Silgan Q3 report
Net sales are up for the company in Q3, but segment income decreases slightly, due to supply chain challenges…
Silgan Holdings has reported third quarter 2021 net income of $106.3 million, or $0.96 per diluted share, as compared to third quarter 2020 net income of $112.9 million, or $1.01 per diluted share.
“We delivered third quarter 2021 adjusted earnings per diluted share of $1.02, which was more than 30% above any other third quarter in Company history with the exception of the pandemic driven third quarter of 2020. said Adam Greenlee, President and CEO. “We were able to sustain performance near the prior year’s record level as demand for many of our products remains exceptionally high.
“Record volumes in our Dispensing and Specialty Closures and Metal Container segments and tremendous operating performance helped offset unprecedented inflation and continued supply chain and labour challenges, while strong year-to-date volumes in our Custom Container segment remain above pre-pandemic levels.”
“Sustained strong volumes for the beauty, fragrance, food and beverage markets in our Dispensing and Speciality Closures segment were more than offset by the unfavourable impact of significant raw material inflation and the contractual lags in passing these increased costs of over $10 million on to our customers.
“Our Metal Container segment achieved record volume levels for any quarter in Company history driven primarily by strong seasonal vegetable and pet food markets, but continued to be negatively impacted by higher production costs and inefficiencies resulting from supply disruptions and labor challenges throughout the entire supply chain. Strong operating performance and effective cost controls in our Custom Container segment helped offset lower volumes as compared to the pandemic driven record volumes last year.
“Given our performance to date and our expectation for continued supply chain and labor challenges during the fourth quarter, we are tightening our estimate of full year 2021 adjusted earnings per diluted share from a range of $3.30 to $3.45 to a range of $3.30 to $3.40, which represents a 9.5 percent increase at the midpoint over record 2020 levels. We are also increasing our free cash flow estimate to approximately $450 million from $400 million primarily due to anticipated lower working capital and the utilisation of tax benefits from the recent acquisitions. As we begin to look forward to 2022, while early in the process, we anticipate another year of significant earnings growth which is expected to exceed the growth rate in 2021 before including the impact from our recent acquisitions.”
Net sales for the third quarter of 2021 were $1.65 billion, an increase of $162.6 million, or 10.9 percent, as compared to the same period in the prior year. This increase was the result of higher net sales in all segments.
Net sales of the Metal Container segment were $942.1 million for the third quarter of 2021, an increase of $85.4 million, or 10.0 percent, as compared to $856.7 million in the third quarter of 2020. This increase was primarily the result of the pass through of higher raw material and other manufacturing costs and higher unit volumes of approximately 6% as compared to the prior year record quarter, partially offset by a higher percentage of smaller cans sold. The increase in unit volumes was due primarily to higher volumes for pet food and seasonal vegetable markets.
Segment income of the Metal Container segment in the third quarter of 2021 was $94.3 million, a decrease of $0.2 million as compared to $94.5 million in the third quarter of 2020, and segment income margin decreased to 10% from 11% percent over the same periods.
The decrease in segment income was primarily attributable to operational inefficiencies and higher costs as a result of labour and supply chain challenges and the mix effect of more smaller cans sold, mostly offset by higher unit volumes and higher pension income.