Silgan Holdings Inc. Financial Statement Analysis Report

Executive Summary

Silgan Holdings Inc., a leading manufacturer in the sustainable rigid packaging sector, has evolved considerably since its founding in 1987. This report provides a comprehensive financial statement analysis covering historical income, balance sheet, and cash flow data over the past five fiscal years (2020–2024). Detailed analyses of key financial ratios, debt structures including covenant compliance and maturity profiles, as well as organic and inorganic growth strategies, corroborate the firm’s strong free cash flow generation and stable earnings. Complemented by industry valuation multiples, a Discounted Cash Flow (DCF) sensitivity analysis, and comparative assessments against competitors, our analysis indicates that Silgan Holdings is currently undervalued with an estimated intrinsic value approximately 15–20% above the prevailing market price. With strategic acquisitions, disciplined capex deployment, and robust operational performance, the company is well positioned for significant EPS and free cash flow growth in 2025 and beyond. Based on this integrated analysis, we support a “Buy” recommendation.

──────────────────────────────────────────────────────────── 2. Company Profile ──────────────────────────────────────────────────────────── 2.1 Basic Information and Founding History

┌─────────────────────────────┬─────────────────────────────────────────────────────┐ │ Full Legal Name │ Silgan Holdings Inc. │ ├─────────────────────────────┼─────────────────────────────────────────────────────┤ │ Stock Ticker │ SLGN │ ├─────────────────────────────┼─────────────────────────────────────────────────────┤ │ Headquarters Location │ 4 Landmark Square, Suite 400, Stamford, CT 06901 │ ├─────────────────────────────┼─────────────────────────────────────────────────────┤ │ Primary Sectors/Industries │ Consumer Cyclical; Packaging & Containers │ └─────────────────────────────┴─────────────────────────────────────────────────────┘

Founded in 1987 by Phil Silver and Greg Horrigan, Silgan Holdings began with a mission to compete through quality products and customer-focused solutions. Significant milestones include rapid market share expansion in the 1990s, strategic acquisitions in the late 1990s and 2000s, as well as a series of international expansions resulting in over 107 manufacturing facilities across four continents and annual sales exceeding USD 6 billion as of 2023.

2.2 Management and Corporate Governance

While detailed current executive profiles (e.g., CEO and CFO) are not available in the provided sources, available documentation clarifies that Silgan Holdings maintains a balanced board of directors with a mix of independent and non‑independent members. Approximately 70–80% of the board comprises independent directors, ensuring robust oversight and adherence to NYSE and SEC standards. The company’s corporate governance is reinforced by comprehensive guidelines, an established Code of Business Conduct and Ethics, and periodic reviews of board structure. Recent amendments—such as changes to the stockholders’ agreement to enhance board independence—underscore Silgan’s commitment to maintaining transparent and effective governance.

──────────────────────────────────────────────────────────── 3. Financial Statements Analysis ──────────────────────────────────────────────────────────── 3.1 Income Statement Analysis

The company’s net sales have evolved as follows:

┌─────────────┬─────────────────────────┬─────────────────────────────┐ │ Fiscal Year │ Total Revenue (Millions USD) │ YoY Growth (%) │ ├─────────────┼─────────────────────────┼─────────────────────────────┤ │ 2020 │ 4,921.9 │ – │ │ 2021 │ 5,677.1 │ +15.35% │ │ 2022 │ 6,411.5 │ +12.94% │ │ 2023 │ 5,988.2 │ –6.61% │ │ 2024 │ 5,854.7 │ –2.23% │ └─────────────┴─────────────────────────┴─────────────────────────────┘

Cost components such as Cost of Goods Sold (COGS) and SG&A have fluctuated over the period. For example, COGS increased steadily through 2022 before slightly declining in 2023 and rising modestly in 2024. Simultaneously, SG&A expenses decreased in 2021 then rose in 2022–2023 with some stabilization in 2024. Profitability margins computed from gross profit, operating income, and net income reveal a slight decline in gross margins over 2020–2024 and a drop in net margin from 6.3% in 2021 to 4.7% in 2024, although operating margins have remained relatively stable around 10%.

3.2 Balance Sheet Analysis

The most recent FY 2023 balance sheet indicates:

┌─────────────────────────────┬─────────────────────────────┐ │ Asset Category │ Amount (USD) │ ├─────────────────────────────┼─────────────────────────────┤ │ Current Assets │ 2,348,982,000 │ ├─────────────────────────────┼─────────────────────────────┤ │ Non-Current Assets │ 5,262,254,000 │ ├─────────────────────────────┼─────────────────────────────┤ │ Total Assets │ 7,611,236,000 │ └─────────────────────────────┴─────────────────────────────┘

Over the period 2020–2023, total assets increased from approximately USD 6.51 billion to USD 7.61 billion. Meanwhile, working capital (the difference between current assets and current liabilities) has shown dramatic variations; while healthy levels were maintained in 2020–2022 (ranging from USD 607 million to USD 787 million), a significant drop to USD 37 million in 2023 highlights an increase in current liabilities—particularly short‑term debt.

3.3 Cash Flow Statement Analysis

Operating cash flows provided a measure of the company’s operational strength. Notably:  • FY 2020: ~USD 562.7 million
 • FY 2021: ~USD 585.8 million
 • FY 2022: ~USD 704.1 million
 • FY 2023: ~USD 480 million

Investing activities over 2020–2022 reveal significant acquisitions in 2020 and 2021 that reduced free cash flow. In contrast, minimal acquisition expenditure in 2022 allowed a higher proportion of operating cash flow to translate into free cash flow. A multi-year cost-improvement initiative worth USD 50 million was noted for 2023. Overall, free cash flow is expected to improve, supporting both debt reduction and shareholder returns.

──────────────────────────────────────────────────────────── 4. Financial Ratios and Metrics ──────────────────────────────────────────────────────────── 4.1 Liquidity Ratios

For FY 2024, key liquidity metrics include:

┌────────────────────────┬───────────────┐ │ Metric │ Value │ ├────────────────────────┼───────────────┤ │ Current Ratio │ 1.65 │ ├────────────────────────┼───────────────┤ │ Quick Ratio (Excl. Inventory) │ 0.93 │ └────────────────────────┴───────────────┘

While the current ratio indicates adequate liquidity, a quick ratio below 1 shows limited coverage by liquid assets alone.

4.2 Solvency and Leverage Ratios

Historical Debt-to-Equity ratios have declined from 4.20 in 2020 to 3.03 in 2023. Interest coverage ratios, calculated as EBIT divided by interest expense, were as follows:

┌─────────────┬────────────────────────────┬─────────────────────────────┐ │ Fiscal Year │ EBIT Estimate (USD) │ Interest Coverage Ratio │ ├─────────────┼────────────────────────────┼─────────────────────────────┤ │ 2020 │ 510.9 million │ ~4.92x │ │ 2021 │ 574.7 million │ ~5.30x │ │ 2022 │ 600.5 million │ ~4.75x │ │ 2023 │ 595.4 million │ ~3.44x │ └─────────────┴────────────────────────────┴─────────────────────────────┘

The decline to ~3.44x in 2023 needs monitoring despite overall manageable levels.

4.3 Profitability Ratios

Key profitability margins are as follows:

┌─────────────┬─────────────────────────┬───────────────────────────┬─────────────────────────┐ │ Fiscal Year │ Gross Margin (%) │ Operating Margin (%) │ Net Margin (%) │ ├─────────────┼─────────────────────────┼───────────────────────────┼─────────────────────────┤ │ 2020 │ 17.63 │ 9.95 │ 6.27 │ │ 2021 │ 16.18 │ 10.41 │ 6.32 │ │ 2022 │ 16.35 │ 10.55 │ 5.32 │ │ 2023 │ 16.57 │ 10.09 │ 5.44 │ │ 2024 │ 14.68 │ 10.17 │ 4.72 │ └─────────────┴─────────────────────────┴───────────────────────────┴─────────────────────────┘

The slight erosion in gross and net margins in 2024 indicates increasing cost pressures.

4.4 Efficiency and Valuation Ratios

Although full efficiency ratios (e.g., asset turnover) could not be computed due to missing balance sheet details, valuation ratios currently reflect:

┌──────────────────────────┬─────────────────────────────┐ │ Valuation Metric │ Value │ ├──────────────────────────┼─────────────────────────────┤ │ Trailing P/E │ ~21.02 │ ├──────────────────────────┼─────────────────────────────┤ │ Forward P/E │ ~13.28 │ ├──────────────────────────┼─────────────────────────────┤ │ Price/Book Ratio │ ~2.91 │ ├──────────────────────────┼─────────────────────────────┤ │ EV/EBITDA │ ~10.7 │ ├──────────────────────────┼─────────────────────────────┤ │ Price/Sales Ratio │ ~0.93–0.99 │ └──────────────────────────┴─────────────────────────────┘

These multiples align with industry norms in the packaging sector.

──────────────────────────────────────────────────────────── 5. Debt Analysis ──────────────────────────────────────────────────────────── 5.1 Debt Structure and Maturity Profile

Silgan Holdings employs a blend of revolving credit facilities and term loans. Key insights include:

┌────────────────────────────────────────────────────────────┬───────────────────────────────────────────────────────────────┐ │ Debt Component │ Details │ ├────────────────────────────────────────────────────────────┼───────────────────────────────────────────────────────────────┤ │ Revolving Credit Facility │ ~USD 1.5 billion available; ~USD 814.5 million currently available after adjustments │ ├────────────────────────────────────────────────────────────┼───────────────────────────────────────────────────────────────┤ │ Term Debt and Long-Term Loans │ Active issuances and aggressive debt repayment in 2020–2021; reduced new borrowing by 2022 │ ├────────────────────────────────────────────────────────────┼───────────────────────────────────────────────────────────────┤ │ Interest Rate Swaps │ Agreements for fixed rates (3.889% – 3.905%) maturing in April 2026 │ └────────────────────────────────────────────────────────────┴───────────────────────────────────────────────────────────────┘

5.2 Annual Interest Expense and Covenants

Annual interest expenses have increased over time:

┌─────────────┬────────────────────────────────┐ │ Fiscal Year │ Interest Expense (Million USD) │ ├─────────────┼────────────────────────────────┤ │ 2020 │ 103.8 │ │ 2021 │ 108.4 │ │ 2022 │ 126.3 │ │ 2023 │ 173.3 │ │ 2024 │ 167.4 │ └─────────────┴────────────────────────────────┘

Additionally, the company adheres to covenants that restrict additional indebtedness, require maintenance of specified working capital levels, and limit certain asset transactions. Documentation confirms full compliance with these covenants.

──────────────────────────────────────────────────────────── 6. Growth and CapEx Analysis ──────────────────────────────────────────────────────────── 6.1 Organic Growth Strategies

Silgan pursues several organic growth initiatives:  • Market Expansion – extending long‑term customer contracts and penetrating new regional markets.  • Product Development – broadening the product mix in dispensing and specialty closures.  • Investment in R&D – focusing on technological innovation and process improvements to reduce costs.

6.2 Inorganic Growth Strategies and Synergies

Key inorganic strategies include:  • Acquisition of Weener Packaging, which boosted the custom containers segment by approximately 22% in sales and generated significant operating synergies.  • Strategic partnerships and long‑term contract extensions that secure recurring volumes and stabilize revenues.

6.3 Historical and Future Capital Expenditures

Historical CapEx data is not detailed; however, future plans include:  • 2024 CapEx: Approximately USD 262.8 million to support ongoing operations.
 • 2025 CapEx: Planned increase to around USD 300 million driven by acquisition integration and expansion initiatives. These expenditures are aligned with efforts to enhance operating margins, boost free cash flow, and create shareholder value.

6.4 Revenue and Earnings Projections

Analyst estimates forecast:  • Revenue for 2025 in the range of USD 5.8–6.8 billion.  • EPS projections between USD 3.97 and 4.67 for 2025, with a midpoint target around USD 4.21. Free cash flow is expected to grow by approximately 15% in 2025, supporting robust financial flexibility.

──────────────────────────────────────────────────────────── 7. Competitive Analysis ──────────────────────────────────────────────────────────── 7.1 Industry Size, Growth, and Trends

The sustainable packaging market, which includes metal containers, dispensing systems, and custom packaging, is globally significant. Although Silgan’s exact market size is not fully disclosed, its annual net sales of ~USD 5.9 billion (2024) and 124 manufacturing facilities highlight the scale. Projected industry growth rates in specific submarkets range between 6.5% and 12.3% CAGR.

7.2 Competitors and Market Positioning

Main competitors include Ardagh Group, Ball Corporation, and Crown Holdings. While specific market shares vary, Silgan holds an estimated 7.5% share in certain segments. Competitive advantages include:  • Geographic proximity of plants (within 300 miles for metal containers) to reduce transportation costs.  • Differentiation through superior product quality and sustainable packaging offerings.  • Operational efficiency and constant strategic acquisitions that support a diversified product portfolio.

7.3 Porter's Five Forces Analysis

┌─────────────────────────────┬─────────────────────────────────────────────────────────────┐ │ Force │ Insight Summary │ ├─────────────────────────────┼─────────────────────────────────────────────────────────────┤ │ Threat of New Entrants │ Moderate to low – high capital requirements and regulatory barriers│ ├─────────────────────────────┼─────────────────────────────────────────────────────────────┤ │ Bargaining Power of Suppliers│ Moderate to high – commodity price volatility for raw materials │ ├─────────────────────────────┼─────────────────────────────────────────────────────────────┤ │ Bargaining Power of Buyers │ Moderate to high – large buyer concentration offset by switching costs│ ├─────────────────────────────┼─────────────────────────────────────────────────────────────┤ │ Threat of Substitutes │ Moderate – new eco-friendly alternatives emerging, but traditional packaging remains resilient│ ├─────────────────────────────┼─────────────────────────────────────────────────────────────┤ │ Industry Rivalry │ High – intense competition driven by pricing, innovation, and capacity utilization│ └─────────────────────────────┴─────────────────────────────────────────────────────────────┘

──────────────────────────────────────────────────────────── 8. Risk Assessment ──────────────────────────────────────────────────────────── 8.1 Financial and Credit Risks

Silgan faces risks from high leverage (Debt-to-EBITDA ratios around 2.5x–3.6x) and rising interest expenses. Despite these risks, robust operational cash flows and a sizeable revolving credit facility (~USD 1.5 billion, with ~USD 814.5 million available) underpin its short-term liquidity.

8.2 Operational Risks

Critical risks include supply chain vulnerabilities—such as raw material price escalation and seasonal working capital spikes—and technological dependencies in manufacturing. Mitigation measures include diversified global facilities, long-term supplier contracts, continuous R&D investment, and strengthened cybersecurity protocols.

8.3 Macroeconomic and Market Risks

Silgan is sensitive to fluctuations in commodity prices, interest rate shifts, and economic downturns that could dampen consumer demand. The company’s pricing mechanisms and product diversification help mitigate these external pressures.

8.4 Regulatory and Legal Risks

Silgan must comply with stringent codes covering business conduct, supply chain transparency regulations, occupational health and safety, and environmental standards. Ongoing notable legal matters include EU competition cases and historical litigation (e.g., whistleblower and discrimination suits), though recent disclosures indicate resolution or active compliance.

──────────────────────────────────────────────────────────── 9. Valuation Analysis ──────────────────────────────────────────────────────────── 9.1 DCF Analysis and Sensitivity

Key DCF assumptions:  • Projection Period: 5 years
 • Terminal Growth Rate: 2.0%–3.0%
 • Discount Rate (WACC): ~6.0%–7.0% (central estimate ~6.6%)
Using these inputs, the estimated intrinsic value per share averages around USD 64. Sensitivity analysis indicates that higher discount rates and lower terminal growth compress valuation, whereas favorable assumptions widen the margin.

9.2 Multiples and Comparable Companies Analysis

Silgan’s current valuation multiples are:  • Trailing P/E: 21.02
 • Forward P/E: ~13.28
 • Price-to-Book: ~2.91
 • EV/EBITDA: ~10.7
These figures align with typical industry ranges (e.g., EV/EBITDA between 8 and 14). Comparisons to precedent transactions, such as the Weener Packaging acquisition with an implied EBITDA multiple of ~8.7x, suggest that Silgan is competitively valued. Integrated with the DCF estimates, a margin of safety of approximately 15–20% exists relative to the current share price (USD 54.24).

──────────────────────────────────────────────────────────── 10. Investment Thesis ──────────────────────────────────────────────────────────── 10.1 Core Investment Arguments

┌───────────────────────────────────────┬────────────────────────────────────────────────────────────────────────────┐ │ Factor │ Description │ ├───────────────────────────────────────┼────────────────────────────────────────────────────────────────────────────┤ │ Diversified Product Portfolio │ Multiple segments (dispensing & specialty closures, metal containers, custom containers) mitigate risk and capture growth. │ ├───────────────────────────────────────┼────────────────────────────────────────────────────────────────────────────┤ │ Sustainability Leadership │ Focus on eco‑friendly, recyclable packaging aligns with market and regulatory trends. │ ├───────────────────────────────────────┼────────────────────────────────────────────────────────────────────────────┤ │ Robust Free Cash Flow Generation │ Consistent FCF enables debt reduction, dividend growth, and funding for strategic M&A initiatives. │ ├───────────────────────────────────────┼────────────────────────────────────────────────────────────────────────────┤ │ Strategic Acquisitions │ The Weener Packaging acquisition enhances scale and operational synergies, driving top-line improvements. │ ├───────────────────────────────────────┼────────────────────────────────────────────────────────────────────────────┤ │ Operational Efficiency │ Disciplined SG&A management and cost rationalization initiatives support margin stability. │ └───────────────────────────────────────┴────────────────────────────────────────────────────────────────────────────┘

10.2 Shareholder Value Creation and Recommendation

Silgan creates shareholder value through robust free cash flow, disciplined capital allocation, strategic M&A, and consistent earnings stability. Relative valuation analyses using both DCF and multiples indicate that the stock is undervalued by approximately 15–20% compared to intrinsic value estimates. Record Q4 earnings, favorable EPS guidance for 2025, and anticipated operational improvements support an upward trajectory in the stock price.

Based on this comprehensive analysis, we recommend a “Buy” for Silgan Holdings.

──────────────────────────────────────────────────────────── 11. Conclusion ──────────────────────────────────────────────────────────── Silgan Holdings Inc. exhibits a compelling financial profile characterized by diversified revenue streams, progressive cost and capital management, and robust free cash flow generation despite recent modest declines in net income and gross margins. Strong strategic initiatives—including targeted acquisitions and organic growth investments—coupled with disciplined financial and operational execution, have enhanced its market positioning. Valuation analyses suggest a fair intrinsic value in the vicinity of USD 64 per share, providing a margin of safety relative to the current price. Overall, the integrated data supports a Buy recommendation, anticipating a turnaround in EPS growth, margin expansion, and long-term shareholder value creation.

──────────────────────────────────────────────────────────── 12. References ──────────────────────────────────────────────────────────── • Business Wire, Silgan Holdings Record Q4 Results and 2025 Earnings Guidance.
• CSIMarket, Financial Ratios and Competition Analysis.
• Fitch Ratings, Corporate Finance Research on Silgan Holdings.
• GuruFocus, Stock Analysis and Historical Ratio Data.
• Simply Wall St, Intrinsic Value Calculations.
• StockAnalysis and Yahoo Finance, Valuation Metrics and Key Statistics.
• SEC Filings and Annual Reports from Silgan Holdings Inc.
• Various industry sources including IBISWorld, DCF Modeling, and ValueInvesting.io.

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