Silgan (US:SLGN)2021-11-04 19:21Financial Performance - Consolidated net sales for Q3 2021 were $1.65 billion, a 10.9% increase compared to Q3 2020, driven by higher unit volumes and the pass-through of increased raw material costs[77] - Net income for Q3 2021 was $106.3 million, down from $112.9 million in Q3 2020, with diluted earnings per share at $0.96 compared to $1.01 in the prior year[77] - Consolidated net sales for the first nine months of 2021 were $4.24 billion, a 14.7% increase compared to the same period in 2020[89] - Net income for the first nine months of 2021 was $274.0 million, compared to $248.6 million in the same period of 2020, with diluted earnings per share increasing from $2.23 to $2.47[89] Segment Performance - The Dispensing and Specialty Closures segment saw a sales increase of $58.3 million, or 12.3%, in Q3 2021, attributed to higher unit volumes and favorable foreign currency translation[79] - Net sales in the Dispensing and Specialty Closures segment increased by $345.7 million, or 27.8%, driven by higher unit volumes and favorable foreign currency translation[91] - The Metal Container segment's sales increased by $85.4 million, or 10.0%, in Q3 2021, primarily due to higher unit volumes of approximately 6%[80] - Net sales in the Metal Container segment rose by $158.3 million, or 8.1%, primarily due to higher unit volumes and the pass-through of increased raw material costs[93] - The Custom Container segment reported a sales increase of $18.9 million, or 12.1%, in Q3 2021, despite a volume decline of approximately 14% compared to the previous year[81] - Segment income for the Dispensing and Specialty Closures segment increased by $31.6 million, while the segment income margin decreased to 12.6%[98] Profitability Metrics - Gross profit margin decreased to 15.0% in Q3 2021, down 2.4 percentage points from the same period in 2020[82] - Gross profit margin decreased by 1.5 percentage points to 16.6% in the first nine months of 2021[95] - Income before interest and income taxes for Q3 2021 was $167.9 million, a decrease of $6.1 million compared to Q3 2020, with margins dropping to 10.2% from 11.7%[83] - Selling, general and administrative expenses decreased to 5.5% of consolidated net sales in Q3 2021, down from 6.2% in Q3 2020[82] - Selling, general and administrative expenses as a percentage of consolidated net sales decreased to 6.6% from 7.7% year-over-year[96] Debt and Taxation - Interest and other debt expense decreased to $27.0 million in Q3 2021, down from $27.7 million in Q3 2020, due to lower weighted average interest rates[87] - The effective tax rate for Q3 2021 was 24.6%, compared to 22.9% in Q3 2020, influenced by an audit period expiration in the prior year[88] - The effective tax rate for the first nine months of 2021 was 25.3%, compared to 24.4% in the same period of 2020[102] Cash Flow and Expenditures - Cash payments for rationalization plans were $6.9 million for the nine months ended September 30, 2021, compared to $7.7 million in the same period of 2020[117] - Remaining expenses for rationalization plans are expected to be $1.2 million, with cash expenditures of approximately $5.9 million[117] - Annual cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $3.1 million through 2040[117] - Average annual interest accretion for the withdrawal liability related to the Central States Pension Plan is expected to be approximately $1.1 million through 2040[117] Acquisitions and Financing - The company acquired Silgan Specialty Packaging and Unicep in September 2021, and Easytech on October 1, 2021, funded through revolving loan borrowings[105] - As of September 30, 2021, the company had $910.0 million of revolving loans outstanding under the Credit Agreement[108] Market Risks - Market risks include changes in interest rates, foreign currency exchange rates, and commodity price changes[120] - The company employs established policies to manage exposure to market risks and does not use derivative financial instruments for speculative purposes[120] - There has not been a material change in interest rate risk, foreign currency exchange rate risk, or commodity pricing risk since the last annual report[121]