Silgan Holdings Inc. is investing millions of dollars in a pair of new plastic container plants as part of the company's overall push to improve operations.
The Stamford, Conn.-based company does most of its business in metal cans, but still has a sizeable business in plastic containers and closures.
And, as part of that plastics-related business, Silgan is eying two new locations.
News of one location was reported last fall when Pennsylvania state officials revealed plans for a 135,000-square-foot facility in the Borough of North East in Erie County.
Silgan officials talked about growth opportunities in both plastics and metal containers on a recent conference call to discuss quarterly earnings.
While not providing a lot of specific information, company officials did give stock analysts some insight about the company's view toward the new construction.
“The capital associated with the two new facilities is right around $25 million,” Chief Operating Officer Adam J. Greenlee said.
“The primary focus of these two plants are continued cost-out efforts at our plastics business and also to support our customers' growing needs and growth in markets that we like and that we participate in today,” he continued.
Silgan indicated on the call that it has closed four less-efficient and smaller plastics facilities over the past several years. The new locations will provide size, scale and logistical advantages, the company said.
Silgan indicated that the new locations will serve the food, healthcare and personal care markets, but deferred when asked about what specific products and customers will be served from the sites.
More detail about the plastics plants comes as the company also indicated it is spending $100 million on a new metal can plant in the U.S. Creating this site, CEO Tony Allott said, is about saving costs through location and scale, and not about adding new capacity.
The second plastics location, similarly, will be built in a location designed to take advantage of geography in relation to customers.
“We've disclosed Midwest,” Allott said about the potential location. “We've got a couple of locations that are kind of under final negotiation on incentives, etc., so we are not prepared to announce location yet.”
Silgan does expect to construct the unidentified facility this year. The new Midwest plant also will be designed to allow for future expansion.
“We have been talking for a while about getting at legacy costs of the system. And so that's part of the point of the plant, too, is to allow us to have more flexibility in that regard as well,” Allott said.
Silgan already has 20 plastics plants in North America. It is No. 10 in Plastics News' ranking of blow molders in North America and comes in at No. 21 in the rankings for injection molders.
Silgan also reported earnings of $182.4 million, or $2.86 per diluted share on sales of $3.91 billion for 2014. That compares with earnings of $185.4 million, or $2.87 per diluted share, on sales of $3.71 billion in 2013.
Fourth quarter earnings were $23.6 million, or 37 cents per diluted share, on sales of $910 million in 2014. That compares with fourth quarter earnings of $23.3 million, or 36 cents per diluted share, on sales of $865 million in 2013.
Sales in the plastics container portion of the company's business was $659.2 million in 2014, and sales in the closures portion of Silgan totaled $882.9 million last year. Metal container sales were $2.37 billion, the company said.
Silgan also said it will buy back up to $200 million of its common stock.
