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Silgan (SLGN) Q3 Earnings & Sales In Line with Estimates

Silgan Holdings Inc. SLGN reported third-quarter 2019 adjusted earnings of 76 cents per share, coming in line with the Zacks Consensus Estimate. Further, the figure also matched the year-ago quarter’s earnings.

Including one-time items, the company’s earnings per share came in at 73 cents compared with the prior-year quarter’s 76 cents.

Total revenues improved 1.1% year over year to $1.32 billion, matching the Zacks Consensus Estimate. The top line improved on higher net sales in the metal container businesses, partially offset by a decline in net sales in the closures and plastic container business.

Silgan Holdings Inc. Price, Consensus and EPS Surprise

 

Silgan Holdings Inc. Price, Consensus and EPS Surprise

Silgan Holdings Inc. price-consensus-eps-surprise-chart | Silgan Holdings Inc. Quote

Cost and Margins

In third-quarter 2019, cost of goods sold went up 1% to $1,114 million from $1,103 million a year ago. Gross profit improved 1.7% year over year to $207.6 million. Gross margin came in at 15.7% compared with year-ago quarter’s 15.6%.

Selling, general and administrative expenses increased 3.3% year over year to $76 million during the third quarter. Adjusted operating income inched up 0.8% to $131.6 million from $130.5 million reported in the year-ago quarter. Operating margin was 10.0% in the reported quarter, flat compared with the prior-year quarter.

Segment Performance

Revenues in the Metal Containers segment rose 3% year over year to $822 million. The segment’s adjusted operating income declined 3.3% year over year to $84 million.

The Closures segment’s revenues declined 2% year over year to $353 million. Adjusted operating income for the segment was $45 million in the reported quarter, down 5% from the prior-year quarter.
 
In the Plastic Containers segment, revenues edged down to $146 million from $148 million reported in the prior-year quarter. The segment reported an adjusted profit of $12 million, up from $9 million in the year-ago quarter.

Financial Updates

The company had cash and cash equivalents of $117.4 million at the end of the third quarter, down from the year-earlier quarter end’s balance of $171.4 million. The company utilized $2.5 million of cash in operations during the nine-month period ended Sep 30, 2019 compared with $13.2 million in the prior-year comparable period.

Outlook

Silgan provided adjusted earnings per share guidance of 34-39 cents for fourth-quarter 2019. The guidance includes an unfavorable non-cash pension impact of approximately 3 cents per share. It also reflects an earlier-than-anticipated end to the fruit and vegetable pack in the beginning of October.

Based on year-to-date performance and the impact of the earlier-than-anticipated end to the fruit and vegetable pack, on fourth quarter, Silgan trimmed adjusted earnings per share to the range of $2.12 to $2.17 from the prior $2.10 to $2.20 for the ongoing year. The guidance for 2019 includes an unfavorable non-cash pension impact of approximately 13 cents per share resulting from significant market declines in investment values at the end of 2018 that negatively impacted the assets held in the company’s pension plans.

Share Price Performance

Over the past year, Silgan Holdings’ stock has gained 32.5% compared with the industry’s growth of 55.2%.

Zacks Rank & Stocks to Consider

Silgan Holdings currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector are Dover Corporation DOV, Lawson Products, Inc. LAWS and Tetra Tech, Inc. TTEK, each sporting a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dover Corporation has an estimated earnings growth rate of 17.71% for 2019. The company’s shares have gained 46% in the past year.

Lawson Products has an expected earnings growth rate of 37.41% for the current year. The stock has appreciated 39% in a year’s time.

Tetra Tech has a projected earnings growth rate of 18.56% for the ongoing year. The company’s shares have rallied 70% over the past year.

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