Silgan (US:SLGN)2022-01-26 19:14Financial 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]