Silgan Holdings Inc.

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 company's annual report on Form 10-K 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. In addition, commentary on today's call may contain references to certain non-GAAP financial metrics, including 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.

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, Philippe has integrated into the Silgan culture and is already contributing to the success of our organization. We're excited to have Philippe on the Holdings team.

Thank you, Adam, for the 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 90 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 Silgan. 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. The 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 have been impressed by the passionate people I've met and the high level of efficiency in our operations and manufacturing technology. I am excited to be part of the Salatin team and look forward to contributing to Silgan's continued successes and growth.

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. Our dispensing and specialty closure 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 and 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 multi-year 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. 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 250 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 and 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. 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. 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 in the full year of 2025.

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 for approximately $1.5 billion increased 11% from the prior year period, driven primarily by the addition of the Vayner business, which closed in the fourth quarter of 2024, and organic volume growth in all segments. Record total adjusted EBIT for the quarter of $158.3 million 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. Turning to our segments, first quarter sales in our dispensing and specialty closure segment increased 25% versus the prior year, primarily as a result of the contribution from the VaynerPackaging acquisition, which added approximately $126 million during the quarter and higher volume mix of 4%. The improvement in volume mix is driven primarily by a double-digit increase in organic volume of dispensing products during the quarter, resulting in favorable mix. Record first quarter 2025 dispensing and special closures adjusted EBIT increased $21 million, or 28%, versus the prior year period as a result of the contribution from the VaynerPackaging acquisition, which added approximately $17 million, and favorable volume mix. In our metal container 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. 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 2024, primarily due to favorable price costs, including mix and higher volumes. Looking ahead to 2025, we are confirming our estimate of adjusted EPS in the range of $4 to $4.20. a 13% increase at the midpoint of the range as compared to $3.62 in 2024. This estimate includes interest expense of approximately $185 million, a tax rate of approximately 24%, corporate expense of approximately $45 million, and a weighted average share count of approximately 107 million shares. At the midpoint of our 2025 adjusted EPS range, we will exceed our prior records of adjusted EBITs 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 million, 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 million. This estimate also includes approximately $20 million of cash costs to support our cost reduction program. Turning to our outlook for the second quarter of 2025, 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. 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 will open up the call for questions. Rachel, would you kindly provide the directions for the question and answer session?

Yes, thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. To remove yourself from the queue, please press star 2. Again, please press star 1 to ask a question. And we will take our first question from George Staffos with Bank of America.

Hi, everyone. Good morning. 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 some of us on the 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 of the nature of the business, is seasonally weighted to the second half and third quarter. And we have the overlay, certainly, 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 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? As you mentioned earlier in the call, I apologize that I joined the call late, and I'll stop there.

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. And I think it's important to understand the details of that is 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. I think we've talked a lot about, you know, in the higher end segments 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, you know, it's driving mid single digit growth 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 we've been requirements supplier for 30 plus years and have decades of experience 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. I think I'd probably throw in a comment here that our strategic growth initiatives include a significant capital deployment in our dispensing products. You're seeing that growth fall through. Our other 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. Feeling really good about that. It's half of our volume. I'll dovetail just a second, George, and start to answer 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, so just take that that there's 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, 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. That's a bit of a driver for our growth, 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 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 non-discretionary items that that consumers are making purchase decisions on. And we feel comfortable and confident in our outlook. We've got excellent relationships when you get to the food can side. Remember, so much of that business is onsite 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. George, long question, probably even longer answer. So I apologize for that, but hopefully the detail was helpful.

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

Sure. Look, Vayner is going really well. We're very pleased with the acquisition. As you know, George, we've known that business for a long time. 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 some new capital supporting customer growth. We did that at the end of last year. That is part of the I'll say a beat that we had in Vayner in Q1 is we're realizing the volumes that we were able to invest in at the end of last year. So it's been really good. It's right in line with what we were hoping for, and it's a really strong business.

Thank you very much. Thank you.

Thank you. We will take our next question from Gansham Punjabi with 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 undoubtedly create more uncertainty from a macroeconomic standpoint, 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 it to?

Look, I think we're at the forefront of innovation and new product development with our customers. Maybe the one thing that I would give you, Ganshan, that I can think of that changed versus Q4, one of our large soup customers actually initiated two new product launches for 2025 in the first quarter. And 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 tell you, we're feeling more comfortable with our soup volume in particular. 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 products, well, let me just jump to dispensing really fast. Again, a little longer pipeline with our dispensing products. So no no knee-jerk reaction to the uncertainty that maybe the market has felt here in the first quarter. You think about kind of the fragrance and beauty market. You know, we're catering to 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 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.

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 DSC segment, do you have a sense as to how much crosses borders? You know, you mentioned some of the categories like luxury fragrances, et cetera, those get shipped around. What would that equate to? And then just separately, what do you expect net debt to EBITDA to add 2025?

Sure. I'll pass it to Kim for the second part of that question. But for the impact of tariffs, I mean, it's a good question 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 what I had mentioned earlier. You know, 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 we see on tariffs. In fairness, specifically on fragrance, a lot of that product is built in Europe and shipped around the world. So, you know, you talk about the price point 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 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 got a good understanding of the impact. 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 think that's kind of in summary, Gansham, how we're feeling about tariffs at this point. We don't believe it's driving any different purchase activity for our customers.

And on the leverage ratio side, so on a long-term basis where our range is 2.5 to 3.5 times, we would expect to be towards the low end of that range by the 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 million for the year end. So I think from us, as you heard us say before, with our range of 2.5 to 3.5, when we get to the lower end of that range, we would expect to be deploying cash somehow.

Okay, perfect. Thank you, guys.

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

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? And if it is volume, you know that there were new product launches in soup. While there is a harder comp in 2Q and metal, maybe you could just talk about the split between PET and food cans in 2Q and just generally what you're seeing on each of those. You know, it seems like some of your peers have also put up strong results in metal food cans as well. So just getting your view there.

Sure. Yeah, you've got it right. So volume for metal containers was expected to be flat in Q2. So the one thing I would mention, Matt, you know, we're working through the details. There may have been a slight pull forward of some aluminum can volume on the pet food side into Q1 as one of our customers was dealing with a labor issue in one of their facilities. So it 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 got brought into Q1, but outside of that, not a whole lot of activity. So as we, you're right, it's a pretty tough comp as we look at last year's volume. So soup in particular was up quite a bit last year in the second quarter. So, you know, as we look at the year-over-year comps, you know, we're expecting nice growth again in pet food. what we'll see is our veg and fruit volume, that's going to happen more in the back half of the year. And I'm saying back half intentionally because that's when the product's packed. It'll be stronger in Q3. We'll see how late the pack runs this year. But, you know, given that and some pack volume in Q2 last year, it's just the timing of a couple of our specific markets, but nothing out of a surprise or out of the realm of what we were expecting. as we came into the year for Q2.

Okay, that makes sense. Thank you, Adam. And maybe on PET, performance there continues to impress and customers seem to corroborate that view. And PET, are you seeing any changes in the promotions in that category or maybe even just more broadly what you're seeing in terms of the promotional environment overall? Thank you again for taking the questions.

Sure, yeah, great question. 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 canned pet food. We continue to see that. So the first quarter, there was strong promotional activity. And I think one thing that I want to bring in that's on a broader base, it's not only our customers promoting the product, it's retail establishments promoting product as well. 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 profiles for 2025. 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 maybe to jump over to dispensing and specialty closures for a quick second, we're seeing very good promotional activity in certain areas of the business. In items like Isotonix 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 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. So Isotonix 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 Silicon.

Very helpful. Thank you, Adam.

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

Adam, Kim, Bob, good morning.

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

Yeah, it's a really interesting question, Gabe. As you very well know, you know, we're putting crops in the ground right now. So, you know, it's the time that contracted acreage is concluded. They're planting crops, so they're planning right now for the pack season of this year. Back to imported filled goods, you know, 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. That was a good thing last year. I think that continues a bit this year. I think your question is 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 U.S. into the U.S. market. And really that should be the benefit to the packers of fruit and veg in the U.S. market. And obviously we're a little underweight to the category, but to the can makers that should also be a benefit as well. We don't have anything that says that's what's happening, but it's one of the opportunities on our list as well.

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 e-commerce at this point? And is your... to the best of your knowledge, I know it's tough to say once it leaves your factory, but are you overweight or underweight or under-indexed to the overall e-commerce channel in pet food specifically?

Yeah. And so what I tell you, and it's a little bit of a loose number, Gabe, but call it 25% of the market goes through kind of an e-commerce channel. And now 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 market share sort of correlates to that 25% of the market that goes through an e-commerce channel. And in fairness, our small dog and cat products ship very efficiently. So, you know, my guess is we're appropriately represented through e-commerce and you wouldn't see a big change of our share of that particular channel. Again, You know, we think that we've got a winning solution with our largest branded customers. We're represented in private label, but really think about us as the big brands that are driving the volume growth into this segment on a continued basis.

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

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

And Gabe, to your point, you know, I think that the SG&A 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 holdings level.

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

Perfect. Thank you, guys, and good luck.

Thank you. We will take our next question from Anthony Petanari with C.

Hi, good morning. This is actually Brian Bergmeier sitting in for Anthony. Thank you for taking the question. Maybe just one housekeeping item to start. After acquiring Vayner, do you have an earning sensitivity to changes in FX, or could you share maybe what your guidance is assuming in terms of FX rates for the euro at this point? I think Silicon's about 25% revenue from Europe now, so I just wanted to check on that.

Great. Look, just from an FX perspective, what we have, typically what we do is we kind of hold a current rate spot rate through the end of the forecast period. So that's where we are. You know, we're kind of taking the end of Q1 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 113, 114 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 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. I'll just say the exposure sensitivity is pretty limited from an FX perspective.

Okay. Got it. Got it. Makes sense.

And then... You know, maybe just on the M&A landscape, you know, Adam, you've been with Sylvan for a while. You know, in your experience, do you think, you know, these kind of heightened levels of economic uncertainty can create, you know, more or less appetite from sellers? Do you think people want to cash out or do interest rates become kind of a roadblock for Sylvan even perhaps? Just kind of your general thoughts here, just kind of given the macro backdrop. Thank you. I'll turn it over.

Yeah, sure. Look, I've been here for a little over 20 years. Bob has me 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&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 be deep into our markets so we understand the businesses we're talking about. We are quick and thorough in our diligence. We have access to capital. We've got tremendous cash generation in our legacy businesses. 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... or any other comments you might add?

Yeah, I think Adam's answer was spot on. I think 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? 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 leverage outlook, as we talked about, is really good, trending to the lower end, having just completed nearly a billion-dollar acquisition and getting back inside the range pretty quickly. As Adam indicated, we've got some strategic candidates out there that we've identified. We've begun doing our internal work there, 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 come to market.

Otherwise, we're armed and ready to go. Thank you.

We will take our next question from Mike Roxland with Truth Security.

Thank you for taking my questions and congrats on the quarter and the progress.

You've spoken at length about volume, about volume outlook. Just quickly, trends you're seeing thus far in April, how are order books shaping up for May? Is everything consistent? I'm sure the answer is probably going to be yes, it is, and I can move on to the next question. But Figured I'd throw it out there anyway in terms of how things have trended in April and what the orders look like for May thus far.

Sure. And, you know, again, we're about 30 days into the second quarter. And so what I tell you, you know, the momentum we carried into the quarter continues on. And 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 we were looking for. 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 clarity and confidence here in what we're doing and how we're doing it that's translating to continued growth for the company. And we're looking forward to the remainder of 25 as well.

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

Yeah, obviously it's order book activity. And, again, I'd start with DSC and dispensing especially closures. Very strong, you know, as we prepare for the summer months. You know, we're now heading into kind of the beverage season that we have our hot fill beverages and dispensing especially closures. Metal containers, right in line with expectations. Nice month already in pet food and expected to continue, you know, our – We talked a while back, Mike, about our customers' investments and manufacturing capacity expansions. They're running those lines better this year than they did last year. And that's great news for us, that they've improved their efficiencies as well. That's part of the support for the year-over-year volume increases 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. And, again, it just flows through to the bottom line, and it flows through to the volume conversation. So right where we wanted to be in Q2 and feeling confident in the delivery of Q2.

That's great. Thank you. And then just one quick follow-up. I believe, or I call it a part of the 2025 guidance in DSC included some new wins. I think you mentioned they were going to ramp up late this year and really have more of an impact in 2026. 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 hiring and perfumes and closures, maybe even from Vayner as well. Just any color you can provide on that upcoming, on those wins. Thank you.

Sure, sure. And to be really clear, in dispensing and specialty closures, we're winning literally in all of the segments that we served. Again, it's back to that innovation 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. The one that I specifically mentioned, I think, on the last call, Mike, it was a beverage application, and it's sort of in the legacy business. And 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 nice step up in our hot filled beverage volume as 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.

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

Thank you.

Thank you. We will take our next question from Arun Viswanathan with 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 segment. I think you may have moderated that a little bit. But could you just review what your volume expectations for the full year are now again? Thanks.

Sure, no problem. And we did talk about that a little bit earlier on. So just for clarity, no change in our original expectations for the year. So mid-single-digit volume growth in each of the segments. And, again, I think with a really strong first quarter, it's confirming our belief and our confidence in the full year as well.

Thanks. And then on free cash flow, so I know you've got it to 450 this year. And I think last time around, you'd mentioned that there's maybe 50 million of working capital drags in there that won't repeat next year. And so next year, you're at a base of 500 million. Is that still the way you're thinking about it? And if so, I guess, and just given your other comments around M&A, Is M&A still kind of the priority use of that cash flow? Could you potentially pivot more to buybacks, just given some of the uncertainty and if deals don't come to market?

Sure. So, yes, our assumption is our pre-cash flow is $450 million this year. That includes really strong earnings growth, as Adam has been talking about, both organically and from Vaynerchuk. We have a lower rationalization spend year over year, so $30 million last year for $20 million run rate savings. And then the reverse this year, $20 million spend for $30 million 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. And we do have higher interest in cash tax, again, 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, as I mentioned, a little bit less of a benefit this year than last year.

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

Yes, and just as far as deployment, what would you say, priorities there?

Yeah, and clearly, I mean, I think you heard Bob mention as well, we're comfortable with the pipeline of activity and our corporate development activity. So we obviously put M&A as 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 how we evaluate and integrate and bring on M&A opportunities into the company. Outside of that, sure, we've got the usual levers that we can pull for capital allocation, whether it's returning cash to shareholders, whether it's paying down debt, but, you know, clear preference to continuing to grow out the portfolio in a very deliberate way and as we've done in the past through M&A activity.

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 M&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 deploy capital. So I don't think there's anything changed in that strategy, and we'll go where we need to go relative to capital deployment. But I think given where the leverage is at year end, we still have ability to read the tea leaves relative to the M&A market. And we're going to do what's right for shareholders and the returns therefore.

Got it. Thanks a lot.

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

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

Hey, Jeff. As we think about resin pass-through, maybe I'll start with custom containers quickly because that's the business that Silgun'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 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 resin changes are a little longer than what Silgan typically has. So we get to work right away in shortening those resin pass-through lags whenever we can and as quickly as we can. So in fairness to your question, yes, there's a little more lag effect in our dispensing, especially closure segment, but it's a small impact overall for the business. And, you know, there would be a slight benefit to the company if propylene continues on the trend that we just saw posted, I think it was earlier this week or late last week.

And as far as the vena acquisition, When you look at the first quarter results on a pro forma basis, how did it do in terms of volumes and operating process?

For the Vayner acquisition, it really, really happened.

In other words, versus the pro forma results from last year.

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

Okay, great. Thank you so much.

Sure. Thank you.

Thank you. Once again, if you would like to ask a question, please signal by pressing star 1. And at this time, we have no further questions. I would now like to turn the call back for any additional or closing remarks.

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

This does conclude today's call. Thank you for your participation.