumes believe it to and customers' levels not that destocking revised to in our our historic in company unit within our position We'll inventory we've while progress control, Dispensing XXXX. full actions has factors promotional to priorities Closures in in we Specialty continue activity, with we signs in have to pervasive made in to are positive business effectively the outlook deeper needs while in the priorities compelling We manage see to our We regard

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

Kimberly Ulmer

Adam. third billion. were you, of Thank $X.X sales quarter approximately XXXX Net for the

of Excluding third nonrecurring by declined in million Container Containers volumes a Russia nonrecurring Closures the the decline. of partially $X.XX quarter XXXX with of adjusted sales diluted with lower higher X% Dispensing third Adjusted record the of Specialty offset EBIT and and by income decreased per of lower $X.XX declined primarily segment. volumes year-over-year record the net the with for record quarter of quarter third year-over-year in cost quarter Russia Metal segment associated achieved the interest of EBIT driving lower by from sales segments, year and our from associated adjusted share pass-through driven adjusted basis, with sales $XXX.X inflation. $X.XX XXXX, on the EBIT the in X% Custom the offset by XXXX in expense prior period Total each in

which higher volume segments. more prior beverage mix by in dispensing mid-single-digit grew Closures closures Turning compared impact year, from for was segment and percentage a declined driven for the international and volume products, value double-digit by year. markets, higher to volume than which and a The sales to volume primarily of declines X%. prior offset record food versus X% excluding the lower Russia decline as result of Specialty our Dispensing sales, a X%

high-value beverage adjusted Specialty a $X.X year Dispensing due in products as XXXX higher result record volume quarter to and third management, and in dispensing effective as of the mix million markets Record in achieved sales increased and high-volume Closures period closures the the food cost a including well and lower in SG&A. EBIT versus for improvements as segment prior

Fruit X% Container the while shortfall due year and labor to largest product from costs Russia excluding adjacent volumes our with manufacturing was below categories lower X% category. pass declined sales record despite priorities impacted customer more vegetable volumes the structure. In our prior managing the quarter successfully the to pervasive volumes across the prior other Metal business sales year-over-year categories in decline EBIT year, in and the adjusted as our segment, as slightly soup expectations. Metal actively destocking Containers in were versus and through were level impact the continued cost a all below

most Custom XX% XXXX, categories quarter lower on drove costs XX% which, resin a year volume in below the volumes prior of below coupled year-over-year Containers, period. sales in the third with lower In resulted basis

less As XXXX, of favorable Containers sold. as $XX a adjusted million of primarily mix as declined lower volumes quarter expected, of Custom the products EBIT customer compared and destocking third result due to a to

million. On quarter interest share adjusted Looking ahead includes share in diluted segment adjusted share fourth EBIT estimating and count level, range which fourth to to year are a we net expense in Custom to timing comparable $X.XX income be year. Specialty fourth management prior average to prior of $X.XX $XXX per $X.XX, approximately period in is the in primarily of per Dispensing Containers lower of weighted higher of quarter Containers quarter, a than Metal to expected the prior from the period the in discussed and due previously and period higher inventory the year benefits the year than prior Closures, the

share be to XX%, interest This $XXX As a range exclude approximately to per share approximately million. result, a adjustments approximately more in $X.XX food we includes primarily to of estimates and These weighted tax to markets. $X.XX of from of impact our adjusted of $X.XX a now C a of $X.XX $XXX pervasive expect million, shares adjacent we income in outlook beverage press a from certain estimate and outlined a expense, headwind Table release. destocking to customer $X.XX year-over-year per average of rate outstanding of for net which range due the our diluted are revising and revised

capital the flow cost flow estimated for Based which cash in year are of in earnings free revising Revised including program, working CapEx in $XXX million, on associated the of program. reduction incorporates the our $XXX estimate we $XXX well as also the costs XXXX from current million. free outlook, earnings with our XXXX cash estimated outlook to revision facilitate million additional to announced reflects for cash as

kindly Anna, directions call the our and question-and-answer That concludes would remarks, prepared provide the open for session? for we'll the questions. you

Operator

take our we'll And first Panjabi Instructions] from Baird. question Ghansham with [Operator

Ghansham Panjabi

how I during color third of destocking quarter. half, you just maybe more can guess the first Adam, that give the on and unfolded us cadence

at to But tail what ends this year You be in this seeing mentioned called adjacent fourth there out based pet do a just point, first well. Or guess, I residual on you're next think I that, quarter? you and into food the well? the related of will categories, quarter you as think as

Adam Greenlee

of Sure. think destocking their we the conversations second the frustrated the were Ghansham. as end this And And anybody with third and customers it Good for upon with anticipated we having us, as else's all priorities point. quarter. are in we at look, based questions, I at quarter new the our

we So that's happened had QX actually accelerated than details. fairness, in on in anticipated, we is destocking and the during What our what's that customers those programs were that QX and happened actually the year-end numbers. our inventory in reflected working earlier

that's part So of destocking. one the

piece indicated that The customers by of of late second our of they would end destocking on quarter in all food the a it program the are the endeavor pet is year. for also

impact So in impact we late but bit the destocking food as in QX pet little include of a an and the conversation. quarter, more now of

the in And we and year-end, to inventory And Ghansham, system. need are. for system. have that but the understand happened food, that now we way sells and so we're confident their items say the worked of most The our we be in what anticipating new at seeing think correct. of that the programs to just products their customers about continue we're destocking food the These cleanse this standpoint, pet through a going done feel talking timing to We're that it with have work they're from part. those post the I'd by markets broad I point, through beverage and recovery pretty pandemic, those

customers level of than food The norms. inventory, the that about value of lower for historic our the of now last inventory beverage pet markets know volume with lot and that our fact our absolute dollar piece a dialogue And is, the across and right a it we unit is is certainly unit level. food not

and some that, consumers. it market at this the have at to anticipating So does stop year-end. point, we're order point, in is And at that to service

Ghansham Panjabi

have earnings question, the target, relates Obviously, then cost volumes just confidence second XXXX you are Got sounds it X-year it. on it outlook year-over-year. a It's as a like. your And to program, and being up moving savings. but my

we through curious should will it keep other flow Just to lower in us variances in as much help savings cost you apart how relates the terms from of as Any with count? in XXXX. variances a think to share mind,

Adam Greenlee

a we'll for had next we actual of the destocking Sure. dialogue XXXX that call. And influence just lot guidance off, the our will on I first think, on get

have decided to part savings we it, and the reduction that our we program. And sit in is aggressively we really about within should cost of be as things and XXXX. done P&L As today, the here of what to that impacting XX% manage $XX control, proactively think is from you standpoint, call a million

round So $XX of savings $XX we'll million about the cost million just program.

So that what and is happens what our large year next irrespective earnings drive part volume. going to is of recovery with in market growth

So input that's Ghansham. one

continue growth Specialty getting big that other what's not is from Dispensing talked about now continued and mix irrespective high-value in has the will products our benefit input that's been dispensing the segment, products, food benefit in a mix recovery business. our of year dispensing trends and being right and from the of Those our is and markets other next we long. year we're growth and and The all lot generated and beverage again, frankly, Closures the anticipate aspects XXXX, high-value generating

cost year irrespective front really, what's of will us, but market recovery. growth we next immediately we So drive savings of can earnings believe for program control in

Operator

Staphos We'll from our now George take next America. question Bank with of

George Staphos

would was your everyone. is Hi, not GLP-X aren't yet, pets there. What adjacencies Thanks food then then couple in seeing I soup? in volume terms they're terms thereafter, a follow-ons. -- the And pulling the the details. the was just going said doing what volume of that that why it in of for the to they're the the destocking Adam, for forward probably But beverage, and the that's else are mean customers Metal on? destocking, this. accelerating related had And I it morning. Relatedly, that's quarter on a that But so and seeing occurred. a or you're you And in destocking their what time, pickup is why wouldn't you're you're reason in fourth destocking great. saying have that, in soon assume quarter? of Good

Adam Greenlee

Container George. volume the food. again, Thanks, in our of half in roughly pet And is segment Sure. Metal

this is part point, more right, is than the which right, not So part business. that you're a at which our is than of more GLP-X conversation meaningful meaningful of

question. you're your destocking right with George, thought So fundamentally, and

to dollars It that levels. that about that about of inventory at is not year-end great unit And there At again, inventory sheet. on it's some their accelerated. So it's it's volume the point, is our will inventory mean recovery they that absolute volume replenish hold of customers balance for this point. the

So for our favorable though to targeting the that's we're should for be are into because think it's not factoring be next growth going what don't I drive it's It upside XXXX, for value. they accelerated, QX ability earnings a to year. even but year-end

then... what So I the component next we're that's And for year. for to thinking and quarter important fourth an think about

George Staphos

beverage. [indiscernible]

beverage was and where additional in destocking? it, this So food where you had

Adam Greenlee

Sure.

there. our about segment, Metal Container start think in we'll the So

pack really bit market. volume, So it's for in the really, our a destocking pet soup, got now the little in of included that food but additional adjacency destocking

the last biggest time we U.S. the Food Specialty as that's well, also were talked. particularly and and So beverage applies in Closures Dispensing market. the change

closure So business. traditional U.S. our hot it market fill impacting kind and fill cold in the is of

George Staphos

what quarter, was it? overall volume the And for Metal Okay. the in

Adam Greenlee

Down about XX%.

George Staphos

Okay. to go the program. cost Understood. to reduction I want

to we at what the other But what's activities. Ghansham's cost a capability get, can So summarize going you of why doesn't some service, you here can you forward. it to You in -- change mentioned terms in But your Silgan tiles result terms bit the makes its reduction delineation question. give us disrupt footprint, gave means company and what more and in a that why it competitive this? of more Mosaic as you actually us of going cadence

out is Aside of of to Silgan $XX from What of in the yes, get over do our shareholders out we'll into build it? time. try your models What get fact, it? reduction million cost

Adam Greenlee

cost that rightsizing say and And great at starters, for reduction is It's many, program what years times think capacity George. Sure. over our Silgan. Silgan a is many at I in question, the a executed I we've this would

any we we're putting be facilities benefit the improvement we're confidence Closures, be and supporting there. that and capacity able taking putting that Dispensing clearly, should the and things. driving of Specialty -- think that there you, can is not really front about a you and of taking One, markets it. market. execute efficient that we'll we So confidence tremendous execute manner. in out products, what that in in volume what have there's It about growing And indeed optimizing footprint, got we more get, to of couple is it then growing growing It's that we've about

of When you of those Containers be rightsize that that's Containers, as move statement, Custom that. There our this important we George, little X markets to bit is of and to volumes see to capacity is and there's a Metal an capacity some both we now. the out right going coming

not So because have year recovering. necessarily that But volume grow. growth the again, We'll market. products we're predicated recovery volume from of next on planning markets this is specific on not

that tremendous learned pandemic we did meet have structure during to this ability to and what incremental flex is demand. Importantly, cost our the surge we

for demand to and levels invested tremendous confidence grows last meet to view ability we of it as have in the markets is Metal portfolio. pet will growing capacity in demand existing because as required that Containers, footprint Custom for that have So been separately rightsizing our by do capacity adjusted then with our Containers and volume recover customers decades make the important on have. One Metal growth. in food We've head has Containers that we and we the note to

we for forward capacity there to growth need those good assets in food we or in believe, the as ago, because we the planning heard pet no incremental or making of been next pet is invested sit and will are food. incremental really our a be minute year, statements. that But about we for remarks rationalizing this here growth capacity go add in as food they've very public level customers Our and there's as you, have today to I get news pet next growth the and customers any not

George Staphos

there's and be if I'll other everybody questions, Okay. I it else have I turn to will back over fair, come but to time.

Operator

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

Anthony Pettinari

talk Container maybe and more on just I'm you offsetting on progress anything that? how can wondering but gaining can don't progressing some business talk if of tap that Is any about bit about little Custom sort of destocking versus I if can expectations. wins. a there you kind Or for customer share back, know that's you're if maybe 'XX you

Adam Greenlee

Yes, Anthony, you've it got right. I think

are in having we think the market. I success

activities We are largely the just broad-based as winning are really, that in the And it's offset very segment. by destocking market the in Custom Container well.

large couple have next wins year So we'll we do a of that now. commercializing new be

The perspective, And quarter. first a us for will mid- win about that one. volume from call pretty of a be first late we good significant commercialized, feel it, one, to which is timing the

win contractual. new second again, interesting on delays are item. is, The it, of now and a are commercialization of the looking couple midyear both second at had a has we What's

news us when for the is So contracts the our product is good start commercialized.

the that same our volume runway or get X-year customers. with we on contracted So we've X- the

do thought. products. products. is we're yet. those not had fall end our these year unfortunately, And destocking, those we the to again, customers new of unfortunately, And spending products now so of at to So just happening capital part commercialize been that the ready just does as commercialize to launch into and originally the ready not have

the unfortunately, first line on X Really large the year. of good next So wins one. in it's sight

one it be midyear, customers' dependent ability second is and The slated execute will upon our to for that.

Anthony Pettinari

you maybe kind not. potentially or absent then back market levels know Okay. you in a EBITDA of if can And That's of think normalized finer Do is maybe earnings for assuming? is point expectation of get you what view you that? environment. materializes of difficult very of can I sort don't exceed the helpful. what XXXX to maybe there's kind in consensus as terms think in recovery whether 'XX or earnings any kind growth I that's a on put Or on

Adam Greenlee

Yes.

just Anthony, really I we're lot we're the to whole XXXX a provide it think to maturity not require because too at And color not question middle but the -- in color budgetary to than -- provide beginning. that's a more little of to early any there just process. our sort what of going specific We're pretty have. I right that's already honestly, that's we more additional able think now, a

Operator

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

Gabe Hajde

morning, guys. Good

tail So of appreciating cuts and disappointing coming we're of here news. little couple the what on maybe a bit just of a guidance

obviously a bit, are of of less also in pricing of a for one the inventories synergy carry sometimes higher customers deplete think following variety But of Your reasons. carrying a in which I for anticipation costs. is reasons, variety lower year for inventory for, again, covering customers might

the one, is been maturity preemptively to across your number for are of mindful year? anything should that of larger up we of discussions? So you of do And any thinking such businesses be contracts there avoid come that X for kind that can kind year different next I'm curious, there

Adam Greenlee

question Maybe I'll that into first. the take tail

significant. as large were beginning, As the at at of and don't end 'XX, we contracts we contracts coming have always 'XX, do, far just anything either but the up of course nothing normal in kind as really no,

Gabe, a between procurement question, raised good You moving activities price for customers given about changes. years

that know, with business activity. very covered well term clear is very some them mechanisms the our French with on associated contracts pass-through drive that you long As a may long-term of under of -- it's lot

there for be that But in challenge will raw the this raw a that fairness consumers. we're component part when that of into for customers the don't a we I be a then don't has year. But at been in And would our occurs coming answer their benefit customers there be changes towards know is those as year-over-year might likely something to activity is it our a significant there And change the that next materials 'XX, to as are with just head that significant point material and year-end. that destocking the and heading good in deflationary of deflation, pass-throughs. in activity. usually, early But see item small we the going way drive work just it's some

Gabe Hajde

Okay. Maybe just that. a quick on follow

for think, Sometimes us sense where there for year. might shaking settlements I I the countervailing are duties give you be template on some, a maybe know out following and antidumping duties.

So I'll just provide been direction And over maybe to of high-value growth. the get you a sense that there. DSC, you about then with a and it just has spot ask solutions talked guys mid-single-digit bright

of back the 'XX? there on year. some about next first a activity talked meaning You How things a high-value fill, on in half holiday. in of solutions into bit the little people shelf it carrying maybe for for good those gets around pull them now holiday is pipeline that and that, of good Is the contingent a season are kind potential over destock

Adam Greenlee

Okay. Great question.

So to with start going I'm to with. begin the template

U.S.-based usual, customers crazy that it's guidance we're is we fighting mid-single-digit maybe And so of right I But most of obviously, there the to bit portion going for kind our give than as that's going -- really, process will of our still And U.S. Gabe, XXXX. now. And a are we in market. be kind buy is And to template deep in greater the be Europe it's be think deflation negotiations. a the in of in of little now like in be for We're and probably consumers. segment. Container for in Metal significant the kind anticipating a our

question raised higher really and Dispensing Specialty good think items. the I value then And you and a on

We've today, shift kind single-digit with a we're on growth slight areas holiday mix, we're with seen customer that able in to rate customers So be market. some market other the XXXX going we mid- of volume of shift. already, bit opportunities in deliver working are a able sit same already season. We've to with offset high to that irrespective the to and that here activities little as and seeing customers we've seen other destocking been of a of of

we high very consistently providing for now. time of single-digit to growth a have portfolio been it's So rates of that's balanced mid- that some kind period

Operator

next We'll Roberts take our with [ James. ] Raymond from Matt question

Unknown Analyst

that you those I'll quarter, forward, discussed any of just Anything contracts there any maybe are been Maybe works? been terms in there last I we when look reset you Have that mean resolved? are mindful years? labor for how ask, a Or coming changes some those of issues, for to there? up potential hasn't bargaining renewal need of there couple be of as

Adam Greenlee

Matt, the to coverage for Silgan. universe welcome

you. have to good So

at million. guidance given we as talked What plants food call. it As the last business, $X far labor issues we that that improvement about the the cost that one we the would about on see, the and U.S. beverage in the -- we've estimate we be to

forecast. be $X $X that gave also We've reduced our QX. reduced we've [ absolutely got guidance we It's on cost what QX, last are delivered number. million upon. embedded and to the impact million that in the executing we had would we to what So absolutely was in QX that call to in $XX that, right that's on ] And basically million

said we that we've done ways major were your answer to So exactly good do we news, what specific do related the X were And going to contracts. on going to I labor and question issue. I'll

that's contracts earlier. we And labor union nothing of as I mean always a customer standpoint, come I facilities, normal normal a every from our up, course we we've our year. or work very year normal But this we labor couple year. so the ratified them next us. all that agreements negotiate on much churn for several course that through of We'll again, significant. have have nothing then mentioned set have that So a significant

Unknown Analyst

leverage Okay. expect in of there and consider cash terms to would any your the the shake XXXX of returns? or And terms those you considerations helpful. any to certainly year-end or then shareholder either update in where quarter be Perfect. in were to maybe at encouraging. Is debt in out debt, lastly, there buybacks Anything more down of paying

Kimberly Ulmer

to Bob. on bit leverage Xx. perspective, From little for the be end pass the of answer it I'll ratio year, over probably we'll a a Okay. leverage ratio and the then

you As X.Xx is stated between our know, range and X.Xx.

in and that middle we not we're it like So any us right that from restricting opportunities the is feel of see. may

Robert Lewis

and maintained Yes. And we've open upsized did maybe repurchases, a you roughly any on back continue amounts that left. about we we in about sizable on buying historically transactions. over relative million to the $XXX year-to-date got maintain share $XXX secret years. to been it's But market Where today, done a what authorization. back buy we million Historically, million it's $XXX I stand basis, have X don't fairly saw, think as after we've

we've repurchase most been our is we share a kind of arena where standpoint, from in So as to in lower middle. to of trend right the X.Xx end the the leverage start we're typically guidance

flip. the the That a everything the that in be market given now, that think combined market. the environment, in relative dislocation market backdrop like in just right time stock active M&A seemed on we saw particularly M&A performance, maybe it being activity some if I with floated, is the that's the fact I clunkiness some that around good economy to to the rates interest waiting on a to the there's likely where ideas to has you and the a for few will, but specific activity calendar on in of going slowed think are kind a generally, pause, that

Adam Greenlee

capital our shareholders. that kind think of value I is that another allocation create intended for to disciplined did. I just And then clearly, think, example of And program it's our

Operator

will Capital Arun Viswanathan with RBC Markets. from Our come next question

Arun Viswanathan

been guess of broader little question. I had destocking us expected. has bit a Obviously, I maybe deeper So than a some the

to structural well. far companies side retailers the lower of the with Would Now as making these or I from hearing guess, maybe maybe any retail hearing that those brand pet inventories and owners of issues? mean, I lower rates is owners anything are it's brand deal obviously into as over moved these changes as that you're are any side? the maybe some say you then companies? on of you on consumption from category food what

Adam Greenlee

been resilient. for it's product is in the to second point, we've our pretty No, the in seen consumer purchases not. particular, fairness And have that what

any programs And that customers' don't either or products. this we fairly branded see, that for integrated into more remains really different. or provide still a our point, promotional it's sales volume activity. benefit our is retail consumption at go-to-market positive, we structural is seen, their we inventory customers. the products, anticipate our when for any which And So have are cycle change to What robust programs fully to a to

to I'm Again, been X about the talk that value the at have I'll publicly a what's provide our segment. food system Food XXXX talking part And have our most to our the going for largest Pet Arun, about that's going and of inventory growth driving our destocking their now year-end. they that just that of we be for dollar to specifically now them. of customers believe repeat, activity beverage across stated is our and in customers products volume really, year

So we're anxious level. to to XXXX we're back said move not for on as and to But earlier, get more volume waiting that. a we normalized

earnings growth drive good take control are destiny action to our aggressive going for XXXX. We own to and

Arun Viswanathan

maybe again on to this primary in into if related to to think that parse out and is related would to saw And progression you be what of volume able destocking you XXXX, maybe kind it what's you were demand.

kind related see that's to really side? But it's wondering chain COVID to we've issues. gyrations supply weakness has if what and some take that Just and some going had obviously there through it structural on on primary been that how curious to improvement appear does of just demand

Adam Greenlee

that of But to impact little destocking really to in we Well, get I'll I through said back fourth fairness, the benefit from understand the earlier significant a quarter that is as think seeing the we a for items, mix the in what growth define full of that we products, driving growth Closures are high-value year. and we products Dispensing standpoint. to need the bit go in company and our Specialty for

So beverage. food and really, it to I is think back

destocking I think now destocking fourth upon probably from to XXXX. quarter and months the on now standpoint expectations right X some talk here for January earnings go what out get what call, sit rather in a the value in about our actually can the we'd do and based from we'll think we we was all I for work did experience math figure But XXXX.

Arun Viswanathan

just on helpful. activity. That's promotional If one can I ask more Okay.

that the that activity you that hearing been Is maybe that on meaning incrementally on an kind there Could of a you we've the just it strong, not necessarily little that? deep. there. increase seeing You also promotional of broad-based? discounts elaborate been promotional you aren't more has What of And kind confidence? noted gives depth as the is are activity that bit

Adam Greenlee

Yes.

of the a activities increased I couple know think we it there's from One, things. was. where

is with the that we then not pre-pandemic. it activity start level know that. also what was And So let's

manufacturers, wise It clear think out the the pre-pandemic So week. in I a was pretty one on sales, were XX% their promotion that of food largest at CPG their sales there was earlier report of versus XX%. was

promotion from a below quarters however, XX% lower had prior levels, up So that rate. prepandemic than

that viewing So kind think largely, I'm progression. that progress. And the is following as market we that again, of

other through price shelves. I inflation levels, product as And and past, And a item in There's real right and the some the it drive encouraged a And increased segment. I promotion not that of we or and time at on to are. always that consumers promotional We're that percent up is been customers. consumers think XXXX. promotions product is we're the is we're been that happening proposition in you what lot cost QX. those the store what benefit activity seeing the is the as now passed approaching is, activity. of waiting same absolute raised sold will was effective of the see how yes, now And provided The promotional is has to for enter prepandemic pre-pandemic. that's across there the value to all going being think on that's we volume be should, think

Robert Lewis

we would that the to all didn't, you getting start. know going was and for I think were take the that I in setting didn't back stage that when Arun, this we last that was that about discussion activity. destocking promotional had from exactly to point, Yes. quarter, was at we And customers the that the our sense

fact the to bright there's we ultimate destocking So seeing waters and a is what that's if proof fact activity concept, if will, program in but of the spot relative that is in testing that begin the are this, like. yet the you there don't whether the the look is activity. going I of terms to know, think destocking kind just of the We it's

Operator

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

Michael Roxland

Can about Adam, which pulled made to actually you what in you I customers and how just to customers' wanted speak the get the your your to comment they how about that follow that doing. earlier you up disconnect ultimately, a and on there's are in been how [indiscernible] actually going to comments not between XQ. -- forecast that you to you telling they told And forward, your occur given later destocking you anticipating. you or whether what they're change make approach any they're quickly betting,

Adam Greenlee

And destocking was maybe as Mike, call, think I earnings off just our the information the for Yes, sure. the about we fresh were clarity, activity hot on talking last presses.

we're meetings near either of of to the located most and facilities were So our into Number there's that part. to customers for take I just or a in one, our many couple co-located things about production context. to planning remember, think their think

planning manufacture what planning to understand So manufacture. we exactly they and what to we're they're understand exactly

really transparent. what of understanding remained So good that a strong, got very customers doing. very the of has level relationship are We've our

issue that objectives the were location. we there from outside is had initiatives were and think the that coming I of

number year-end they a more targeting. activity flow a think our with free at So were customers corporate that from of cash

our think metric to schedules from flow And customers and was I our they that its year-end objectives is way accelerated. plans And were the embedded focused the on corporate their working down reality simply the got production free was those as at of cash time, planners. the the production it what the disconnect then timing information were. a of simple customers was same So much very into the issue

we a thinking for they QX. the earlier it was because moved it So disconnect originally were versus us accelerated we whereas timing the target is into thought what year-end and

happened. So reality that's the what of just

pet I programs work embedded think that And item we've now. it got food, we're on I we as through is earlier. new and customers through a and our continuing a are to here good talked think handle those

Michael Roxland

it. Got

Okay.

early, through all might it can still budget I realized that you the know initially question, be little and But a just second EBITDA frame you're the I still help us for [indiscernible] details. The XXXX. working you said

headwinds the year, to closure that $XX plan expect he'll be repeat. savings mentioned you're going you $XX million You next million cost of head of

do all positive. you elevated have when resin you especially factors opposite customers in destocking, the of higher to trajectory us you new Can also continue to You have about on and X you thinking have any still But the custom which end, the containers, are XXXX? you costs. EBITDA Europe, other mindful in mentioned, help have inflation, be

Adam Greenlee

got I a we've think point. at much what this level what about talked at you've about thinking them pretty and high we're

the where And but operating it it believe next the I we year not need So as nothing to growth whether would for and what make -- of each to to we're changed near-term it feel exactly our kind quarter, pretty we destocking of I trails we as so, of statement longer-term think through and maybe first the think got segments. understand good Mike, are overarching we this has thesis we the the is that, sure rates on segments each make as into about We've is. through don't in to get that. get far

big parts as of for what then it about to still volumes frankly, be, we're need working the we're year quarter. our programs 'XX, the details the thinking But add to those we for we're how will balance customer next and you've got relates that moving to through viewing

Operator

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

Daniel Rizzo

the just destocking on products across are heard is I've spectrum. fairly wouldn't if there little any just color with seems whole customers be high-value other all wondering why this the I you what now could growing. broad-based kind provide that was of with high-value just that kind and companies, a at It more of the from

Adam Greenlee

across well. think as of broad-based we segments and pretty it's our Dan, all

got I we think about our about to the package we're overall of items, challenges high-value costs the areas the that lot Dispensing business. -- items percentage really, of what items you've not the think talking of are what that that talking subject that's a other is to and kind of we're about represent to And really in our buying our consumer those customers.

think as year single was and year, to mid- do grown well. it's high quarter we this every very So It's last resilient. been frankly, it digit

we've our and got driver growth good for to so dispensing have Closures 'XX. in good that do segment line and we Specialty And confidence of that sight continue

Daniel Rizzo

about, So apologize. I is fragrance beauty And to. thrust guess, referring the missed we're it, and there we're what talking I main I is if kind of

Adam Greenlee

And Yes. and beauty elements it's really, of fragrance.

think subject I We drivers, end the prestige/luxury are some if that to markets. will. those Again, economic are of you in different

Daniel Rizzo

we the know missed what's of Is kind the it if how of don't that? cost I but plan? this one-for-one basis? should about a Or I think savings either, And cost cash Okay.

Adam Greenlee

one year I the right more XX% And way is where the year X, it. period, be savings for of about over think for associated. flipped X-year would said to going one cash we to XX% kind X, cost be think that's the the

business. to a drive more the have bit the out door little cost preparing we'll upfront, of out So cash the

the on XX-XX it call So cost. cash

Operator

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

Jeffrey Zekauskas

is or savings. quickly it? already some you so they Does Your down your number costs cost the much you're ago, your management the any were so in this and SG&A $XX XX. million SG&A And of and year Can How they of explain savings? in the capturing get contain that bonuses previous in cost were million quarter, did XXX were the $XX quarter. you

Adam Greenlee

Jeff. Thanks, Sure.

a change there. So is some couple of there it's components. One, headcount

be driving and the executed to we QX. upon we business. will what are $XX cost of will on execute QX million The continue we've out to So in incremental what in

well. head with costs as And take the we that some we've administrative lower were got got headcount employee-related you've on. able to you've costs count, action then So other got associated

because management X months And costs. larger accruals everything of year. with items of of the those up, up other for some you QX a you're of drew the the associated like all includes as course get and truing that kind impact you in So bonus

maybe outsized So prior bit that or versus little like it part was of does why year reduction look prior a either quarters.

Jeffrey Zekauskas

in XXX. wondering cash have first CapEx in for your outstanding XXX through you including changes check it in the math X you've the checks, I call my in was about year negative if is And flow. question flow your XXX then free months, XXX. And got that a that's I could cash

last to got so you weak. a bit free generated little And you than $X.X year, little quarter. in And bit in a in think order And cash the quarter, I XXX. more generate is to be fourth around you've fourth think XXX quarter, going flow, the generate this billion to

things. You've got some other

So billion is free right? cash to Do have you that that flow? do in $X.X XXX to get to

Kimberly Ulmer

Yes.

have of higher receivables So is coming what through expecting we're to we this the the end looking are year. at into which collect quarter, we

be offset higher will programs have. that that we levels by of some And rationalization slightly inventory the due to

Jeffrey Zekauskas

payable accounts was in What quarter? your the

Kimberly Ulmer

It's included sheet, checks million. on let's the with balance other say outstanding $XXX

Operator

take now a will follow-up Staphos We from of George with Bank America.

George Staphos

So I back. come just want to

term? in we of customers banks, you year? if the that come EBITDA effect, on considering couple have I right then had not So an for new what follow-ons. you should effect next a revenue the and bank And Are

Adam Greenlee

in And Container Custom you segment? George, are the

George Staphos

where Yes, said customers. you're new you commercializing That's correct.

Adam Greenlee

Correct.

one associated So the that commercializing to the of year in quarter, from income basis. the And midyear. rate were Obviously, XXXX. the replace one look, nonrenewal run we contract we we'll full looking believe on with first we're a replace

So the year the by of replace the fully end run rate will that.

were smaller be but mix not So rate will we're more The as bottles replacement to $XX about be the decided year-end. the call run be it not something what are these we a million revenue will around getting. profit to profit And replacing renew. manufacturing it's because of simply of benefit one-for-one by just really, that going

George Staphos

last not ends on customers lot in year-end mid-years. for food X year of calendar fiscals but my their ones, your are And or Okay. A

of customers, they And beverage luck GLP-X. the a year probably half which of wouldn't your fiscal do see guessing heck first reduce for earlier, 'XX? of calendar in human flow to food and question relative your question with talk about, there's lot on them dealing back Good quarter. to destocking think the kind still to drive I'm and a same we a means then cash year, end So we on to but not capital touched for more through why what do the one this of higher working their destocking, you're time, fiscal the

Adam Greenlee

Great.

things think, on the so year-end couple a into items, take George, of to there's So I account.

customers Many year-end. right. You're on calendar on fiscal a a a or are Several calendar basis. on are basis customers not

kind to there this are is on a the calendar discussions. year-end element about change a component And and that. there So XXXX, Really retail clearly, conversations is other price retail piece is year. renew the January based discussions for retail customers their of that of a discussion that of our as cost

closely activity. again, we that is do working to with the that and So very destocking impact we're an think through them,

George Staphos

the not has I'm a really you could which effect fiscal about, think just it's the which of sorry, do we're calendar year? Adam, talking impact, year-end, some through middle that have the

Adam Greenlee

Yes.

of is Again, on George, are are I aren't some a discussions a year-end basis. these I in on part and it think And other year some the calendar retail year-end. question, calendar your apologize.

George Staphos

Yes. No worries.

from What Just and beverage. are you customers effect have hearing? to not be What there drugs should the you extent would on great. it's and that what your Any commentary on thoughts food the would having consider about? any worry you anti-obesity human we

Adam Greenlee

with our Thank of think business conversation. And most discussions the had you. earlier non-pet segment our I customers. the for food for We've several part, the

high-value products and nutrition low-cost, products value. nutrition consumers do safe I a consumers. been tremendous a we And think of has it's provide getting the our discussion largely around means as to what to

weight candidates that product we be application. do high this is consumers likely of the loss our that won't think we And we some nutrition also kind even so this support. though for that And may that products of think be

are foreseeable what just So of there's don't our of our part the think products advent closer, not are GLP material beverage future to we snacks that the of some the impact do. big any for we were not type a but -- probably if We've from customers, got according applications.

Operator

It are conference like back to no presenters or further comments. for telephone closing additional to our questions. turn over there the I'd appears any

Adam Greenlee

in Anna, in you, our forward Thank today Great. I Look time XXXX our interest and and outlook company. and appreciate year-end reviewing everyone's January. the to

Operator

for all conference. does your you thank participation. today's And We that once again, conclude

disconnect. now may You

Silgan (SLGN) 25 Oct 232023 Q3 Earnings call transcript