Silgan (US:SLGN)2022-02-24 21:32Sales 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].