Silgan Holdings Inc.'s plastic container business has earned the right, thanks to a turnaround in business in recent years, to now consider growth opportunities.
The Stamford, Conn.-based maker of plastic containers, metal containers and both metal and plastic closures talked about that future during an Oct. 23 conference call to discuss quarterly earnings.
"The plastics business has turned the corner nicely," Chief Financial Officer Bob Lewis said. "Right in line with what we would have expected to have happen over time. So the idea that we could see some capital deployed there is not off the table. I'm not trying to signal that there's something that we're going hard after. But, certainly, the team has earned at least an opportunity."
But any future potential deals obviously would need to have a disciplined financial approach, he said, as the company would look at the best ways to return capital to shareholders.
Portions of the plastics industry face uncertainty as more opposition develops regarding single-use products.
Silgan does not have much exposure in that space, CEO Tony Allott said during the call. Most of its plastic containers are for multi-use, including packaging for kitchen and bathroom applications.
And in those locations, he said, the idea of using other materials such as glass is "just a little hard to imagine."
A trend such as the growing use of tethered caps — Europe has already passed legislation requiring their use — also provides an opportunity for Silgan to grow, the company said.
While Silgan talks openly about the potential to expand in the plastics business, the company said that will not take place in a vacuum. Market conditions will help dictate an approach.
"We're going to watch the pipeline a little bit more. We're going to see where the business can develop," Allott said, while devising a strategy.
"Consolidation needs to happen in the plastic bottle supplier community. There are a lot of players. It's going to be an important aspect to it. Either we fell like we need to be part of that process or at least want to watch what happens around us before we can finish the thought process on the long term," he said.
Third quarter profit was $81.3 million, or 73 cents per diluted share, on sales of $1.32 billion. That compares with profit of $84.7 million, or 76 cents per diluted share, on sales of $1.31 billion during last year's third quarter.
Silgan also tightened its profit guidance for the year to a range of $2.10 to $2.17 per diluted share, a change from earlier guidance of $2.10 to $2.20 per diluted share.