Silgan (SLGN) Q1 Earnings & Revenues Beat Estimates, Up Y/Y
Silgan Holdings Inc. SLGN reported first-quarter 2021 adjusted earnings of 75 cents per share, beating the Zacks Consensus Estimate of 71 cents. The bottom line also improved 31.5% year over year and met the higher range of the company’s adjusted earnings guidance of 65-75 cents. Solid demand for personal care, hygiene and health care products and an early recovery in the fragrance market led to the encouraging results.
Including one-time items, earnings for the manufacturer of sustainable rigid packaging solutions for consumer goods came in at 66 cents per share compared with the 52 cents reported in the prior-year quarter.
Total revenues improved 20.2% year over year to $1,238 million on higher sales across its business segments. Further, the top line surpassed the Zacks Consensus Estimate of $1,220 million. The company witnessed volume growth of 9% in each of the Dispensing and Specialty Closures segment and Metal Container segment.
Cost and Margins
During first-quarter 2021, cost of goods sold climbed 20.3% to $1,017 million from the prior-year quarter. Gross profit improved 20% year over year to $222 million. Gross margin came in at 18%, flat year over year.
Selling, general and administrative expenses flared up 8% year over year to $97.4 million during the March-end quarter. Operating income shot up 24.5% year over year to $127 million. Operating margin improved to 10.2% in the reported quarter compared with the prior-year period’s 9.9%.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Silgan Holdings Inc. price-consensus-eps-surprise-chart | Silgan Holdings Inc. Quote
Segment Performance
Revenues in the Dispensing and Specialty Closures segment were up 42.5% year over year to $509 million. The segment’s operating income increased 46.6% year over year to $66 million.
The Metal Containers segment’s revenues increased 8.8% year over year to $554 million. Operating income for the segment amounted to $46 million compared with the prior-year quarter’s $48 million.
In the Custom Containers segment, revenues came in at $175 million compared with the year-ago quarter’s $165 million. The segment reported an operating profit of $25 million, reflecting an improvement of 13.6% from the year-earlier quarter.
Financial Updates
The company had cash and cash equivalents of $190 million at the end of first-quarter 2021 compared with $615 million at the end of the prior-year quarter. The company utilized around $172 million cash in operating activities during the March-end quarter compared with the prior-year quarter’s $168 million.
2021 Outlook
Silgan estimates adjusted earnings per share for 2021 to lie between $3.30 and $3.45. The mid-point of the range indicates a 10.3% year-over-year improvement.
Silgan anticipates adjusted earnings per share to lie between 75 cents and 85 cents in second-quarter 2021. The guidance assumes continued strong product demand, which will be partly offset by lagged pass through of resin and other raw-material cost inflation. The company reported earnings per share of 85 cents in second-quarter 2020.
Price Performance
Silgan’s shares have gained 19.6%, in a year’s time, compared with the industry’s rally of 47.3%.
Zacks Rank and Stocks to Consider
Silgan currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Industrial Products sector include Dover Corporation DOV, Caterpillar Inc. CAT and Pentair plc PNR, each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 54.3%.
Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 99.7% in the past year.
Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 86% in a year’s time.
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