We have reiterated our Neutral recommendation on Silgan Holdings
with a target price of $53.00. Earnings increased 14% year over
year to $0.73 per share in the first quarter of 2014. The company
guided adjusted EPS to between $3.10 and $3.30 for 2014, reflecting
13% to 20% y-o-y growth. Silgan will benefit from its successful
acquisition of Portola Packaging in Oct 2013. The acquisition will
enhance Silgan's Closure business and also enable expansion of its
plastic closures offerings in Europe. Geographic expansion will
also help in long-term growth. Increasing productivity and cost
reduction initiatives, such as the Can Vision 2020, will also drive
growth. However, high debt-to-capitalization ratio remains a
Silgan Holdings Inc. is one of the leading North American
manufacturers of metal and plastic consumer goods packaging
products. Its products are used in diverse end-markets. It is the
largest metal-container supplier for food products in North
America. The company has 81 manufacturing plants throughout North
and South America, Europe and Asia. Its product lines include steel
and aluminum containers for human and pet food custom-designed
plastic containers for personal care, healthcare, pharmaceutical,
household, industrial chemical, food, pet care, agricultural
chemical, automotive and marine chemical products and metal,
composite and plastic closures for food and beverage products. Some
of the world's best-known branded consumer products, including
Campbell's Soup, Del Monte Fruits and Vegetables, Listerine and
Friskies Pet Food, use Silgan's containers.
The Metal Food Container (MFC) (55% of total revenue in the
first quarter of fiscal 2014) business is engaged in the
manufacture and sale of steel and aluminum containers used
primarily by processors and packagers of food products such as
metal containers for soup, vegetables, fruit, meat, coffee, pet
food and other miscellaneous goods. Silgan holds around 50% of the
market share in the U.S. metal food container market.
The Closures business (25%) manufactures and sells metal,
composite and plastic vacuum closures for food and beverage
products. The segment also provides sealing/capping equipment to
complement its closure product offering.
The Plastic Container business (20%) is one of the leading North
American manufacturers of custom-designed high-density polyethylene
(HDPE) for personal care, healthcare and household and industrial
chemical products. The segment also makes polyethylene
terephthalate (PET) containers for the personal care market. It
produces plastic containers from a full range of resin materials
and offers a wide array of molding and decorating capabilities.
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