Silgan Holdings' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Silgan Holdings (SLGN)

Q1 2012 Earnings Call

April 26, 2012 11:00 am ET


Kimberly I. Ulmer - Vice President and Controller

Anthony J. Allott - Chief Executive Officer, President and Director

Robert B. Lewis - Chief Financial Officer, Principal Accounting Officer and Executive Vice President


Gabe S. Hajde - Wells Fargo Securities, LLC, Research Division

Christopher D. Manuel - Wells Fargo Securities, LLC, Research Division

Matthew R. Wooten - Robert W. Baird & Co. Incorporated, Research Division

Ghansham Panjabi - Robert W. Baird & Co. Incorporated, Research Division

Mark Wilde - Deutsche Bank AG, Research Division

Chip A. Dillon - Vertical Research Partners Inc.

Adam J. Josephson - KeyBanc Capital Markets Inc., Research Division

Ernie Ortiz

Albert T. Kabili - Crédit Suisse AG, Research Division

Christopher W. Butler - Sidoti & Company, LLC

Usha Chundru Guntupalli - Goldman Sachs Group Inc., Research Division

Ariel Avila - JP Morgan Chase & Co, Research Division



Thank you for joining Silgan Holdings First Quarter Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Kim Ulmer, Vice President and Controller of Silgan Holdings. Please go ahead.

Kimberly I. Ulmer

Thank you. Joining me from the company today, I have 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 2011 and other filings with the SEC. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statement.

With that, let me turn it over to Tony.

Anthony J. Allott

Thanks, Kim. Welcome, everyone, to our first quarter 2012 Earnings Conference Call. Our agenda for this morning is to focus on the financial performance for the first quarter and to review our outlook for 2012. After these prepared remarks, Bob, Adam and I will be pleased to answer any questions.

As you saw in the press release, we're off to a strong start in the first quarter delivering adjusted earnings per diluted share of $0.50, which exceeded the high end of our estimated range of $0.42 to $0.47 and was well above the same quarter of the prior year, which had previously been a record first quarter. We also took the opportunity during the quarter to raise new money in the bond market to repay outstanding higher rate debt, extend our maturities and to make voluntary contributions to fully fund our company sponsored pension plans.

While its early days and the first quarter is seasonally slow quarter, we're pleased with the performance of our businesses as they each exceeded the first quarter of 2011 results. Volume was stable or growing across much of our business with benefits coming from our 2011 acquisitions and continued progress on operational improvements in certain overhead cost reductions.

While we certainly have a ways to go, we're pleased with our plastic container performance with steady improvement in operating performance in the quarter, while also benefiting from the year-over-year resin pass-through comparison. Equally, we view the sequential improvement in operating performance as a good sign, although we do expect future improvement will not occur in a straight-line manner. As a result of the strength of our first quarter performance and our positive outlook for the rest of the year, we have confirmed our full year guidance for adjusted earnings per diluted share in a range of $2.80 to $2.90.

With that, I'll now turn it over to Bob to review the financial results in more detail and provide additional explanations around our earnings estimates for 2012.

Robert B. Lewis

Thank you, Tony. Good morning, everyone. As Tony highlighted, 2012 is off to a strong start. Our 2011 acquisitions delivered results in line with expectations. We're making good headway with stabilizing our plastics operations, and volumes for the quarter were as expected.

Unit volumes were strong, and the closures operation is driven by solid demand in the U.S. operation and the benefit of the DGS acquisition in Europe. The metal container operations saw a volume benefit as a result of the full quarter of Vogel & Noot and the addition of the Nestlé Purina PetCare steel can assets in the U.S.

Volumes in our plastic business were comparable to a solid first quarter 2011. The first quarter also benefited from a larger-than-anticipated comparative year-over-year resin change.

On a consolidated basis, net sales for the first quarter of 2012 were $768.4 million, an increase of $65.3 million or 9.3%, primarily as a result of acquired businesses in containers and closures, higher average selling prices due to the pass-through of higher raw material costs and stronger unit volumes in the U.S. closures operations, partially offset by unfavorable foreign currency translation.

Net income for the first quarter was $32.8 million or $0.47 per diluted share compared to first quarter of 2011 net income of $26.1 million or $0.37 per diluted share. And results for 2012 included rationalization charges of $3.6 million or $0.03 per diluted share, but 2011 included rationalization charges of $1.7 million and costs associated with announced acquisitions of $1.8 million for an aggregate impact of $0.04 per diluted share. As a result, we delivered adjusted income per diluted share of $0.50 in 2012 versus $0.41 in 2011.

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