Why Silgan Holdings Shares Are Rising Today

Silgan Holdings Inc. SLGN shares are trading higher on Wednesday.

The Connecticut-based manufacturing company that produces consumer goods packaging reported adjusted EPS of $0.63, beating the analyst consensus of $0.58.

Net sales for the fourth quarter of 2023 were $1.34 billion, down 8% year over year owing to lower volumes. Sales missed the analyst consensus of $1.39 billion.

Net sales of the Dispensing and Specialty Closures segment decreased 3%. Volumes decreased due to customer destocking activities in food and beverage markets and double-digit declines in higher volume metal closures for international food and beverage markets due to the ongoing impact of inflation on consumers.

Dispensing and Specialty Closures adjusted EBIT increased to $87 million from $74.6 million in the year-ago period. The increase in adjusted EBIT was driven primarily by improved price/cost due to lower manufacturing costs, partially offset by lower volumes for food and beverage products.

The company also highlighted a multi-year $50 million cost reduction initiative.

“We have seen early signs of recovery in certain categories from the customer destocking activities that impacted 2023, and we expect these favorable trends to continue to improve during the first half of the year,” said Adam Greenlee, President and CEO. 

Outlook: Silgan expects first-quarter adjusted EPS of $0.60-$0.70 versus an estimate of $0.72. The company sees FY24 Adjusted EPS of $3.55-$3.75 versus estimate of $3.61.

The company anticipates interest and other debt expenses in 2024 of approximately $170 million and an effective tax rate in 2024 of approximately 24%-25%.

The company currently estimates that free cash flow in 2024 will be approximately $375 million as compared to $356.7 million in 2023. Capital expenditures are expected to be approximately $240 million in 2024.

Price Action: SLGN shares are trading higher by 5.13% to $45.88 on the last check Wednesday.