Silgan Holdings Inc. SLGN reported first-quarter 2019 adjusted earnings of 46 cents per share, beating the Zacks Consensus Estimate of 43 cents. Further, the figure improved 10% from the year-ago quarter and was also a first-quarter record.
Including one-time items, the company’s earnings per share were 42 cents compared with 41 cents in the prior-year quarter.
Total revenues inched up 1.5% year over year to $1,027 million, surpassing the Zacks Consensus Estimate of $998 million. Higher net sales in the metal and plastic container businesses were partially offset by a decline in net sales in the closures business.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Silgan Holdings Inc. price-consensus-eps-surprise-chart | Silgan Holdings Inc. Quote
Cost and Margins
In first quarter 2019, cost of goods sold went up 1% to $861 million from $852 million a year ago. Gross profit improved 3.7% year over year to $166 million. Gross margin rose 40 basis points to 16.2% from the prior-year quarter.
Selling, general and administrative expenses increased 1.3% year over year to $78 million during first-quarter 2019. Adjusted operating income increased 6% to $88.3 million from $83.3 million recorded in the year-ago quarter. Operating margin was 8.6% in first-quarter 2019 compared with 8.2% in the year-ago quarter.
Revenues at the Metal Containers segment increased 4.3% year over year to $507 million. The segment’s adjusted operating income improved 4% year over year to $39.1 million.
The Closures segment’s revenues declined 3.8% year over year to $356 million. Adjusted operating income was $45.9 million in the reported quarter, down 5% from the prior-year quarter.
At the Plastic Containers segment, revenues climbed 5% year over year to $163.9 million. The segment reported an adjusted profit of $12.3 million, up from $11.3 million in the prior-year quarter.
The company reported cash and cash equivalents of $141.4 million at the end of first-quarter 2019, up from $72.8 million at the end of 2018. The company utilized $156 million of cash in operations during the first quarter of 2019 compared with $90 million in the prior-year quarter.
Silgan anticipates adjusted earnings per share in the range of $2.10 to $2.20 for 2019, reflecting an increase of 3% from the prior year at the mid-point. The guidance for 2019 includes an unfavorable non-cash pension impact of approximately 13 cents per share resulting from significant market declines in investment values at the end of 2018 that negatively impacted the assets held in the company’s pension plans.
Silgan provided adjusted earnings per share guidance in the range of 51 cents to 56 cents for the second quarter of 2019. This includes an unfavorable non-cash pension impact of approximately 3 cents per share. Compared with earnings per share of 52 cents in the second quarter of 2018, the mid-point of the guidance range reflects year-over year improvement of 3%.
Share Price Performance
Over the past year, Silgan Holdings’ stock has gained 6.6%, compared with the industry’s growth of 30.4%.
Zacks Rank & Stocks to Consider
Silgan Holdings currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, DXP Enterprises, Inc. DXPE and Lawson Products, Inc. LAWS, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DMC Global has an estimated earnings growth rate of 78.7% for the ongoing year. The company’s shares have soared 66% in the past year.
DXP Enterprises has a projected earnings growth rate of 22.7% for the current year. The stock has appreciated 20% in a year’s time.
Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 40% in a year’s time.
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