Silgan Q1 2025 Earnings Report

Silgan EPS Results

• Actual EPS: $0.82
• Consensus EPS: $0.78
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.69

Silgan Revenue Results

• Actual Revenue: $1.47 billion
• Expected Revenue: $1.48 billion
• Beat/Miss: Missed by -$9.76 million
• YoY Revenue Growth: +11.40%

Silgan Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 11:00AM ET

Silgan (NYSE:SLGN), together with its subsidiaries, manufactures and sells rigid packaging solutions for consumer goods products in the United States and internationally. It operates through three segments: Dispensing and Specialty Closures, Metal Containers, and Custom Containers. The Dispensing and Specialty Closures segment offers a range of metal and plastic closures, and dispensing systems for food, beverage, health care, garden, home, personal care, beauty products, and hard surface cleaning products, as well as capping/sealing equipment and detection systems. The Metal Containers segment manufactures and sells steel and aluminum containers for food products, such as pet food, vegetables, soups, proteins, fruits, and other miscellaneous food products, as well as general line metal containers primarily for chemicals. The Custom Containers segment manufactures and sells custom designed and stock plastic containers for use in personal care and health care; food and beverage; household and industrial chemical; pharmaceutical; pet food and care; agricultural; automotive. This segment also provides thermoformed barrier and non-barrier bowls, and trays for food products, such as soups, other ready-to-eat meals, and pet food products; and plastic closures, caps, sifters, and fitments, as well as thermoformed tubs for food, household, and personal care products. The company markets its products primarily through direct sales force, as well as through a network of distributors, and an online shopping catalog. The company was founded in 1987 and is headquartered in Stamford, Connecticut.

Silgan Q1 2025 Earnings Call Transcript

Key Takeaways

• Silgan delivered a record first quarter with net sales of $1.5 billion up 11% y/y and adjusted EPS of $0.82, up 19% y/y, driven by organic growth, cost savings, and the Vayner acquisition.
• The dispensing and specialty closures segment saw 25% y/y sales growth (including $126 million from Vayner) and four consecutive quarters of double-digit organic growth in dispensing products.
• In metal containers, unit volumes rose 4% y/y led by pet food and soup demand, while custom containers posted 2% volume growth and a 250 bps adjusted EBIT margin improvement.
• Silgan reaffirmed 2025 guidance for mid-single-digit volume growth in each segment, adjusted EPS of $4.00–$4.20 (+13% at midpoint), and free cash flow of ~$450 million.
• Their customer intimacy model, localized manufacturing footprint, and ongoing cost reduction initiatives aim to sustain resilience through economic cycles and support future M&A.

Presentation

[Operator]

Good day, and welcome to the Silgan Holdings First Quarter twenty twenty five Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Alex Hutter, Vice President of Investor Relations. Please go ahead.

[Alexander Hutter, VP - Investor Relations at Silgan]

Thank you, and good morning. Joining me on the call today are Adam Greenlee, President and CEO Philippe Chevrier, EVP and COO Bob Lewis, EVP, Corporate Development and Administration and Kim Ulmer, SVP and CFO. Before we begin the call today, we would like to make it clear that certain statements made on this conference call may be forward looking statements. These forward looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks, including, but not limited to, those described in the annual in the company's annual report on Form 10 ks for 2024 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward looking statements.

[Alexander Hutter, VP - Investor Relations at Silgan]

In addition, commentary on today's call may contain references to certain non GAAP financial metrics, including adjusted EBIT, adjusted EBITDA, free cash flow and adjusted net income per diluted share or adjusted EPS. Reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's press release and under the non GAAP financial information portion of the Investor Relations section of our website at silganholdings.com. With that, let me turn it over to Adam.

[Adam Greenlee, President , CEO & Director at Silgan]

Thank you, Alex, and we'd like to welcome everyone to Silgan's first quarter earnings call. Before we get into our discussion on the quarter today, I want to take a moment to welcome Philippe Chevrier, Silgan's Chief Operating Officer, to the call. Since joining the company in February, Filippe has integrated into the Silgan culture and is already contributing to the success of our organization. We're excited to have Filippe on the holdings team.

[Philippe Chevrier, Executive VP & COO at Silgan]

Thank you, Adam, for a warm welcome, and it is a pleasure to join our analysts and investors on today's call. This has been an exciting quarter personally and professionally. Having had almost ninety days to become more fully acquainted with the company and our businesses, I continue to be very impressed with the caliber of our people at Syngas, the effectiveness of our operating model, the intense focus on execution and the strong position we enjoy as long term partners with our customers across all our businesses. Unique structure clearly drives an opportunity culture in the company that is built upon sense of accountability and naturally creates opportunities for profitable growth with our customers. I've been impressed by the passionate people I've met and the high level of efficiency in our operations and manufacturing technology.

[Philippe Chevrier, Executive VP & COO at Silgan]

I'm excited to be part of the Stalatin team and look forward to contributing to Silgan's continued successes and growth.

[Adam Greenlee, President , CEO & Director at Silgan]

That's great. Thank you, Philippe. Now turning our attention back to Silgan's performance. Our company is off to a very strong start in 2025 as our team delivered another quarter of record results that reflect the success of our long term strategic efforts, the efficiency of our operating model, our focus on meeting the unique needs of our customers, the resilience of our chosen end markets and products, and the power of our capital deployment model. The continued normalization of volume conditions in our food and beverage markets highlighted the success of our strategic initiatives as we delivered double digit revenue growth and nearly 20% adjusted EPS growth in the first quarter, primarily driven by strong organic growth in each of our businesses, our cost savings actions and the contribution of the Vayner acquisition.

[Adam Greenlee, President , CEO & Director at Silgan]

Our dispensing and specialty closures segment continues to capitalize on our momentum in the marketplace, our market leading innovation and the strength of our long term customer relationships by delivering our fourth consecutive quarter of double digit organic growth in dispensing products. The Vayner acquisition integration is on track, and we continue to see incremental opportunities to leverage both our commercial presence and our expanded product offering to drive accelerated growth well into the future as a result of this combination. Our teams are executing well on both the synergy capture for the Vayner acquisition and our multiyear cost reduction initiative in our legacy businesses. In metal containers, our volume growth continued to accelerate in the first quarter driven by strong demand for both pet food and soup products. Consumer demand for our customers' pet food products continues to grow at a mid single digit rate driven by pet population growth and mainstream premiumization in our core markets for cats and small dogs.

[Adam Greenlee, President , CEO & Director at Silgan]

In soup, consumers continue to appreciate the value that these highly efficient, low cost meal occasions provide, and we have commercialized several new customer product launches in the category to drive growth. In custom containers, our business delivered record operating performance and experienced continued success in the marketplace as the commercialization of contractual business awards, more normalized market conditions and growth in pet food products drove low single digit volume growth and nearly two fifty basis points of adjusted EBIT margin improvement. With our strong start to the year and momentum into the second quarter, we remain confident in our ability to achieve our objectives in 2025 and deliver record results. Our long term contractual arrangements and localized manufacturing philosophy of sourcing materials and producing packaging in regions where the products are consumed insulate our business from much of the recent uncertainty in international trade policy that has impacted the financial markets. The deliberate construct of our portfolio of products and end markets, our long term partnerships with our customers, and our low cost global manufacturing footprint continue to uniquely position Silgan to outperform through all stages of the economic cycle.

[Adam Greenlee, President , CEO & Director at Silgan]

Additionally, our unwavering focus on meeting the unique and at times evolving needs of our customers and aiding those customers to solve any challenges they face through uncertain times solidifies our company as the long term packaging partner of choice to the world's most recognizable and most successful brands. Our expectations for the remainder of 2025 remain largely unchanged. We continue to expect dispensing and specialty closures organic volume mix to grow by a mid single digit rate in 2025, driven by another year of high single digit growth in our dispensing products and improved mix. Our metal containers are on track to grow by a mid single digit percentage, driven primarily by mid single digit growth in pet food and a partial recovery in fruit and vegetable pack volumes. In custom containers, with the annualization of the new business that ramped up in 2024 as well as additional new business awards in 2025, we continue to expect volumes to grow by a mid single digit percentage this year.

[Adam Greenlee, President , CEO & Director at Silgan]

We remain focused on the opportunities that lay ahead for the company in both the near and longer term and confident in our ability to execute on our plan. Our customer intimacy model continues to set us apart in the marketplace as we compete and win in the markets we serve. After several years of market disruptions, we are confident that the success of our strategic growth initiatives will be more evident in our results in 2025 as our organic growth and the power of our capital deployment model drives record results. With that, Kim will take you through the financials for the quarter and our estimates for the second quarter and the full year of 2025.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Thank you, Adam. As Adam highlighted, we reported another quarter of record financial results that were near the high end of our expected range in the first quarter, driven by strong performance from the Vayner acquisition, organic growth in each of our segments and the success of our cost reduction plan. Net sales of approximately $1,500,000,000 increased 11% from the prior year period, driven primarily by the addition of the Vayner business, which closed in the fourth quarter of twenty twenty four and organic volume growth in all segments. Record total adjusted EBIT for the quarter of January increased by 17% on a year over year basis, driven by the inclusion of Vayner Packaging, strong organic growth and the benefits of our cost reduction efforts, resulting in record adjusted EBIT in the dispensing and specialty closures and custom container segments and higher adjusted EBIT in the metal container segment. Record adjusted EPS of $0.82 increased $0.13 or 19% from the prior year quarter.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Turning to our segments. First quarter sales in our dispensing and specialty closures segment increased 25% versus the prior year, primarily as a result of the contribution from the Vayner Packaging acquisition, which added approximately $126,000,000 during the quarter and higher volume mix of 4%. The improvement in volume mix was driven primarily by a double digit increase in organic volume of dispensing products during the quarter, resulting in favorable mix. Record first quarter twenty twenty five dispensing and specialty closures adjusted EBIT increased $21,000,000 or 28% versus the prior year period as a result of the contribution from the Vayner Packaging acquisition, which added approximately $17,000,000 and favorable volume mix. In our Metal Containers segment, sales increased 2% versus the prior year as a result of a 4% increase in unit volumes during the quarter due to mid single digit growth in pet food and strong demand for soup.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Higher volumes were partially offset by less favorable price mix due to the strong growth in smaller cans for pet food markets, which drove a less favorable mix. Metal containers adjusted EBIT increased 10% primarily as a result of favorable price cost and higher volumes. In custom containers, sales increased 2% compared to the prior year quarter, driven by a 2% increase in volumes as a result of the commercialization of new business awards. Custom containers adjusted EBIT increased 22% as compared to the first quarter of twenty twenty four, primarily due to favorable price cost including mix and higher volumes. Looking ahead to 2025, we are confirming our estimate of adjusted EPS in the range of $4 to $4.2 a 13% increase at the midpoint of the range as compared to $3.62 in 2024.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

This estimate includes interest expense of approximately $185,000,000 a tax rate of approximately 24%, corporate expense of approximately $45,000,000 and a weighted average share count of approximately 107,000,000 shares. At the midpoint of our 2025 adjusted EPS range, we will exceed our prior records of adjusted EBIT, adjusted EBITDA and adjusted EPS achieved in 2022. From a segment perspective, we are confirming our prior expectations of a mid teen percentage increase in total adjusted EBIT in 2025, driven primarily by a greater than 20% increase in dispensing and specialty closures adjusted EBIT, a mid teen percentage increase in custom containers adjusted EBIT, and a high single digit percentage increase in metal containers adjusted EBIT. Based on our current earnings outlook for 2025, we are confirming our estimate of free cash flow of approximately $450,000,000 a 15% increase from the prior year as earnings growth will be partly offset by higher cash interest and tax payments with CapEx of approximately $300,000,000 This estimate also includes approximately $20,000,000 of cash costs to support our cost reduction program. Turning to our outlook for the second quarter of twenty twenty five, we are providing an estimate of adjusted earnings in the range of $0.98 to $1.08 per diluted share, a 17% increase as compared to adjusted EPS of $0.88 in the prior year period.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

The year over year improvement in adjusted earnings in the second quarter is driven primarily by the inclusion of Vayner Packaging, higher volumes in the dispensing and specialty closures and custom container segments and the ongoing benefits of our cost reduction program. Dispensing and specialty closures second quarter volume mix is expected to grow by a mid single digit percentage. Volumes in the custom container segment are expected to grow by a mid single digit rate. Metal containers volumes are expected to be flat to prior year levels in the second quarter, with the majority of the volume improvement for the fruit and vegetable pack occurring in the peak harvest months during the third quarter. That concludes our prepared comments, and we'll open up the call for questions.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Rachel, could you kindly provide the directions for the question and answer session?

[Operator]

Yes. Thank you.

[Operator]

And we will take our first question from George Staphos with Bank of America.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Hi, everyone. Good morning.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thanks for the details. Hope you're doing well. You know, my question to start is just really around volume. You know, the question I know you've probably received because you've received it from from some of us on phone and certainly we get from investors, you know, why you remain comfortable with the volume guidance that you've been providing, you know, in light of the fact that, you know, portions of your business, especially in metal, are not the most rapidly growing, Adam. And, you know, recognizing that a lot of the volume, just because the nature of the business, is seasonally weighted to the second half and third quarter, and we have the the overlay certainly of of kind of a potentially weaker economy as a factor. So, you know, can you go through the one, two, three in terms of why you remain or maybe have changed your view on the the the outlook? Secondly, on volume. Secondly, can you talk if at all whether you're seeing customers changing their purchasing patterns, doing any tactical moves within the supply chain to get ahead of any potential risks in terms of tariffs and the like, how that's factoring into your business.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

And she mentioned that earlier in the call. I I apologize that I joined the call late, and I'll I'll stop there.

[Adam Greenlee, President , CEO & Director at Silgan]

Great. Thanks, George. Maybe just a couple of things getting back to kind of your first question with overall volume. So nothing's changed for us. You know, we continue to expect mid single digit volume growth in each of our operating segments for 2025.

[Adam Greenlee, President , CEO & Director at Silgan]

And I think it's important to understand the details of that. As we just talked about, you know, we've just delivered our fourth consecutive quarter of double digit growth in dispensing products. So very pleased with how the business continues to perform. Think we've talked a lot about, you know, in the higher end segments that that we participate in, we are winning a disproportionate amount of the new product launches in those categories. So, you know, really right in line with our expectation.

[Adam Greenlee, President , CEO & Director at Silgan]

You know, it's driving mid single digit growth for for that segment, and we continue to feel really, really good about that. Our innovation agenda, our customer relationships, all driving, I think, outperformance versus the market and versus competition. I think when you move over to metal containers, it's really important to reiterate that about 50% of our overall unit volume falls into the pet food category. And I know we've talked about that many, many times, but, you know, we've been requirement supplier for thirty plus years and have decades of experience in in understanding the dynamics of that market. And having another quarter where we've delivered mid single digit growth, in our pet food products is critically important to what we've done.

[Adam Greenlee, President , CEO & Director at Silgan]

And, you know, I think I'd probably throw in a comment here that, you know, our strategic growth initiatives include a significant capital deployment in our dispensing products. You're seeing that growth fall through. Our other, you know, strategic growth initiative around the metal containers business is the investments we've made over time to continue to support our customers growing pet food product demands. And we've just continued to deliver results, I think, year after year in the pet food segment of our business. So feeling really good about that.

[Adam Greenlee, President , CEO & Director at Silgan]

It's half of our volume. I'll dovetail just a second, George, and start to answer a part of your second question. For our volume in the quarter, we didn't see any unusual, buying activity. Remember, half of our volume is in pet food, and for the most part, those are aluminum cans. Our aluminum volumes are supported primarily by North American suppliers.

[Adam Greenlee, President , CEO & Director at Silgan]

So just take that that there's nothing nothing to do from a tariff or, a supply chain perspective on half of the volume. I'll come back to the other side of that in just a second. But wrapping up on custom containers, you know, we talked a lot last year about two specific large new business awards. We've commercialized those in 2024 as we cycle over and get the full year annualization of those awards. You know, that's a bit of a driver for our growth.

[Adam Greenlee, President , CEO & Director at Silgan]

But it's very clear that we, continue to win in that market, and we've said for a while that we believe the market has been underserved from a customer service perspective, and that's what Silgan brings to the table. And then I'll jump back to the the other part of the question, George, just going back to, you know, customers buying activities. You know, food and beverage is a big part of what we do. You know, we've said, I think, on this call, roughly 75% of our products fall into that consumer staple category. So these really, for the most part, are nondiscretionary items that that consumers are making purchase decisions on, and we feel comfortable and confident in our outlook.

[Adam Greenlee, President , CEO & Director at Silgan]

We've got excellent relationships when you get to the food can side. Remember, so much of that business is on-site or near site with our customers. We're returning back to the historic days of having quite a bit of transparency and clarity between us and our customers and the supply chains that support them having success in the marketplace. So, George, long question, probably even longer answer, so I apologize for that. But, hopefully, the detail was helpful.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

No. I appreciate it, Adam. A quickie, and I'll turn it over just out of respect for everybody. Just, Vayner, it sounds like it's going well. Any what would be the one learning you've had that makes you comfortable on the deal model? I'll leave it there. Thank you.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. I look. Vayner's going really well. We're very pleased with the acquisition. As you know, George, we've we've known that business for a long time.

[Adam Greenlee, President , CEO & Director at Silgan]

So not a whole lot of surprises. Probably a confirmation in our thesis for dispensing products that there is greater than market growth rate activities available for the right business, for the right innovation, for the right customer service model. And so we talked on the last call, we had some opportunities to invest in in some new capital supporting customer growth. We did that at the end of last year. That is part of the, I'll say, beat that we had in Vayner in q one as we're realizing the volumes that we were able to invest in at the end of last year.

[Adam Greenlee, President , CEO & Director at Silgan]

So it's it's been really good. It's right in line with with what we were hoping for, and it's a really strong business.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thank you very much.

[Adam Greenlee, President , CEO & Director at Silgan]

Thank you.

[Operator]

Thank you. We will take our next question from Ghansham Panjabi with Baird.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Thank you, operator. Good morning, everybody. Adam, I just want to go back to your comments to George's question. Obviously, you laid out guidance assumption for 2025, which seems very comparable to what you said when you reported 4Q, it seems like a lifetime ago. But just given the sequence of events that have occurred, which, you know, undoubtedly create more uncertainty from a macroeconomic standpoint, may maybe you can answer the question as it relates to customer, new product activity, and if you've seen any change there across the different regions and businesses that you sell into.

[Adam Greenlee, President , CEO & Director at Silgan]

Look. I think, you know, we're at the forefront of of innovation and new product development with our customers. Maybe the one thing that I would give you, Ghansham, that I can think of the change versus q four, one of our large soup customers actually, initiated two new product launches, for 2025 in the first quarter. And as, you know, as a large CPG, those two launches fall into their top five of total spend for new product launches in 2025. So if anything, I'd tell you, we're feeling more comfortable with our soup volume in particular.

[Adam Greenlee, President , CEO & Director at Silgan]

We had a good first quarter as you heard. As we look to the rest of the year, we think there's potential for opportunity there. And then when you think about dispensing pro well, let me just jump to dispensing really fast. You know, again, a little longer pipeline with our dispensing products. So no no knee jerk reaction to the uncertainty that that maybe the market has has felt here in the first quarter.

[Adam Greenlee, President , CEO & Director at Silgan]

You think about kind of the the fragrance and beauty market, you know, we're catering to a a specific set of consumer demographic that's just simply less elastic with the products that they purchase, the utility we provide to our customers at that high end of prestige and luxury fragrance and beauty. We haven't seen any slowdown in the development activities and innovation requests from our largest customers. So, again, I I understand the question. And I think what I would tell you, we were confident on the last call. I think our confidence is unchanged as we look at the rest of the year given the intelligence and knowledge we have about our businesses.

[Ghansham Panjabi, Senior Research Analyst at Baird]

Okay. Fair enough. And then in terms of the impact of tariffs, you know, obviously, the direct impact seems pretty low for you. But in terms of what your best estimate is in terms of, the the DSC segment, Do you have a sense as to how much crosses borders? You mentioned some of the categories like luxury fragrances, etcetera, those get shipped around.

[Ghansham Panjabi, Senior Research Analyst at Baird]

What would that equate to? And then just separately, what do you expect net debt to EBITDA to end 2025?

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. I'll I'll pass it to Kim for the second part of that question. But for the impact of tariffs, Goncho, I mean, it's a good question for for DSC specifically. And, you know, there just isn't that much cross border activity within that business. And, you know, it's back to to what I had mentioned earlier.

[Adam Greenlee, President , CEO & Director at Silgan]

You know, our our manufacturing philosophy, we like to buy raw materials, make it, and sell it in the same geography. So you sort of take out the noise of all this cross border activity that we've been dealing with. So in DSC, there's not a whole lot of impact that that we see on tariffs. In fairness, specifically on fragrance, a lot of that product is filled in Europe and shipped around the world. So, know but you you talk about the price point of of those products. And, you know, I think, again, as I mentioned before, it's just a different consumer demographic that we're addressing. What we have seen is several of our customers on the the high end beauty and fragrance side of the business have actually gone out with price increases to reflect any additional inflation from the tariffs. So, again, we're feeling comfortable that we've we've got a good understanding of the impact.

[Adam Greenlee, President , CEO & Director at Silgan]

For Silgan, as you mentioned, you know, there really isn't much of an impact financially to Silgan. We will pass through the inflation to our customers, and I'll say that irrespective of the segment that we're talking about. And, you know, I I think that's kind of in summary, Ghansham, how we're feeling about tariffs at this point. We don't believe it's driving any different purchase activity for our customers.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

And on the leverage ratio side, so on a long term basis, where, know, our range is two and a half to three and a half times, we would expect to be towards the low end of that range by the year year end, assuming there are no acquisition opportunities. And that's driven primarily by our strong earnings, as we talked about, including the Vayner acquisition and a strong free cash flow of about $450,000,000 at the year and and for the year end. So I think from us, so you've heard us say before, our with our range of two and a half to three and a half, when we get to the lower end of that range, we would expect to be deploying cash somehow.

[Ghansham Panjabi, Senior Research Analyst at Baird]

We

[Operator]

will take our next question from Matt Roberts with Raymond James.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Hey, good morning, everyone. And welcome, Philippe. Good to hear you. First question, let me ask on metal containers. I believe you said flat volume expectation in 2Q or was that EBIT?

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

And if it is volume, you know, that there were new product launches in soup. There is a harder comp in two q and metal. Maybe you could just talk about the split between pet and food cans in two q and just generally what you're seeing on on each of those. You know, it seems like some of your peers have also put up strong results in in metal food cans as well. So just getting your view there.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. Yeah. You've got it right. So so volume for metal containers was, expected to be flat in q two. So the one thing I would mention, Matt, you know, we're we're working through the the details.

[Adam Greenlee, President , CEO & Director at Silgan]

There may have been a slight pull forward of of some aluminum can volume on the pet food side, into q one as one of our customers was dealing with a a labor issue in one of their facilities. So doesn't materially impact anything. But as they were preparing for, those issues that have now been fully resolved, there might have been a little bit of volume that brought got brought into q one. But outside of that, not a whole lot of activity. So as we you're right.

[Adam Greenlee, President , CEO & Director at Silgan]

It's a pretty tough comp, as we look at at last year's volume. So soup in particular was up quite a bit last year, in the the second quarter. So, you know, as we look at the year over year comp, you know, we're expecting nice growth again in pet food. What we'll see is our our veg and and fruit volumes, that's gonna happen more in the back half of the year, and I'm I'm saying back half intentionally because that's when the product's packed. It'll be stronger in q three.

[Adam Greenlee, President , CEO & Director at Silgan]

We'll see how late the pack runs this year. But, you know, given that in some pack volume in q two last year, it's just it's just the timing of a couple of our specific markets, but nothing out of a a a surprise or out of the realm of what we were expecting as we came into the year for q two.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Okay. That makes sense. Thank you, Adam. And and maybe, you know, on Pet, Performance Air continues to impress, and and your customers seem to corroborate that view. In Pet, are you seeing any changes in in the promotions in that category?

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Or or maybe even just more broadly, you're seeing in terms of the promotional environment overall? Thank you again for taking the questions.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. Yeah. Great question. We, you know, we talked about on the last call that one of the examples that we talked about was where promotional activity had been successful was on the wet pet segment in our our canned pet food. We continue to see that.

[Adam Greenlee, President , CEO & Director at Silgan]

So I the first quarter, there was strong promotional activity. And I I think one thing that I wanna bring in that's on a broader base, it's not only our customers promoting the product, it's retail establish establishments promoting product as well. So I think we've been a beneficiary of that now for a couple of quarters. We're anticipating that to continue. It's a big part of our customers' plans and and profiles for 2025.

[Adam Greenlee, President , CEO & Director at Silgan]

And I think broadly speaking, where we see that targeted promotional activity, we are seeing volume follow that. We have a couple of instances where, you know, maybe to jump over to to dispensing, especially closures for a quick second, You know, we're seeing, very good promotional activity in certain areas of the business. In items like isotonics and sports drinks, we're seeing a mixed bag where we've got several customers with very aggressive promotional activity. We're seeing volume follow the promotional activity and grow, and we're seeing others that that didn't promote quite as aggressively as maybe what we would have liked them to do. And therefore, they're not seeing the growth that they expected.

[Adam Greenlee, President , CEO & Director at Silgan]

So isotonic is the one point where I'd probably tell you it's just a little mix. Customers that are targeted and aggressive, they are driving growth. And where that's not happening, the growth is not following. Outside of that, across the businesses, targeted promotional activity is driving growth throughout all of Silgan.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Very helpful. Thank you, Adam.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure.

[Operator]

Thank you. We will take our next question from Gabe Haiti with Wells Fargo Securities.

[Gabe Hajde, Analyst at Wells Fargo]

Adam, Kim, Bob, good morning. I had a question import tariffs a little bit from a different angle, Adam. Based on your conversations with some of your fruit vegetable customers, has there been any discussion around Chinese food not making its way into The US and onto to shelves? And I know, again, like, it requires planning ahead and planting, etcetera, but maybe that leads to actually a better than expected, I guess, harvest in in 2025 and better plantings in '26?

[Adam Greenlee, President , CEO & Director at Silgan]

Yeah. It's a really interesting question, Gabe. As you very well know, you know, we're we're putting crops in the ground right now. So, you know, it's it's the time that contracted acreage has concluded. They're planting crops.

[Adam Greenlee, President , CEO & Director at Silgan]

So they're planning right now for the the pack season of this year. Back to imported filled goods, you know, that that was an issue, a large issue, we'll call it a year ago. One of the large retailers in The US market for their private label brand had brought in filled goods from Southeast Asia and actually had a social media campaign that went against that change in their private label brand. And they did move back to purchasing canned vegetables for The US market from US producers. So that was a good thing last year.

[Adam Greenlee, President , CEO & Director at Silgan]

I think that continues a bit this year. I think your question's spot on. I think there probably is some upside in the event that there is a tariff on filled goods coming in from any other region outside of The US into The US market. And really, that should be the benefit to the the packers of fruit and veg in in The US market. And obviously, as a we're a little underweight to the category, but to the can makers, that should also be a benefit as well.

[Adam Greenlee, President , CEO & Director at Silgan]

We don't have anything that says that's what's happening, but it's one of the opportunities on our list as well.

[Gabe Hajde, Analyst at Wells Fargo]

Okay. And then in pet food, it seems like maybe just depending on which scanner data you look at, the trend could be decelerating or disappointing if you're talking about through traditional channels. Do you have a sense for how much pet food goes through ecommerce at this point? And is your to the best of your knowledge, I know it's tough to say once it leaves your your factory, but are you overweight or underweight or under indexed to the overall ecommerce channel in in pet food specifically?

[Adam Greenlee, President , CEO & Director at Silgan]

Yeah. And so what I tell you I it's a little bit of a loose number, Gabe, but call it 25% of of the market goes through kind of an ecommerce channel. And now I it's very loose after that. So what I tell you is we are significantly overweight in the market for wet pet food products. So I assume that our our market share sort of correlates to that 25% of the market that goes through an ecommerce channel.

[Adam Greenlee, President , CEO & Director at Silgan]

And in fairness, our small dog and cat products ship very efficiently. So, you know, I my guess is we're appropriately represented through ecommerce, and you wouldn't see a big change of of our share of that particular channel. Again, you know, we think that that we've got a winning solution with our largest branded customers. We're representative private label, but really think about us as the big brands that are driving the volume growth into to this segment on a continued basis.

[Gabe Hajde, Analyst at Wells Fargo]

Understood. Last one, maybe a little bit of a in the weeds question on corporate. I think, Kim, you reaffirmed around 45,000,000 for the year, a bit elevated in the first quarter. You guys run on a mostly decentralized, fully allocated, I guess, reporting basis for for Vayner specifically, I'm thinking about. So was there is there any added corporate expense as it relates to Vayner? And if not, that means that Bob is really busy.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Bob is very busy. And yeah. So from our perspective, it's all in here at the holdings office, and it was about $45,000,000 or about $5,000,000 higher as a result of higher corporate development activity in the first quarter. So our expectation is going forward that we're gonna be at a total for $45,000,000 as we mentioned in the opening remarks.

[Adam Greenlee, President , CEO & Director at Silgan]

Yep. And, Gabe, to your point, you know, I think that the s g and a is and the corporate costs associated with Vayner resides down in the business. So, you know, what Kim's describing is our corporate activities here at the holding platform.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

So same functionality as all of the other businesses that we have. Exactly.

[Gabe Hajde, Analyst at Wells Fargo]

Perfect. Thank you, guys, and good luck.

[Matthew Roberts, Equity Research Analyst at Raymond James Financial]

Thank

[Operator]

you. We will take our next question from Anthony Pettinari with Citi.

[Bryan Burgmeier, Analyst at Citigroup]

Hi, good morning. This is actually Brian Bergmeier saying in for Anthony. Thank you for taking the question. Maybe just one housekeeping item to start. After acquiring Vayner, do you have like an earnings sensitivity to changes in FX?

[Bryan Burgmeier, Analyst at Citigroup]

Or could you share maybe what your guidance is assuming in terms of FX rates for the euro? At this point, I think Silgan's about 25% revenue from Europe now, so I just wanted to check on that.

[Adam Greenlee, President , CEO & Director at Silgan]

Great. Hey. Look. Just from an FX perspective, what we have I mean, typically, what we do is we kind of hold a a current rate spot rate through the end of the the forecast period. So that's where we are.

[Adam Greenlee, President , CEO & Director at Silgan]

You know, we're kind of taking the end of q one spot rate, and we hold that for the balance of the year on all currencies, so specific to the euro as well. And, really, it's kind of a one thirteen, one 14 number. I'm not sure exactly which one. From a sensitivity perspective, you know, we talk a lot about the fact that we've got a natural hedge that we we like to have local debt and local currency that offsets any exposure to FX. So, you know, we can come back to you on that one.

[Adam Greenlee, President , CEO & Director at Silgan]

I'll just say the the exposure sensitivity is pretty limited from a an FX perspective.

[Bryan Burgmeier, Analyst at Citigroup]

Okay.

[Bryan Burgmeier, Analyst at Citigroup]

Got it. Got it. Makes sense. And then maybe just on the M and A landscape, Adam, you've been with Sogden for a while. In your experience, do you think these kind of heightened levels of economic uncertainty can create you know, more or less appetite from sellers?

[Bryan Burgmeier, Analyst at Citigroup]

Do you think people wanna cash out or, you do interest rates become kind of a roadblock for Silgan even perhaps? Just kind of your general thoughts here just kind of given the the macro backdrop. Thank you. I'll turn it over.

[Adam Greenlee, President , CEO & Director at Silgan]

Yeah. Sure. Hey. Look. It's I've been here for a little over twenty years.

[Adam Greenlee, President , CEO & Director at Silgan]

Bob has been beat by a stretch, so we'll ask his opinion too. But from my perspective, what I tell you is that I think the opportunity for corporate development and m and a activity is probably as great as it's ever been in my time with Silgan. And I also would say that I think we are more advantaged in these kind of environments because of our ability to, you know, be deep into our markets so we understand the businesses we're talking about. We are are quick and thorough in our diligence. We have access to capital.

[Adam Greenlee, President , CEO & Director at Silgan]

We've got tremendous cash generation in our our legacy businesses, and and we are ready and able to move, when the time is right. So much like with the Vayner transaction, very competitive process, we thought we were advantaged from the get go, and there were a lot of reasons for that. But I feel like we're sort of in the same position today, and I'll throw it over to Bob for for any other comments he might add.

[Robert Lewis, Executive VP, Corporate Development and Administration & Director at Silgan]

Yeah. I I think Adam's answer was was spot on. I think if you if you recall back to the last earnings call, we spoke pretty optimistically about our ability to get a deal done. I still certainly believe that that level of optimism is warranted, particularly from an internal perspective. Right?

[Robert Lewis, Executive VP, Corporate Development and Administration & Director at Silgan]

For all the reasons that Adam just laid out, we feel like we've got our arms around the Vayner acquisition, and we're well on our way to that integration and on track with the synergy capture. Our app our leverage outlook, as we talked about, is is really good, trending to the to the lower end. Having just completed nearly a billion dollar acquisition and getting back inside the range pretty quickly. You know, as Adam indicated, we've got some strategic candidates out there that we've identified. We've begun, you know, doing our internal work there.

[Robert Lewis, Executive VP, Corporate Development and Administration & Director at Silgan]

So should they become available, we believe we can move really quickly. So all of that is still intact. I think the only thing that's changed from the last call is a bit of the economic slash political backdrop. And the only difference that that makes to us is whether or not some of those targets choose to to come to market. Otherwise, we're we're armed and ready to go.

[Operator]

Thank you. We will take our next question from Mike Roxland with Truist Security.

[Michael Roxland, MD - Equity Research at Truist Securities]

On the quarter and the progress. You've spoken at length about volume outlook. Just quickly, trends you're seeing thus far in April, how are order book shaping up for for May? I mean, is everything consistent? I'm sure the answer is probably gonna be yes.

[Michael Roxland, MD - Equity Research at Truist Securities]

It is, Mike. We're going to the next question, but figured I'd throw it out there anyway in terms of how things have trended in April and and what the orders look like for May thus far.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. And, you know, again, we're about thirty days into the second quarter. And so what I tell you, you know, the momentum we carried into the the quarter, continues on. And we're we're right in line with what we expected for the month of April. And so, you know, our quarter is off to exactly the start that we were expecting and that that we were looking for.

[Adam Greenlee, President , CEO & Director at Silgan]

And each of our businesses continues to perform. Vayner continues to perform. So, again, hopefully, it comes across in the conversation. There's a level of of clarity and confidence here in in what we're doing and how we're doing it that's that's translating, to continued growth for the company, and and we're looking forward to the remainder of '25 as well.

[Michael Roxland, MD - Equity Research at Truist Securities]

That's great. And and any early read on May thus far in terms of order books?

[Adam Greenlee, President , CEO & Director at Silgan]

Obviously, it's order books. Yeah. It's order book activity. And, again, I'd start with DSC and dispensing, especially closures. Very strong, you know, as as we prepare for the summer months.

[Adam Greenlee, President , CEO & Director at Silgan]

You know, we're now heading into kind of the the beverage season that we have our hot fill beverages and dispensing and specialty closures. Metal containers, right in line with expectations. Nice nice month already in in pet food and expected to continue. You know, our we talked a a while back, Mike, about our customers' investments and and manufacturing capacity expansions. They're running those lines better this year than they did last year.

[Adam Greenlee, President , CEO & Director at Silgan]

And that's great news for us that they've improved their efficiencies as well. That's part of the support for the the year over year volume increases in in pet food products. And then in custom containers, again, I'll just say the team's done a great job. They continue to win in the marketplace multiple new business awards. Nothing quite as big as we had last year at this point to announce, but winning every single day in that business.

[Adam Greenlee, President , CEO & Director at Silgan]

And again, that it just flows through to the bottom line, and it flows through to the volume conversation. So right where we wanted to be in q two and and feeling confident in the delivery of q two.

[Michael Roxland, MD - Equity Research at Truist Securities]

That's great, Adam. Thank you. And then just one quick follow-up. I I believe I recall that part of the 2025 guidance in DSC included some new wins. I think you mentioned they were gonna, you know, to ramp up late this year and really have more of an impact in 2026.

[Michael Roxland, MD - Equity Research at Truist Securities]

Can you give us a little more color on where those wins are coming from? I'm trying to get a sense whether they're coming from your base business, whether it's from the higher end perfumes and closures, maybe seeing from from Vayner as well. Just any any color you can provide on on that upcoming on those wins. Thank you.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. Sure. And and to be really clear in dispensing and specialty closures, we're winning literally in all of the segments that we serve. Again, it's back to that innovation and and customer service model that Silgan's really well known for that we've rolled out across all the acquisitions over time. So, you know, there are new business wins in beauty and fragrance for sure, lawn and garden for sure.

[Adam Greenlee, President , CEO & Director at Silgan]

The one that I specifically mentioned, I think, the last call, Mike, it was a beverage application, and it's sort of in the legacy business. And it does it is a new contractual award that we're investing for right now, and we'll bring that capacity online later in 2025 just given lead times, and we will start '26 with a with a nice step up in our hot fill beverage volume as we we move into '26. So right in line with where we expect it to be, but probably not much of an opportunity to bring that volume into 25 for whatever that's worth.

[Michael Roxland, MD - Equity Research at Truist Securities]

That's great color. Thank you, and good luck in 2Q.

[Adam Greenlee, President , CEO & Director at Silgan]

Thank you.

[Operator]

Thank you. We will take our next question from Arun Viswanathan with RBC Capital Markets.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Thanks for taking my questions. Congrats on the strong quarter there. I apologize if I missed this. I think the volume expectations you provided last time were mid single digits for each each segment. I think you you you may have moderated that a little bit.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

But may could you just review what your volume expectations for, the full year are now again? Thanks.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. No problem. And and we did talk about that a little bit earlier, Arun. So no just for clarity, no change in our original expectations for the year. So mid single digit volume growth in each of the segments.

[Adam Greenlee, President , CEO & Director at Silgan]

And again, I think with a really strong first quarter, it's it's confirming our belief and our our confidence in the full year as well.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Thanks. And then, on free cash flow, so I know you've guided to four fifty this year. And, I think last time around, you had mentioned that there's, maybe 50,000,000 of working capital drags in there that won't repeat next year. And so next year, you're at a base of $500,000,000 Is that still the way you're thinking about it? And if so, I guess, does and just given your your other comments around m and a, is m and a still kind of the the the priority use of that cash flow?

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Could you potentially pivot more to buybacks just given some of the uncertainty and if deals don't come come to market?

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

Sure. So, yes, our assumption is our free cash flow is 450,000,000 this year. That includes really strong earnings growth, as Adam has been talking about, both organically and from Vayner. We have a lower rationalization spend year over year, so 30,000,000 last year for $20,000,000 run rate savings, and then the reverse this year, $20,000,000 is spent for $30,000,000 of run rate savings. We are assuming a lower working capital benefit versus the prior year, but it is still a benefit in our numbers.

[Kimberly Ulmer, CFO & Senior VP of Finance at Silgan]

And we do have higher interest in cash tax again from from the Vayner acquisition and then our profit from that perspective. Capital expenditures are expected to be what we had provided as guidance last time, and our working capital is is, as I mentioned, a little bit less of a benefit this year than than last year.

[Adam Greenlee, President , CEO & Director at Silgan]

And so I think the normalized free cash flow maybe to that very point is about 500,000,000, and that's how we continue to think about the business. So, does that answer your question, Arun?

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Yes. And just as far as the deployment, what what would you say priority is there?

[Adam Greenlee, President , CEO & Director at Silgan]

Yeah. And, you know, clearly, I mean, I think you heard Bob mention as well. We're we're comfortable with the pipeline of activity and and our corporate development activity. So we we obviously put m and a as a a priority for our capital allocation. And, again, we are incredibly disciplined as I think you've seen over the years with our 41 acquisitions and and how we evaluate and integrate and bring on m and a opportunities into the company.

[Adam Greenlee, President , CEO & Director at Silgan]

Outside of that, sure, we've got the the usual levers that we can pull for capital allocation, whether it's returning cash to shareholders, whether it's it's paying down debt, but, you know, clear preference to continuing to to grow out the portfolio in a very deliberate way and as we've done in the past through m and a activity.

[Robert Lewis, Executive VP, Corporate Development and Administration & Director at Silgan]

Hey, Arun. If I could just add one thing to that. I think we've got a long history of discipline and patience here about how we deploy capital. And, yes, while we would love to get an an m and a deal done, and we think that's how we've created a lot of value for shareholders on an ongoing basis, We've also been disciplined and patient around how we how we deploy capital. So, I don't think there's anything changed in that strategy, and and we'll we'll go where we need to go relative to capital deployment.

[Robert Lewis, Executive VP, Corporate Development and Administration & Director at Silgan]

But I think given where the leverage is at year end, we still have ability to to read the tea leaves relative to the m and a market. And we're gonna do what's right for shareholders and the returns, therefore.

[Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets]

Got it. Thanks a lot.

[Operator]

Thank you. We will take our next question from Jeff Zekauskas with JPMorgan.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Thanks very much. Propylene values have come down pretty sharply. Does that give you a benefit in your dispensing and specialty closure business?

[Adam Greenlee, President , CEO & Director at Silgan]

Hey, Jeff. As we think about resin pass through, maybe I'll I'll start with custom containers quickly because that's that's the business that Silgan's had for so long. You know, we worked very diligently over the years to shorten, the exposure to changes in resin cost and pass through. And so we've really limited the lag in that business, and and I would say virtually eliminated it. Obviously, with dispensing as we continue to invest and expand that portfolio, what we typically find through acquisition is the pass throughs of of resin changes are a little longer than what Silgan typically has.

[Adam Greenlee, President , CEO & Director at Silgan]

So we get to work right away in in shortening those those resin pass through lags whenever we can and as quickly as we can. So in fairness to your your question, yes, there's a little more lag effect in our dispensing, especially closure segment, but it's it's a small impact overall for the business. And, you know, there there would be a slight benefit to the company if if if propylene continues on the trend that that we just saw posted. I think it was earlier this week or late last week.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Great. And, as far as the Veiner acquisition, when you look at the first quarter results on a pro form a basis, how did it do in terms of volumes and operating profit?

[Adam Greenlee, President , CEO & Director at Silgan]

For the Vayner acquisition, I'm really, really happy

[Jeffrey Zekauskas, Analyst at JP Morgan]

with the pro form a results, you know, from last year.

[Adam Greenlee, President , CEO & Director at Silgan]

Yeah. So, I mean, a, Silgan performed really well. B, Vayner performed really well, you know, as two separate entities. Both grew versus prior year. And, again, I think for Vayner specifically, the ability that we had to to put some capital into play to support customer growth that is indeed driving not only volume growth at Vayner, but also bottom line growth as well.

[Adam Greenlee, President , CEO & Director at Silgan]

So versus our models, Vayner came in slightly ahead of where we were expecting as we came into the year, Jeff.

[Jeffrey Zekauskas, Analyst at JP Morgan]

Okay. Great. Thank you so much.

[Adam Greenlee, President , CEO & Director at Silgan]

Sure. Thank you.

[Operator]

Thank you. Once again, if you would like to ask a question, please signal by pressing star one. And at this time, we have no further questions. I would now like to turn the call back for any additional or closing remarks.

[Adam Greenlee, President , CEO & Director at Silgan]

Great. Thank you, Rachel, and we appreciate everyone's interest in the company and look forward to reviewing our second quarter results towards the July. Thank you.

[Operator]

This does conclude today's call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Alexander Hutter, VP - Investor Relations
• Adam Greenlee, President , CEO & Director
• Philippe Chevrier, Executive VP & COO
• Kimberly Ulmer, CFO & Senior VP of Finance
• Robert Lewis, Executive VP, Corporate Development and Administration & Director

Analysts

• George Staphos, Managing Director at Bank of America Merrill Lynch
• Ghansham Panjabi, Senior Research Analyst at Baird
• Matthew Roberts, Equity Research Analyst at Raymond James Financial
• Gabe Hajde, Analyst at Wells Fargo
• Bryan Burgmeier, Analyst at Citigroup
• Michael Roxland, MD - Equity Research at Truist Securities
• Arun Viswanathan, Senior Equity Analyst at RBC Capital Markets
• Jeffrey Zekauskas, Analyst at JP Morgan