Silgan Holdings Inc. (

SLGN

)

Q2 2011 Earnings Call

July 27, 2011 11:00 am ET

Executives

Malcolm Miller - VP and Treasurer

Tony Allott - President and CEO

Bob Lewis - EVP and CFO

Adam Greenlee - EVP and COO

Analysts

Ghansham Panjabi - Robert W. Baird

Alton Stump - Longbow Research

James Armstrong - Vertical Research Partners

Mark Wilde - Deutsche Bank

Christopher Butler - Sidoti & Company

Alex Ovshey – Goldman Sachs

Benjamin Wong - Banc of America/Merrill Lynch

Presentation

Operator

Compare to:
Previous Statements by SLGN
» Silgan Holdings Inc. Q1 2009 Earnings Call Transcript
» Silgan Holdings Q4 2008 Earnings Call Transcript
» Silgan Holdings Q4 2007 Earnings Call Transcript

Thank you for joining Silgan Holdings, Second Quarter 2011 Earnings Conference Call. Today's call is being recorded. At this time I would like to turn the conference over to Mr. Malcolm Miller, Vice President and Treasurer. Please go ahead sir.

Malcolm Miller

Thank you. Joining me from the company today are Tony Allott, President and CEO, Bob Lewis, EVP and CFO and Adam Greenlee, EVP and COO.

Before we begin the call today, we would like to make it clear that certain statements made today on this conference call may be forward-looking statements. These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks including but not limited to those described in the company's annual report on Form 10-K for 2008 and other filings with the Securities and Exchange Commission.

Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements.

With that, let me turn it over to Tony.

Tony Allott

Thank you, Malcolm and welcome everyone to our second quarter 2011 earnings conference call. The agenda for this morning as usual we will review the financial performance for the quarter, make a few comments about our outlook for 2011. After these prepared remarks, Bob, Adam, and I will be pleased to take any questions you might have.

As you saw in the press release we had another solid quarter delivering record adjusted earnings per diluted shares of $0.53 compared to a very strong prior year quarter of $0.48. Our business did a nice job of combating overall inflation and effectively managing cost factors and each of our recently acquired businesses delivered positive operating results in line with our acquisition models.

Overall, we are pleased with our second quarter results. As expected, we did have to manage through a very volatile revenue market and broader uncertainty around the macro economic environment, which was further compounded by a cooler and weathered start to the summer. Yet we remained on track for another record year and anticipate double-digit share earnings growth for the full-year.

In addition, I will comment on the large gain we recorded as a result of the Graham Packaging acquisition termination fee we recorded for the quarter. We did receive in the quarter a $39.5 million contractual termination fee, of which $27 million was gain in excess of transaction cost.

While we were disappointed that the deal moved away from us, we believe our patience and discipline is what has driven our outsize returns to shareholders over time. Also on this calls, we indicated that for every completed deal, we pursue at least 10 others. Unfortunately, since this was a public transaction, you will have to live the up and the e downs of that one with us this time.

As a consequence we are now back to our work on annualizing other strategic alternatives to deploy capital on behalf of our shareholders. We continue to believe good acquisitions are the most compelling opportunities. But have a variety of opportunities open to us.

Finally, as we move toward our peak season, we confirmed our full-year guidance of adjusted earnings per diluted share to be in the range of $2.60 to $2.70 as revenue inflations beginning to abate, the hot summer weather has returned to most of the country and our overall volume outlook remains steady. Achieving this estimate would represent a 17% to 22% increase over our record 2010 results.

With that, I will now turn it over to Bob to review the financial results in more detail and provide additional explanations or rather our assessments for 2011.

Bob Lewis

Thank you, Tony. Good morning everyone. As Tony highlighted, the second quarter of 2011 was a record quarter as we delivered adjusted earnings in line with our expectations and 10% above the second quarter of 2010. Keys to the quarter are positive contributions from our recently acquired businesses, the operating performance in our plastic business improved modestly as we anticipated and the second quarter experienced continued earnings headwind as a result of the lagged pass through of resin cost to our customers as resin prices picked during the quarter.

The resin situation affected both the plastic business and the plastic portion of our closure’s business. As a result we delivered second quarter adjusted earnings per share of $0.53 versus the prior year quarter of $0.48.

On a consolidated basis net sales for the second quarter of 2011 were $822.2 million, an increase of $128.3 million or 18.5% primarily as a result of higher unit volumes in the metal container and closures businesses as each benefited from the recent acquisitions.

Net sales also benefited from higher average selling prices across each business as a result of the pass through of higher raw material cost and an impact of favorable foreign currency translation. These benefits were partially offset by slightly lower unit volumes in the plastic container business.

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