Highlights:
*Record net income of $0.66 per diluted share
*Record adjusted net income of $0.75 per diluted share
*Volume increases of 9 percent in each of the Dispensing and Specialty Closures segment and Metal Container segment
*Issued $500 million of 1.4% Senior Secured Notes due 2026
*Increased cash dividend per share by 16.7 percent
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of sustainable rigid packaging solutions for consumer goods products, today reported record first quarter 2021 net income of $73.3 million, or $0.66 per diluted share, as compared to first quarter 2020 net income of $57.6 million, or $0.52 per diluted share.
Adjusted net income per diluted share was a record $0.75 for the first quarter of 2021, after adjustments increasing net income per diluted share by $0.09. Adjusted net income per diluted share was a record $0.57 for the first quarter of 2020, after adjustments increasing net income per diluted share by $0.05. A reconciliation of net income per diluted share to “adjusted net income per diluted share,” a Non-GAAP financial measure used by the Company that adjusts net income per diluted share for certain items, can be found in Tables A and B at the back of this press release.
“We are very pleased to report continued record financial performance in the first quarter of 2021, with a 20% increase in sales and a 32% increase in adjusted earnings per diluted share over the previous record first quarter of 2020,” said Tony Allott, Chairman and CEO. “Our businesses exceeded a very strong prior year quarter that had been positively impacted by the initial pantry stocking in response to the global Covid-19 outbreak, and earnings grew solidly despite power and supply chain disruptions associated with winter storms across the southern U.S. and unparalleled increases in resin costs,” continued Mr. Allott.
“As we began 2021, we renamed two of our segments to better capture the evolving nature of their products and ongoing strategic focus. Our Dispensing and Specialty Closures segment, formerly Closures, lead the way in the first quarter with significant growth and profit expansion driven by continued strength in the personal care, hygiene and health care markets and an early recovery in the fragrance market. This segment is now our largest in terms of profit and is expected to continue to grow as markets recover and our recently combined management team continues to deliver the Silgan customer service and operating models in these strategic markets. As expected, our industry leading Metal Container segment posted further volume growth over the record first quarter of 2020 as consumers continued to value the cost, quality and sustainable advantage of these products. Segment income in Metal Containers continued to benefit from strong volumes which further propelled us to incur one-time investments in hiring and training costs associated with a spike in onboarding new employees to more efficiently support increased demand levels. In addition, Metal Containers segment income was negatively impacted by higher costs due to operational challenges associated with winter storm Uri and rationalization charges in our European operations. Our Custom Containers segment, formerly Plastic Containers, continued to benefit from a more favorable mix of products sold and strong operational performance, partially offset by delays in passing through unprecedented resin inflation experienced late in the quarter,” continued Mr. Allott.
“We are confirming our outlook for full year 2021 adjusted earnings per diluted share in a range of $3.30 to $3.45, which had envisioned this strong start to the year and continuing strong demand for our products and represents a 10.3 percent increase at the midpoint over record 2020 levels. For the second quarter of 2021, we anticipate adjusted earnings per diluted share in a range of $0.75 to $0.85, as compared to a record $0.85 in the second quarter of 2020 and significantly in excess of any previous second quarter. The second quarter of 2020 benefited from an outsized liquidation of inventory to meet significant customer demand as home lockdowns were enacted across the globe. Our current year second quarter estimate anticipates continued strong product demand, which will be partially offset by a significant impact from contractual lags in passing through the unprecedented inflation in resin and other raw materials. Our full year earnings estimate assumes a subsequent benefit, as we anticipate benefiting from the lagged pass through of these costs as they return to more normal levels,” concluded Mr. Allott.
Net sales for the first quarter of 2021 were $1.24 billion, an increase of $207.7 million, or 20.2 percent, as compared to the same period in the prior year. This increase was the result of higher net sales in all of the segments.
Income before interest and income taxes for the first quarter of 2021 was a record $126.6 million, an increase of $24.5 million, or 24.0 percent, as compared to $102.1 million for the first quarter of 2020, and margins increased to 10.2 percent from 9.9 percent for the same periods. The increase in income before interest and income taxes was the result of higher income in the Dispensing and Specialty Closures and Custom Containers segments and lower corporate expenses primarily related to prior year costs for one-time plant employee incentive payments and announced acquisitions, partially offset by higher rationalization charges. Rationalization charges were $10.3 million and $2.8 million in the first quarters of 2021 and 2020, respectively.
Interest and other debt expense before loss on early extinguishment of debt for the first quarter of 2021 was $26.4 million, an increase of $3.0 million as compared to the first quarter of 2020. This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisition of the dispensing operations of the Albéa Group in the second quarter of 2020, partially offset by lower weighted average interest rates during the current quarter due to lower variable market rates. Loss on early extinguishment of debt was $0.9 million and $1.5 million in the first quarters of 2021 and 2020, respectively.
The effective tax rates were 26.2 percent and 25.4 percent for the first quarters of 2021 and 2020, respectively. The effective tax rate for the first quarter of 2021 was unfavorably impacted by higher income in less favorable tax jurisdictions.
The Company published its inaugural sustainability report today, which outlines the positive impact of its products and the progress in further reducing its environmental footprint. This report is available on the Company’s website.
details at: https://silganholdingsinc.gcs-web.com/news-releases/news-release-details/silgan-announces-record-first-quarter-earnings-confirms-full