slgn-20230630

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, 2023


			☐						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 001-41459

SILGAN HOLDINGS INC.

(Exact name of Registrant as specified in its charter)


Delaware		06-1269834
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

4 Landmark Square
Stamford,	Connecticut	06901
(Address of principal executive offices)		(Zip Code)

(203) 975-7110

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SLGN	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, the number of shares outstanding of the Registrant’s common stock was 109,946,430.

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SILGAN HOLDINGS INC.

TABLE OF CONTENTS

			Page No.


Part I. Financial Information			3

Item 1. Financial Statements			3

Condensed Consolidated Balance Sheets at June 30 , 2023 and 2022 and December 31, 2022			3

Condensed Consolidated Statements of Income for the three and six months ended June 30 , 2023 and 2022			4

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2023 and 2022			5

Condensed Consolidated Statements of Cash Flows for the six months ended June 30 , 2023 and 2022			6

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30 , 2023 and 2022			7

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3. Quantitative and Qualitative Disclosures About Market Risk			28

Item 4. Controls and Procedures			28

Part II. Other Information			29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29

Item 6. Exhibits			30

Signatures			31

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Part I. Financial Information

Item 1. Financial Statements

SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	June 30, 2023		June 30, 2022		Dec. 31, 2022
	(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	236,606	$	247,843	$	585,622
Trade accounts receivable, net	1,067,550		931,282		657,968
Inventories	1,251,544		1,253,894		769,403
Prepaid expenses and other current assets	142,757		120,133		119,659
Total current assets	2,698,457		2,553,152		2,132,652

Property, plant and equipment, net	1,934,187		1,932,805		1,931,497
Goodwill	2,007,388		1,966,136		1,984,952
Other intangible assets, net	745,275		785,976		763,812
Other assets, net	528,414		636,430		532,844
	$	7,913,721	$	7,874,499	$	7,345,757

Liabilities and Stockholders’ Equity
Current liabilities:
Revolving loans and current portion of long-term debt	$	811,387	$	718,695	$	80,061
Trade accounts payable	751,758		880,862		974,030
Accrued payroll and related costs	94,961		109,211		98,914
Accrued liabilities	221,521		251,271		284,855
Total current liabilities	1,879,627		1,960,039		1,437,860

Long-term debt	3,351,176		3,367,469		3,345,381
Deferred income taxes	384,410		430,147		388,677
Other liabilities	427,372		491,381		455,583

Stockholders’ equity:
Common stock	1,751		1,751		1,751
Paid-in capital	345,442		331,877		339,839
Retained earnings	3,072,021		2,833,431		2,961,079
Accumulated other comprehensive loss	(279,554)		(308,216)		(345,310)
Treasury stock	(1,268,524)		(1,233,380)		(1,239,103)
Total stockholders’ equity	1,871,136		1,625,463		1,718,256
	$	7,913,721	$	7,874,499	$	7,345,757

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and six months ended June 30, 2023 and 2022

(Dollars and shares in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022


Net sales	$	1,426,727	$	1,543,781	$	2,845,008	$	2,985,667
Cost of goods sold	1,176,601		1,269,855		2,356,917		2,478,288
Gross profit	250,126		273,926		488,091		507,379
Selling, general and administrative expenses	102,171		123,830		203,501		223,841
Rationalization charges	2,667		3,428		6,788		4,807
Other pension and postretirement expense (income)	1,295		(11,349)		2,581		(22,678)
Income before interest and income taxes	143,993		158,017		275,221		301,409
Interest and other debt expense before loss on early extinguishment of debt	46,792		28,660		83,558		58,009
Loss on early extinguishment of debt	—		—		—		1,481
Interest and other debt expense	46,792		28,660		83,558		59,490
Income before income taxes	97,201		129,357		191,663		241,919
Provision for income taxes	18,311		36,682		40,744		64,369
Net income	$	78,890	$	92,675	$	150,919	$	177,550

Earnings per share:
Basic net income per share	$	0.72	$	0.84	$	1.37	$	1.60
Diluted net income per share	$	0.71	$	0.83	$	1.36	$	1.59

Weighted average number of shares:
Basic	110,129		110,840		110,211		110,750
Effect of dilutive securities	323		388		476		590
Diluted	110,452		111,228		110,687		111,340

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended June 30, 2023 and 2022

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022


Net income	$	78,890	$	92,675	$	150,919	$	177,550
Other comprehensive income (loss), net of tax:
Changes in net prior service credit and actuarial losses	1,217		539		3,523		1,038
Change in fair value of derivatives	4,652		(60)		3,365		2,277
Foreign currency translation	39,147		(64,053)		58,868		(51,703)
Other comprehensive income (loss)	45,016		(63,574)		65,756		(48,388)
Comprehensive income	$	123,906	$	29,101	$	216,675	$	129,162

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2023 and 2022

(Dollars in thousands)

(Unaudited)


	2023		2022
Cash flows provided by (used in) operating activities:
Net income	$	150,919	$	177,550
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	134,122		136,790
Rationalization charges	6,788		4,807
Stock compensation expense	7,156		8,870
Loss on early extinguishment of debt	—		1,481
Other changes that provided (used) cash, net of effects from acquisitions:
Trade accounts receivable, net	(397,413)		(243,261)
Inventories	(472,989)		(475,171)
Trade accounts payable	(143,180)		15,331
Accrued liabilities	(78,545)		15,914

Other, net	(18,606)		5,753
Net cash (used in) operating activities	(811,748)		(351,936)

Cash flows provided by (used in) investing activities:
Purchase of businesses, net of cash acquired	—		(1,333)
Capital expenditures	(118,204)		(118,357)
Other, net	1,239		(688)
Net cash (used in) investing activities	(116,965)		(120,378)

Cash flows provided by (used in) financing activities:
Borrowings under revolving loans	998,167		753,657
Repayments under revolving loans	(244,554)		(54,815)
Proceeds from issuance of long-term debt	5,094		—
Repayments of long-term debt	(51,867)		(300,000)
Changes in outstanding checks - principally vendors	(61,433)		(225,863)
Dividends paid on common stock	(40,422)		(36,680)


Repurchase of common stock	(30,974)		(39,402)


Net cash provided by financing activities	574,011		96,897

Effect of exchange rate changes on cash and cash equivalents	5,686		(8,179)

Cash and cash equivalents:
Net (decrease)	(349,016)		(383,596)
Balance at beginning of year	585,622		631,439
Balance at end of period	$	236,606	$	247,843

Interest paid, net	$	80,623	$	59,297
Income taxes paid, net	84,884		28,881

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and six months ended June 30, 2023 and 2022

(Dollars and shares in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022


Common stock - shares outstanding
Balance at beginning of period	110,252		110,800		110,079		110,410
Net issuance of treasury stock for vested restricted stock units	46		65		312		455
Repurchases of common stock	(352)		(650)		(445)		(650)
Balance at end of period	109,946		110,215		109,946		110,215

Common stock - par value
Balance at beginning and end of period	$	1,751	$	1,751	$	1,751	$	1,751

Paid-in capital
Balance at beginning of period	342,157		328,201		339,839		325,448
Stock compensation expense	3,475		3,991		7,156		8,870
Net issuance of treasury stock for vested restricted stock units	(190)		(315)		(1,553)		(2,441)
Balance at end of period	345,442		331,877		345,442		331,877

Retained earnings
Balance at beginning of period	3,013,104		2,758,697		2,961,079		2,691,745
Net income	78,890		92,675		150,919		177,550
Dividends declared on common stock	(19,973)		(17,941)		(39,977)		(35,864)
Balance at end of period	3,072,021		2,833,431		3,072,021		2,833,431

Accumulated other comprehensive loss
Balance at beginning of period	(324,570)		(244,642)		(345,310)		(259,828)
Other comprehensive income (loss)	45,016		(63,574)		65,756		(48,388)
Balance at end of period	(279,554)		(308,216)		(279,554)		(308,216)

Treasury stock
Balance at beginning of period	(1,251,152)		(1,205,768)		(1,239,103)		(1,196,420)
Net issuance of treasury stock for vested restricted stock units	(415)		(1,245)		(7,664)		(10,593)
Repurchases of common stock	(16,957)		(26,367)		(21,757)		(26,367)
Balance at end of period	(1,268,524)		(1,233,380)		(1,268,524)		(1,233,380)
Total stockholders’ equity	$	1,871,136	$	1,625,463	$	1,871,136	$	1,625,463

Dividends declared on common stock per share	$	0.18	$	0.16	$	0.36	$	0.32

See accompanying notes.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2023 and 2022 and for the

three and six months then ended is unaudited)

Note 1. Significant Accounting Policies

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of Silgan Holdings Inc., or Silgan, have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. The results of operations for any interim period are not necessarily indicative of the results of operations for the full year.

The Condensed Consolidated Balance Sheet at December 31, 2022 has been derived from our audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

You should read the accompanying condensed consolidated financial statements in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Note 2. Revenue

The following tables present our revenues disaggregated by reportable segment and geography as they best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Revenues by segment were as follows:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

	(Dollars in thousands)
Dispensing and Specialty Closures	$	560,096	$	602,431	$	1,140,028	$	1,200,358
Metal Containers	710,864		754,396		1,380,960		1,405,122
Custom Containers	155,767		186,954		324,020		380,187
	$	1,426,727	$	1,543,781	$	2,845,008	$	2,985,667

Revenues by geography were as follows:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

	(Dollars in thousands)
North America	$	1,061,906	$	1,154,614	$	2,118,432	$	2,240,838
Europe and other	364,821		389,167		726,576		744,829
	$	1,426,727	$	1,543,781	$	2,845,008	$	2,985,667

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $109.7 million, $110.3 million, and $110.2 million as of June 30, 2023 and 2022 and December 31, 2022, respectively. Unbilled receivables are included in trade accounts receivable, net on our Condensed Consolidated Balance Sheets.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2023 and 2022 and for the

three and six months then ended is unaudited)

Note 3. Rationalization Charges

We continually evaluate cost reduction opportunities across each of our segments, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. Rationalization charges by segment were as follows:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

	(Dollars in thousands)
Dispensing and Specialty Closures	$	1,214	$	—	$	1,328	$	—
Metal Containers	1,453		3,428		5,356		4,702
Custom Containers	—		—		104		105
	$	2,667	$	3,428	$	6,788	$	4,807

Activity in reserves for our rationalization plans were as follows:


	Employee Severance and Benefits		Plant Exit Costs		Total
	(Dollars in thousands)
Balance at December 31, 2022	$	31,641	$	159	$	31,800
Charged to expense	3,640		3,148		6,788
Utilized and currency translation	(5,710)		(3,143)		(8,853)
Balance at June 30, 2023	$	29,571	$	164	$	29,735

Rationalization reserves as of June 30, 2023 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $2.5 million and other liabilities of $27.2 million. Excluding the impact of our withdrawal from the Central States, Southeast and Southwest Areas Pension Plan, or the Central States Pension Plan, in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $1.0 million and $3.3 million, respectively. Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $0.9 million per year and be recognized annually through 2040, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $0.8 million in 2023 and $2.6 million annually thereafter through 2040.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information at June 30, 2023 and 2022 and for the

three and six months then ended is unaudited)

Note 4. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is reported in our Condensed Consolidated Statements of Stockholders’ Equity. Amounts included in accumulated other comprehensive loss, net of tax, were as follows:


	Unrecognized Net Defined Benefit Plan Costs		Change in Fair Value of Derivatives		Foreign Currency Translation		Total
	(Dollars in thousands)
Balance at December 31, 2022	$	(156,733)	$	(772)	$	(187,805)	$	(345,310)
Other comprehensive income before reclassifications	—		2,736		35,279		38,015
Amounts reclassified from accumulated other comprehensive loss	3,523

SEC Form 10-Q filed by Silgan Holdings Inc.