Highlights
• Record net income of $2.42 per diluted share
• Record adjusted net income of $1.65 per diluted share
• Cash from operations of $389.7 million, or $3.50 per diluted share
• Free cash flow of $224.1 million, or $2.01 per diluted share
• Enhanced the scope and growth opportunities of the Company with the Dispensing Systems acquisition
• Delivered significant improvement in the plastic container business
• Initiated construction on two new manufacturing facilities to support growth in the pet food market
• Recognized $110.9 million net reduction in future cash tax obligations primarily due to the recently enacted U.S. Tax Cuts and Jobs Act
• Refinanced debt portfolio to extend maturities, increase flexibility and increase long-term fixed rate debt at attractive interest rates
• Completed third 2-for-1 stock split
• Increased cash dividend per share by approximately 6 percent
Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid packaging for consumer goods products, today reported full year 2017 record net income of $269.7 million, or $2.42 per diluted share, as compared to full year 2016 net income of $153.4 million, or $1.27 per diluted share.
“In 2017, we posted record adjusted net income per diluted share of $1.65, an increase of approximately 20 percent over the prior year, and an increase of approximately 25 percent in free cash flow to $224.1 million,” said Tony Allott, President and CEO. “We successfully integrated the Dispensing Systems operations, which we acquired in April 2017, and are very pleased with its performance and opportunities to further grow our closures portfolio. As expected, our metal and plastic container businesses benefitted from lower manufacturing costs and improved efficiencies throughout the year as a result of our footprint optimization programs completed in 2016,” continued Mr. Allott. “Lastly, at the end of 2017, the U.S. passed tax reform that will significantly benefit Silgan, which had been operating with comparative tax rate disadvantages to many of its competitors. This new tax reform will reduce our future cash obligations for existing net deferred tax liabilities, reduce our tax rates on future U.S. earnings and allow us greater flexibility to utilize global cash to invest in the most optimal locations. We believe Silgan is well positioned for another year of double digit earnings growth, with adjusted net income per diluted share for 2018 estimated to be in a range of $2.03 to $2.13, and for further growth investment in the coming years. As a result, we expect to continue to improve free cash flow, which we estimate to be approximately $300 million in 2018,” concluded Mr. Allott.
Adjusted net income per diluted share was $1.65 for the full year 2017, after adjustments decreasing net income per diluted share by $0.77, including $1.00 in net tax adjustments reflecting reduced future cash tax obligations. Adjusted net income per diluted share was $1.38 for the full year 2016, after adjustments increasing net income per diluted share by $0.11. A reconciliation of net income per diluted share to “adjusted net income per diluted share,” a Non-GAAP financial measure used by the Company which adjusts net income per diluted share for certain items, can be found in Tables A and B at the back of this press release.
All per share amounts for prior periods have been adjusted for the two-for-one stock split that occurred on May 26, 2017.
The Company reported net cash provided by operating activities of $389.7 million in 2017 as compared to $394.6 million in 2016. Free cash flow improved $44.2 million to $224.1 million in 2017 as compared to $179.9 million in 2016 primarily as a result of lower capital expenditures and improved operating performance, partially offset by costs attributable to announced acquisitions. The Company is providing a reconciliation in Table C of this press release of net cash provided by operating activities to “free cash flow,” a Non-GAAP financial measure which adjusts net cash provided by operating activities for capital expenditures and changes in outstanding checks.
Net sales for the full year of 2017 were $4.09 billion, an increase of $477.0 million, or 13.2 percent, as compared to 2016. This increase was the result of the acquisition of the Dispensing Systems operations in April 2017 and higher net sales across all businesses.
Income from operations for 2017 was $357.0 million, an increase of $57.3 million, or 19.1 percent, as compared to $299.7 million for 2016, and operating margin increased to 8.7 percent from 8.3 percent over the same periods. The increase in income from operations was the result of higher income from operations in the closures business due to the acquisition of Dispensing Systems and higher income from operations in the metal and plastic container businesses. Rationalization charges were $5.8 million and $19.1 million in 2017 and 2016, respectively. Costs attributed to announced acquisitions were $24.7 million and $1.4 million in 2017 and 2016, respectively.
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