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Silgan Holdings (SLGN) Q4 Earnings, Revenues Top Estimates

Zacks Equity Research

Silgan Holdings Inc. SLGN reported fourth-quarter adjusted earnings of 38 cents per share, which improved 18.8% from the year-ago quarter. Earnings beat the Zacks Consensus Estimate of 36 cents.

Including one-time items, the company’s earnings per share were 34 cents compared with $1.31 in the prior-year quarter. Silgan Holdings recorded costs attributed to acquisitions of $1.00 per share in the prior-year quarter, while the reported quarter did not have such an adjustment.

Total revenues increased 7.5% year over year to $1,071 million. This can be attributed to increase in volumes across all businesses and pass through of higher raw material and other manufacturing costs, partly offset by unfavorable foreign currency translation. The revenue figure beat the Zacks Consensus Estimate of $1,017 million.

2018 Results
 
Silgan Holdings’ 2018 adjusted earnings were $2.08, up 26% from the prior year. Earnings beat the Zacks Consensus Estimate of $2.05. Including rationalization charges, the company’s earnings per share came in at $2.01, down from $2.42 in the prior-year quarter.
 
Total revenues increased 8.7% year over year to $4.45 billion, surpassing the Zacks Consensus Estimate of $4.39 billion. The improved performance stemmed from higher net sales across all businesses.

Cost and Margins

Cost of goods sold went up 8.8% to $918 million from $843 million a year ago during the fourth-quarter. Gross profit edged up 0.13% year over year to $152 million. Gross margin declined to 14.2% from 15.3% a year ago.

Selling, general and administrative expenses increased 9.6% year over year to $80 million during fourth-quarter. Adjusted operating income fell to $72.7 million from $79.5 million recorded in the year-ago quarter. Operating margin decreased to 7% from 8% a year ago.

Silgan Holdings Inc. Price, Consensus and EPS Surprise

Silgan Holdings Inc. Price, Consensus and EPS Surprise | Silgan Holdings Inc. Quote

 

Segment Performance

Revenues at the Metal Containers segment increased 11.7%, year over year to $569 million. The segment’s adjusted operating income dropped 30% year over year to $31.1 million.

The Closures segment’s revenues rose 1.3% year over year to $347 million. Adjusted operating income increased 18% year over year to $46.6 million.

At the Plastic Containers segment, revenues climbed 7.5% year over year to $154.2 million. The segment reported an adjusted profit of $10.2 million, up from $8.6 million in the prior-year quarter.

Financial Updates

The company reported cash and cash equivalents of $72.8 million at the end of 2018, up from $53.5 million at the end of 2017. The company reported cash flow from operations of $506.5 million during the 12-month period ended Dec 31, 2018, compared with $389.7 million in the comparable period last year.

Outlook

Silgan Holdings expects to deliver improved operating results across all businesses in 2019, offset by an approximately $20 million non-cash pension headwind due to significant market declines in investment values at the end of 2018. Considering these factors, the company expects adjusted earnings per share in the range of $2.10- $2.20 for 2019 reflecting a 9.6% increase from the prior year at the mid-point.

The guidance excludes the unfavorable impact of non-cash pension. The company also expects to generate significant cash flow of around $275 million in 2019.

Silgan provided adjusted earnings per share guidance at 40 to 45 cents for the first quarter of 2019. Compared to the earnings per share of 42 cents in the first quarter of 2018, the mid-point of the guidance range reflects a year-over year improvement of 1%.
 
Share Price Performance

Over the past year, Silgan Holdings’ stock has declined around 11.6%, compared with the industry’s gain of 10.9%.



Zacks Rank & Key Picks

Silgan Holdings currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Industrial Products sector are Axon Enterprise, Inc AAXN, Bemis Company, Inc BMS and EnerSys ENS. While Axon and Bemis flaunts a Zacks Rank #1 (Strong Buy), EnerSys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon has an expected earnings growth rate of 14.5% for 2019. The company’s shares have rallied 85.3% in the past year.

Bemis has an expected earnings growth rate of 7.4% for 2019.  The stock has gained 3% in a year’s time.

EnerSys has an expected earnings growth rate of 9.5% for 2019. Its shares have climbed 19.9% in the past year.

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