Silgan Holdings Inc.'s plastic packaging business continues to exceed pre-pandemic levels as the company performs "at a very high level in a very challenging environment," according to the company's CEO.
Silgan has a three-pronged approach toward business: dispensing and specialty closures, plastic containers and metal containers.
"While we expect market demand to remain strong and our operating teams continue to deliver on behalf of our customers, supply chain and labor challenges are expected to continue through the fourth quarter and likely into 2022," CEO Adam Greenlee said.
Silgan had a profit of $106.3 million, or 96 cents per diluted share, on sales of $1.65 billion for the third quarter. That compares with a profit of $112.9 million, or $1.01 per diluted share, on sales of 1.49 billion during the third quarter of 2020.
Segment results saw sales of $553.4 million during the third quarter for dispensing and specialty closures, a business segment that includes plastic products. That compares with sales of $475.1 million for the third quarter of 2020.
Plastic containers, also called custom containers by the company, had sales of $175.6 million for the third quarter. That's up from $156.7 million for the third quarter of 2020.
Metal containers is the largest market segment for Silgan with $942.1 million in sales for the quarter, up from $856.7 million the previous third quarter.
"The third quarter had a number of competing dynamics. Volumes across the board for our businesses were very good as compared to historical trends. Supply chain and labor challenges were pervasive. And inflation continues to impact almost every aspect of our business. Our business did an excellent job offsetting many of these headwinds through price pass-throughs, operational performance and cost reductions," Chief Financial Officer Robert Lewis said on the conference call.
Silgan delivered what the company called strong adjusted earnings per diluted share despite "unprecedented inflation, continued supply chain and labor disruptions, the effects of the ongoing pandemic and tough-year-over-year comparisons."
Demand for products using Silgan containers was exceedingly strong as people continued to hunker down during the fourth quarter of last year due to COVID-19.
With restrictions easing over time, and more people out and about on a more regular basis, last year's robust third quarter sales make for a difficult comparison for this year's third quarter, the company said. Even with the dip from last year, Silgan said the plastic packaging business is exceeded business posted during the third quarter of 2019.
Silgan, citing supply chain and labor challenges, also tightened its full year adjusted earnings per diluted share guidance to $3.30 to $3.40 per share from the previous $3.30 to $3.45 per share. Even with the change, the company said the midpoint of the guidance will would be a 9.5-percent increase over 2020.
Dispensing and Specialty Closures saw strong volume in the beauty, fragrance, food and beverage markets, Greenlee told stock analysts on the call. These gains "more than offset" inflation and raw material impacts.
Strong operating performance and cost controls were key factors in the custom containers business, the CEO said. These factors helped offset lower volumes compared with 2020's third quarter record production.
Greenlee also told analysts that early indications for 2022 from both a company view point to what he called "significant earnings growth."