(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)

Silgan Holdings Inc. (NYSE:SLGN) Q3 2022 Earnings Conference Call October 26, 2022 11:00 AM ET Company Participants Kim Ulmer - SVP, Finance and Treasurer Adam Greenlee - President & CEO Robert Lewis - EVP & CFO Conference Call Participants Mark Wilde - Bank of Montreal George Staphos - Bank of America Adam Josephson - KeyBanc Anthony Pettinari - Citi Gabe Hajde - Wells Fargo Ghansham Panjabi - Baird Arun Viswanathan - RBC Capital Markets Kyle White - Deutsche Bank Daniel Rizzo - Jefferies Mike Roxland - Tr ...

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 June 30, 2022 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 000-22117 SILGAN HOLDINGS INC. (Exact name of Registrant as specified in its charter) Delaware 06-1 ...

Financial Data and Key Metrics Changes - The company reported record adjusted earnings of $1.08 per diluted share for Q2 2022, a 27% increase from $0.85 per diluted share in Q2 2021 [6][12] - Net sales for Q2 2022 increased by $195.1 million or 14.5% year-over-year to $1,540 million, driven by higher average selling prices and recent acquisitions [12][13] - Full year earnings estimate is confirmed in the range of $3.90 to $4.05 per diluted share, representing a 17% increase at the midpoint over 2021 levels [9][19] Business Segment Data and Key Metrics Changes - Adjusted segment income in the Dispensing and Specialty Closures segment increased by $17.4 million to a record $91.3 million, primarily due to favorable cost pass-throughs and strong operating performance [15] - Adjusted segment income in the Metal Containers segment rose by $11 million to $69.8 million, attributed to favorable price pass-throughs and strong operational performance, despite a 10% decline in unit volume [16] - Adjusted segment income in the Custom Containers segment increased by $3.6 million to $30.9 million, driven by higher average selling prices and strong operating performance [17] Market Data and Key Metrics Changes - The company faced challenging year-over-year volume comparisons in certain areas, particularly in the metal container and custom container segments [7] - The company anticipates a strong vegetable and fruit pack for Q3, with expectations of record levels for certain products [64] Company Strategy and Development Direction - The company is focused on operational efficiency and cost management to mitigate inflation and supply chain disruptions [7][11] - The company maintains a diversified portfolio that allows it to withstand economic uncertainties, with a strong innovation pipeline in the Dispensing and Specialty Closures segment [75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering significant earnings growth in 2022 despite inflationary pressures and supply chain challenges [5][9] - The company expects continued operational performance improvements and is maintaining its free cash flow guidance of approximately $350 million [22] Other Important Information - The company noted that unfavorable foreign currency translation negatively impacted earnings by approximately $0.04 in Q2 2022 [12] - The company is actively managing supply chain issues related to aluminum can sheet and does not expect any impact on operations in Q3 and Q4 [31] Q&A Session Summary Question: Observations on the cyclicality of dispensing and its evolution - Management discussed the resilience of the Dispensing and Specialty Closures segment, highlighting recovery in fragrance and beauty markets post-pandemic [26][28] Question: Update on aluminum can sheet supply - Management confirmed proactive measures to manage aluminum supply issues, with no expected impact on Q3 operations [31] Question: Impact of FX and interest rates on guidance - Management acknowledged FX and interest rate pressures but maintained guidance due to strong performance in the first half of the year [36][38] Question: Volume expectations for Q2 and full year - Management noted unexpected inventory corrections by major retailers impacted Q2 volumes but maintained a positive long-term outlook [40][41] Question: Consumer elasticity and price increases - Management indicated that consumer demand remained resilient despite inflation, particularly in food and beverage packaging [82] Question: Raw material inflation expectations - Management expects raw material inflation to stabilize, with effective pass-through mechanisms in place to manage costs [85][86]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2022, and 2021, including balance sheets, statements of income, comprehensive income, cash flows, and stockholders' equity, along with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets increased to $7.71 billion from $6.44 billion year-over-year, primarily driven by growth in inventories, goodwill, and other intangible assets, with total liabilities also rising and stockholders' equity expanding to $1.64 billion from $1.28 billion in the prior year Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | March 31, 2021 | Dec. 31, 2021 | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $2,281,771 | $1,819,238 | $2,295,849 | | **Total Assets** | **$7,710,410** | **$6,441,472** | **$7,770,846** | | **Total Current Liabilities** | $1,716,956 | $1,155,108 | $1,508,522 | | **Long-term Debt** | $3,445,633 | $3,163,292 | $3,772,926 | | **Total Stockholders' Equity** | **$1,638,239** | **$1,276,356** | **$1,562,696** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the first quarter of 2022, the company reported a 16.5% increase in net sales to $1.44 billion compared to $1.24 billion in the prior-year period, with net income growing to $84.9 million from $73.3 million, resulting in a diluted EPS of $0.76, up from $0.66 in Q1 2021 Q1 Statement of Income (in thousands, except per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Sales | $1,441,886 | $1,238,110 | | Gross Profit | $233,453 | $221,466 | | Income before interest and income taxes | $143,392 | $126,549 | | Net Income | $84,875 | $73,281 | | Diluted Net Income per Share | $0.76 | $0.66 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2022 was $100.1 million, a significant increase from $42.4 million in Q1 2021, primarily driven by a positive foreign currency translation adjustment of $12.4 million in 2022, compared to a negative adjustment of $33.4 million in the same period last year Comprehensive Income (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Income | $84,875 | $73,281 | | Other Comprehensive Income (Loss) | $15,186 | $(30,853) | | **Comprehensive Income** | **$100,061** | **$42,428** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $267.4 million in Q1 2022 from $172.1 million in Q1 2021, largely due to increased use of cash for inventories and trade accounts receivable, while financing activities resulted in a net cash outflow of $35.8 million, a shift from a net inflow of $25.7 million in the prior year Cash Flow Summary (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(267,401) | $(172,148) | | Net cash used in investing activities | $(70,027) | $(68,362) | | Net cash (used in) provided by financing activities | $(35,843) | $25,693 | | **Net decrease in cash** | **$(371,875)** | **$(219,350)** | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased to $1.64 billion as of March 31, 2022, from $1.28 billion a year prior, driven by net income of $84.9 million and other comprehensive income of $15.2 million, with the company also increasing its quarterly dividend per share to $0.16 from $0.14 in the prior year - Dividends declared on common stock per share increased to **$0.16** in Q1 2022 from **$0.14** in Q1 2021[19](index=19&type=chunk) Changes in Stockholders' Equity (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Beginning Balance | $1,562,696 | $1,264,676 | | Net Income | $84,875 | $73,281 | | Other Comprehensive Income (Loss) | $15,186 | $(30,853) | | Dividends Declared | $(17,923) | $(15,680) | | **Ending Balance** | **$1,638,239** | **$1,276,356** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on significant accounting policies, revenue disaggregation, rationalization charges, debt, financial instruments, and segment performance, highlighting revenue growth across all segments, a significant decrease in rationalization charges, and the redemption of $300 million in 4¾% Senior Notes Revenues by Segment (in thousands) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Dispensing and Specialty Closures | $597,927 | $509,352 | | Metal Containers | $650,726 | $554,081 | | Custom Containers | $193,233 | $174,677 | | **Total** | **$1,441,886** | **$1,238,110** | - On March 28, 2022, the company redeemed all **$300.0 million** of its outstanding 4¾% Senior Notes due 2025, resulting in a pre-tax charge of **$1.5 million** for the loss on early extinguishment of debt[30](index=30&type=chunk) Segment Income (in thousands) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Dispensing and Specialty Closures | $87,313 | $65,645 | | Metal Containers | $38,009 | $45,614 | | Custom Containers | $24,694 | $24,486 | | Corporate | $(6,624) | $(9,196) | | **Total Segment Income** | **$143,392** | **$126,549** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 16.5% increase in consolidated net sales to $1.44 billion for Q1 2022, driven by higher selling prices and volume growth in the dispensing and specialty closures segment, with net income rising to $84.9 million from $73.3 million year-over-year, and sufficient liquidity for future needs after redeeming $300 million in senior notes [General](index=17&type=section&id=General) Silgan is a leading manufacturer of sustainable rigid packaging solutions for consumer goods across three main segments, aiming to increase shareholder value through business growth, cost reduction, and strategic acquisitions - The company is a leading manufacturer of sustainable rigid packaging solutions for consumer goods products across dispensing/specialty closures, metal containers, and custom plastic containers[53](index=53&type=chunk) - The company's objective is to increase shareholder value by growing the business, reducing operating costs, building sustainable competitive positions, and completing acquisitions with attractive cash returns[54](index=54&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Q1 2022 net sales increased 16.5% YoY to $1.44 billion, and income before interest and taxes rose by $16.8 million, driven by passing through higher costs and an 8% volume increase in the dispensing segment, despite volume declines in metal and custom containers due to customer pre-buy activity and strong prior-year demand - Consolidated net sales increased **16.5%** in Q1 2022 compared to Q1 2021, primarily due to passing through higher raw material and inflationary costs[58](index=58&type=chunk) - Dispensing and specialty closures segment sales increased **17.4%**, driven by higher prices and an approximate **8%** increase in unit volumes[61](index=61&type=chunk) - Metal containers segment sales increased **17.4%** due to higher prices, but this was partially offset by a unit volume decrease of approximately **14%**[62](index=62&type=chunk) - Custom containers segment sales increased **10.6%** due to higher prices and a more favorable product mix, partially offset by an approximate **8%** volume decrease[63](index=63&type=chunk) [Capital Resources and Liquidity](index=20&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) The company's primary liquidity sources are cash from operations and debt facilities, with Silgan redeeming all $300 million of its 4¾% Senior Notes in Q1 2022, and having $972.2 million available under its revolving credit facility as of March 31, 2022, which management believes is sufficient for foreseeable needs - On March 28, 2022, the company redeemed all **$300.0 million** of its outstanding 4¾% Notes, funded by revolving loan borrowings and cash on hand[72](index=72&type=chunk) - As of March 31, 2022, the company had **$972.2 million** available for borrowing under its revolving credit facility[76](index=76&type=chunk) - Management believes that cash from operations and available borrowings will be sufficient to meet expected operating needs, capital expenditures, debt service, and dividends for the foreseeable future[78](index=78&type=chunk) [Guaranteed Securities](index=21&type=section&id=Guaranteed%20Securities) This section provides summarized financial information for the Obligor Group, comprising Silgan Holdings Inc. and its U.S. subsidiaries that guarantee the company's senior notes and credit facility, including key balance sheet and income statement figures for this specific group of entities Obligor Group Summarized Financials (in millions) | Metric | March 31, 2022 | Dec. 31, 2021 | | :--- | :--- | :--- | | Current assets | $1,412.5 | $1,506.9 | | Noncurrent assets | $4,144.9 | $4,159.9 | | Current liabilities | $1,348.1 | $1,159.2 | | Noncurrent liabilities | $4,050.6 | $4,392.4 | Obligor Group Q1 2022 Results (in millions) | Metric | Q1 2022 | | :--- | :--- | | Net sales | $1,046.0 | | Gross profit | $143.7 | | Net income | $57.3 | [Rationalization Charges](index=22&type=section&id=Rationalization%20Charges) The company continues to execute cost reduction plans, including facility rationalizations, with cash payments of $2.5 million in Q1 2022, and future cash expenditures expected to be approximately $3.1 million annually through 2040, primarily related to the withdrawal liability from the Central States Pension Plan - Cash payments for rationalization plans were **$2.5 million** for the three months ended March 31, 2022[85](index=85&type=chunk) - Remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately **$3.1 million** annually through 2040[85](index=85&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks stem from changes in interest rates, foreign currency exchange rates, and commodity prices, which Silgan manages using established policies and derivative instruments for hedging purposes, with no material changes to these risks or management policies since the 2021 Annual Report on Form 10-K - The company's primary market risks are from changes in interest rates, foreign currency exchange rates, and commodity prices like natural gas[88](index=88&type=chunk) - There has not been a material change to the company's interest rate risk, foreign currency exchange rate risk, or commodity pricing risk since the fiscal year ended December 31, 2021[89](index=89&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls over financial reporting during the quarter, and the company is currently integrating the internal controls of three entities acquired in 2021 for inclusion in the 2022 annual assessment - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[90](index=90&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[91](index=91&type=chunk) - The company is in the process of integrating the internal controls of three entities acquired in 2021: Gateway Plastics LLC, Unicep Packaging LLC, and Easytech Closures S.p.A[92](index=92&type=chunk) [Part II. Other Information](index=24&type=section&id=Part%20II.%20Other%20Information) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including a form of Restricted Stock Unit Agreement, an amendment to the Senior Executive Performance Plan, and certifications by the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act, along with XBRL data files - The report includes certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[93](index=93&type=chunk)

Financial Data and Key Metrics Changes - The company reported record adjusted earnings of $0.78 per diluted share for Q1 2022, an increase from $0.75 in Q1 2021, representing a year-over-year growth of 4% [7][15] - Consolidated net sales for Q1 2022 increased by $203.8 million or 16.5% year-over-year, reaching $1.44 billion [15][16] - The full-year earnings guidance was raised to a range of $3.90 to $4.05 per diluted share, indicating a 17% increase at the midpoint over 2021 levels [11][25] Business Segment Data and Key Metrics Changes - Adjusted segment income in the Dispensing and Specialty Closures segment increased by $16.4 million to $87.3 million in Q1 2022, driven by higher unit volumes and improved operational efficiencies [19][20] - Adjusted segment income in the Metal Container segment decreased by $11.3 million to $39.3 million, primarily due to lower unit volumes and ongoing inflation [21][22] - The Custom Container segment reported adjusted segment income of $24.8 million, slightly above the prior year, attributed to favorable impacts from lower resin costs [23] Market Data and Key Metrics Changes - The company experienced unfavorable foreign currency translation losses of approximately $22 million in Q1 2022 [17] - Volumes in the Metal Container segment were down nearly 14% year-over-year, largely due to prebuy activity in Q4 2021 [21][22] - The first quarter volumes were reported to be 10% above pre-pandemic levels compared to 2019 [22] Company Strategy and Development Direction - The company emphasized the importance of strong commercial relationships to mitigate the impact of inflation and supply chain disruptions [8][9] - The integration of recent acquisitions is progressing well, contributing positively to sales and operational performance [13][25] - The company is focused on maintaining operational efficiencies and cost pass-through mechanisms to counteract inflationary pressures [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the volume outlook for the remainder of the year, anticipating improvements as customers cycle over supply chain issues [24][25] - The company is optimistic about maintaining free cash flow guidance of approximately $350 million despite inflationary pressures [25][79] - Management noted that demand for canned goods remains strong, with no significant disruptions expected from inflation [95] Other Important Information - The company has suspended new investments in Russia following the invasion of Ukraine, with ongoing sales limited to essential products [85][87] - The company is actively managing working capital in light of rising raw material costs and inflation [79][120] Q&A Session Summary Question: Margin drop in Metal Containers - Management indicated that the 300 basis point drop in margins was primarily due to significant inflation, particularly in metal prices, and a less favorable product mix [29][30] Question: Tinplate price increases - Management is in discussions with suppliers regarding tinplate prices and does not anticipate significant inflation in 2023 [34][36] Question: EPS guidance increase - The increase in EPS guidance is attributed to strong performance from acquisitions and good operational performance across all segments [41][43] Question: Demand trends in food can markets - Management noted strong demand for pet food and soup products, with expectations of continued growth despite some supply chain challenges [45][48] Question: Volume outlook for 2022 - Management provided details on volume expectations, indicating slight declines in Metal Containers but growth in Dispensing and Specialty Closures [54][56] Question: Free cash flow guidance - Management maintained free cash flow guidance at approximately $350 million, citing working capital management amid inflation [79] Question: Impact of energy costs - Energy costs represent 2% to 3% of the cost of goods sold, and management is actively managing energy procurement to mitigate inflation impacts [118][119] Question: Competitive advantages in Dispensing and Metal Containers - Management highlighted strong customer relationships and operational efficiencies as key competitive advantages in both segments [126]

Sales Performance - Net sales of the dispensing and specialty closures business reached $2.16 billion in 2021, with a compounded annual growth rate of approximately 13.9% since 2003[158]. - The metal containers business generated net sales of $2.81 billion in 2021, representing a compounded annual growth rate of approximately 7.3% since 1987[159]. - Custom containers business net sales increased to $708.6 million in 2021, with a compounded annual growth rate of approximately 6.3% since 1987[160]. - Consolidated net sales for 2021 were $5.68 billion, a 15.3% increase from 2020, driven by higher unit volumes and favorable foreign currency translation[173]. - Net sales in the dispensing and specialty closures segment increased by $448.1 million, or 26.2%, primarily due to higher unit volumes and acquisitions[175]. - Net sales for the metal containers segment rose by $250.0 million, or 9.8%, attributed to higher unit volumes and raw material cost pass-through[176]. - Net sales for the custom containers segment increased by $57.1 million, or 8.8%, despite a 10% decline in volumes[177]. Profitability and Margins - The gross profit margin for 2021 was 16.2%, a decrease from 17.6% in 2020[169]. - Gross profit margin decreased by 1.4 percentage points to 16.2% in 2021 due to significant raw material cost inflation[178]. - Income before interest and income taxes increased by $63.7 million, or 12.4%, with a margin of 10.1%[181]. - Segment income for dispensing and specialty closures increased by $37.7 million, while segment income margin decreased to 12.1%[182]. - Segment income for metal containers increased by $7.1 million, with a margin decrease to 9.0%[183]. Debt and Financing - The company has incurred significant interest expense, with the aggregate interest and other debt expense as a percentage of income before interest and income taxes at 18.8% for 2021[167]. - Interest and other debt expense increased to $108.4 million in 2021, primarily due to higher borrowings from acquisitions[185]. - Total consolidated indebtedness at December 31, 2021, was $3,815.4 million, with cash and cash equivalents of $631.4 million[211]. - The company has a $1.5 billion multi-currency revolving loan facility available for working capital and other corporate purposes[212]. - Total long-term debt obligations as of December 31, 2021, amounted to $3,746.6 million, with principal payments scheduled at $17.5 million in 2022, escalating to $2,429.8 million thereafter[221]. - As of December 31, 2021, the company had $3,815.4 million of outstanding indebtedness, with $1,013.4 million bearing interest at floating rates, making financial results sensitive to changes in market interest rates[227]. Acquisitions and Growth Strategy - The company plans to pursue further acquisition opportunities in the consumer goods packaging market to enhance growth and shareholder value[156]. - The company continues to evaluate acquisition opportunities in the consumer goods packaging market and may incur additional indebtedness to finance such acquisitions[219]. - In 2021, the company funded acquisitions totaling $745.7 million using proceeds from new term loans and cash from operating activities[208]. Operational Efficiency - The company has closed multiple manufacturing facilities since 2016 to streamline operations and reduce costs, including two dispensing and specialty closures facilities and six metal container facilities[161]. - Approximately 20% of annual net sales in 2021 were subject to customer-based supply chain financing arrangements, improving days sales outstanding by approximately twelve days[215]. - Approximately 12% and 14% of the Cost of Goods Sold for the years ended December 31, 2021, and 2020, respectively, were subject to the Supply Chain Financing (SCF) program, with outstanding trade accounts payables under this program at approximately $325 million as of December 31, 2021[216]. Tax and Regulatory - The effective tax rate improved to 23.0% in 2021 from 24.2% in 2020, influenced by tax rate changes in certain jurisdictions[186]. - The effective tax rate for 2020 was 24.2%, compared to 23.1% in 2019[199]. Capital Expenditures - The company expects capital expenditures of approximately $280 million in 2022, with annual expenditures thereafter ranging from $250 million to $280 million, potentially increasing due to specific growth or cost-saving projects[220]. Risk Management - The company does not engage in hedging activities for raw materials due to the ability to pass on price changes to customers[250]. - The company manages exposure to natural gas price fluctuations through natural gas swap agreements[251].

Financial Data and Key Metrics Changes - Silgan Holdings reported revenue of $5.7 billion for 2021, an increase of $755.2 million or 15.3% compared to the previous year [14] - Adjusted net income per diluted share was $3.40, up 11% from the prior year [9] - Free cash flow reached a record $466 million, or $4.19 per diluted share, compared to $384 million in the previous year [13][9] - For Q4 2021, earnings per diluted share were $0.76, compared to $0.54 in the prior-year quarter, with adjusted earnings per diluted share of $0.79 versus $0.60 a year ago [20] Business Line Data and Key Metrics Changes - Adjusted segment income in the Dispensing and Specialty Closures segment increased by $35.9 million to $269.5 million, driven by recent acquisitions and volume growth [16] - Adjusted segment income in the Metal Container segment was $263.6 million, an increase of $7.1 million or 2.8% due to higher unit volumes [18] - Custom Container segment adjusted income increased by $4.5 million or 5% to $92.7 million, primarily due to strong operating performance despite a 10% decline in volumes compared to the previous year [19] Market Data and Key Metrics Changes - The company experienced year-over-year volume improvement in Dispensing and Specialty Closures and Metal Containers segments, with a 15% increase in Dispensing and Specialty Closures and a 3% increase in Metal Containers for Q4 2021 [31] - Custom Containers saw a volume decline of 12% in Q4 2021 [31] Company Strategy and Development Direction - Silgan Holdings is focused on integrating recent acquisitions and investing in operational improvements to drive growth [10] - The company plans to provide full-year guidance for adjusted earnings per diluted share in the range of $3.80 to $4.00 for 2022, representing a 15% increase over 2021 [11] - Strategic acquisitions in 2021 included Gateway, Unicep, and Easytech, aimed at expanding commercial supply and improving operational efficiencies [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation and supply chain disruptions but expressed confidence in the company's ability to manage these issues through price discipline and operational improvements [13] - The outlook for 2022 includes expectations for adjusted earnings per diluted share to increase, driven by segment income growth in Dispensing and Specialty Closures and Metal Containers [22][23] - Management noted that the food can business is expected to normalize and grow above pre-pandemic levels, with a focus on pet food and protein markets [75] Other Important Information - The company expects capital expenditures in 2022 to be approximately $280 million, up from $232 million in 2021, to support growth opportunities [25] - Free cash flow for 2022 is estimated at approximately $350 million, impacted by higher working capital and capital expenditures [27] Q&A Session Summary Question: Can you provide a view on volume for the fourth quarter by segment, excluding acquisition effects? - Volumes were up 15% in Dispensing and Specialty Closures, with organic volume growth of 8.5% in Q4. Metal Containers saw a 3% increase, while Custom Containers experienced a 12% decline [31] Question: How comfortable are you that both Custom Container and DSC can grow through post-COVID de-stocking? - Management expressed confidence in growth for Dispensing and Specialty Closures, citing a strong food and beverage business and recovery in hygiene products. Custom Containers are expected to see growth due to new commercial awards [34][36] Question: Can you help with pension income compared to last year and price-cost expectations? - Pension is expected to be a $5 million headwind year-over-year. Price-cost dynamics indicate a $10 million negative impact from resin costs, with some recovery anticipated [43] Question: What is the outlook for food service business within Metal Containers? - The food service business is recovering, with good growth in small cans and expectations for normalization in 2022 [87] Question: Are you confident in protecting margin dollars despite inflation? - Management confirmed confidence in passing through inflation costs to customers, with over 90% of the food can business under contract allowing for direct pass-through [92]