SILGAN RECORDS RECORD SALES IN 2022

Silgan Holdings Inc, a leading provider of sustainable rigid packaging solutions for the world’s essential consumer goods products, announced record full-year net sales of nearly $6.41 billion. Data that translates into a 12.9 percent increase over the prior year’s net sales of $5.68 billion, and full-year 2022 net income of $340.8 million, or $3.07 per diluted share. compared to full-year 2021 net income of $359.1 million, or $3.23 per diluted share.

“The Silgan team continued to operate at a very high level, capitalizing on our momentum in the market along with our customers in 2022. As a result, we delivered our 6th consecutive year of record tight EPS in 2022, with a new all-time high that is 17 percent above the previous record in 2021,” said Adam Greenlee, president and CEO. “Since our founding, our unique business model has proven successful through a variety of economic cycles, as evidenced by our 12 percent 10-year CAGR for adjusted EPS. The past three years have demonstrated the exceptional strength of our team and the execution of our strategic initiatives, as well as our ability to adapt to rapidly changing market conditions, with a CAGR in excess of 20 percent for adjusted EPS from pre-pandemic levels,” continued Mr. Greenlee.

“As our focus shifts to 2023, we believe the prospects for continued success and growth are stronger than at any time in our history. We expect the results of our long-term growth strategy of building partnerships with our customers, financial discipline, effective deployment of capital and a relentless focus on costs and profitability to continue to generate higher revenues, organic volume growth and higher segment income in 2023, as well as significantly improved free cash flow generation,” concluded Greenlee.

The Company reported net cash provided by operating activities of $748.4 million in 2022 compared to $556.8 million in 2021. Free cash flow for 2022 was $368.2 million compared to $466.1 million in 2021. The decrease in free cash flow was primarily due to higher working capital, the European Commission settlement payment and higher interest payments, partially offset by higher income before interest and income taxes in 2022. The Company provides a reconciliation in Table C of this press release of net cash provided by operating activities to “free cash flow,” a non-GAAP financial measure used by the Company that adjusts net cash provided by operating activities for certain items. Net sales for 2022 were $6.41 billion, an increase of $734.4 million, or 12.9 percent, compared with $5.68 billion in 2021. This increase was the result of higher net sales in all segments.

Dispensing and special closures

Net sales for the dispensing and specialty closures segment were a record $2.32 billion in 2022, an increase of $156.2 million, or 7.2 percent, compared with $2.16 billion in 2021. This increase was primarily the result of higher average selling prices due to the pass-through of higher inflationary raw material and other costs and higher unit volumes of approximately 1 percent, partially offset by unfavorable foreign currency translation of approximately $106 million.

Specialty dispensing and closures segment revenue for 2022 increased $60.9 million to a record $323.0 million compared to $262.1 million in 2021, and segment margin increased to 13.9 percent from 12.1 percent for the same periods. The increase in segment income was primarily due to higher average selling prices, primarily as a result of the pass-through of higher inflationary raw material and other costs, strong operating performance including the benefit of an inventory management program, the favorable comparative year-over-year impact of the delayed pass-through of resin costs, cost recovery for certain customer project expenses, lower rationalization charges and a charge of $1.6 million for inventory write-downs for purchase accounting in the prior year period, partially offset by inflation in manufacturing and selling, general and administrative costs and the impact of unfavorable foreign currency translation.

Metal containers

Net sales for the metal container segment were a record $3.37 billion for 2022, an increase of $563.8 million, or 20.1 percent, compared with $2.81 billion in 2021. This increase was primarily the result of higher average selling prices due to the pass-through of higher raw material and other manufacturing costs, partially offset by lower unit volumes of approximately 11 percent and unfavorable foreign currency translation of approximately $52 million. As expected, the decrease in unit volumes was primarily the result of the impact of customer pre-purchase activity in the fourth quarter of 2021 ahead of significant price increases due to unprecedented metal inflation in 2022, lower fruit and vegetable volumes compared to higher customer restocking volumes in the prior record year and the continued unfavorable impact of supply chain and ongoing labor challenges from certain customers in 2022.

Metal Containers segment revenue in 2022 was $234.2 million, a decrease of $19.5 million compared to $253.7 million in 2021, and segment margin decreased to 6.9 percent from 9.0 percent for the same periods. The decrease in segment income was mainly due to higher rationalization expenses, which amounted to US$64.2 million. The segment’s revenues benefited from strong operating performance, including an inventory management program, and higher average selling prices due to the pass-through of higher inflationary raw material and other costs. These increases were partially offset by manufacturing and selling inflation, general and administrative costs, lower unit volumes, a less favorable mix of products sold and the impact of unfavorable foreign currency translation. Rationalization charges were $73.1 million and $8.9 million in 2022 and 2021, respectively. Rationalization charges in 2022 included $73.8 million primarily related to the write-off of net assets from operations in Russia, partially offset by an $8.5 million rationalization credit related to the finalization of the Central States, Southeast and Southwest Pension Plan withdrawal liability in 2019.

Customized containers

Custom container segment net sales were $723.0 million in 2022, an increase of $14.4 million, or 2.0 percent, compared with $708.6 million in 2021. This increase was primarily due to higher average selling prices, including the pass-through of higher resin and other inflationary costs, and a more favorable mix of products sold, partially offset by lower volumes of approximately 8 percent and the impact of unfavorable foreign currency translation of approximately $5 million. The decrease in volumes was primarily due to higher volumes in the prior year as a result of increased pandemic-related demand and subsequent inventory corrections across the supply chain in 2022, particularly for home, personal care and lawn and garden products.

Custom container segment revenue in 2022 was $92.5 million, an increase of $0.1 million compared to $92.4 million in 2021, while segment margin decreased to 12.8 percent from 13.0 percent in the same periods. The increase in segment revenues was primarily attributable to higher average selling prices, the favorable year-over-year comparative impact of the delayed pass-through of resin costs, and strong operating performance. These increases were partially offset by lower volumes and inflation in manufacturing and selling, general and administrative costs.

Outlook for 2023

Segment revenues in the dispensing and specialty closures segment in 2023 are expected to increase significantly from the prior year, primarily due to higher volumes and continued improvement in operating performance. Volumes in 2023 are expected to be higher than in 2022 as a result of continued growth in the beauty and fragrance markets, improved volume levels for hygiene and cleaning products compared to the negative impact in 2022 of inventory management throughout the supply chain for these products and less customer pre-purchase activity than in the prior-year period.