Silgan Holdings Inc (NYSE:SLGN) Q4 2023 Earnings Call Transcript January 31, 2024 11:00 AM ET Company Participants Alex Hutter - Vice President of Investor Relations Adam Greenlee - President & CEO Kim Ulmer - CFO, Senior VP of Finance & Treasurer Robert Lewis - Executive VP, Corporate Development and Administration & Director Conference Call Participants George Staphos - Bank of America Matt Roberts - Raymond James Gabe Hadje - Wells Fargo Ghansham Panjabi - Baird Anthony Pettinari - Citi Mike Roxland - Tr ...

Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q3 2023 show decreased net sales and income, negative operating cash flow, and increased total assets and liabilities Financial Metric | Financial Metric | Sept. 30, 2023 | Sept. 30, 2022 | Dec. 31, 2022 | | :--- | :--- | :--- | :--- | | Total Current Assets | $2,661,822 | $2,332,228 | $2,132,652 | | Total Assets | $7,812,307 | $7,519,413 | $7,345,757 | | Total Current Liabilities | $1,915,561 | $1,681,412 | $1,437,860 | | Long-Term Debt | $3,312,685 | $3,246,738 | $3,345,381 | | Total Stockholders' Equity | $1,781,889 | $1,693,231 | $1,718,256 | Income Statement (in thousands) | Income Statement (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,803,101 | $1,970,445 | $4,648,109 | $4,956,112 | | Gross profit | $285,918 | $307,765 | $774,009 | $815,144 | | Net income | $110,617 | $138,703 | $261,536 | $316,253 | | Diluted net income per share | $1.02 | $1.25 | $2.38 | $2.85 | Cash Flow (in thousands) | Cash Flow (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash (used in) operating activities | ($596,042) | ($117,522) | | Net cash (used in) investing activities | ($170,558) | ($161,611) | | Net cash provided by (used in) financing activities | $487,600 | ($90,561) | | Net decrease in cash | ($278,498) | ($387,830) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes declining sales and income to lower volumes and destocking, while maintaining liquidity through operations and credit facilities [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Consolidated net sales and income declined due to lower volumes and non-recurring sales, while interest expenses significantly increased - Consolidated net sales decreased by **$167.3 million (8.5%)** in Q3 2023 and **$308.0 million (6.2%)** in the first nine months of 2023, primarily due to lower volumes across all segments, non-recurring sales from Russia in 2022, and the pass-through of lower resin costs[60](index=60&type=chunk)[61](index=61&type=chunk) - Income before interest and income taxes fell by **$25.3 million** in Q3 2023 and **$51.5 million** in the first nine months of 2023, mainly due to lower volumes, higher pension expenses, and increased rationalization charges, partially offset by lower SG&A costs[65](index=65&type=chunk)[66](index=66&type=chunk) - Interest and other debt expense increased by **$13.6 million** in Q3 2023 and **$37.6 million** in the first nine months of 2023, primarily due to higher weighted average interest rates[67](index=67&type=chunk)[68](index=68&type=chunk) [Dispensing and Specialty Closures Segment](index=23&type=section&id=Dispensing%20and%20Specialty%20Closures%20Segment) Dispensing and Specialty Closures segment net sales decreased due to lower volumes, but Q3 adjusted EBIT and margins improved Dispensing and Specialty Closures | Dispensing and Specialty Closures | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $559.1M | $575.5M | $1,699.1M | $1,775.9M | | Adjusted EBIT | $93.8M | $88.4M | $253.6M | $285.2M | | Adjusted EBIT margin | 16.8% | 15.4% | 14.9% | 16.1% | - Q3 net sales decreased by **2.8%** due to a **3%** decline in unit volumes, mainly from lower demand for closures in international food and beverage markets and non-recurring sales in Russia[78](index=78&type=chunk) - Q3 adjusted EBIT increased by **$5.4 million**, driven by higher selling prices to offset inflation, a more favorable product mix, and reduced SG&A expenses, which outweighed the impact of lower volumes[80](index=80&type=chunk) [Metal Containers Segment](index=24&type=section&id=Metal%20Containers%20Segment) Metal Containers segment net sales declined due to volume drops, yet Q3 adjusted EBIT margin improved, and nine-month EBIT increased Metal Containers | Metal Containers | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,094.6M | $1,212.0M | $2,475.6M | $2,617.1M | | Adjusted EBIT | $113.5M | $117.6M | $241.7M | $214.0M | | Adjusted EBIT margin | 10.4% | 9.7% | 9.8% | 8.2% | - Q3 net sales fell **9.7%** due to an **11%** decrease in unit volumes, largely attributed to customer destocking and non-recurring volumes from Russia in the prior year[85](index=85&type=chunk) - For the first nine months of 2023, adjusted EBIT increased by **$27.7 million**, primarily due to higher average selling prices from the contractual pass-through of inflation and lower SG&A costs, which offset the impact of lower volumes[88](index=88&type=chunk) [Custom Containers Segment](index=25&type=section&id=Custom%20Containers%20Segment) Custom Containers segment net sales and adjusted EBIT significantly decreased due to lower volumes, destocking, and unfavorable product mix Custom Containers | Custom Containers | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $149.4M | $182.9M | $473.4M | $563.1M | | Adjusted EBIT | $11.8M | $22.8M | $50.3M | $75.5M | | Adjusted EBIT margin | 7.9% | 12.5% | 10.6% | 13.4% | - Q3 net sales decreased **18.3%** due to a combination of approximately **10%** lower volumes from customer destocking, the pass-through of lower resin costs, and a less favorable product mix[92](index=92&type=chunk) - Q3 adjusted EBIT decreased by **$11.0 million**, and the margin fell to **7.9%** from **12.5%**, primarily due to the lower volumes and unfavorable product mix[94](index=94&type=chunk) [Capital Resources and Liquidity](index=25&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) The company relies on cash from operations and credit facilities for liquidity, funding operations, repurchases, and dividends through borrowings - For the nine months ended September 30, 2023, the company used net borrowings and cash on hand to fund a **$596.0 million** use of cash in operations, **$183.9 million** in common stock repurchases, and **$59.7 million** in dividends[98](index=98&type=chunk) - As of September 30, 2023, the company had **$818.0 million** of revolving loans outstanding and an available borrowing capacity of **$660.5 million** under its Credit Agreement[101](index=101&type=chunk) - The company maintains a Supply Chain Finance (SCF) program, with outstanding trade accounts payables subject to this program totaling approximately **$294.1 million** at September 30, 2023[105](index=105&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks primarily involve interest rates, foreign currency, and commodity prices, with no material changes since year-end 2022 - The company's primary market risks are related to interest rates, foreign currency exchange rates, and commodity prices[114](index=114&type=chunk) - There has been no material change to the company's market risk exposures or its management policies since the Annual Report on Form 10-K for the year ended December 31, 2022[115](index=115&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[116](index=116&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) Part II [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **3.45 million** shares for **$152.9 million** in Q3 2023, with **$93.3 million** remaining for future repurchases Unregistered Sales of Equity Securities and Use of Proceeds | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value Remaining Under Program | | :--- | :--- | :--- | :--- | | July 2023 | — | $— | $246.2M | | August 2023 | 2,829,774 | $44.63 | $119.9M | | September 2023 | 618,220 | $43.14 | $93.3M | | **Q3 2023 Total** | **3,447,994** | **$44.36** | **$93.3M** | - The Board of Directors authorized a **$300.0 million** stock repurchase program on March 4, 2022, which is effective through December 31, 2026[118](index=118&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[119](index=119&type=chunk)

Silgan Holdings Inc. (NYSE:SLGN) Q3 2023 Earnings Conference Call October 25, 2023 11:00 AM ET Company Participants Alex Hutter - Vice President, Investor Relations Adam Greenlee - President & Chief Executive Officer Kim Ulmer - Senior Vice President, Chief Financial Officer & Treasurer Bob Lewis - Executive Vice President, Corporate Development & Administration Conference Call Participants Ghansham Panjabi - Baird George Staphos - Bank of America Anthony Pettinari - Citi Gabe Hajde - Wells Fargo Matt Rober ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 001-41459 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) SILGAN HOLDINGS INC. (Exact name of Registrant as specified in its charter) Delaware 06-1 ...

Financial Data and Key Metrics Changes - Total adjusted EBIT for Q2 2023 was $160.8 million, a decrease of 14% year-over-year, with record adjusted EBIT in the Metal Containers segment offset by lower adjusted EBIT in the Dispensing & Specialty Closures and Custom Containers segments [27][55] - Adjusted net income per diluted share declined by $0.26 from the record achieved in Q2 2022, impacted by higher interest expense of $0.08 and non-recurring sales associated with Russia of $0.06 [27][55] - Free cash flow estimate for 2023 revised to $375 million, with CapEx expected to be approximately $230 million [15] Business Line Data and Key Metrics Changes - In the Metal Containers segment, adjusted EBIT increased nearly 20% from the prior year, achieving a new record for Q2 despite lower overall volumes due to prior year restocking activities [13][55] - Dispensing & Specialty Closures segment adjusted EBIT decreased by $23.4 million compared to the prior year, primarily due to skilled labor challenges and lower volume mix, particularly in Food & Beverage products in Europe [28][55] - Custom Containers segment saw a 14% decline in volumes compared to Q2 2022, resulting in a 17% decrease in sales due to non-renewal of contracts and lower food and personal care volumes [54] Market Data and Key Metrics Changes - Evidence of consumers trading down to lower-cost packaged products was noted, particularly in Europe, impacting the Food & Beverage market [9][76] - U.S. consumer demand remained resilient, with no significant impact observed from inflation, contrasting with the weaker consumer environment in Europe [76][97] Company Strategy and Development Direction - The company is shifting focus to align operational activities with revised customer inventory management initiatives for the second half of 2023, aiming to drive out costs across all business lines [7][10] - Management expressed confidence in the long-term growth outlook for the Dispensing & Specialty Closures segment, despite current challenges, and anticipates a return to growth as inventory management issues are resolved [44][98] Management's Comments on Operating Environment and Future Outlook - Management acknowledged disappointment with Q2 performance and revised outlook for the remainder of 2023, viewing current issues as transitory and expected to be resolved within the year [32][57] - The company expects adjusted net income per diluted share for 2023 to be in the range of $3.40 to $3.60, reflecting a year-over-year headwind of $0.30 per share due to interest expense [55] Other Important Information - The company wrote off tax indemnity and related tax reserves, which adversely impacted corporate expenses by approximately $2 million and interest expenses by approximately $3.5 million, while benefiting tax expenses by approximately $5 million [12] - The company is actively managing labor challenges at a U.S. Food & Beverage facility, which has resulted in significant incremental costs [23][40] Q&A Session All Questions and Answers Question: Can you elaborate on the customer inventory management programs and how they differ from previous destocking initiatives? - Management clarified that the current inventory management programs are distinct from previous COVID-related destocking, driven by significant inflation impacting both consumers and customers [16][17] Question: What are the expected benefits of restructuring programs in 2023 or 2024? - Management indicated that discussions regarding the benefits of restructuring programs would be held off until teams are fully informed of the actions being taken [34] Question: Can you provide insights on the incremental corporate development costs in the quarter? - Management stated that the costs are part of ongoing M&A activity and should not be interpreted as a change in capital allocation posture [38] Question: How confident is management that the labor issues will be resolved by the end of the year? - Management expressed confidence that the labor challenges would be resolved through various actions taken to mitigate the impact on production [40][109] Question: What is the outlook for the Dispensing & Specialty Closures segment given the current volume challenges? - Management expects low single-digit growth for the segment in the back half of the year, with confidence in long-term growth despite current challenges [43][97] Question: How does the company view the impact of inflation on consumer demand? - Management noted that while inflation is impacting consumer spending, the U.S. market remains resilient, contrasting with the weaker European market [76][95]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 001-41459 SILGAN HOLDINGS INC. (Exact name of Registrant as specified in its charter) Delaware 06- ...

Silgan Holdings Inc. (NYSE:SLGN) Q1 2023 Results Conference Call April 26, 2023 11:00 AM ET Company Participants Alex Hutter - VP, IR Adam Greenlee - President, CEO Kim Ulmer - SVP, CFO & Treasurer Conference Call Participants Anthony Pettinari - Citi Arun Viswanathan - RBC Capital Markets Daniel Rizzo - Jefferies Gabe Hajde - Wells Fargo George Staphos - Bank of America Ghansham Panjabi - Baird Jeff Zekauskas - JP Morgan Kyle White - Deutsche Bank Mike Roxland - Truist Securities Operator Good day, ever ...

(Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the transition period from to Washington, DC 20549 FORM 10-K Delaware 06-1269834 (I.R.S. Employer Identification No.) Registrant's telephone number, including area code (203) 975-7110 Securities registered pursuant to Secti ...

Silgan Holdings Inc. (NYSE:SLGN) Q4 2022 Earnings Conference Call January 25, 2022 11:00 AM ET Company Participants Kim Ulmer - Senior Vice President of Finance & Treasurer Adam Greenlee - President & Chief Executive Officer Robert Lewis - Executive Vice President & Chief Financial Officer Conference Call Participants Adam Josephson - KeyBanc Ghansham Panjabi - Baird George Staphos - Bank of America Gabe Hajde - Wells Fargo Bryan Burgmeier - Citi Kyle White - Deutsche Bank Arun Viswanathan - RBC Capital Mar ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, cash flows, and stockholders' equity, with detailed notes for periods ended September 30, 2022 and 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased from **$7.77 billion** at December 31, 2021, to **$7.52 billion** at September 30, 2022, driven by lower cash and cash equivalents, while stockholders' equity increased | Metric (Dollars in thousands) | Sept. 30, 2022 | Sept. 30, 2021 | Dec. 31, 2021 | | :---------------------------- | :------------- | :------------- | :------------ | | Cash and cash equivalents | 243,609 | 270,567 | 631,439 | | Total current assets | 2,332,228 | 2,181,374 | 2,295,849 | | Total assets | 7,519,413 | 7,547,840 | 7,770,846 | | Total current liabilities | 1,681,412 | 2,041,088 | 1,508,522 | | Long-term debt | 3,246,738 | 3,191,581 | 3,772,926 | | Total stockholders' equity | 1,693,231 | 1,456,706 | 1,562,696 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net sales increased **19.3%** for the three months and **16.9%** for the nine months ended September 30, 2022, driving significant growth in gross profit and net income, with diluted EPS rising to **$1.25** and **$2.85** respectively | Metric (Dollars in thousands, except per share) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :-------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net sales | 1,970,445 | 1,651,070 | 4,956,112 | 4,237,841 | | Cost of goods sold | 1,662,680 | 1,402,836 | 4,140,968 | 3,533,257 | | Gross profit | 307,765 | 248,234 | 815,144 | 704,584 | | Net income | 138,703 | 106,292 | 316,253 | 274,049 | | Diluted net income per share | 1.25 | 0.96 | 2.85 | 2.47 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income slightly increased to **$81.6 million** for the three months but decreased to **$210.7 million** for the nine months ended September 30, 2022, primarily due to foreign currency translation losses | Metric (Dollars in thousands) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income | 138,703 | 106,292 | 316,253 | 274,049 | | Foreign currency translation | (58,254) | (30,952) | (109,957) | (38,655) | | Other comprehensive loss | (57,140) | (27,725) | (105,528) | (30,205) | | Comprehensive income | 81,563 | 78,567 | 210,725 | 243,844 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to **$117.5 million** for the nine months ended September 30, 2022, while investing activities decreased due to fewer acquisitions, leading to an overall **$387.8 million** decrease in cash and cash equivalents | Metric (Dollars in thousands) | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :---------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | (117,522) | (5,778) | | Net cash used in investing activities | (161,611) | (889,190) | | Net cash (used in) provided by financing activities | (90,561) | 761,886 | | Net decrease in cash and cash equivalents | (387,830) | (138,914) | | Balance at end of period | 243,609 | 270,567 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased to **$1.69 billion** at September 30, 2022, driven by net income and retained earnings growth, despite increased accumulated other comprehensive loss and treasury stock repurchases | Metric (Dollars in thousands, except per share) | Sept. 30, 2022 | Sept. 30, 2021 | | :-------------------------------------------- | :------------- | :------------- | | Total stockholders' equity | 1,693,231 | 1,456,706 | | Retained earnings | 2,954,292 | 2,622,401 | | Accumulated other comprehensive loss | (365,356) | (291,158) | | Dividends declared on common stock per share | 0.16 (3 months) / 0.48 (9 months) | 0.14 (3 months) / 0.42 (9 months) | | Repurchases of common stock (9 months) | (26,367) | — | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed context for financial statements, covering accounting policies, revenue, rationalization, comprehensive loss, inventory, debt, financial instruments, commitments, retirement benefits, income taxes, treasury stock, stock-based compensation, and segment information [Note 1. Significant Accounting Policies](index=9&type=section&id=Note%201.%20Significant%20Accounting%20Policies) Financial statements are prepared under GAAP for interim reporting, with no impairment found in the 2022 annual assessment of goodwill and indefinite-lived intangible assets - Financial statements are unaudited and prepared under GAAP for interim reporting, not full GAAP[20](index=20&type=chunk) - Annual impairment assessment for goodwill and indefinite-lived intangible assets was performed in Q3 2022, with **no impairment found**[22](index=22&type=chunk) [Note 2. Revenue](index=9&type=section&id=Note%202.%20Revenue) Revenue is disaggregated by segment and geography, with total revenue of **$4.96 billion** for the nine months ended September 30, 2022, primarily from North America and the Metal Containers segment | Segment (Dollars in thousands) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Dispensing and Specialty Closures | 575,530 | 533,329 | 1,775,888 | 1,588,449 | | Metal Containers | 1,212,034 | 942,125 | 2,617,156 | 2,120,740 | | Custom Containers | 182,881 | 175,616 | 563,068 | 528,652 | | **Total Revenues** | **1,970,445** | **1,651,070** | **4,956,112** | **4,237,841** | | Geography (Dollars in thousands) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | North America | 1,592,775 | 1,274,025 | 3,833,613 | 3,140,924 | | Europe and other | 377,670 | 377,045 | 1,122,499 | 1,096,917 | | **Total Revenues** | **1,970,445** | **1,651,070** | **4,956,112** | **4,237,841** | [Note 3. Rationalization Charges](index=10&type=section&id=Note%203.%20Rationalization%20Charges) Rationalization charges totaled **$2.7 million** for three months and **$7.5 million** for nine months ended September 30, 2022, primarily in Metal Containers, with remaining expenses and cash expenditures of **$3.1 million** and **$6.0 million** respectively | Segment (Dollars in thousands) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Dispensing and Specialty Closures | 346 | 406 | 346 | 5,704 | | Metal Containers | 2,480 | 1,822 | 7,182 | 7,068 | | Custom Containers | (100) | 87 | 5 | 254 | | **Total Rationalization Charges** | **2,726** | **2,315** | **7,533** | **13,026** | - Remaining expenses for rationalization plans (excluding Central States Pension Plan) are expected to be **$3.1 million**, and cash expenditures **$6.0 million**[25](index=25&type=chunk) - Remaining cash expenditures for Central States Pension Plan withdrawal liability are approximately **$3.1 million** annually through 2040[25](index=25&type=chunk) [Note 4. Accumulated Other Comprehensive Loss](index=11&type=section&id=Note%204.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss increased to **$(365.4) million** at September 30, 2022, primarily due to **$(109.9) million** in foreign currency translation losses for the nine-month period | Component (Dollars in thousands) | Balance at Dec. 31, 2021 | Other comprehensive loss (9 months ended Sept. 30, 2022) | Balance at Sept. 30, 2022 | | :------------------------------- | :----------------------- | :------------------------------------------------------- | :------------------------ | | Unrecognized Net Defined Benefit Plan Costs | (119,474) | 1,731 | (117,743) | | Change in Fair Value of Derivatives | (2,327) | 2,698 | 371 | | Foreign Currency Translation | (138,027) | (109,957) | (247,984) | | **Total Accumulated Other Comprehensive Loss** | **(259,828)** | **(105,528)** | **(365,356)** | - Foreign currency translation losses for the nine months ended September 30, 2022, were **$(109.9) million**, including **$(168.1) million** from foreign subsidiary financial statements and **$72.2 million** from net investment hedges[28](index=28&type=chunk) [Note 5. Inventories](index=12&type=section&id=Note%205.%20Inventories) Inventories increased to **$851.1 million** at September 30, 2022, with an inventory management program decreasing cost of goods sold by **$33.5 million** due to LIFO liquidations | Inventory Type (Dollars in thousands) | Sept. 30, 2022 | Sept. 30, 2021 | Dec. 31, 2021 | | :------------------------------------ | :------------- | :------------- | :------------ | | Raw materials | 452,307 | 333,202 | 394,102 | | Work-in-process | 231,036 | 152,429 | 157,406 | | Finished goods | 542,044 | 370,134 | 394,378 | | **Total Inventories (LIFO adjusted)** | **851,070** | **762,182** | **798,837** | - An inventory management program decreased cost of goods sold by **$26.2 million** for the three months and **$33.5 million** for the nine months ended September 30, 2022, due to LIFO inventory liquidations[30](index=30&type=chunk) [Note 6. Long-Term Debt](index=12&type=section&id=Note%206.%20Long-Term%20Debt) Total principal debt decreased to **$3.86 billion** at September 30, 2022, following the redemption of **$300.0 million** of Senior Notes in March 2022, incurring a **$1.5 million** pre-tax charge | Debt Type (Dollars in thousands) | Sept. 30, 2022 | Sept. 30, 2021 | Dec. 31, 2021 | | :------------------------------- | :------------- | :------------- | :------------ | | Bank revolving loans | 497,000 | 910,000 | — | | U.S. term loans | 1,000,000 | 400,000 | 1,000,000 | | 3¼% Senior Notes | 636,740 | 753,285 | 739,180 | | 4⅛% Senior Notes | 600,000 | 600,000 | 600,000 | | 2¼% Senior Notes | 489,800 | 579,450 | 568,600 | | 1.4% Senior Secured Notes | 500,000 | 500,000 | 500,000 | | **Total debt - principal** | **3,856,298** | **4,147,799** | **3,815,372** | - Redeemed **$300.0 million** of 4¾% Senior Notes in March 2022, resulting in a **$1.5 million** pre-tax charge for early extinguishment of debt[32](index=32&type=chunk) [Note 7. Financial Instruments](index=13&type=section&id=Note%207.%20Financial%20Instruments) Financial instruments include cash, receivables, payables, debt, and swap agreements, with fair values measured using Level 1 or Level 2 inputs, and derivatives used to manage interest rate, natural gas, and foreign currency risks - Cash and cash equivalents fair value measured using **Level 1 inputs**[35](index=35&type=chunk) - Derivative instruments (interest rate and natural gas swaps) fair value measured using **Level 2 inputs**[35](index=35&type=chunk) - Utilizes interest rate swap agreements (**$50.0 million** notional principal each, fixed rate **2.878%**, maturing March 24, 2023) and natural gas swap agreements to manage exposures[40](index=40&type=chunk)[41](index=41&type=chunk) - Foreign currency gains related to net investment hedges (Euro-denominated 3¼% Senior Notes) were **$30.2 million** for the three months and **$72.2 million** for the nine months ended September 30, 2022[42](index=42&type=chunk) [Note 8. Commitments and Contingencies](index=15&type=section&id=Note%208.%20Commitments%20and%20Contingencies) The company settled a European Commission investigation regarding metal packaging operations, paying a **€23.9 million** fine in October 2022, with no other material adverse legal proceedings expected - Settled European Commission investigation for metal packaging operations, paying a fine of **€23.9 million** in October 2022[43](index=43&type=chunk) - No other legal proceedings are expected to have a **material adverse effect** on business or financial condition[44](index=44&type=chunk) [Note 9. Retirement Benefits](index=15&type=section&id=Note%209.%20Retirement%20Benefits) Net periodic pension benefit credit was **$(7.7) million** for three months and **$(23.1) million** for nine months ended September 30, 2022, with similar trends for other postretirement benefits | Metric (Dollars in thousands) | Three Months Ended Sept. 30, 2022 | Three Months Ended Sept. 30, 2021 | Nine Months Ended Sept. 30, 2022 | Nine Months Ended Sept. 30, 2021 | | :---------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Net periodic pension benefit credit | (7,720) | (8,605) | (23,060) | (25,847) | | Net periodic other postretirement benefit credit | (389) | (490) | (1,106) | (1,252) | [Note 10. Income Taxes](index=15&type=section&id=Note%2010.%20Income%20Taxes) The IRS completed its 2020 tax year review with no changes and accepted the company into the Compliance Assurance Program for 2021 and 2022 - IRS completed 2020 tax year review with **no changes**[46](index=46&type=chunk) - Accepted into Compliance Assurance Program for **2021 and 2022** tax years[46](index=46&type=chunk) [Note 11. Treasury Stock](index=16&type=section&id=Note%2011.%20Treasury%20Stock) The Board authorized a **$300.0 million** common stock repurchase program through 2026, with **$26.4 million** in repurchases during the first nine months of 2022 and **$273.6 million** remaining - Board authorized **$300.0 million** common stock repurchase program through December 31, 2026[47](index=47&type=chunk) - Repurchased **649,727 shares** for **$26.4 million** during the nine months ended September 30, 2022[47](index=47&type=chunk) - Approximately **$273.6 million** remains under the repurchase authorization[47](index=47&type=chunk) [Note 12. Stock-Based Compensation](index=16&type=section&id=Note%2012.%20Stock-Based%20Compensation) The company granted **429,731** restricted stock units with a fair value of **$17.9 million** during the first nine months of 2022, amortized over their vesting period - Granted **429,731** restricted stock units with a fair value of **$17.9 million** during the first nine months of 2022[50](index=50&type=chunk) [Note 13. Segment Information](index=17&type=section&id=Note%2013.%20Segment%20Information) The company operates in three segments: Dispensing and Specialty Closures, Metal Containers, and Custom Containers, with Metal Containers generating the highest net sales and Dispensing and Specialty Closures the highest segment income | Segment (Dollars in thousands) | Net Sales (9 Months Ended Sept. 30, 2022) | Segment Income (9 Months Ended Sept. 30, 2022) | | :----------------------------- | :---------------------------------------- | :--------------------------------------------- | | Dispensing and Specialty Closures | 1,775,888 | 257,825 | | Metal Containers | 2,617,156 | 225,634 | | Custom Containers | 563,068 | 79,846 | | Corporate | — | (42,486) | | **Total** | **4,956,112** | **520,819** | - Corporate expenses for the nine months ended September 30, 2022, include a **$25.2 million** charge for the European Commission settlement[52](index=52&type=chunk) - Sales and segment income for metal containers and part of dispensing and specialty closures are **seasonal**, with higher unit sales and disproportionate annual segment income historically in the third quarter due to harvests[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance and condition, analyzing results for the three and nine months ended September 30, 2022, covering revenue, income drivers, segment performance, capital resources, and liquidity [General](index=19&type=section&id=General) Silgan Holdings Inc. is a leading manufacturer of sustainable rigid packaging solutions, aiming to increase shareholder value through growth, cost reduction, competitive positioning, and strategic acquisitions - Leading manufacturer of **sustainable rigid packaging solutions** for consumer goods[58](index=58&type=chunk) - Products include dispensing and specialty closures, steel and aluminum containers, and custom plastic containers[58](index=58&type=chunk) - Objective: increase shareholder value by growing business, reducing costs, building competitive positions, and completing attractive acquisitions[59](index=59&type=chunk) [RESULTS OF OPERATIONS](index=20&type=section&id=RESULTS%20OF%20OPERATIONS) Consolidated net sales increased **19.3%** and **16.9%** for the three and nine months ended September 30, 2022, respectively, driven by higher selling prices and unit volumes, leading to increased income despite inflationary costs and unfavorable foreign currency translation [Three Months Ended September 30, 2022 Compared with Three Months Ended September 30, 2021](index=21&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20Compared%20with%20Three%20Months%20Ended%20September%2030%2C%202021) Consolidated net sales increased **19.3%** to **$1.97 billion**, with diluted EPS rising to **$1.25**, driven by higher selling prices and unit volumes in dispensing and specialty closures, partially offset by lower volumes in other segments and unfavorable foreign currency translation - Consolidated net sales increased **19.3%** to **$1.97 billion**[63](index=63&type=chunk) - Net income per diluted share increased to **$1.25** from **$0.96**[63](index=63&type=chunk) - **Dispensing and Specialty Closures:** Net sales increased **7.9%** (**$42.1 million**) due to higher selling prices, **1%** higher unit volumes, and favorable mix, partially offset by **$37 million** unfavorable foreign currency translation; segment income increased **$19.1 million**, with margin rising to **13.8%**[65](index=65&type=chunk)[71](index=71&type=chunk) - **Metal Containers:** Net sales increased **28.6%** (**$269.9 million**) due to higher selling prices, partially offset by **9%** lower unit volumes and **$19 million** unfavorable foreign currency translation; segment income increased **$27.0 million**, with margin remaining at **10.0%**[66](index=66&type=chunk)[72](index=72&type=chunk) - **Custom Containers:** Net sales increased **4.2%** (**$7.3 million**) due to favorable product mix and higher selling prices, partially offset by **7%** lower volumes and **$1 million** unfavorable foreign currency translation; segment income increased **$1.6 million**, with margin rising to **13.3%**[67](index=67&type=chunk)[73](index=73&type=chunk) - Interest and other debt expense increased **$6.7 million** to **$33.7 million** due to higher outstanding borrowings from acquisitions and higher interest rates[74](index=74&type=chunk) [Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021](index=22&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20Compared%20with%20Nine%20Months%20Ended%20September%2030%2C%202021) Consolidated net sales increased **16.9%** to **$4.96 billion**, with diluted EPS rising to **$2.85**, driven by higher selling prices and unit volumes, partially offset by lower volumes in some segments, unfavorable foreign currency, and a European Commission settlement - Consolidated net sales increased **16.9%** to **$4.96 billion**[76](index=76&type=chunk) - Net income per diluted share increased to **$2.85** from **$2.47**[77](index=77&type=chunk) - **Dispensing and Specialty Closures:** Net sales increased **11.8%** (**$187.5 million**) due to higher selling prices and **3%** higher unit volumes, partially offset by **$81 million** unfavorable foreign currency translation; segment income increased **$58.2 million**, with margin rising to **14.5%**[79](index=79&type=chunk)[85](index=85&type=chunk) - **Metal Containers:** Net sales increased **23.4%** (**$496.4 million**) due to higher selling prices, partially offset by **11%** lower unit volumes and **$40 million** unfavorable foreign currency translation; segment income increased **$27.1 million**, but margin decreased to **8.6%**[80](index=80&type=chunk)[87](index=87&type=chunk) - **Custom Containers:** Net sales increased **6.5%** (**$34.4 million**) due to higher selling prices and favorable product mix, partially offset by **7%** lower volumes and **$3 million** unfavorable foreign currency translation; segment income increased **$5.4 million**, with margin rising to **14.2%**[81](index=81&type=chunk)[88](index=88&type=chunk) - Interest and other debt expense (before early extinguishment loss) increased **$11.8 million** to **$91.7 million** due to higher outstanding borrowings from 2021 acquisitions[89](index=89&type=chunk) - Corporate expenses increased due to a **$25.2 million** settlement with the European Commission[84](index=84&type=chunk) - Rationalization charges decreased to **$7.5 million** from **$13.0 million**[76](index=76&type=chunk) [CAPITAL RESOURCES AND LIQUIDITY](index=24&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) Liquidity is primarily from operating activities and debt, with cash used for debt redemption, capital expenditures, and dividends, while maintaining compliance with financial covenants and sufficient resources for future needs - Principal liquidity sources: net cash from operating activities and borrowings under debt instruments[91](index=91&type=chunk) - Redeemed **$300.0 million** of 4¾% Notes in March 2022 using revolving loan borrowings and cash on hand[92](index=92&type=chunk) - For the nine months ended September 30, 2022, cash was used for[94](index=94&type=chunk)[95](index=95&type=chunk) - Debt redemption and other foreign long-term debt: **$300.3 million** - Decreases in outstanding checks: **$225.9 million** - Net capital expenditures and other investing activities: **$161.6 million** - Cash used in operations: **$117.5 million** - Dividends paid: **$54.3 million** - Stock repurchases: **$39.4 million** - Available revolving loans under the Credit Agreement at September 30, 2022, were **$983.3 million**[97](index=97&type=chunk) - Seasonal working capital requirements (averaging **$350 million**) are funded through revolving loans, other foreign bank loans, and cash on hand[98](index=98&type=chunk) - Believes cash from operations and available borrowings will meet expected operating needs, capital expenditures, debt service, tax obligations, pension contributions, share repurchases, and dividends[99](index=99&type=chunk) - In compliance with all financial and operating covenants[100](index=100&type=chunk) [Guaranteed Securities](index=25&type=section&id=Guaranteed%20Securities) Various Senior Notes are guaranteed by the Obligor Group, comprising U.S. subsidiaries that also guarantee the Credit Agreement, with summarized financial information provided - 3¼%, 4⅛%, 2¼% Senior Notes, and 1.4% Senior Secured Notes are guaranteed by the **Obligor Group** (U.S. subsidiaries)[101](index=101&type=chunk) | Obligor Group (Dollars in millions) | Sept. 30, 2022 | Dec. 31, 2021 | | :---------------------------------- | :------------- | :------------ | | Current assets | 1,460.8 | 1,506.9 | | Noncurrent assets | 4,066.2 | 4,159.9 | | Current liabilities | 1,323.3 | 1,159.2 | | Noncurrent liabilities | 3,877.6 | 4,392.4 | - For the nine months ended September 30, 2022, the Obligor Group reported net sales of **$3,714.0 million** and net income of **$227.4 million**[105](index=105&type=chunk) [Rationalization Charges](index=26&type=section&id=Rationalization%20Charges) The company continues to pursue cost reduction opportunities, with **$6.3 million** in cash payments for rationalization plans during the nine months ended September 30, 2022, and remaining expenses of **$3.1 million** - Cash payments for rationalization plans were **$6.3 million** for the nine months ended September 30, 2022[106](index=106&type=chunk) - Remaining expenses and cash expenditures for rationalization plans (excluding Central States Pension Plan) are expected to be **$3.1 million** and **$6.0 million**, respectively[106](index=106&type=chunk) - Remaining cash expenditures for Central States Pension Plan withdrawal liability are approximately **$3.1 million** annually through 2040[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rates, foreign currency, and commodity prices, managed through derivative financial instruments and internal hedging strategies, with no material changes since the last annual report - Primary market risks: **interest rates**, **foreign currency exchange rates**, and **commodity prices** (natural gas)[109](index=109&type=chunk) - Uses derivative financial instruments (interest rate and natural gas swap agreements) and internal hedging strategies for foreign currency to manage risks, not for speculation[109](index=109&type=chunk) - No material changes to market risks or management policies since the December 31, 2021, Form 10-K, except as noted in Financial Statements Notes 6 and 7[110](index=110&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal controls over financial reporting, and acquired entities' controls are being integrated for the 2022 annual assessment - Disclosure controls and procedures were **effective** as of September 30, 2022[111](index=111&type=chunk) - No **material changes** in internal controls over financial reporting during the period[112](index=112&type=chunk) - Integrating internal controls of 2021 acquisitions (Gateway Plastics LLC, Unicep Packaging LLC, Easytech Closures S.p.A.) for the 2022 annual assessment[113](index=113&type=chunk) [Part II. Other Information](index=28&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a European Commission investigation regarding metal packaging operations on July 12, 2022, paying a **€23.9 million** fine in October 2022, closing the investigation - Settled European Commission investigation regarding metal packaging operations in Europe on **July 12, 2022**[114](index=114&type=chunk) - Paid a fine of **€23.9 million** in October 2022[114](index=114&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and XBRL documents - Includes certifications by CEO and CFO pursuant to **Section 302** and **Section 906** of the Sarbanes-Oxley Act[116](index=116&type=chunk) - XBRL Instance Document and Taxonomy Extension documents are filed[116](index=116&type=chunk) [Signatures](index=30&type=section&id=Signatures) The Quarterly Report on Form 10-Q was signed on November 3, 2022, by Robert B. Lewis, Executive Vice President and Chief Financial Officer - Report signed by Robert B. Lewis, Executive Vice President and Chief Financial Officer, on **November 3, 2022**[121](index=121&type=chunk)