Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of sustainable rigid packaging solutions for consumer goods products, today reported record second quarter 2021 net income of $94.5 million, or $0.85 per diluted share, as compared to second quarter 2020 net income of $78.2 million, or $0.70 per diluted share.
Adjusted net income per diluted share for the second quarter of 2021 was $0.85. Adjusted net income per diluted share for the second quarter of 2020 was also $0.85, after adjustments increasing net income per diluted share by $0.15. A reconciliation of net income per diluted share to “adjusted net income per diluted share,” a Non-GAAP financial measure used by the Company that adjusts net income per diluted share for certain items, can be found in Tables A and B at the back of this press release.
“We are very pleased to have maintained exceptionally strong performance levels in the second quarter of 2021, delivering earnings of $0.85 per diluted share which matches the unprecedented pandemic driven second quarter 2020 results,” said Tony Allott, Chairman and CEO. “Our Dispensing and Specialty Closures segment continued to benefit from strengthening beauty and fragrance markets and the inclusion of the Albéa operations. This continued volume growth along with great operating performance more than offset the significant unfavorable impact of unprecedented spikes in raw material costs and the contractual lags in passing these on to customers. Our Metal Container segment continued to experience sustained strong demand levels but was challenged by lower inventory levels to meet this demand, largely as a result of unacceptable steel supply performance, and by tight labor markets across the supply chain. Our Custom Container segment once again delivered improved profitability primarily on the strength of its product mix and operating performance, despite the anticipated decline in volumes and the impact of significant raw material inflation,” continued Mr. Allott. “While the raw material and labor supply challenges are real across all of our operating segments and will continue to have a negative impact on the rest of the year, given other areas of strong performance we are holding our estimate of full year 2021 adjusted earnings per diluted share in a range of $3.30 to $3.45, which represents a 10.3 percent increase at the midpoint over record 2020 levels. We are also increasing our free cash flow estimate to approximately $400 million from $380 million primarily due to anticipated lower ending inventory levels. For the third quarter of 2021, we anticipate adjusted earnings per diluted share in a range of $0.95 to $1.10, as compared to a record $1.04 in the third quarter of 2020. Our current third quarter estimate anticipates continued strong product demand in key markets and a robust harvest, which will be partially offset by ongoing raw material and labor supply challenges,” concluded Mr. Allott.
Net sales for the second quarter of 2021 were $1.35 billion, an increase of $172.2 million, or 14.6 percent, as compared to the same period in the prior year. This increase was the result of higher net sales in all segments.
Income before interest and income taxes for the second quarter of 2021 was a record $153.0 million, an increase of $21.8 million, or 16.6 percent, as compared to $131.2 million for the second quarter of 2020, and margins increased to 11.3 percent from 11.2 percent for the same periods. The increase in income before interest and income taxes was the result of higher income in the Dispensing and Specialty Closures and Custom Container segments, lower corporate expenses primarily related to prior year costs of $16.1 million for announced acquisitions and lower rationalization charges, partially offset by lower income in the Metal Container segment. Rationalization charges were $0.4 million and $2.0 million in the second quarters of 2021 and 2020, respectively. The second quarter of 2020 also included the negative impact of a $3.5 million charge related to the purchase accounting write-up of inventory for the dispensing operations acquired from the Albéa Group in June 2020.
Interest and other debt expense for the second quarter of 2021 was $26.4 million, an increase of $0.6 million as compared to the second quarter of 2020. This increase was primarily due to higher weighted average outstanding borrowings during the quarter as a result of the acquisition of the dispensing operations of Albéa, partially offset by lower weighted average interest rates during the current quarter due to lower variable market rates.
The effective tax rates were 25.3 percent and 25.8 percent for the second quarters of 2021 and 2020, respectively.
Net income for the first six months of 2021 was $167.8 million, or $1.51 per diluted share, as compared to net income of $135.8 million, or $1.22 per diluted share, for the first six months of 2020. Adjusted net income per diluted share for the first six months of 2021 was a record $1.60, an increase of 12.7 percent as compared to $1.42 in the prior year period, after adjustments increasing net income per diluted share by $0.09 for the first six months of 2021 and by $0.20 for the first six months of 2020.
Net sales for the first six months of 2021 increased $380.0 million, or 17.2 percent, to $2.59 billion as compared to $2.21 billion for the first six months of 2020. This increase was primarily a result of higher unit volumes in each of the Dispensing and Specialty Closures and Metal Container segments, the pass through of higher raw material costs, the impact of favorable foreign currency translation and a more favorable mix of products sold in the Dispensing and Specialty Closures and Custom Container segments, partially offset by lower volumes in the Custom Container segment and a higher percentage of smaller cans sold in the Metal Container segment.