slgn-20230930

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 September 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 October 31, 2023, the number of shares outstanding of the Registrant’s common stock was 106,498,436.

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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 September 30, 2023 and 2022 and December 31, 2022			3

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

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

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

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 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)


	Sept. 30, 2023		Sept. 30, 2022		Dec. 31, 2022
	(unaudited)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	307,124	$	243,609	$	585,622
Trade accounts receivable, net	1,295,882		1,124,051		657,968
Inventories	919,013		851,070		769,403
Prepaid expenses and other current assets	139,803		113,498		119,659
Total current assets	2,661,822		2,332,228		2,132,652

Property, plant and equipment, net	1,911,638		1,886,596		1,931,497
Goodwill	1,979,693		1,914,894		1,984,952
Other intangible assets, net	724,340		757,882		763,812
Other assets, net	534,814		627,813		532,844
	$	7,812,307	$	7,519,413	$	7,345,757

Liabilities and Stockholders’ Equity
Current liabilities:
Revolving loans and current portion of long-term debt	$	897,809	$	591,287	$	80,061
Trade accounts payable	651,991		688,383		974,030
Accrued payroll and related costs	96,375		110,358		98,914
Accrued liabilities	269,386		291,384		284,855
Total current liabilities	1,915,561		1,681,412		1,437,860

Long-term debt	3,312,685		3,246,738		3,345,381
Deferred income taxes	380,250		425,181		388,677
Other liabilities	421,922		472,851		455,583

Stockholders’ equity:
Common stock	1,751		1,751		1,751
Paid-in capital	349,634		335,924		339,839
Retained earnings	3,163,161		2,954,292		2,961,079
Accumulated other comprehensive loss	(309,586)		(365,356)		(345,310)
Treasury stock	(1,423,071)		(1,233,380)		(1,239,103)
Total stockholders’ equity	1,781,889		1,693,231		1,718,256
	$	7,812,307	$	7,519,413	$	7,345,757

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended September 30, 2023 and 2022

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

(Unaudited)


	Three Months Ended				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022


Net sales	$	1,803,101	$	1,970,445	$	4,648,109	$	4,956,112
Cost of goods sold	1,517,183		1,662,680		3,874,100		4,140,968
Gross profit	285,918		307,765		774,009		815,144
Selling, general and administrative expenses	84,320		96,680		287,821		320,521
Rationalization charges	6,424		2,726		13,212		7,533
Other pension and postretirement expense (income)	1,083		(11,051)		3,664		(33,729)
Income before interest and income taxes	194,091		219,410		469,312		520,819
Interest and other debt expense before loss on early extinguishment of debt	47,264		33,743		130,822		91,752
Loss on early extinguishment of debt	—		—		—		1,481
Interest and other debt expense	47,264		33,743		130,822		93,233
Income before income taxes	146,827		185,667		338,490		427,586
Provision for income taxes	36,210		46,964		76,954		111,333
Net income	$	110,617	$	138,703	$	261,536	$	316,253

Earnings per share:
Basic net income per share	$	1.02	$	1.26	$	2.39	$	2.86
Diluted net income per share	$	1.02	$	1.25	$	2.38	$	2.85

Weighted average number of shares:
Basic	108,421		110,281		109,583		110,572
Effect of dilutive securities	331		460		428		548
Diluted	108,752		110,741		110,011		111,120

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended September 30, 2023 and 2022

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022


Net income	$	110,617	$	138,703	$	261,536	$	316,253
Other comprehensive income (loss), net of tax:
Changes in net prior service credit and actuarial losses	1,995		693		5,518		1,731
Change in fair value of derivatives	1,865		421		5,230		2,698
Foreign currency translation	(33,892)		(58,254)		24,976		(109,957)
Other comprehensive (loss) income	(30,032)		(57,140)		35,724		(105,528)
Comprehensive income	$	80,585	$	81,563	$	297,260	$	210,725

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2023 and 2022

(Dollars in thousands)

(Unaudited)


	2023		2022
Cash flows provided by (used in) operating activities:
Net income	$	261,536	$	316,253
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	200,747		201,912
Rationalization charges	13,212		7,533
Stock compensation expense	11,348		12,917
Loss on early extinguishment of debt	—		1,481
Other changes that provided (used) cash, net of effects from acquisitions:
Trade accounts receivable, net	(638,282)		(459,131)
Inventories	(152,891)		(92,181)
Trade accounts payable	(233,724)		(165,717)
Accrued liabilities	(31,055)		64,458

Other, net	(26,933)		(5,047)
Net cash (used in) operating activities	(596,042)		(117,522)

Cash flows provided by (used in) investing activities:
Purchase of businesses, net of cash acquired	—		(1,333)
Capital expenditures	(173,453)		(162,271)

Other, net	2,895		1,993
Net cash (used in) investing activities	(170,558)		(161,611)

Cash flows provided by (used in) financing activities:
Borrowings under revolving loans	1,119,960		813,628
Repayments under revolving loans	(283,275)		(290,327)

Proceeds from issuance of long-term debt	8,649		6,042
Repayments of long-term debt	(52,650)		(300,314)
Changes in outstanding checks - principally vendors	(61,433)		(225,863)
Dividends paid on common stock	(59,712)		(54,325)


Repurchase of common stock	(183,939)		(39,402)


Net cash provided by (used in) financing activities	487,600		(90,561)

Effect of exchange rate changes on cash and cash equivalents	502		(18,136)

Cash and cash equivalents:
Net (decrease)	(278,498)		(387,830)
Balance at beginning of year	585,622		631,439
Balance at end of period	$	307,124	$	243,609

Interest paid, net	$	123,944	$	91,037
Income taxes paid, net	95,911		66,959

See accompanying notes.

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SILGAN HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2023 and 2022

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

(Unaudited)


	Three Months Ended				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022


Common stock - shares outstanding
Balance at beginning of period	109,946		110,215		110,079		110,410
Net issuance of treasury stock for vested restricted stock units	—		—		312		455
Repurchases of common stock	(3,448)		—		(3,893)		(650)
Balance at end of period	106,498		110,215		106,498		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	345,442		331,877		339,839		325,448
Stock compensation expense	4,192		4,047		11,348		12,917
Net issuance of treasury stock for vested restricted stock units	—		—		(1,553)		(2,441)
Balance at end of period	349,634		335,924		349,634		335,924

Retained earnings
Balance at beginning of period	3,072,021		2,833,431		2,961,079		2,691,745
Net income	110,617		138,703		261,536		316,253
Dividends declared on common stock	(19,477)		(17,842)		(59,454)		(53,706)
Balance at end of period	3,163,161		2,954,292		3,163,161		2,954,292

Accumulated other comprehensive loss
Balance at beginning of period	(279,554)		(308,216)		(345,310)		(259,828)
Other comprehensive (loss) income	(30,032)		(57,140)		35,724		(105,528)
Balance at end of period	(309,586)		(365,356)		(309,586)		(365,356)

Treasury stock
Balance at beginning of period	(1,268,524)		(1,233,380)		(1,239,103)		(1,196,420)
Net issuance of treasury stock for vested restricted stock units	—		—		(7,664)		(10,593)
Repurchases of common stock	(154,547)		—		(176,304)		(26,367)
Balance at end of period	(1,423,071)		(1,233,380)		(1,423,071)		(1,233,380)
Total stockholders’ equity	$	1,781,889	$	1,693,231	$	1,781,889	$	1,693,231

Dividends declared on common stock per share	$	0.18	$	0.16	$	0.54	$	0.48

See accompanying notes.

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SILGAN HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

three and nine 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.

Goodwill and Other Intangible Assets. We review goodwill and other indefinite-lived intangible assets for impairment as of July 1 of each year and more frequently if circumstances indicate a possible impairment. We determined that our goodwill and other indefinite-lived intangible assets were not impaired in our annual 2023 assessment performed during the third quarter.

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				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022

	(Dollars in thousands)
Dispensing and Specialty Closures	$	559,081	$	575,530	$	1,699,109	$	1,775,888
Metal Containers	1,094,609		1,212,034		2,475,569		2,617,156
Custom Containers	149,411		182,881		473,431		563,068
	$	1,803,101	$	1,970,445	$	4,648,109	$	4,956,112

Revenues by geography were as follows:


	Three Months Ended				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022

	(Dollars in thousands)
North America	$	1,437,539	$	1,592,775	$	3,555,971	$	3,833,613
Europe and other	365,562		377,670		1,092,138		1,122,499
	$	1,803,101	$	1,970,445	$	4,648,109	$	4,956,112

Our contract assets primarily consist of unbilled accounts receivable related to over time revenue recognition and were $104.2 million, $113.3 million, and $110.2 million as of September 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 September 30, 2023 and 2022 and for the

three and nine 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				Nine Months Ended
	Sept. 30, 2023		Sept. 30, 2022		Sept. 30, 2023		Sept. 30, 2022

	(Dollars in thousands)
Dispensing and Specialty Closures	$	3,836	$	346	$	5,164	$	346
Metal Containers	2,588		2,480		7,944		7,182
Custom Containers	—		(100)		104		5
	$	6,424	$	2,726	$	13,212	$	7,533

Activity in reserves for our rationalization plans were as follows:


	Employee Severance and Benefits		Plant Exit Costs		Non-Cash Asset Write-Down		Total
	(Dollars in thousands)
Balance at December 31, 2022	$	31,641	$	159	$	—	$	31,800
Charged to expense	5,947		3,890		3,375		13,212
Utilized and currency translation	(6,647)		(3,885)		(3,375)		(13,907)
Balance at September 30, 2023	$	30,941	$	164	$	—	$	31,105

Rationalization reserves as of September 30, 2023 were recorded in our Condensed Consolidated Balance Sheet as accrued liabilities of $4.1 million and other liabilities of $27.0 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 $6.6 million and $9.9 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 September 30, 2023 and 2022 and for the

three and nine 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)

SEC Form 10-Q filed by Silgan Holdings Inc.