Silgan Announces Record 2017 Earnings; Positioned for Growth and Significant Improvement in Cash Generation in 2018

Highlights

• Record net income of $2.42 per diluted share
• Record adjusted net income of $1.65 per diluted share
• Cash from operations of $389.7 million, or $3.50 per diluted share
• Free cash flow of $224.1 million, or $2.01 per diluted share
• Enhanced the scope and growth opportunities of the Company with the
  Dispensing Systems acquisition
• Delivered significant improvement in the plastic container business
• Initiated construction on two new manufacturing facilities to support
  growth in the pet food market
• Recognized $110.9 million net reduction in future cash tax obligations
  primarily due to the recently enacted U.S. Tax Cuts and Jobs Act
• Refinanced debt portfolio to extend maturities, increase flexibility
  and increase long-term fixed rate debt at attractive interest rates
• Completed third 2-for-1 stock split
• Increased cash dividend per share by approximately 6 percent

STAMFORD, Conn.–(BUSINESS WIRE)–Silgan Holdings Inc. (Nasdaq:SLGN), a leading supplier of rigid
packaging for consumer goods products, today reported full year 2017
record net income of $269.7 million, or $2.42 per diluted share, as
compared to full year 2016 net income of $153.4 million, or $1.27 per
diluted share.

“In 2017, we posted record adjusted net income per diluted share of
$1.65, an increase of approximately 20 percent over the prior year, and
an increase of approximately 25 percent in free cash flow to $224.1
million,” said Tony Allott, President and CEO. “We successfully
integrated the Dispensing Systems operations, which we acquired in April
2017, and are very pleased with its performance and opportunities to
further grow our closures portfolio. As expected, our metal and plastic
container businesses benefitted from lower manufacturing costs and
improved efficiencies throughout the year as a result of our footprint
optimization programs completed in 2016,” continued Mr. Allott. “Lastly,
at the end of 2017, the U.S. passed tax reform that will significantly
benefit Silgan, which had been operating with comparative tax rate
disadvantages to many of its competitors. This new tax reform will
reduce our future cash obligations for existing net deferred tax
liabilities, reduce our tax rates on future U.S. earnings and allow us
greater flexibility to utilize global cash to invest in the most optimal
locations. We believe Silgan is well positioned for another year of
double digit earnings growth, with adjusted net income per diluted share
for 2018 estimated to be in a range of $2.03 to $2.13, and for further
growth investment in the coming years. As a result, we expect to
continue to improve free cash flow, which we estimate to be
approximately $300 million in 2018,” concluded Mr. Allott.

Adjusted net income per diluted share was $1.65 for the full year 2017,
after adjustments decreasing net income per diluted share by $0.77,
including $1.00 in net tax adjustments reflecting reduced future cash
tax obligations. Adjusted net income per diluted share was $1.38 for the
full year 2016, after adjustments increasing net income per diluted
share by $0.11. A reconciliation of net income per diluted share to
“adjusted net income per diluted share,” a Non-GAAP financial measure
used by the Company which adjusts net income per diluted share for
certain items, can be found in Tables A and B at the back of this press
release.

All per share amounts for prior periods have been adjusted for the
two-for-one stock split that occurred on May 26, 2017.

The Company reported net cash provided by operating activities of $389.7
million in 2017 as compared to $394.6 million in 2016. Free cash flow
improved $44.2 million to $224.1 million in 2017 as compared to $179.9
million in 2016 primarily as a result of lower capital expenditures and
improved operating performance, partially offset by costs attributable
to announced acquisitions. The Company is providing a reconciliation in
Table C of this press release of net cash provided by operating
activities to “free cash flow,” a Non-GAAP financial measure which
adjusts net cash provided by operating activities for capital
expenditures and changes in outstanding checks.

Net sales for the full year of 2017 were $4.09 billion, an increase of
$477.0 million, or 13.2 percent, as compared to 2016. This increase was
the result of the acquisition of the Dispensing Systems operations in
April 2017 and higher net sales across all businesses.

Income from operations for 2017 was $357.0 million, an increase of $57.3
million, or 19.1 percent, as compared to $299.7 million for 2016, and
operating margin increased to 8.7 percent from 8.3 percent over the same
periods. The increase in income from operations was the result of higher
income from operations in the closures business due to the acquisition
of Dispensing Systems and higher income from operations in the metal and
plastic container businesses. Rationalization charges were $5.8 million
and $19.1 million in 2017 and 2016, respectively. Costs attributed to
announced acquisitions were $24.7 million and $1.4 million in 2017 and
2016, respectively.

Interest and other debt expense before loss on early extinguishment of
debt for 2017 was $110.2 million, an increase of $42.4 million as
compared to 2016 due primarily to higher average outstanding borrowings
principally as a result of additional borrowings for the acquisition of
Dispensing Systems in April 2017 and higher weighted average interest
rates, including the impact from increasing long-term fixed rate debt
through the issuance in February 2017 of the 4 3/4% senior notes due
2025 and the 3 1/4% senior notes due 2025. Loss on early extinguishment
of debt of $7.1 million in 2017 was a result of the prepayment of
outstanding U.S. term loans and Euro term loans under the previous
senior secured credit facility in conjunction with the issuance of the
new senior notes and the partial redemption in April 2017 of the 5%
senior notes due 2020.

The effective tax rate for 2017 was a negative 12.5 percent as compared
to a provision of 33.9 percent for 2016. The effective tax rate for 2017
was favorably impacted by the benefit from effective tax rate
adjustments totaling $110.9 million, or $1.00 per diluted share,
primarily related to the revaluation of net deferred tax liabilities to
reflect lower future cash tax obligations as a result of the reduction
in U.S. corporate income tax rates under the recently enacted U.S. Tax
Cuts and Jobs Act of 2017. The tax rate calculated under the recently
enacted U.S. Tax Cuts and Jobs Act reflects the Company’s best
provisional estimate of the new legislation’s impact. As new information
becomes available, including the issuance of interpretations by
regulatory bodies, the Company may update this estimate. The tax rate in
2017, exclusive of these effective tax rate adjustments, would have been
a provision of 33.8 percent.

Metal Containers

Net sales of the metal container business were $2.28 billion in 2017, an
increase of $6.2 million, or 0.3 percent, as compared to 2016. This
increase was primarily a result of the pass through of higher raw
material costs and the impact of favorable foreign currency translation,
partially offset by lower unit volumes of approximately two percent
principally attributable to lower soup volumes and a less favorable
fruit and tomato pack on the west coast of the United States.

Income from operations of the metal container business in 2017 was
$230.2 million, an increase of $15.5 million as compared to $214.7
million in 2016, and operating margin increased to 10.1 percent in 2017
from 9.5 percent in the prior year. The increase in income from
operations was primarily attributable to lower manufacturing costs,
lower rationalization charges and the favorable impact from an increase
in inventories in the current year as compared to a decrease in
inventories in the prior year, partially offset by the impact of lower
unit volumes, the unfavorable impact from the contractual pass through
to customers of indexed deflation, an increase in depreciation expense,
the unfavorable impact of a charge related to the resolution of a past
non-commercial legal dispute and foreign currency transaction losses in
the current year period as compared to foreign currency transaction
gains in the prior year period. Rationalization charges were $3.3
million and $12.1 million in 2017 and 2016, respectively.

Closures

Net sales of the closures business were $1.25 billion in 2017, an
increase of $449.6 million, or 56.4 percent, as compared to $797.1
million in 2016. This increase was primarily the result of the inclusion
of the Dispensing Systems operations, the pass through of higher raw
material costs and the impact of favorable foreign currency translation,
partially offset by lower unit volumes of approximately three percent in
the legacy closures operations as compared to record volumes in the
prior year period principally as a result of a decline in single-serve
beverages due to cooler weather conditions in major markets served.

Income from operations of the closures business for 2017 increased $42.2
million to $142.0 million as compared to $99.8 million in 2016, while
operating margin decreased to 11.4 percent from 12.5 percent over the
same periods. The increase in income from operations was primarily due
to the inclusion of Dispensing Systems and lower manufacturing costs,
partially offset by the impact from a decrease in unit volumes in the
legacy closures operations. Operating margin was unfavorably impacted
primarily due to the write-up of inventory of Dispensing Systems for
purchase accounting.

Plastic Containers

Net sales of the plastic container business were $565.1 million in 2017,
an increase of $21.2 million, or 3.9 percent, as compared to $543.9
million in 2016. This increase was principally due to the pass through
of higher raw material costs, higher volumes of approximately two
percent and the impact of favorable foreign currency translation,
partially offset by a less favorable mix of products sold.

Income from operations of the plastic container business in 2017 was
$27.8 million, an increase of $22.6 million as compared to $5.2 million
in 2016, and operating margin increased to 4.9 percent from 1.0 percent
over the same periods. The increase in income from operations was
primarily attributable to lower manufacturing costs, higher volumes and
lower rationalization charges, partially offset by higher depreciation
expense and the unfavorable impact from the lagged pass through of
increases in resin costs. Rationalization charges were $1.5 million and
$6.4 million in 2017 and 2016, respectively.

Fourth Quarter

The Company reported record net income for the fourth quarter of 2017 of
$146.1 million, or $1.31 per diluted share, as compared to net income
for the fourth quarter of 2016 of $23.7 million, or $0.20 per diluted
share. Adjusted net income per diluted share for the fourth quarter of
2017 was a record $0.32, after adjustments decreasing net income per
diluted share by $0.99, including $1.00 in net tax adjustments
reflecting reduced future cash tax obligations. Adjusted net income per
diluted share for the fourth quarter of 2016 was $0.24, after
adjustments increasing net income per diluted share by $0.04.

Net sales for the fourth quarter of 2017 increased $189.8 million, or
23.6 percent, to $995.7 million as compared to $805.9 million for the
fourth quarter of 2016. This increase was primarily due to the inclusion
of the Dispensing Systems operations, the pass through of higher raw
material costs, the impact of favorable foreign currency translation and
an increase in volumes of approximately four percent in the plastic
container business, partially offset by a decrease in unit volumes in
the legacy closures operations and metal container business of
approximately four percent and one percent, respectively.

Income from operations for the fourth quarter of 2017 was $86.4 million,
an increase of $34.2 million as compared to $52.2 million for the fourth
quarter of 2016, and operating margin increased to 8.7 percent from 6.5
percent over the same periods. The increase in income from operations
was primarily due to the inclusion of the Dispensing Systems operations,
manufacturing efficiencies and lower costs in each of the businesses,
the favorable impact in the metal container business of an increase in
inventories in the fourth quarter of 2017 as compared to a decrease in
inventories in the prior year period, lower rationalization charges and
higher volumes in the plastic container business. These increases were
partially offset by lower unit volumes in the legacy closures operations
and metal container business and the unfavorable impact from the
contractual pass through to customers of indexed deflation in the metal
container business. Rationalization charges were $1.3 million and $5.1
million in the fourth quarters of 2017 and 2016, respectively. Costs
attributed to announced acquisitions were $0.9 million and $1.4 million
in the fourth quarters of 2017 and 2016, respectively.

Interest and other debt expense for the fourth quarter of 2017 was $30.0
million, an increase of $12.9 million as compared to the fourth quarter
of 2016. This increase was primarily due to higher average outstanding
borrowings principally as a result of additional borrowings for the
acquisition of Dispensing Systems and higher weighted average interest
rates, including the impact from increasing long-term fixed rate debt
through the issuance in February 2017 of the 4 3/4% senior notes due
2025 and the 3 1/4% senior notes due 2025 and rising interest rates.

The effective tax rate for the fourth quarter of 2017 was a negative
159.2 percent as compared to a provision of 32.4 percent for the fourth
quarter of 2016. The effective tax rate for the fourth quarter of 2017
was favorably impacted by the benefit from effective tax rate
adjustments totaling $110.9 million, or $1.00 per diluted share,
primarily related to the revaluation of net deferred tax liabilities to
reflect lower future cash tax obligations as a result of the reduction
in U.S. corporate income tax rates under the recently enacted U.S. Tax
Cuts and Jobs Act of 2017. The tax rate in the fourth quarter of 2017,
exclusive of these effective tax rate adjustments, would have been a
provision of 37.6 percent primarily due to the negative impact of the
settlement of certain tax disputes, partially offset by higher income in
more favorable tax jurisdictions.

New Manufacturing Facilities

The Company has initiated construction of a metal container
manufacturing facility in Allentown, Pennsylvania to serve a major pet
food customer. In addition, the Company has initiated construction of a
thermoformed plastic container manufacturing facility in Fort Smith,
Arkansas in support of continued growth.

Outlook for 2018

The Company currently estimates that its adjusted net income per diluted
share for the full year 2018 will be in the range of $2.03 to $2.13, as
compared to adjusted net income per diluted share for the full year of
2017 of $1.65. Adjusted net income per diluted share excludes
rationalization charges, loss on early extinguishment of debt, costs
attributed to announced acquisitions and the net impact of certain
effective tax rate adjustments in the fourth quarter of 2017.

Net sales in the metal container business are expected to increase in
2018 as compared to 2017 primarily due to the pass through of higher raw
material and other manufacturing costs and the impact from anticipated
favorable foreign currency rates. Unit volumes in the metal container
business are expected to be flat as an anticipated normal fruit and
vegetable pack on the west coast of the U.S. and continued growth in pet
food are offset by potential declines in certain other can markets.
Income from operations in the metal container business is expected to
benefit from continued manufacturing efficiencies and the lagged
contractual pass through to customers of indexed inflation. However,
much of this improvement is expected to be offset by the impact from
unfavorable overhead absorption from a significant planned reduction in
inventories in the U.S. as the Company generates additional cash and
realizes supply chain benefits arising from its footprint optimization
program. Net sales in the closures business are expected to increase in
2018 as compared to 2017 primarily as a result of the benefit of a full
year of Dispensing Systems, the pass through of higher raw material and
other manufacturing costs, the impact from anticipated favorable foreign
currency rates and improved unit volumes. Income from operations in the
closures business is expected to increase in 2018 primarily as a result
of the benefit of a full year of Dispensing Systems, including expected
synergies and the absence of the prior year unfavorable impact from the
inventory write-up for purchase accounting, continued manufacturing
efficiencies and higher unit volumes. Net sales in the plastic container
business are expected to increase in 2018 as compared to the prior year
as a result of volume growth and the pass through of higher raw material
costs. Income from operations in the plastic container business is
expected to benefit from continued manufacturing efficiencies and volume
growth, partially offset by costs associated with the start-up of the
new plant in Fort Smith, Arkansas.

The Company expects interest expense to increase in 2018 due to higher
average outstanding borrowings as a result of additional borrowings for
the acquisition of Dispensing Systems in April 2017 and higher weighted
average interest rates due primarily to market rate increases on
variable rate debt.

The Company expects its effective tax rate for 2018 to be approximately
24 percent, as compared to the effective tax rate for 2017 of 33.8
percent excluding certain effective tax rate adjustments. The effective
tax rate for 2018 reflects the current estimate of the impact from the
recently enacted U.S. Tax Cuts and Jobs Act of 2017.

The Company currently estimates that free cash flow in 2018 will
increase approximately 34 percent to approximately $300 million as
compared to $224.1 million in 2017. The expected increase in free cash
flow is primarily the result of operating income improvement in each of
the businesses, including the impact from a full year of Dispensing
Systems, improvements in working capital principally as a result of a
significant planned reduction in inventories in the metal container
business and the benefit of a lower effective tax rate, partially offset
by an increase in interest payments and capital expenditures.

For the first quarter of 2018, the Company is providing an estimate of
adjusted net income per diluted share in the range of $0.32 to $0.36, as
compared to $0.31 in the first quarter of 2017. The increase over the
prior year is due primarily to the inclusion of the Dispensing Systems
operations in the first quarter of 2018 and the benefit of a lower
effective tax rate, partially offset by higher interest expense, the
unfavorable impact of a significantly lower seasonal inventory build
than in the prior year period in the metal container business and the
unfavorable impact from the lagged pass through of increases in resin
costs. Adjusted net income per diluted share excludes rationalization
charges, loss on early extinguishment of debt and costs attributed to
announced acquisitions.

Conference Call

Silgan Holdings Inc. will hold a conference call to discuss the
Company’s results for the fourth quarter and full year 2017 at 11:00
a.m. eastern time on January 31, 2018. The toll free number for those in
the U.S. and Canada is 800-239-9838 and the number for international
callers is 323-794-2551. For those unable to listen to the live call, a
taped rebroadcast will be available through February 14, 2018. To access
the rebroadcast, U.S. and Canadian callers should dial 888-203-1112 and
international callers should dial 719-457-0820. The pass code is 8955953.

Silgan is a leading supplier of rigid packaging for consumer goods
products with annual net sales of approximately $4.1 billion in 2017.
Silgan operates 100 manufacturing facilities in North and South America,
Europe and Asia. The Company is a leading supplier of metal containers
in North America and Europe for food and general line products. The
Company is also a leading worldwide supplier of metal and plastic
closures and dispensing systems for food, beverage, health care, garden,
home and beauty products. In addition, the Company is a leading supplier
of plastic containers for shelf-stable food and personal care products
in North America.

Statements included in this press release which are not historical facts
are forward looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and
the Securities Exchange Act of 1934, as amended. Such 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 2016 and other
filings with the Securities and Exchange Commission. Therefore, the
actual results of operations or financial condition of the Company could
differ materially from those expressed or implied in such forward
looking statements.

Contacts

Silgan Holdings Inc.
Robert B. Lewis, 203-406-3160

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