Silgan Holdings (NASDAQ: SLGN) reported Q2 EPS of $0.85, $0.20 better than the analyst estimate of $0.65. Revenue for the quarter came in at $1.18 billion versus the consensus estimate of $1.12 billion.

Highlights

• Record net income of $0.70 per diluted share
• Record adjusted net income of $0.85 per diluted share
• Record income before interest and taxes of $131.2 million
• Record segment income for each of the businesses
• Second sequential quarter of record volumes in the metal container business
• Record volumes for any quarter in the plastic container business
• Successfully kept all plants operational during global pandemic
• Completed acquisition of the dispensing operations of Albéa Group

“We are pleased to report a 55 percent increase in adjusted earnings per diluted share in the second quarter of 2020 as compared with the prior year period as strong demand growth continued for many of our products. This sustained growth has been driven by continued increased home preparation and consumption of food, enhanced marketing efforts by several of our customers and increased consumer focus on health and hygiene,” said Tony Allott, Chairman and CEO. “We are particularly thankful for the exceptional dedication and success of the Silgan team in meeting the sustained needs of our markets and customers under the challenging operational circumstances caused by the COVID-19 pandemic. Our metal container business reported strong second quarter segment income, driven largely by unit volume growth of approximately 15 percent in food cans which was sustained throughout the quarter. Our closures business also delivered strong second quarter segment income, with a 25 percent increase over the prior year period, driven by volume growth for pumps and triggers offset in part by demand declines in beauty and certain beverage products. In addition, on June 1, 2020, we welcomed 2,400 new Silgan employees through the acquisition of the dispensing operations of Albéa. Our plastic container business continued its multi-year progression of steadily increasing segment income with second quarter 2020 results that were nearly double the prior year period, driven by volume growth of approximately 14 percent and excellent cost control,” continued Mr. Allott. “As a result of the favorable performance realized in the first half of the year, the outstanding work of the Silgan team and the anticipated continued strong year-over-year growth for many of our products, we are increasing our full year earnings estimate to $2.70 to $2.85 per share, which represents a 28 percent increase over record 2019 levels at the midpoint of the range. We are also increasing our free cash flow estimate for 2020 from approximately $275 million to approximately $330 million. At the current share price, this represents a free cash flow yield of nearly 8.5 percent,” concluded Mr. Allott.

GUIDANCE:

Silgan Holdings sees FY2020 EPS of $2.70-$2.85, versus the consensus of $2.45.

Outlook for 2020
As a result of the Company's strong year-to-date performance and current demand levels for our products, the Company increased its estimate of adjusted net income per diluted share for the full year of 2020 to a range of $2.70 to $2.85 from a range of $2.30 to $2.50, which represents a 28 percent increase at the midpoint of such range as compared to adjusted net income per diluted share of $2.16 in 2019. This increased estimate is driven by the Company's performance to date, anticipated continued strong demand for food and consumer health and hygiene products used principally in the home and the inclusion of the dispensing operations acquired from Albéa on June 1, 2020, partially offset by anticipated continued weaker demand for beauty products and other products used primarily in public venues. The Company also increased its free cash flow estimate for 2020 from approximately $275 million to approximately $330 million. These estimates assume that the Company, its customers and its suppliers are able to continue running plants during the ongoing COVID-19 pandemic.

The Company is also providing an estimate of adjusted net income per diluted share for the third quarter of 2020 in the range of $0.85 to $1.00, a 22 percent increase at the midpoint of such range as compared to adjusted net income per diluted share of $0.76 in the third quarter of 2019. Given the uncertainties around the timing of the fruit and vegetable harvest in the U.S. and Europe, the results of the back half of the year could shift between the third and fourth quarters.

The full year and third quarter estimates of adjusted net income per diluted share for 2020 exclude the impact from rationalization charges, costs attributable to announced acquisitions, purchase accounting write-up of acquired inventory and the loss on early extinguishment of debt. The impact of the dispensing operations acquired from Albéa is expected to be minimal in both periods as recovery in demand levels in beauty markets remains uncertain due to the COVID-19 pandemic.

For earnings history and earnings-related data on Silgan Holdings (SLGN) click here.