Silgan (SLGN) Beats Q3 Earnings Estimates, Lowers 2023 View
Silgan Holdings Inc. SLGN reported adjusted earnings of $1.16 per share in third-quarter 2023, which surpassed the Zacks Consensus Estimate of adjusted earnings of $1.14 per share. The bottom line declined 9% year over year but came within the company’s guidance of $1.10-$1.20 per share.
Including one-time items, earnings were $1.02 per share compared with $1.25 per share reported in the prior-year quarter.
Total revenues decreased 8.5% year over year to $1,803 million from the prior-year quarter’s $1,970.4 million. The top line missed the Zacks Consensus Estimate of $1,957 million.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Silgan Holdings Inc. price-consensus-eps-surprise-chart | Silgan Holdings Inc. Quote
Costs and Margins
In third-quarter 2023, the cost of goods sold decreased 8.7% year over year to $1,517 million. The gross profit decreased 7.1% to $286 million. The gross margin was 15.9% compared with the prior-year quarter’s 15.6%.
Selling, general and administrative expenses were $84 million in the reported quarter compared with the year-ago quarter’s $97 million. The company reported an operating income of $194 million in the quarter compared with $219 million in the prior-year quarter.
Adjusted operating profit was $214 million in the third quarter of 2023, 4% lower than $223 million in the prior-year quarter. The adjusted operating margin was 11.9% in the reported quarter compared with the prior-year quarter’s 11.3%.
Segmental Performances
Revenues in the Dispensing and Specialty Closures segment were down 3% year over year to $559 million in the third quarter. The figure lagged the Zacks Consensus Estimate of $569 million due to a lower volume and mix. Due to the persistent impacts of inflation on consumers, mid-single-digit increases in higher-value dispensing products were offset by double-digit decreases in higher-volume closures for the international food and beverage markets.
The operating income for the segment was $78 million in the third quarter of 2023 compared with $79.2 million in third-quarter 2022. The figure lagged the Zacks Consensus Estimate of $99 million. The segment’s adjusted operating income was $93.8 million compared with $88.4 million in the prior-year period.
The Metal Containers segment’s revenues in the quarter declined 10% year over year to $1,095 million due to lower volumes. However, revenues in the quarter surpassed the Zacks Consensus Estimate of $764 million.
The segment’s operating income in the quarter under review was $110 million, down 9% from the prior-year quarter. However, the figure surpassed the consensus estimate of $44 million. Adjusted operating income for the segment amounted to $113.5 million, down 3% from the prior-year quarter.
In the Custom Containers segment, revenues were $149 million compared with the year-ago quarter’s $183 million. The figure was higher than the Zacks Consensus Estimate of $143 million. Operating income slumped 56% year over year to $10.7 million and missed the consensus estimate of $14 million. The segment reported an adjusted operating income of $11.8 million, down from the previous year’s $22.8 million.
2023 Outlook
Silgan expects 2023 adjusted earnings per share (EPS) between $3.30 and $3.40, declining from the previously mentioned $3.40-$3.60 due to expected lower volumes and higher interest expenses in the fourth quarter of 2023.
For fourth-quarter 2023, SLGN anticipates adjusted EPS in the range of 55-65 cents.
Price Performance
Silgan’s shares have lost 13.5% in the past year against the industry’s growth of 0.5%.
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Zacks Rank and Stocks to Consider
Silgan currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Applied Industrial Technologies AIT, Emerson Electric Co. EMR and Brady BRC. All these companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.13 per share, which indicates year-over-year growth of 2%. Estimates have moved up 2% in the past 60 days. The company’s shares gained 27% in the last year.
Emerson has an average trailing four-quarter earnings surprise of 7.4%. The Zacks Consensus Estimate for EMR’s 2023 earnings is pegged at $4.45 per share. The consensus estimate for 2023 earnings has moved 1% north in the past 60 days. EMR’s shares gained 5.9% in the last year.
The Zacks Consensus Estimate for Brady’s 2023 earnings per share is pegged at $3.62. The consensus estimate for 2023 earnings has moved 13% north in the past 60 days and suggests year-over-year growth of 9.9%. The company has a trailing four-quarter average earnings surprise of 7.2%. Shares of BRC rallied 17.7% in the last year.
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