Silgan Holdings Inc.
) posted adjusted earnings of 63 cents per share in the
second-quarter of 2013, up 15% from 55 cents earned in the
year-ago quarter. The improvement was driven by solid operating
performance by the metal and plastic container businesses.
Earnings were consistent with the company's guided range of 60
cents to 70 cents per share but missed the Zacks Consensus
Estimate of 65 cents.
Including a rationalization charge of 1 cent per share and
favorable tax adjustment of 31 cents per share, earnings came in
at 93 cents per share in the reported quarter. Including plant
start-up costs of 2 cents per share, acquisition cost of 1 cent
per share and loss of 37 cents per share for an early
extinguishment of debt, earnings per share in the prior-year
quarter were 15 cents per share.
Total revenue increased 7% year over year to $880 million,
beating the Zacks Consensus Estimate of $862 million. Sales
increased at the metal food container and plastic container
businesses, partly offset by lower sales in the closures
Cost and Margins
Cost of goods sold increased 6% year over year to $758.1 million.
Gross profit improved 11% to $128 million from $115 million in
the year-ago quarter. Consequently, gross margin expanded 50
basis points (bps) to 14.6%. Selling, general and administrative
expenses increased 12.6% to $52 million. Adjusted operating
income increased 10% to $75.8 million, leading to 20 bps
expansion in operating margin to 8.6%.
Total revenue in the
segment rose 10.7% to $532 million, attributed to higher unit
volumes mainly in soup and pet food in the U.S., higher selling
prices, the benefits derived from the new plants in Eastern
Europe and the inclusion of the acquired Turkish operation.
Foreign currency also benefited the sales.
Adjusted operating income grew 9.5% year over year to $46
million. The year-over-year increase was due to increased unit
volumes partially offset by the overhead costs of the new
operations and lower volumes in the Middle East as a result of
political instability. Operating margin remained flat at 8.7%.
segment's total revenue slipped 0.9% to $181 million, affected by
lower beverage volumes in the U.S. as a result of adverse weather
condition and significantly lower sales in Venezuela due to
political instability, partly compensated by favorable foreign
currency. Adjusted operating income fell 4% to $21.9 million and
operating margin plunged 40 bps to 12%.
segment, total revenue increased 5.4% to $167 million. The growth
was attributable to the inclusion of net sales from the plastic
food container operation and a favorable mix of products sold,
partly offset by a decline in unit volumes in the legacy plastic
business. Adjusted operating income in the quarter was $11.9
million, up 28% from $11.9 million in the prior-year quarter. The
increase was primarily attributable to solid operating
performance, partly offset by lower volumes in the legacy
operations and increase in the cost of resin.
Cash and cash equivalents were $113 million as of Jun 30, 2013
compared with $368.9 million as of Jun 30, 2012. Current and
long-term debt increased to $1.87 billion as of Jun 30, 2013 from
$1.78 billion as of Jun 30, 2012. Debt-to-capitalization ratio
increased to 77% as of Jun 30, 2013, from 73% as of Jun 30, 2012.
Cash used in operating activities was $159 million during the
second quarter compared with $195 million in the prior-year
Outlook for 2013
For 2013, Silgan lowered its full-year expectation for adjusted
earnings per share to $3.00 to $3.15 from the previous band of
$3.05 to $3.20. The guidance excludes the impact of tax
adjustment, rationalization charges, plant start-up costs, loss
on early extinguishment of debt and the impact from the
remeasurement of net assets in Venezuela.
Adjusted earnings are expected at $1.25 to $1.35 per share for
the third quarter of 2013. The guidance is based on the normal
distribution of fruit and vegetable pack. However, political
volatility in various international regions could hurt earnings.
Silgan will benefit from its successful acquisitions, increasing
productivity and cost reduction initiatives, such as the newly
started Can Vision 2020. However, soft demand in Europe, a high
debt-to-capitalization ratio and lower volume expectation remain
Stamford, Ct.-based Silgan is a leading manufacturer of consumer
goods packaging products operating 81 manufacturing facilities in
North and South America, Europe and Asia. In North America,
Silgan is the largest supplier of metal containers for food
products and a leading supplier of plastic containers for
personal care products.
Silgan retains a Zacks Rank #3 (Hold). Among Silgan's peers
) reported second-quarter 2013 adjusted earnings of 85 cents per
share, down 4.5% from the year-ago adjusted earnings of 89 cents
per share. The results however beat the Zacks Consensus Estimate
by a penny. Its other peers
Mobile Mini, Inc.
) are yet to announce their quarterly results.
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