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Silgan (SLGN) Q1 Earnings & Revenues Top Estimates, View Up

Zacks Equity Research

Silgan Holdings Inc. SLGN reported first-quarter 2020 adjusted earnings of 57 cents per share, beating the Zacks Consensus Estimate of 49 cents. Further, the figure increased 24% year over year. Record volumes across all business segments contributed to the quarterly results.

Including one-time items, the company’s earnings per share came in at 52 cents compared with the prior-year quarter’s 42 cents.
Total revenues inched up 0.3% year over year to $1,030 million on higher sales across its business segments. The top-line figure also surpassed the Zacks Consensus Estimate of $1,028 million.

Cost and Margins

In the March-end quarter, cost of goods sold edged down 1.9% to $845 million from the prior year’s $861 million. Gross profit improved 11.5% year over year to $185 million. Gross margin came in at 18% compared with the year-ago quarter’s 16%.

Selling, general and administrative expenses flared up 15.4% year over year to $89.9 million during the first quarter. Adjusted operating income was up 10.6% year over year to $102.6 million. Operating margin was 9.9% in the first quarter compared with the 9% witnessed in the prior-year period.

Silgan Holdings Inc. Price, Consensus and EPS Surprise

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 Metal Containers segment inched up 0.3%, year over year, to $508.5 million. The segment’s adjusted operating income increased 6.4% year over year to $49.5 million.

The Closures segment’s revenues were up 0.3% year over year to $357.2 million. Adjusted operating income for the segment was $45.9 million, flat year over year.

In the Plastic Containers segment, revenues improved to $164.7 million from the $163.9 million reported in the prior-year quarter. The segment reported an adjusted operating profit of $22.1 million, up from the year-ago quarter’s $12.3 million.

Financial Updates

The company had cash and cash equivalents of $614.8 million as of Mar 31, 2020, significantly up from the $141.4 million as of Mar 31, 2019. Cash utilized in operating activities were $168.2 million in the March-end quarter compared with the $155.8 million recorded in the prior-year period.

Outlook

Despite the economic uncertainties due to the coronavirus crisis, Silgan has increased its adjusted earnings per share guidance for 2020. It now expects adjusted earnings per share between $2.30 and $2.50 compared to prior range of $2.28 to $2.38. The mid-point of the guidance indicates an 11.1% year-over-year increase from $2.16 in 2019. The increased guidance factors in higher demand for food and consumer health products used mainly in homes in the first half of the year, as people are forced to stay at home due to the coronavirus pandemic. However, this will be somewhat negated by lower demand for products that are used in public venues.

This also considers that the company, along with its customers and suppliers, will be able to keep operating plants during this crisis.

For the second quarter of 2020, Silgan now expects adjusted earnings per share in the range of 55 cents to 70 cents compared with the 55 cents recorded in second-quarter 2019.

During the first quarter, the company completed the Cobra Plastics acquisition. Silgan also announced that it expects to complete the pending acquisition of the dispensing business of Albea Group in second-quarter 2020.

Share-Price Performance

Over the past year, Silgan Holdings’ stock has gained 11.9% as against the industry’s decline of 22.2%.



Zacks Rank and Other Stocks to Consider

Silgan currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. SMED, Lakeland Industries, Inc. LAKE and Intellicheck, Inc. IDN. While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Lakeland Industries and Intellicheck carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Sharps Compliance has an estimated earnings growth rate of 800% for the current year. In a year's time, the company’s shares have soared 105%.

Lakeland Industries has an estimated earnings growth rate of 73% for 2020. In the past year, the company’s shares have gained 29%.

Intellicheck has an estimated earnings growth rate of 112.5% for the ongoing year. Over the past year, the company’s shares have gained 31.6%.

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