Silgan Holdings Inc. · NYSE:SLGN
Silgan — Investor Presentation (June 2019)
64 slides from Silgan's investor presentation, Jun 11, 2019
Slide 1: Investor Relations Presentation June 11, 2019
Investor Relations Presentation June 11, 2019 Exhibit 99.1
Slide 2: Presentation Notes
Presentation Notes This presentation, and the statements made during the course of this presentation, are not intended to and do not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities. Statements made in or
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Generally accepted accounting principles in the United States are commonly referred to as GAAP. A non-GAAP financial measure is generally defined as a financial measure that purports to measure financial performance, financial position or liquidity but excludes or include
Slide 4: Agenda
Agenda Hidden in Plain Sight Business Overview Financial Metrics Conclusion Q&A
Slide 5: Perception vs. Reality
Perception vs. Reality Perception Low growth markets = Low earnings growth Food can market decline accelerating Returns challenged Lacking a catalyst Primarily defensive stock
Slide 6: Hidden in Plain Sight
Hidden in Plain Sight Valuation expectations Understanding Silgan Model Unique culture Flexibility of cash deployment Past is prologue — better positioned than any time in our history More diversified More free cash flow — 9% free cash flow yield More acquisition opportunities Effective and winning
Slide 7: $4.4B Diversified Rigid Packaging Company for Consumer Goods
$4.4B Diversified Rigid Packaging Company for Consumer Goods 100 plants >90 countries served 35 acquisitions over 31 years 30% insider ownership 13,100 employees End Markets Geography Segments 2018 Revenue 2018 Revenue 2018 Revenue 2018 Adj. Segment EBITDA Note: End market revenue breakdowns are app
Slide 8: Unique Business Model
Unique Business Model Our cash deployment model gives us the flexibility to selectively grow and create franchise positions in the packaging industry Proven leadership team Focused segment management Customer-focused Metric-driven culture Track record of value creation Preference for stable, mature
Slide 9: Cornerstone Business Strategy
Cornerstone Business Strategy Earnings growth and value creation Sustainable competitive advantage Supply best value in industry by focusing on unique needs of customers Deploy strong Free Cash Flow Build and enhance franchise positions Growth through targeted acquisitions Other cash deployment to d
Slide 10: Leading Position in Mature Markets
Segment Our Outlook Leading Position in Mature Markets Metal Containers Leading positions in: North American metal food cans Global pet food cans North American soup and simple meal cans Eastern European food cans Stability driven by Pet Food and Protein markets Sustainability advantaged package Clo
Slide 11: Proven Customer-Focused Model
Proven Customer-Focused Model From Competitive to World Class Source: Strategex, Inc. Net Promoter Score (NPS) conducted periodically, typically every 2 years Note: Average of all Silgan Business Units excludes Dispensing Systems and Europe Metal Containers. Shaded area represents range of high to l
Slide 12: Disciplined Approach to M&A
Disciplined Approach to M&A Focused M&A team works closely with business and senior leaders to identify attractive targets Build out franchise positions or extend franchises in: Mature industries with strong free cash flow and attractive returns or Value-oriented growth businesses with high barriers
Slide 13: Core Competency in M&A
Core Competency in M&A Stock Price and Acquisition Timeline (1997 to Present) Alcoa Closures Rexam Plastic Bottle Campbell’s can making operations Winn Packaging Clearplass Containers RXI Pacific Coast can making operations White Cap Closures (NA) Thatcher Tubes White Cap Closures (Intl.) Cousins-Cu
Slide 14: Acquisition Strategy Strengthens Franchise Positions
Metal Containers Self-Make Takeouts Van Can Consolidate mature market Targeted pet and protein markets Acquisition Strategy Strengthens Franchise Positions Closures WestRock Dispensing Systems IPEC Portola Packaging Plastic Containers Rexam Plastic Thermoformed Containers Enhance adjacent capabiliti
Slide 15: Catalysts from Acquisitions
Catalysts from Acquisitions Note: Silgan stock price and S&P 500 indexed to 1 on 2/14/1997 (Silgan IPO date) Note: Includes announcements of the following acquisitions: White Cap Closures Intl., Vogel & Noot, Graham Packaging*, Rexam Plastic Thermoformed Containers, Portola Packaging, WestRock Dispe
Slide 16: Disciplined Strategy Drives Strong Return Profile
Disciplined Strategy Drives Strong Return Profile Note: Return on Tangible Assets defined as: Adjusted EBITDA / Tangible Assets Return on Invested Capital defined as: Adjusted EBITDA / Invested Capital Return on Stockholders’ Equity defined as: Adjusted Net Income / Stockholders’ Equity Return on Se
Slide 17: 10-Year Growth and Returns Compare Favorably to Packaging Peers
10-Year Growth and Returns Compare Favorably to Packaging Peers Source: Data was derived from Bloomberg. Averages do not include SLGN. Note: For purposes of Free Cash Flow Yield, Market Capitalization is as of 6/5/2019 per Bloomberg. For purposes of Enterprise Value to EBITDA Adjusted, Enterprise Va
Slide 18: Value Creation Opportunity for Shareholders
Value Creation Opportunity for Shareholders Data Source: Bloomberg as of 6/5/19 Note: Current Operations Value calculated as (Adjusted EBIT x (1-tax rate)) / (Weighted Average Cost of Capital) Future Operations Value calculated as (Enterprise Value) - (Current Operations Value)
Slide 19: Agenda
Agenda Hidden in Plain Sight Business Overview Financial Metrics Conclusion Q&A
Slide 20: Metal Containers
Metal Containers
Slide 21: Metal Containers: End Markets and Geography
End Markets (US) Metal Containers: $2.4B 2018 Volume (Units) 2018 Volume (Units) 2018 Revenue Geography 15 Intl. plants 29 US plants >50 countries served Market Leader in a Stable Industry Note: End market volume breakdowns are approximate and based on management estimates. End Markets (Intl.)
Slide 22: World Class for Packaging Competitive Advantage
World Class for Packaging Competitive Advantage Scale and geographic presence On-site or near-site with customers Customer focus Cost leadership Long-term contracts Metal Containers Competitively Advantaged Franchise Strategic Focus Commercial discipline Consolidate position in growth markets Capita
Slide 23: Advantages of Metal Containers
Advantages of Metal Containers Recycling Rate Data Source: Can Manufacturers Institute (CMI) • Package is generally cooking vessel for the product • High level of infrastructure investment to process canned products • Our co - location with or near most customers provides freight advantage • Cans ge
Slide 24: Stable Volume with Significant Mix Shift to Pet
Stable Volume with Significant Mix Shift to Pet Silgan North American Metal Containers Volumes 33% of total volume 34% of total volume 22% of total volume 53% of total volume Note: Industry CAGR based on Can Manufacturers Institute (CMI) data 2008-2018 10-Year SLGN CAGR -0.1% vs. Industry CAGR -1.2%
Slide 25: Metal Containers Volume Trends
Metal Containers Volume Trends Silgan Overweight in Growth Categories Industry Mix (2018) 5-year Industry CAGR Silgan Mix (2018) SLGN Growth Estimate Pet Food 30% 2.6% ̴ 40% 2.5-3.5% Protein 5% (included in Other) ̴ 10% 1-2% Vegetable & Fruit 38% (0.9%) ̴ 25% (0-1%) Soup 18% (0.8%) ̴ 20% (1-2%) Othe
Slide 26: Case Study: Pet Food Market Dynamics
Case Study: Pet Food Market Dynamics Data Source: American Pet Products Association CAGR = 4.5% CAGR = 5.2% CAGR = 6.6% CAGR = 3.2%
Slide 27: Metal Containers Business Rationalization
Metal Containers Business Rationalization Modest excess capacity Tariffs Focus on sustainability Shelf stable package preferred for e-commerce Q&A
Slide 28: Closures
Closures
Slide 29: Closures: $1.5B
Closures: $1.5B 11 EUR plants 9 ROW plants 2018 Revenue 2018 Revenue 2018 Revenue Products End Markets Geography >70 countries served 13 US plants Strong Market Positions with Attractive Growth Opportunities Note: End market and product revenue breakdowns are based on management estimates.
Slide 30: World Class for Packaging Competitive Advantage
Competitive Range World Class for Packaging Competitive Advantage Scale and geographic presence Quality, service and technical proficiency Innovative capabilities Customer intimacy Equipment model Closures Competitively Advantaged Global Franchise Strategic Focus Enhance and grow customer relationsh
Slide 31: Broad Portfolio of Products in Diverse End Markets
Broad Portfolio of Products in Diverse End Markets Dispensing Metal Closures Plastic Beverage Closures Plastic Dairy Closures Manufacturing Technology Injection Molding, Product Assembly Coating, Metal Forming Injection & Compression Molding Injection & Compression Molding Select Customers % of Clos
Slide 32: Broad Portfolio of Dispensing Systems
Broad Portfolio of Dispensing Systems with Common Capabilities Supporting Diverse End Markets Triggers Pumps Fine Mist Fragrance Other Select Customers % of Dispensing Systems Revenue 28% 24% 19% 12% 17% End Markets Home, Lawn & Garden Beauty & Personal Care Health Care Personal Care Beauty & Person
Slide 33: Meeting the Unique Needs of Our Customers
Meeting the Unique Needs of Our Customers
Slide 34: Closures Business
Closures Business Growth of dispensing systems Focus on M&A opportunities Continued innovation Raw material trends Increased awareness of sustainability E-commerce Q&A
Slide 35: Plastic Containers
Plastic Containers
Slide 36: Plastic Containers: $614M
Plastic Containers: $614M End Markets Geography 15 US plants 2018 Revenue 2018 Revenue >20 countries served 8 Canada plants Building Competitive Advantage through Service Model Note: End market revenue breakdowns are based on management estimates.
Slide 37: Profitability Improvement a Key Focus
Profitability Improvement a Key Focus Note: Adjusted Segment EBITDA Margin is defined as: Adjusted Segment EBITDA / Segment Net Sales Return on Segment Tangible Assets is defined as: Adjusted Segment EBITDA / Segment Tangible Assets
Slide 38: World Class for Packaging Competitive Advantage
Competitive Range World Class for Packaging Competitive Advantage Breadth of substrates and production capabilities North American scale Customer focus New product launch capabilities Plastic Containers Service Model Drives Competitive Advantage Strategic Focus Growth in target markets Continue to l
Slide 39: Diverse End Markets with Large Customers
Food Home Care Beauty & Personal Care Consumer Health Pet Food Manufacturing Technology Thermoform, Blow Mold, Injection Mold Blow Mold, Injection Mold Blow Mold, Injection Mold Blow Mold, Injection Mold Thermoform Select Customers % of Revenue 42% 20% 17% 15% 6% Growth Drivers Convenience DIY growt
Slide 40: Meeting the Unique Needs of Our Customers
Meeting the Unique Needs of Our Customers
Slide 41: Plastic Container Business
Plastic Container Business Customer service model key to success Returns and profitability Continued innovation Labor shortages and automation Potential opportunity to consolidate industry Raw material trends Increased awareness of sustainability E-commerce Q&A
Slide 42: Agenda
Agenda Hidden in Plain Sight Business Overview Financial Metrics Conclusion Q&A
Slide 43: Silgan Financial Attributes
Silgan Financial Attributes Constancy of purpose Strong free cash flow Disciplined capital deployment – drives value creation A balanced view of shareholder value creation Focus on efficiency of balance sheet Strong long-term returns profile
Slide 44: Strong Recent and Long-Term Financial Performance
Strong Recent and Long-Term Financial Performance Per share data for the relevant years has been split adjusted for the two-for-one stock splits in May 2010 and May 2017. CAGR = 4.1% CAGR = 9.1% CAGR = 9.0% CAGR = 8.9%
Slide 45: High Free Cash Flow Conversion
High Free Cash Flow Conversion Since 2008: Free Cash Flow Per Diluted Share conversion of Adjusted Net Income Per Diluted Share has averaged 122% Free Cash Flow conversion of Adjusted EBITDA has averaged 44% Adjusted EBITDA has grown 49% Capex has averaged 4.2% of net sales D&A has averaged 4.3% of
Slide 46: Disciplined & Balanced Capital Deployment Strategy
Disciplined & Balanced Capital Deployment Strategy Aggregate spend 2008 – 2018: Capital Expenditures: $1.7B / 4.2% of sales Acquisitions: $2.0B Dividends: $393M Share Repurchases: $1.1B Note: Total Shareholder Return is defined as: closing stock price on the last trading day of December in each year
Slide 47: Efficient Balance Sheet
Efficient Balance Sheet Management is committed to reducing debt via free cash flow generation Consistent Silgan track record of deleveraging post-acquisition Financial policy of 2.5x – 3.5x net leverage remains unchanged Note: Total Net Leverage Ratio as defined under Silgan’s Senior Secured Credit
Slide 48: Long Record of Creating Value for Shareholders
Long Record of Creating Value for Shareholders Silgan Stock Price Adjusted Net Income Per Diluted Share CAGR since 1997: 11.4% CAGR 10 Years: 9.6% CAGR 5 Years: 3.6% CAGR since 1997: 9.7% CAGR 10 Years: 9.1% CAGR 5 Years: 8.7% Source for Silgan stock price data: Bloomberg
Slide 49: Agenda
Agenda Hidden in Plain Sight Business Overview Financial Metrics Conclusion Q&A
Slide 50: Perception vs. Reality
Perception vs. Reality Perception Low growth markets = Low earnings growth Food can market decline accelerating Returns challenged Lacking a catalyst Primarily defensive stock Lower growth provides higher returns, attracting less capital 10-year Net Income Per Diluted Share CAGR of 9.4% exceeds peer
Slide 51: Better Positioned Than Ever Before
Better Positioned Than Ever Before People Constancy of purpose Competitive advantage Cash flows to invest Balance sheet capacity Expansion opportunities
Slide 52: Agenda
Agenda Hidden in Plain Sight Business Overview Financial Metrics Conclusion Q&A
Slide 53: Thank you.
Thank you.
Slide 54: Appendix A: Reconciliation of Non-GAAP Financial Measures
Appendix A: Reconciliation of Non-GAAP Financial Measures
Slide 55: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 56: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 57: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 58: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 59: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 60: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 61: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 62: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 63: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 64: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures