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Silgan Holdings Inc. (SLGN - Free Report) reported record third-quarter 2018 adjusted earnings of 76 cents per share, which improved 15% from the year-ago quarter. Earnings missed the Zacks Consensus Estimate by a penny, while it came at the mid-point of management’s guidance of 74-78 cents.
Including one-time items, the company’s earnings per share came in at 76 cents compared to 65 cents recorded in the prior-year quarter. Silgan Holdings recorded costs attributed to acquisitions of 1 cent in the prior-year quarter, while the reported quarter did not have such adjustment.
Total revenues increased 3% year over year to $1,307 million. This can be attributed to higher net sales across all businesses. The revenue figure also beat the Zacks Consensus Estimate of $1,300 million.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Cost of goods sold went up 4% to $1,103 million from $1,061 million in the year-ago quarter. Gross profit edged down 0.7% year over year to $204 million. Gross margin also contracted 60 basis points (bps) year over year to 15.6%.
Selling, general and administrative expenses slipped 1.9% year over year to $74 million. Adjusted operating income remained flat year over year at $131 million. Operating margin shrunk 30 bps year over year to 10%.
Segment Performance
Revenues in the Metal Containers segment decreased 3%, year over year, to $798 million. The segment’s adjusted operating income dropped 6% year over year to $87 million.
The Closures segment’s revenues inched up 1% year over year to $361 million. Adjusted operating income improved 4% year over year to $47.4 million.
In the Plastic Containers segment, revenues climbed 8% year over year to $148 million. The segment reported an adjusted profit of $8.6 million, up from $6.6 million witnessed in the prior-year quarter.
Financial Updates
Silgan reported cash and cash equivalents of $171 million at the end of the quarter under review, up from $54 million witnessed at the end of 2017. The company reported cash flow from operations of $13 million during the nine-month period ended Sep 30, 2018, compared with cash usage of $4 million reported in the comparable period last year.
Guidance
For 2018, Silgan slashed its adjusted earnings per share guidance to $2.03-$2.08 from the prior view of $2.03-$2.13. The guidance includes the unfavorable impact from a planned reduction in finished goods inventory in the metal-container business. The mid-point of the range depicts year-over-year growth of 26%. The company expects improvement in sales and operating across all its three segments.
For fourth-quarter 2018, the company initiated an outlook of 34-39 cents for adjusted earnings per share, reflecting 14% increase at the mid-point.
Share Price Performance
Over the past year, Silgan Holdings has underperformed the industry it belongs to. The stock dipped 20%, wider than the 9% decline witnessed by the industry.
Zacks Rank & Key Picks
Silgan Holdings currently carries a Zacks Rank #3 (Hold).
Tetra Tech has a long-term earnings growth rate of 14%. The stock has appreciated around 32% in a year’s time.
Tenaris has a long-term earnings growth rate of 38.3%. The company’s shares have rallied 12% over the past year.
Mobile Mini has a long-term earnings growth rate of 14%. Its shares have gained 18% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Silgan Holdings (SLGN) Q3 Earnings Miss, Sales Top, View Cut
Silgan Holdings Inc. (SLGN - Free Report) reported record third-quarter 2018 adjusted earnings of 76 cents per share, which improved 15% from the year-ago quarter. Earnings missed the Zacks Consensus Estimate by a penny, while it came at the mid-point of management’s guidance of 74-78 cents.
Including one-time items, the company’s earnings per share came in at 76 cents compared to 65 cents recorded in the prior-year quarter. Silgan Holdings recorded costs attributed to acquisitions of 1 cent in the prior-year quarter, while the reported quarter did not have such adjustment.
Total revenues increased 3% year over year to $1,307 million. This can be attributed to higher net sales across all businesses. The revenue figure also beat the Zacks Consensus Estimate of $1,300 million.
Silgan Holdings Inc. Price, Consensus and EPS Surprise
Silgan Holdings Inc. Price, Consensus and EPS Surprise | Silgan Holdings Inc. Quote
Cost and Margins
Cost of goods sold went up 4% to $1,103 million from $1,061 million in the year-ago quarter. Gross profit edged down 0.7% year over year to $204 million. Gross margin also contracted 60 basis points (bps) year over year to 15.6%.
Selling, general and administrative expenses slipped 1.9% year over year to $74 million. Adjusted operating income remained flat year over year at $131 million. Operating margin shrunk 30 bps year over year to 10%.
Segment Performance
Revenues in the Metal Containers segment decreased 3%, year over year, to $798 million. The segment’s adjusted operating income dropped 6% year over year to $87 million.
The Closures segment’s revenues inched up 1% year over year to $361 million. Adjusted operating income improved 4% year over year to $47.4 million.
In the Plastic Containers segment, revenues climbed 8% year over year to $148 million. The segment reported an adjusted profit of $8.6 million, up from $6.6 million witnessed in the prior-year quarter.
Financial Updates
Silgan reported cash and cash equivalents of $171 million at the end of the quarter under review, up from $54 million witnessed at the end of 2017. The company reported cash flow from operations of $13 million during the nine-month period ended Sep 30, 2018, compared with cash usage of $4 million reported in the comparable period last year.
Guidance
For 2018, Silgan slashed its adjusted earnings per share guidance to $2.03-$2.08 from the prior view of $2.03-$2.13. The guidance includes the unfavorable impact from a planned reduction in finished goods inventory in the metal-container business. The mid-point of the range depicts year-over-year growth of 26%. The company expects improvement in sales and operating across all its three segments.
For fourth-quarter 2018, the company initiated an outlook of 34-39 cents for adjusted earnings per share, reflecting 14% increase at the mid-point.
Share Price Performance
Over the past year, Silgan Holdings has underperformed the industry it belongs to. The stock dipped 20%, wider than the 9% decline witnessed by the industry.
Zacks Rank & Key Picks
Silgan Holdings currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include Tetra Tech, Inc. (TTEK - Free Report) , Tenaris S.A. (TS - Free Report) and Mobile Mini, Inc. . While Tetra Tech sports a Zacks Rank #1 (Strong Buy), Tenaris and Mobile Mini carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tetra Tech has a long-term earnings growth rate of 14%. The stock has appreciated around 32% in a year’s time.
Tenaris has a long-term earnings growth rate of 38.3%. The company’s shares have rallied 12% over the past year.
Mobile Mini has a long-term earnings growth rate of 14%. Its shares have gained 18% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>