Silgan Holdings Inc. SLGN reported a fourth-quarter 2016 adjusted earnings of 48 cents, flat year over year. Earnings came in line with the Zacks Consensus Estimate and also came within management’s guidance range of 43–53 cents.
Including rationalization charges, the company’s earnings per share came in at 41 cents, down from 44 cents in the prior-year quarter.
Total revenue dipped 3% year over year to $806 million, falling short of the Zacks Consensus Estimate of $813.56 million. The decline in net sales was mainly due to the pass through of lower raw material and other costs in the metal container, and closures businesses. Further, it can be attributed to a less favorable mix of products sold in the metal and plastic container businesses, and the impact of unfavorable foreign currency translation in the metal container and closures businesses. However, increase in unit volumes of approximately 1% in each of the metal and plastic container businesses caused a minor offset.
Cost and Margins
Cost of goods sold decreased 3% to $679 million from $696 million in the year-ago quarter. Gross profit declined 3% to $110 million. Gross margin remained flat at 13.6%.
Selling, general and administrative expenses declined 8% year over year to $53 million. Adjusted operating income increased 2% to $57 million. Operating margin expanded 30 basis points year over year to 7.1%.
Segment Performance
Revenues at the Metal Containers segment decreased 3% year over year to $492 million. The segment’s adjusted operating income fell 11% to $37 million.
The Closures segment’s revenues dipped 1% year over year to $183 million. Adjusted operating income advanced 15% to $22 million.
At the Plastic Containers segment, revenues dropped 5% year over year to $132 million. The segment reported an adjusted profit of $4.7 million compared with the loss of $0.3 million in the prior-year quarter.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Silgan Holdings Inc. Price, Consensus and EPS Surprise | Silgan Holdings Inc. Quote
Fiscal 2016 Performance
Silgan reported adjusted earnings per share of $2.77 in fiscal 2016, down 7% year over year but beat the Zacks Consensus Estimate by a penny. Including one-time items, earnings stood at $2.55 compared with $2.81 in the prior year. Revenues in fiscal 2016 were $3.61 billion, down 4% year over year as a result of lower net sales in all of its businesses. Revenues also fell short of the Zacks Consensus Estimate of $3.62.
Financial Updates
As of Dec 31, 2016, cash and cash equivalents were $24.7 million, down from $99.9 million as of Dec 31, 2015. Cash flow from operations was $395 million in 2016, compared with $336 million in the prior year.
Guidance
For 2017, the company has provided earnings per share guidance in the range of $3.15 to $3.35. However, the guidance does not include any impact from the pending acquisition of the Dispensing Systems business. For the first quarter, Silgan anticipates earnings per share in the range of 48–58 cents.
Silgan has underperformed the Zacks categorized Containers- Metal/Glass subindustry in the past one year. Silgan’s share price has gained 12% in said time frame while the subindustry witnessed an increase of 26.8%.
Stamford, CT-based Silgan is a leading manufacturer of consumer goods packaging products, operating 88 manufacturing facilities across the Americas, Europe and Asia. In North America, Silgan is the largest supplier of metal containers for food products and a major supplier of plastic containers for personal care products.
Silgan currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space include ABB Ltd ABB, Altra Industrial Motion Corp. AIMC and Apogee Enterprises, Inc. APOG. All three of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ABB Ltd has a positive average earnings surprise of 23.5% in the last four quarters. Altra Industrial Motion generated a positive average earnings surprise of 8.06% in the trailing four quarters. Apogee has delivered an average positive earnings surprise of 13.24% in the last four quarters.
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