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Silgan (SLGN) Earnings and Sales Beat Estimates in Q2

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Silgan Holdings Inc. (SLGN - Free Report) reported second-quarter 2021 adjusted earnings of 85 cents per share, beating the Zacks Consensus Estimate of 83 cents. The bottom line remained flat year over year and was at the higher range of the company’s guidance of 75-85 cents. Strong recovery in the beverage, beauty and fragrance markets, the pass through of higher raw material costs and favorable foreign currency translation led to the encouraging results.

Including one-time items, earnings for the manufacturer of sustainable rigid packaging solutions for consumer goods came in at record 85 cents per share compared with 70 cents reported in the prior-year quarter.

Total revenues improved 15% year over year to $1,349 million on higher sales across its business segments. Further, the top line surpassed the Zacks Consensus Estimate of $1,302 million.

Cost and Margins

During second-quarter 2021, cost of goods sold climbed 17% to $1,113.8 million from the prior-year quarter. Gross profit improved 5% to $235 million. Gross margin came in at 17% compared with the prior-year quarter’s 19%.

Selling, general and administrative expenses declined 6.3% year over year to $94.3 million during the June quarter. Operating income moved up 17% to $153 million. Operating margin came in at 11% in the reported quarter, stable year over year.

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 Dispensing and Specialty Closures segment were up 33% year over year to $546 million. The segment’s operating income increased 26% to $74 million.

The Metal Containers segment’s revenues increased 5% year over year to $625 million. Operating income for the segment amounted to $59 million compared with the prior-year quarter’s $72 million.

In the Custom Containers segment, revenues came in at $178 million compared with the year-ago quarter’s $169 million. The segment reported an operating profit of $27 million, reflecting an improvement of 18%.

Financial Updates

The company had cash and cash equivalents of $165 million at the end of second-quarter 2021 compared with $191 million at the end of the prior-year quarter. The company utilized around $209 million cash in operating activities during the six months period ended as of Jun 30, 2021 compared with $64 million in the prior-year comparable period.

2021 Outlook

Silgan continues to expect 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 95 cents and $1.10 for third-quarter 2021. The guidance assumes continued strong product demand in key markets and a robust harvest, which will be partly offset by higher raw material costs and labor supply-related challenges. The company reported record earnings per share of $1.04 in third-quarter 2020.

Price Performance

Silgan’s shares have gained 6.4% in a year’s time compared with the industry’s growth of 17.9%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank and Stocks to Consider

Silgan currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Greif, Inc. (GEF - Free Report) , Lindsay Corp. (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.

Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated 36.7%, over the past year.

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