Silgan Holdings Inc. (NASDAQ:) reported second-quarter 2019 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate of 54 cents. Further, the figure improved 6% from the year-ago quarter. Earnings figure improved on volume increase in the metal container business and growth in pet food volumes.
Including one-time items, the company’s earnings per share came in at 28 cents compared with the prior-year quarter’s 50 cents.
Total revenues were up 3.2% year over year to $1,093 million, surpassing the Zacks Consensus Estimate of $1,077 million. The top-line figure increased on higher net sales in the metal container businesses, partially offset by a decline in net sales in the closures and plastic container business.
Cost and Margins
In second-quarter 2019, cost of goods sold went up 2.6% to $909.7 million from $885.8 million a year ago. Gross profit increased 5.8% year over year to $183.5 million. Gross margin came in at 16.7% compared to year-ago quarter’s 16.3%.
Selling, general and administrative expenses flared up 2.1% year over year to $80 million during the June-end quarter. Adjusted operating income climbed 3.6% to $113.6 million from $109.6 million recorded in the year-ago quarter. Operating margin was 10.4% in the quarter compared with 10.3% recorded in the year-ago quarter.
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 jumped 9.6% year over year to $575.6 million. The segment’s adjusted operating income increased 9.2% year over year to $53 million.
The Closures segment’s revenues declined 4% year over year to $363.4 million. Adjusted operating income was $47.1 million in the reported quarter, down 1.26% from the prior-year quarter.
In the Plastic Containers segment, revenues edged down to $154.2 million from $155.4 million reported in the prior-year quarter. The segment reported an adjusted profit of $13.5 million, up from $13.4 million in the year-ago quarter.
Financial Updates
The company reported cash and cash equivalents of $111.3 million at the end of the second quarter, down from the year-earlier quarter end’s balance of $181.2 million. The company utilized $129 million of cash in operations during the second quarter compared with $93 million in the prior-year quarter.
Business Updates
This June, Silgan announced the wrapping up of its two metal container manufacturing facilities in Mt. Vernon, MI and Waupun, WI. Both facilities are expected to be shut down during the fourth quarter this year. As a result, the company recognized pre-tax rationalization charges of $2.5 million during the reported quarter. These plant closures also mark the company’s complete withdrawal from the Central States Pension Fund. In the second quarter, the company recognized pre-tax rationalization charge of around $36.2 million for withdrawal liability.
Outlook
Silgan has maintained its adjusted earnings per share in the range of $2.10 to $2.20 for the ongoing year compared with the prior year’s $2.08. The guidance for 2019 includes an unfavorable non-cash pension impact of approximately 13 cents per share resulting from significant market declines in investment values at the end of 2018 that negatively impacted the assets held in the company’s pension plans.
Silgan provided adjusted earnings per share guidance of 73-78 cents for the third quarter of 2019 compared with earnings per share of 76 cents recorded in third-quarter 2018. The guidance includes an unfavorable non-cash pension impact of approximately 3 cents per share.
Share Price Performance
Over the past year, Silgan Holdings’ stock has gained 13.5% compared with the industry’s growth of 58.1%.
Zacks Rank & Stocks to Consider
Silgan Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are John Bean Technologies Corp. (NYSE:) , CECO Environmental Corp. (NASDAQ:) and Roper Technologies, Inc. (NYSE:) . While John Bean Technologies and CECO Environmental sport a Zacks Rank #1 (Strong Buy), Roper Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
John Bean Technologies has an expected earnings growth rate of 5.9% for the current year. The stock has appreciated 10.2% in a year’s time.
CECO Environmental has an impressive projected earnings growth rate of 84.8% for the ongoing year. The company’s shares have rallied 30.2% over the past year.
Roper Technologies has an estimated earnings growth rate of 9.8% for 2019. The company’s shares have gained 20.4% in the past year.
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