Silgan Holdings Inc.

You are currently on hold for Silicon Holdings' first quarter 2024 earnings call. At this time, we are assembling today's audience and plan to be underway shortly. We appreciate your patience and push me down the line. Good day and welcome to the Sylvan Holdings First Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Mr. Alex Hutter, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning. Joining me on the call today are Adam Greenlee, President and CEO, 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 company's annual report on Form 10-K for 2023 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. 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. A reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's press release and under non-GAAP financial information available in the investor relations section of our website at silganholdings.com. With that, let me turn it over to Adam.

Great. Thank you, Alex. We'd like to welcome everyone to Silgun's first quarter 2024 earnings call. We're off to a solid start in 2024, and our team delivered another quarter of strong financial performance while making progress towards our long-term strategic objectives in delivering on our multi-year cost improvement initiatives. We delivered first quarter adjusted EPS at the high end of the expected range with strong operational and cost performance driving our results as the Silgan team remains focused on managing the items that are within our control. While volumes in the first quarter were mixed relative to our expectations entering the quarter, we continue to believe that the broad destocking trends we have been experiencing over the past year are coming to a conclusion during the first half of 2024 and are seeing positive trends early in the second quarter. Additionally, in certain instances, we have seen customers accelerate their first half destocking initiatives to be more weighted to the first quarter than initially expected. And we continue to see positive activities from our customers in the marketplace with increased promotional spending in 2024 that has expanded to include more of the products we produce. Turning to our segments, our dispensing and specialty closure segment delivered another strong quarter as market demand for our global dispensing products remained strong with significant momentum in the marketplace. Our market leading innovation, production and service capabilities and excellent operational execution continue to drive compelling value for our customer partnerships. Consumer demand for our food and beverage products continues to be strong, and we have been encouraged to see increased promotional activity in the market for many of these products as seasonal demand begins to accelerate. As expected, our customers' destocking plans for the first half of 2024 impacted our volumes in the quarter. And in some cases, the stocking plans have been accelerated to be more weighted to the first quarter. In metal containers, we continue to make progress on our cost reduction initiatives during the quarter and believe we are well positioned to service the market from our low cost manufacturing network while maintaining the ability to grow volumes through our market leading pet food platform. First quarter metal container volumes were fairly consistent with our expectations as our customers work to achieve the majority of their first half destocking initiatives in the first quarter. Our custom container segment delivered strong results in the quarter, with volumes improving sequentially for the first time in several quarters as we saw strong volumes related to the commercialization of new products. In addition, customer order patterns began to show signs of recovery from the destocking trends we have seen over the past several quarters. Turning now to our outlook for the full year of 2024, we continue to believe the business is positioned to deliver volume and profit growth and are pleased to confirm our estimates for the year, which includes adjusted EPS growth of 7% at the midpoint of our guidance range. We continue to expect dispensing and specialty closures volumes to grow by a mid-single-digit rate, with high single-digit growth in our dispensing products and low single-digit growth in our closure products. driving better profitability for the segment with improved mix. Metal containers volumes are expected to grow by a low single digit percentage as we continue to expect mid single digit growth in pet food, which represents approximately half of our overall volume for the segment. But now expect that growth to be partially offset by lower pack volumes in 2024. Fruit and vegetable volumes, which represent roughly 20% of our metal container volume, are now expected to decline by a mid single digit rate as a large pack customer has announced plans to reduce their North American pack in 2024 to pursue a reduction of working capital and to decrease its financial leverage. This decrease will lead to both lower volumes and unfavorable fixed cost absorption in our system in 2024. Custom containers volumes are expected to grow by a low single digit percentage with volumes inflecting positively in the second quarter and improving through the year as destocking trends conclude and new commercial awards continue to provide incremental volume and profit contribution through the year. As we enter the second quarter, we're confident that our focus and our active and effective management of these factors that are within our control will lead to another year of strong financial results for the company. Our strategic growth initiatives continue to see success in the market and shape the company's future. and our customer partnerships remain strong. With that, Kim will take you through the financials for the quarter and our estimates for the second quarter and full year 2024. Thank you, Adam.