Operator: Good day, and welcome to the Silgan Holdings Fourth Quarter 2024 Earnings Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Alex Hutter. Please go ahead.

Alexander Hutter: Thank you, and good morning. Joining me on the call today are Adam Greenlee, President and CEO; Bob Lewis, EVP, Corporate Development and Administration; and Kim Ulmer, SVP and CFO. Before we begin the call today, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. These forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting the Company and therefore involve a number of uncertainties and risks, including, but not limited to, those described in the Company’s annual report on Form 10-K for 2023, and other filings with the Securities and Exchange Commission. Therefore, the actual results of operations or the financial position of the Company could differ materially from those expressed or implied in the forward-looking statements.

In addition, commentary on today’s call may contain references to certain non-GAAP financial metrics, including adjusted EBIT, adjusted EBITDA, free cash flow, and net income per diluted share or adjusted EPS. A reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics can be found in today’s press release and under the non-GAAP financial information portion of the Investor Relations section of our website at silganholdings.com. With that, let me turn it over to Adam.

Adam Greenlee: Thank you, Alex, and we’d like to welcome everyone to Silgan’s fourth quarter and full-year 2024 earnings call. Our team delivered another year of strong performance in 2024 as the success of our winning strategy, the power of our portfolio, the strength of our team, and our disciplined approach to capital deployment continued to set us apart from our competition and drive value for our shareholders. Normalizing end-market conditions in most of our businesses showcase the organic growth potential of our strategic initiatives, and we delivered mid-single-digit organic adjusted EPS growth and double-digit free cash flow growth in 2024, despite customer destocking activities that impacted the first half of the year.

We made significant progress towards achieving our multi-year $50 million cost-saving initiative while continuing to invest organically in our businesses to drive growth into the future. Our disciplined capital deployment model continued to create value for our shareholders as we announced and closed the acquisition of Weener Packaging during the year. We are pleased to add another high-margin strong organic growth business to the Silgan portfolio, and believe this to be a logical next step in the evolution of our capabilities in the attractive dispensing markets as we continue to evolve our portfolio. Its advanced product and manufacturing technologies and strong innovation pipeline will bolster the organic growth and enhance the profile mix of the company for years to come.

At the segment level, our Dispensing and Specialty Closures segment continued to perform exceptionally well in 2024, and delivered three consecutive quarters of double-digit organic growth in dispensing products to close out the year. Our adjusted EBITDA margins in the segment expanded almost 75 basis points during the year and reached new record levels as the margin-enhancing mix and higher growth rate of our dispensing products continue to deliver meaningful upside to our bottom line. We drove operational improvement in the segment and continued to make progress against our multi-year cost-saving initiatives. In Metal Containers, our pet food markets, which represents a strategic growth category and approximately half of our segment volume showed improving trends throughout the year with high single-digit growth in the second half of the year and double-digit growth in the fourth quarter as volumes normalized.

We once again validated our leadership in the market and the strength of our customer relationships by extending our decades-long supply partnership with our largest customer. Our team navigated dynamic volume conditions in the fruit and vegetable market with the impact of a large customer reducing their inventories to drive working capital during the year compounded by severe weather that drove the worst fruit and vegetable pack in many years. In Custom Containers, our business delivered strong operating performance and experienced continued success in the marketplace as the commercialization of new contractual business wins and more normalized market conditions drove mid-single-digit volume growth and over 200 basis points of adjusted EBIT margin improvement.

As we now turn our focus to 2025, with our strategic initiatives yielding strong organic growth, the contribution of the Weener acquisition and first year synergies, the full benefit of our cost-savings program, and a partial recovery in the fruit and vegetable market, our business exits 2024 with strong momentum and is positioned to deliver record performance in 2025 with double-digit increases to both earnings and free cash flow. At the segment level, we are expecting Dispensing and Specialty Closures organic volumes to grow by a mid-single-digit rate in 2025, driven by another year of high single-digit growth in our dispensing products and low single-digit growth in our closure products, resulting in an improved mix. Metal Containers’ volumes are expected to grow by a mid-single-digit percentage driven primarily by mid-single-digit growth in pet food and a partial recovery in the fruit and vegetable volumes.

Custom Containers’ volumes are expected to grow by a mid-single-digit percentage, driven by the annualization of the new business wins that ramped up in 2024, as well as additional new business awards in 2025. As we enter 2025, we are excited about the opportunities that lay ahead for the Company and our ability to execute upon them. Our customer partnerships remain strong and our teams remain focused on meeting the unique needs of our customers. We continue to compete and win in the markets we serve. Our strategic growth initiatives continue to shape the Company’s future and our disciplined capital deployment model continues to create significant value for shareholders. Before I turn it over to Kim, I’d also like to highlight that earlier this week, we announced that Philippe Chevrier will join our team as Executive Vice President and Chief Operating Officer as part of our executive office in Stanford.

We look forward to fully participating in the collaborative management process that has proven to be so successful since the founding of our Company. He brings additional strong leadership capabilities to our team, a broad operational skill set, significant international experience, and a deep understanding of the importance of commercial relationships, all of which will help him be successful at Silgan. With that, Kim will take you through the financials for the quarter and our estimates for the first quarter and full-year 2025.

Kimberly Ulmer: Thank you, Adam. As Adam highlighted, our business continued to deliver strong financial results and converted our profits into double-digit free cash flow growth in 2024. We closed on the Weener acquisition in October, which we financed using cash-on-hand, our revolver, and a new EUR700 million term loan, and we successfully amended and extended our credit agreement during the fourth quarter. Our balance sheet and access to capital markets remains very strong, and after completing the Weener transaction, we ended the year at 3.3 times pro forma net debt to EBITDA, which is within our target leverage range. Turning to the fourth quarter 2024 results. Net sales of approximately $1.4 billion increased 5% from the prior year period, driven primarily by the addition of the Weener business, which closed on October 15th, which was partially offset by less favorable mix in the Metal Containers segment as expected.

Total adjusted EBIT for the quarter of $151.7 million increased by 12% on a year-over-year basis with record adjusted EBIT in Dispensing and Specialty Closures and higher adjusted EBIT in the Metal Containers and Custom Containers segments. Record adjusted EPS of $0.85 increased $0.22, or 35% from the prior year. Turning to our segments. Fourth quarter sales in our Dispensing and Specialty Closures segment increased 22% versus the prior year, primarily as a result of the contribution from the Weener Packaging acquisition, which added approximately $100 million, or 19% during the quarter and a higher-volume mix of 5%. The improvement in volume mix was driven primarily by a double-digit increase in the organic volume of dispensing products during the quarter.

Record fourth quarter 2024 Dispensing and Specialty Closures adjusted EBIT increased $13 million, or 15% versus the record achieved in the prior year period as a result of the contribution from the Weener Packaging acquisition, which added approximately $11.1 million and a favorable volume mix. Late in the quarter, as a result of the announced restructuring program, we had the opportunity to further reduce inventories to more optimal levels, which cost us approximately $10 million in adjusted EBIT relative to our expectations entering the quarter as we sold through some higher-cost inventory. This inventory reduction contributed to the reduction in working capital for the Company, which was the primary driver of free cash flow exceeding our prior estimate for the year.

In our Metal Containers segment, sales declined 8% versus the prior year as a result of the lower-price mix due to a less favorable mix driven by a double-digit increase in smaller cans for pet food and lower volumes for larger cans for the fruit and vegetable markets. Total volumes in the quarter were comparable to the prior year period. Metal Containers adjusted EBIT increased 3%, primarily as a result of favorable price, cost and mix, including SG&A cost management. In Custom Containers, sales increased 6% compared to the prior year quarter, driven by a 4% increase in volumes as a result of the commercialization of new business awards and more favorable price mix. Custom Containers adjusted EBIT increased 40% as compared to the fourth quarter of 2023, primarily due to an improved mix of products sold and higher volumes.

Looking ahead to 2025, we are estimating adjusted EPS in the range of $4 to $4.20, a 13% increase at the midpoint of the range as compared to $3.62 in 2024. This estimate includes interest expense of approximately $185 million, a tax rate of approximately 24%, corporate expense of approximately $40 million, and a weighted average share count of approximately 107 million shares. Depreciation is expected to increase $40 million to $50 million on a year-over-year basis and be in the range of $265 million to $275 million. At the midpoint of our 2025 adjusted EPS range, we will exceed the prior record levels of adjusted EBIT, adjusted EBITDA, and adjusted EPS achieved in 2022. From a segment perspective, mid-teen percentage total adjusted EBIT growth in 2025 is expected to be driven primarily by a greater than 20% increase in Dispensing and Specialty Closures adjusted EBIT.

Custom Containers segment adjusted EBIT is expected to grow by a mid-teen percentage, and in the Metal Containers segment, we expect to recover approximately half of the $40 million decline in adjusted EBIT that we experienced in 2024. Based on our current earnings outlook for 2025, we are providing an estimate of free cash flow of approximately $450 million, a 15% increase from the prior year as earnings growth will be partly offset by higher interest and tax with CapEx of approximately $300 million. This estimate also includes approximately $20 million of cash costs to support our cost-reduction program. Turning to our outlook for the first quarter of 2025, we are providing an estimate of adjusted earnings in the range of $0.74 to $0.84 per diluted share, a 14% increase as compared to adjusted EPS of $0.69 in the prior year period.

The year-over-year improvement in adjusted earnings in the first quarter is driven primarily by the inclusion of Weener Packaging, higher volumes in each segment, and operational improvements, including the benefits from our cost savings program, partially offset by higher interest and corporate expense. First quarter volume and adjusted EBIT is expected to be above prior year levels in all three segments. That concludes our prepared comments and we’ll open the call for questions. Justin, would you kindly provide the directions for the question-and-answer session?

Operator: Thank you. [Operator Instructions] And our first question today will come from George Staphos with Bank of America.

George Staphos: Hi, everyone. Good morning. Thanks for the details. I hope you’re doing well. Two quick ones from me and then a follow-on. Can you talk a little bit about what the learnings with Weener have been so far? What did you learn since you’ve owned it that are additive, or for that matter, maybe a little bit more challenging than you expected as you were closing the deal and relative to the deal model? Second question. Can you talk about within the guidance for this year, what is discrete cost reduction and/or sort of built-in earnings gains, not that anything is ever guaranteed relative to your initiatives from the last couple of years? And then as I said, I had a quick follow-on.

Adam Greenlee: Sure. Good morning, George. Look, the Weener addition to our portfolio, it’s gone really well. We closed in mid-October. To your point, there are always learnings as you bring two organizations together. And I think that process has been very good. One that I would tell you initially is that they probably had more commercial opportunities in the business than maybe what we had given them credit for through our diligence process. And it’s a similar conversation that we’ve had in some other acquisitions that we’ve done that we actually, did take the opportunity to approve some capital prior to the close of the acquisition for future growth. And this is contractual business. In fairness, these are primarily with customers that you can think about as both Silgan customers and Weener customers, but the capital opportunity was there and we took advantage of it.

So I think one learning is we’re gaining confidence and even more confidence in the combined entity’s ability to deliver the growth profile that we’ve projected. So feeling really good about it. I think outside of that, again, we anticipated a strong team coming over — a talented team, and that’s exactly what we’ve got. So we’re excited about the future. I think the teams are working well together and delivering on really the synergies and all the other integration activities as we get into the process now with a full quarter. And then secondly, on the cost-reduction side of the portfolio, our second year of the $50 million cost-reduction program, year one, we did deliver the $20 million of cost savings in ’24, so feel really good about that.

Teams did an excellent job executing against the programs that we established. And then for ’25, it’s really the second portion of the EBIT improvement, which will be about $20 million — I’m sorry, $30 million of improvement to round out the $50 million cost reduction program?

George Staphos: Okay. Adam, just on Weener just a quick follow-on. So there’s always going to be things that don’t go as well. What have those been so far? And then where have the commercial opportunities been where you’ve been may be able to invest a little bit ahead of the curve? And then just the tax rate was a little bit lower than we were expecting. What drove that? Thanks. I’ll turn it over.

Adam Greenlee: Sure. Just back to Weener. Right. Clearly, not everything is seashells and balloons, George. So there’s a lot of good stuff. There’s a lot of stuff when you’re bringing two organizations together that you have to work through. And I think it’s just communication, but I tell you also this is our 41st acquisition that we’ve done as a company. And I think it’s just as you integrate an organization of this size with, call it, 6,000 employees, communication is really important, and just making sure you’re speaking the same language and communicating effectively back-and-forth through the organization. So that’s it. And just sometimes that’s easier than not, and I’ll just say it was pretty standard for us. But we’ve got a lot of experience in working through those issues. I’ll let Kim answer the tax rate question.

Kimberly Ulmer: Sure. So for the tax rate for the fourth quarter, it was about 8.8%, and that was a benefit from tax restructuring we did in foreign operations. We do not expect that to repeat in 2025. So we’ll be back to our 24% average rate as we go through the year next year.

Robert Lewis: Yes. George, you can come back to the last question. This is Bob. Come back around to the question you asked in terms of where the investments were.

George Staphos: CapEx.

Robert Lewis: In typical markets that they have been operating in, very similar markets to where our dispensing business plays as well. So nothing far afield from what the two organizations combined are very capable at doing. They are growth markets so we think there’s a good opportunity with those customers to not only launch these product lines but to continue to grow with them on a go-forward basis.

Adam Greenlee: And as is typical with us, George, you can just assume that those are mid to longer-term contracts that support the capital investment.

George Staphos: Thank you very much.

Operator: And the next question will come from Ghansham Panjabi with Baird.

Ghansham Panjabi: Thank you, operator. Good morning, everybody. Hey, Adam, just looking at our model from a volume metric standpoint, in ’22 volumes were down, ’23 as well, and up a little bit in ’24. And just based on your characterization of ’25, it sounds like you’re expecting a mid-single-digit increase in terms of volume. So can you help us bridge the differential as it relates to your confidence in being able to achieve that, and just in the context of many of your customers that have reported so far, especially the upcycle reporters that seem much more muted on the outlook for volumes?

Adam Greenlee: Yes, sure. It’s — you highlighted some challenging years with a lot of moving parts between ’22 and ’24 there. But what I would tell you, Ghansham, as we came into those years, there was a lot of noise around the market of what was going on with consumers and what was going on with our customer base. And I think what you see at the back half to certainly the fourth quarter of ’24 is just a much more normal kind of business environment that we’re dealing with our customers. We’re through all the destocking activities, and we’re seeing in many cases, our volumes are more indicative of what consumer demand is for our products. So we feel like as we turn the page now to ’25, there’s just a lot less noise around what’s going on with our customers and what’s going on with consumers.

And I’ll continue to say through that window of time that you outlined, Ghansham, consumer demand for our products remained fairly strong through that entire process, and really the disruption was more with our customers and what they were doing with their inventory, what they were doing with their commercial activities, and pricing and promotional activities in the market. So as we sit here today, I think we’ve got a really good degree of confidence that the strategic initiatives that we’ve outlined that we’re executing against them. They’re delivering the value and creating value for our shareholders that we had outlined. And I think ’25 is going to be a much more normal year than what we’ve seen in the last several years.

Ghansham Panjabi: Okay, understood. And then can you help us also bridge the earnings between the $3.62 you generated in 2024 in the midpoint of your guidance, how much of it is from the acquisition? And what operating leverage are you assuming on the legacy Silgan businesses, excluding Weener?

Adam Greenlee: Yes. Very good question. So a couple of things. One, just some of the big numbers right out of the gate. I’m just going to give you some adjusted EBIT numbers. So call it, $50 million from the Weener acquisition of additional adjusted EBIT. I mentioned the $30 million of the cost savings program for year two, and then you’ve really got organic growth that’s driving the remainder of the improvement year-over-year. And then we’re cycling over things. Some of the headwinds that we see, we’ve got some additional incremental interest expense, you’ve got some FX changes that have been taking place. And then our corporate line is a little more expensive next year in ’25 than it was in ’24. But all of that gets us to double-digit adjusted EBIT, adjusted EPS growth, and as Kim said earlier, double-digit adjusted free cash flow growth as well.

Ghansham Panjabi: Perfect. Thank you so much.

Adam Greenlee: Thank you.

Operator: And the next question comes from Matt Roberts with Raymond James.

Matt Roberts: Hey, Adam, Kim, and Alex. Good morning, everybody. I appreciate the bridge you just gave there on the total EBITDA expectations, but maybe you could provide any additional color on how you’re thinking about that by segment. I mean DSC seems like high-value continues to drive growth there in metal. Any impacts you’re expecting as pet food continues to be a higher mix, or steel is a pass-through, but any margin considerations there as we look into 2025?

Adam Greenlee: Yes. Good question. I mean, maybe just going through the segments quickly for you. So DSC, obviously with double-digit first quarter growth in dispensing volumes, again, our fourth straight quarter with expected double-digit growth in dispensing products kind of high-single-digit for the year. That’s a very mix enhancing portfolio growth, not only for the Company but for the segment as well. So really that’s the driver for us in DSC. We’ll see kind of low-single-digit growth for our specialty closures business, non-dispensing closures. And then you go over to Metal Containers, it’s really the story that we’ve been talking about, right? You’ve got mid-single-digit pet food growth through the course of the year in ’25, a partial recovery of fruit and vegetable, and all of that is driving low to mid-single-digit growth for the segment in 2025.

And then lastly, get the Custom Container. We continue to win in that market. We’re looking at mid-single-digit growth in ’25 off of a really good year in ’24. And I think maybe back to Ghansham’s question, this is probably the market that’s most clearly the one that normalized as we came through ’24, and I think we’ve got really good momentum heading into ’25 that’s driving the confidence behind the volume growth expectations.

Matt Roberts: Certainly. I appreciate the additional color there. Maybe secondly, if you think of your M&A strategy, so recently under Weener acquisition, now going through some deleveraging. As we look into 2025, I mean, it seems like there’s some talk for a potential competitor to sell parts of their portfolio. But specifically for Silgan, are there any certain end-markets, or areas of technology that you’d still be interested in following Weener integration in 2025? And if so, what size or timeline are you all comfortable with? And relatedly on the cash, I don’t know if I missed this somewhere, but I believe you saw the Eurobonds due in March, any considerations in addressing those? Thank you.

Robert Lewis: Yes. Matt, this is Bob. I’ll take the first part of that question. Yes, look, having closed Weener in October, we’re feeling really good, as Adam suggested about the collective teams. While there’s work to be done, we’re well on our way to integrating of the operations, identifying and capturing the synergies there. So we are actively looking at what’s out there in the market from an M&A perspective. Our balance sheet would certainly support that. As Kim talked about, we’re right within our range with the free cash flow profile. Looking forward into ’25, we’ll be to the low end of that range by the time we’re there. So there’s nothing getting in our way from an M&A perspective. We think that there is a good pipeline of potential opportunities out there and very specifically things that we think would be actionable in the near term, and that would fit exactly where our investment thesis has been of late.

So we’re optimistic and hard at work at trying to identify and get those next opportunities out in front of us.

Kimberly Ulmer: And on the three-and-a-quarter notes, so we’ll be opportunistic in the markets around those as well, but we do have capacity under our revolver. So we’re not feeling like we’re constrained or forced to do something.

Matt Roberts: Kim and Adam, thank you all again.

Adam Greenlee: Thank you.

Operator: And the next question will come from Anthony Pettinari with Citi.

Bryan Burgmeier: Good morning. It’s actually Bryan Burgmeier sitting in for Anthony. Thank you for taking the question. First one, just kind of on dispensing. You called out the $10 million impact from inventory reduction in December. Was that within beverage caps, or trigger sprayers, or within beauty? Any detail on that? And then just kind of broadly, maybe how much line-of-sight does Silgan usually have to these types of customer inventory actions?

Adam Greenlee: Hey, Brian, a couple of things. Maybe first-off, just in our Dispensing and Specialty Closure segment. So this was actually, a part of a restructuring program that we had initiated in our flat cap specialty closures business. So what we had done is really streamlined the operations and moved volume to more efficient facilities to more efficient manufacturing lines. And as we got through that process, in fairness, we got to it earlier than anticipated in Q4, and it allowed us to make a conscious decision that we actually, drove down our inventory. So in fairness, this didn’t really have anything to do with our customers. This was us saying, geez, we have improved the operational footprint that we’ve been working on and our optimal inventory levels can be much lower than what we anticipated.

So we took the opportunity to go ahead and do that. Obviously, there was a benefit of free cash flow. That really wasn’t why we did this. This was an opportunity to optimize our inventory management, realize the full benefits of the restructuring programs that we had initiated, and move forward from there. So it was part of our flat cap closures business really as a result of the restructuring programs that we’d already initiated.

Bryan Burgmeier: Got it, got it. Thanks for that detail. That makes a lot of sense. And then just on the guidance for high single-digit volume growth for your dispensing products this year. Are there more new business wins being layered in 2025, or are there — is there may be a benefit from new business wins in 2024 that you haven’t lapped yet? Just kind of following up on Matt’s question, I’m just thinking about the growth that Silgan is seeing versus sort of the underlying market growth. Thanks. And I’ll turn it over.

Adam Greenlee: Great. Good question. We are continuing to have a lot of success, particularly with the dispensing products portion of our portfolio in the Dispensing and Specialty Closures segment. So many new wins in 2024, some of which we’ve talked about many more new wins in 2025. And really, as we’ve talked previously, the thesis here is we’re competitively advantaged in this marketplace. Our innovation, our design teams are meeting very unique needs from a variety of customers and markets in this space. And we’re continuing to have tremendous success. So yes, we’ll have additional new wins in ’25, and that’s a broad base across many, many markets that we serve. And then interestingly enough, we’ll be preparing — we’ve recently had a significant business award in our Specialty Closure segment that is more focused on 2026, but we’ll be ramping up late in the year of ’25.

So that’s included in our guidance. But really, as we think about the forward look of where we’re going, we’re taking that innovation design, lightweight in for certain products. All of those elements are winning thesis or ideas in the market, let’s say that, and we’re driving growth through many, many of our markets.

Operator: And the next question will come from Gabe Hajde with Wells Fargo Securities.

Gabe Hajde: Adam, Kim, Bob, and Alex, good morning. I’m going to use a saying I learned today, you have to give a mouse a cookie that will ask for some milk. If I start with a $1.20 billion of EBITDA sort of at the midpoint and I build down to the $450 million of free cash flow. I have about $100 million in there for cash taxes, which would imply maybe a $35 million working capital benefit, and I think I heard $20 million of integration and savings spend in there. Are there other cash components that we should be thinking about? And really the crux of the question is just trying to understand what the baseline should look like and then maybe what that enables you all to do on the M&A side.

Adam Greenlee: Yes. It’s an interesting question, Gabe. I mean, I think some of the things that we’re talking about that are working against free cash flow in 2025. Again, we talked about higher interest expense, higher cash tax. I think you had most of the other components correct. So I think you’re on the right line of thought. And I don’t know if there was anything else that we can provide there that you didn’t already have.

Kimberly Ulmer: Some benefits from our rationalization programs as well. So we have lower cash year-over-year on the rationalization programs.

Gabe Hajde: Yes. Okay. And then…

Robert Lewis: Right. That’s it.

Gabe Hajde: Yes. I’ve got the $300 million in there. I was really walking from $1.20 billion of EBITDA to $450 million, and I had the $185 million of interest, et cetera, and that’s where like I said, there was a little bit of a — it looks like there was a working capital benefit this year.

Adam Greenlee: And there will be. And maybe not quite as big as we had in 2024, but there will be a working capital benefit in 2025.

Gabe Hajde: Got it. Okay. And then the other one, Adam, you guys have talked a little bit and I feel like I missed part of what you answered to Anthony in the last question. Being capacity-constrained in parts of DSC, and I’m thinking it’s the high value-added dispensing systems that you’re adding some capacity this year explains the higher CapEx. But would you be incurring any start-up expenses or frictional costs in the back half of this year to ramp for 2026, or how should we think about that?

Adam Greenlee: Yes. So I mean, we have been adding capacity literally every year since we’ve been working through the dispensing systems business and our DSC segment. So I would say it’s nothing really outside of the norm. So you’re right, Gabe. And we always have startup costs with these projects and programs. We really don’t talk about them a whole lot in this segment because they are much more on the incremental capacity addition side. So we absorb those costs and we commercialize those products, and spend more time talking about the commercialization of the product and the start-up costs. So really, it’s more of the same. And I would just tell you in the market, we’re having success and we’re having success implementing the program and kind of strategy that we’ve laid out over the last several years, and it’s driving significant value for us.

Gabe Hajde: Great. Thank you.

Operator: And moving on to Mike Roxland with Truist Securities.

Mike Roxland: Thanks, Adam, Bob, and Kim for taking my questions. Just — congrats on the — first, congrats on the year-end outlook as well. First question I had was obviously, the Company has done a tremendous job over the last decade, transforming the portfolio, focusing on growth in DSC, high-end dispensing, perfumes, fragrances, and the like, obviously, more recently with Weener and healthcare. Can you help us understand how you’re seeing this business evolve, let’s say, over the next five years? Currently, DSC represents, I think, 52% to 53% of EBITDA roughly. Where do you see that headed?

Adam Greenlee: Hey, Mike, thank you. Yes. I mean, maybe let’s just look back quickly. I mean, if you go back, I think we’ve talked about this maybe on the last call. If you go back, call it, 10 years ago, you know, the DSC segment today pro forma with Weener is bigger than the entirety of Silgan just 10 years ago. So you’re right, we talk about this evolution that has taken place as we’ve moved and invested heavily in our Dispensing and Specialty Closures growth segment. Now fast-forward, does that same opportunity exist as we look forward? Sure, it does. We’re going to continue to generate a lot of cash flow. Our job at our executive office here is to find the most efficient means and opportunities to deploy that capital. And I think as we also talked, our healthcare business now is a $200 million business.

It’s growing, it’s growing faster than our other segments. And I think there is a lot of opportunity to grow both organically and through acquisition in the healthcare segment.

Mike Roxland: Got it. And let me be fair, that is your primary focus as you look to grow in DSC.

Robert Lewis: Yes, Mike. This is Bob. Look, what I would say is it’s obviously, our highest-margin, fastest-growing business so we will continue to allocate capital toward that business as we continue to develop what are already pretty strong relationships with our customers, and we will look to grow with our customers, which is exactly what we’ve done in some of our other segments as well. That doesn’t mean that we’re necessarily going to starve the remainder of the business. We continue to have good access to capital to grow those businesses as well. The growth profile of those businesses just by their very nature tend to be slightly less than the dispensing business. So that is the priority for capital, for sure.

Adam Greenlee: And the other thing I would add to that is on the organic investment side of the business, we do have opportunities with existing customers in healthcare where we are investing where we have long-term partnerships with those same customers. And we’re excited about what the future holds for us, and we have been investing with those customers over time and we’ll probably have more to talk about here as we go forward, sharing some of those successes throughout the course of the year.

Mike Roxland: Perfect. And then just one quick follow-up. Can you just comment on the competitive landscape in metal cans? Obviously, it’s been somewhat fluid the last two years, both here and in Europe. You have conditions — have you seen market conditions become more challenging? Maybe if some new players try to gain a share? Any concerns over pet food and maybe more — probably some companies try to mix up. Just want to get a sense of what you’re seeing on the metal cans side of things.

Adam Greenlee: Yes. And I mean, we’ve talked about this one over time as well. Just as a reminder, Mike, about 90% of our business is covered under long-term contracts in the Metal Containers business. So historically, Silgan has been out of the fray of maybe some of those market activities. And I’d also note, as you saw in the press release, a highlight for the year is that we did extend our single largest customer another significant long-term contract. So that’s really where we spend our time in the marketplace is working with our customers, helping them grow their business. And you don’t have to look much further than pet food to say those investments that we’ve made over time, those long-term contracts that support our pet food volumes and investments have paid off for our customers, our shareholders, and for Silgan.

So look, we don’t see a whole lot of difference in the market activity at this point in Metal Containers, and frankly, we’re a little bit outside of the normal fray anyway.

Mike Roxland: Got it. Thanks very much and good luck in ’25.

Adam Greenlee: Thank you.

Operator: And the next question will come from Arun Viswanathan with RBC Capital Markets.

Arun Viswanathan: Great. Thanks for taking my question. Congrats on another strong year and a good outlook here. I guess, first off, maybe you can just help us understand what you’re hearing from your customers. I know it’s maybe a seasonally less strong part of the year, but how are they feeling as you go into the new year as far as promotional activity, and potentially have they seen any inflection point on-demand trends maybe just — especially for Metal Containers and DSC? Thanks.

Adam Greenlee: Sure. Maybe we’ll start with Metal Containers. And just I think it’s one of the real successes — a couple of real successes in the promotional activity, and we’ve talked about that. Really the targeted promotional activity that we’ve seen in the wet pet food segment, particularly for cap for our business has been very successful. And we talked about double-digit organic growth in Q4. Yes, we were cycling over a bit of destocking that happened in Q4 of ’24, but really the demand level was very strong and we think that targeted investment by our customers and promotional activity drove volume in the quarter. And the good news for us is that will continue into ’25. So we spent a lot of time understanding that with that specific customer.

Another market in food cans, I would tell you that we saw success in promotional activity within the soup market, and really it was very early in the process. So really as we were cycling over maybe some easier comps earlier in the year because promotional activity did take hold late in ’23 and through ’24 in the soup market. So we feel good that our customers understand in the food can markets where promotional activity has worked, maybe where it could be more targeted. And then on the Dispensing and Specialty Closures side, it really does vary by market. You think about things like lawn care, very effective promotional activity, air care, and fabric care. Those kinds of products have had very targeted and very successful promotional activity.

I think the one that we have talked about that wasn’t quite as effective is on the isotonic beverage products. And we’ve spent a lot of time with our customers as we now are putting forward our 2025 programs and objectives together. A more targeted and focused promotional activity is what our customers are planning to drive volume growth in 2025. So I think almost back to George’s first question, there were definitely, learnings that we had as far as working with our customers on their promotional activities, what was successful, what was challenged, and maybe what modifications could be made to ensure success in 2025.

Arun Viswanathan: Great. Thanks for that. And then I guess you mentioned potentially elevated corporate costs, or in ’25, obviously, you do have a bigger company now. So what should we think about as a full-year corporate range? And then similarly, from a cash flow standpoint, obviously, you’re performing at a much stronger rate now with a 15% increase in ’25. Do you expect to continue to grow free cash flow at a much greater rate than, say, your EBITDA? Is there an increase in free cash flow conversion that’s driving that? Or maybe you can just address those two issues? Thanks.

Kimberly Ulmer: Sure. So on the corporate side, we called out about $40 million for this year, and that increase year-over-year is primarily related to corporate development activity. So as we continue to see our leverage ratio come down and see opportunities in the market, we can be opportunistic around that. And then on the free cash flow, we have, as you mentioned, really good improvement year-over-year from strong earnings, as well as lower working — or offset by a bit of a working capital benefit. We see those improvements in the earnings to continue and we would expect that at some point, we’ll be at $0.5 billion in free cash flow as we go through the years.

Arun Viswanathan: Great. Thanks a lot.

Operator: And moving on to Jeff Zekauskas with J.P. Morgan.

Jeff Zekauskas: Thanks very much. You took $17.5 million in restructuring charges in Custom Containers. What are you spending the money on?

Adam Greenlee: Well, — hey, Jeff. It’s a part of our $50 million multi-year cost savings program. So in fairness, we are putting that cash and capital back to work in the broader Silgan portfolio. So as we look at continuing to invest and we talked about $300 million of CapEx in the year supporting primarily growth initiatives, that — it’s — Custom Containers is one portion of that conversation. So in particular, in Custom Containers, we did close two plants in 2024, or announced the closure of two plants. And really that’s what’s driving the cost profile, the benefits will be accrued across all of Silgan.

Jeff Zekauskas: Okay. In terms of Weener, when you look at it on a pro forma basis, how did the business perform in the fourth quarter?

Adam Greenlee: Actually, it did really well. So we had expected them to have year-over-year growth in their portfolio and they delivered upon that. It was very consistent from — both a volume and a profit standpoint versus our acquisition model. So actually, in fairness, it was slightly above it. So we’re very pleased with the performance of the business right out of the gate, and I think we’re feeling more confident about delivering 2025 as well in the growth profile that we projected.

Robert Lewis: Hey, Jeff, the only other thing I would add to what Adam just gave you is that the free cash flow of that business was maybe slightly less than what we were anticipating, and that is entirely due to the fact that we had some investment opportunities come to us right at the outset of closing and in one particular case, even prior to closing that we were able to approve. So I think all of that leads to a very positive fundamental outlook for the business going forward.

Jeff Zekauskas: Okay. Thanks very much.

Operator: And we’ll take a question from Daniel Rizzo with Jefferies.

Daniel Rizzo: Hey, guys, thank you for squeezing me in. So you mentioned the commercial opportunities with Weener. I was just wondering if you’re specifically referring to revenue synergies, I mean, cross-selling and also kind of flip side of that if you will have to kind of give up some sales because of too much overlap with a particular customer, or that’s not a problem at all.

Adam Greenlee: Hey, Dan. So no. I mean, in fairness, we did not model any revenue synergies between the businesses, and that really is not something that Silgan really does. Clearly, there are opportunities that we can cross-sell amongst our groups that are out in the field. So we are seeing opportunities come up between the businesses, but that wasn’t part of our acquisition model.

Daniel Rizzo: Okay. And then I think you mentioned in — within the metal business — Metal Containers that you expect to get half of the fruit and vegetable business back that was lost in 2024, if I’m wrong, just correct me there. But also in addition to that, I was wondering if soup is still kind of doing better than historically speaking, and what the outlook is for there, and if it’s even meaningful at this point.

Adam Greenlee: It’s very meaningful. It’s an important market for us. So the good news, again, I’ll repeat what I said earlier. Through the variety of challenges that we’ve had over the course of working with our customers and volumes in the last two years, what I would tell you underlying demand for soup continued to be strong. So it has remained strong. We had a good quarter in Q4. We’re expecting normalized soup volumes for 2025, and it still is an important part of the business and what we do. Over to the fruit and vegetable markets, what I’d tell you very quickly, Dan, is that we’re still working with our customers on finalizing their pack plans. So we have a little less clarity at this point than what we would like, but we’ll certainly have a lot more information as we come back together to discuss first quarter results in April.

And I think what I would say, I just want to clarify the comment. When we say recovering half, it’s really the financial impact that the Metal Containers business saw year-over-year. So about a $40 million change in ’24, and we’re anticipating getting half of that back as we move to ’25.

Daniel Rizzo: Okay. All right. Thank you very much.

Adam Greenlee: Thanks.

Operator: And we’ll take a question from George Staphos with Bank of America.

George Staphos: Hi, everyone. A couple of quick ones. So, Philippe Chevrier, you mentioned that he brings strong leadership, a strong operating skill set, international experience. Should we read into that, that maybe as you’re having these additional opportunities in corporate development that maybe some of this is going to be outside of the states to a larger degree than in the past? Or are we overthinking at this juncture?

Adam Greenlee: Well, — and it’s not a bad thought, George. I think that — you know, I mean, we like mature markets and we’ve never been shy about saying that. So I think if you look at where the last several acquisitions have been, there’s been definitely, an international flare, particularly a European flare to those acquisitions as well. So I don’t — I wouldn’t read too much into it. For me, this is all about our executive office. We’re sitting in our Founders’ room right now with Phil and Greg staring at us from their portraits on the wall and it’s that model that they generated with our collaborative office here that has been so successful for so long. So we’re just excited that we’re adding additional talent and thought leadership to our team here and excited to bring his experience to our skill set here in our Stanford office.

George Staphos: Understood. And then just on pet food and it comes up periodically and just want an update. As it’s become an increasingly large piece of metal over time, how does it change the operations? Has it changed — you know, perhaps the growth profile we know, but maybe does it bring any risks or supply-chain factors that you’ve got to manage differently than used to be the case? I am guessing certainly there’s maybe some greater reliance on aluminum to some degree. So anything you could share with us there, yes, it’s been helpful; yes, it’s grown. Sure, it’s got a lower mix, but has it changed how you manage the business, and maybe bring in some additional risks down the road? Thanks, guys, and good luck in the quarter.

Adam Greenlee: Yes. It’s a good question, George. I mean, look, the aluminum side of our business has grown significantly over time as you just outlined. And now pet food is, call it, over half of our volume in 2025 from a unit volume perspective. The vast majority of that is in aluminum. So we’re buying significantly more aluminum from a raw-material standpoint than we have in the past. And we have elected to — so it’s a proactive statement I’m about to make, diversify the supply chain that we have for aluminum to make sure that we can continue to do what we do, which is support our customers on a requirements-based contractual arrangement for the long-term. So you can think about our supply chain being diverse, you can think about it being covered under long-term contracts, and supporting the growth that we not only have delivered, but we continue to anticipate going forward as we’ve continued to really invest along with our customers in the pet food market for growth.

George Staphos: Do we reach a point in ’25 — sorry, guys, a quick one here, where comps almost necessarily have to turn flat given that you’re growing at high-single-digits and double-digits right now? Or you don’t see that at all during the four quarters during 2025? Thank you again.

Adam Greenlee: Yes. Hi, George. I think we’re still going to deliver growth for the course of the year. I think the comp I would maybe highlight right now is the one that we just delivered in Q4. So as you think of Q4 in ’25, that will be a tough comp for us. But knowing what our customers have invested in from their capacity standpoint, knowing what our capabilities are, and the growth rates that we collectively are expecting for pet food in ’25, I feel very — we collectively feel very strongly about delivering that kind of mid-single-digit volume growth. And again, we’ve been doing this for 30-plus years in the pet food market over a long horizon that is the kind of growth that we’ve continued to drive through this marketplace.

George Staphos: Sure. Thanks, Adam.

Adam Greenlee: Sure.

Operator: And that does conclude the question-and-answer session. I’ll now turn the call back over to Adam Greenlee for any additional or closing remarks.

Adam Greenlee: Great. Thank you, Justin. I appreciate your support today, and thanks everyone for your interest in Silgan. Look forward to catching up again in April to review our first quarter results.

Operator: Thank you. That does conclude today’s conference. We do thank you for your participation. Have an excellent day.

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SILGAN HOLDINGS INC

Q4 2024

Earnings Transcript

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