STAMFORD - Silgan Holdings Inc. (NYSE: SLGN), a leading supplier of sustainable rigid packaging solutions for the world's essential consumer goods products, today reported record full year net sales of $6.41 billion, a 12.9 percent increase over prior year net sales of $5.68 billion, and full year 2022 net income of $340.8 million, or $3.07 per diluted share, as compared to full year 2021 net income of $359.1 million, or $3.23 per diluted share.
Adjusted net income per diluted share for the full year of 2022 was a record $3.98, after adjustments increasing net income per diluted share by $0.91 primarily related to the write-off of net assets in Russia. Adjusted net income per diluted share for the full year of 2021 was $3.40, after adjustments increasing net income per diluted share by $0.17 primarily related to rationalization charges.
'The Silgan team continued to operate at a very high level, capitalizing on our momentum in the marketplace alongside our customers in 2022. As a result, we delivered our 6th consecutive year of record adjusted EPS in 2022, with a new all-time record that is 17 percent above the previous record in 2021,' said Adam Greenlee, President and CEO. 'Since our founding, our unique business model has proven successful throughout a variety of economic cycles as demonstrated by our 12 percent 10 year CAGR for adjusted EPS. The past three years have showcased the exceptional strength of our team and the execution of our strategic initiatives as well as our ability to adapt to rapidly changing market conditions, with a greater than 20 percent CAGR for adjusted EPS from pre-pandemic levels,' continued Mr. Greenlee.
'As our focus shifts to 2023, we believe the prospects for continued success and growth are stronger than at any point in our history. We expect the results of our long-term growth strategy of building partnerships with our customers, financial discipline, effective deployment of capital and a relentless focus on costs and profitability will continue to deliver increased revenues, organic volume growth and increased segment income in 2023, as well as significantly improved free cash flow generation,' concluded Mr. Greenlee.
Income before interest and income taxes for 2022 was a record $602.0 million, an increase of $25.9 million, or 4.5 percent, as compared to $576.1 million for 2021, while margins decreased to 9.4 percent from 10.1 percent for the same periods largely due to $74.1 million of rationalization charges in 2022. The increase in income before interest and income taxes was the result of higher income in the Dispensing and Specialty Closures and Custom Containers segments, partially offset by lower income in the Metal Containers segment due to higher rationalization charges and higher corporate expenses as a result of a charge of $25.2 million related to the European Commission settlement. Rationalization charges were $74.1 million in 2022 primarily due to the write-off of net assets to service the Russian market in the Metal Containers segment, which also decreased margins in 2022 as compared to 2021. Rationalization charges were $15.0 million in 2021. The full year of 2021 also included costs attributed to announced acquisitions and a charge for the write-up of inventory for purchase accounting of $5.0 million and $2.6 million, respectively.
Interest and other debt expense before loss on early extinguishment of debt for 2022 was $126.3 million, an increase of $17.9 million as compared to 2021. This increase was primarily due to higher weighted average outstanding borrowings as a result of the acquisitions completed in the third and fourth quarters of 2021, partially offset by the impact from lower foreign currency exchange rates on outstanding Euro denominated debt.
The effective tax rates were 28.1 percent and 23.0 percent for 2022 and 2021, respectively. The effective tax rate for 2022 was unfavorably impacted by the write-off of net assets related to operations in Russia and the European Commission settlement, each of which was non-deductible.
Dispensing and Specialty Closures
Net sales of the Dispensing and Specialty Closures segment were a record $2.32 billion in 2022, an increase of $156.2 million, or 7.2 percent, as compared to $2.16 billion in 2021. This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other inflationary costs and higher unit volumes of approximately 1 percent, partially offset by unfavorable foreign currency translation of approximately $106 million. Unit volumes increased over the prior year record primarily due to higher unit volumes for beauty and fragrance and dispensing products, including from the businesses acquired in September 2021. These increases were partially offset by expected volume decreases in closures for certain food and beverage markets, as compared to record volumes in the prior year primarily due to customer pre-buy activity in the fourth quarter of 2021 in advance of significant metal inflation, and a decrease in volumes for lawn and garden, hygiene and home cleaning products which were impacted by further inventory corrections throughout the supply chain in 2022. Unit volumes were approximately 18 percent higher than pre-pandemic levels in 2019.
Segment income of Dispensing and Specialty Closures for 2022 increased $60.9 million to a record $323.0 million as compared to $262.1 million in 2021, and segment margin increased to 13.9 percent from 12.1 percent for the same periods. The increase in segment income was primarily due to higher average selling prices principally as a result of the pass through of higher raw material and other inflationary costs, strong operating performance including the benefit of an inventory management program, the favorable year-over-year comparative impact from the delayed pass through of resin costs, cost recovery for certain customer project expenditures, lower rationalization charges and a $1.6 million charge for the write-up of inventory for purchase accounting in the prior year period, partially offset by inflation in manufacturing and selling, general and administrative costs and the impact of unfavorable foreign currency translation.
Metal Containers
Net sales of the Metal Containers segment were a record $3.37 billion for 2022, an increase of $563.8 million, or 20.1 percent, as compared to $2.81 billion in 2021. This increase was primarily the result of higher average selling prices due to the pass through of higher raw material and other manufacturing costs, partially offset by lower unit volumes of approximately 11 percent and unfavorable foreign currency translation of approximately $52 million. As expected, the decrease in unit volumes was principally the result of the impact of customer pre-buy activity in the fourth quarter of 2021 in advance of significant price increases due to unprecedented metal inflation in 2022, lower fruit and vegetable volumes as compared to higher volumes from customer restocking in the record prior year and the continued unfavorable impact from certain customers' ongoing supply chain and labor challenges in 2022.
Segment income of Metal Containers in 2022 was $234.2 million, a decrease of $19.5 million as compared to $253.7 million in 2021, and segment margin decreased to 6.9 percent from 9.0 percent for the same periods. The decrease in segment income was primarily attributable to higher rationalization charges of $64.2 million. Segment income benefited from strong operating performance, which included an inventory management program, and higher average selling prices due to the pass through of higher raw material and other inflationary costs. These increases were partially offset by inflation in manufacturing and selling, general and administrative costs, lower unit volumes, a less favorable mix of products sold and the impact of unfavorable foreign currency translation. Rationalization charges were $73.1 million and $8.9 million in 2022 and 2021, respectively. Rationalization charges in 2022 included $73.8 million primarily related to the write-off of net assets of operations in Russia, partially offset by a rationalization credit of $8.5 million related to finalizing the liability for the withdrawal from the Central States, Southeast and Southwest Areas Pension Plan in 2019.
Custom Containers
Net sales of the Custom Containers segment were $723.0 million in 2022, an increase of $14.4 million, or 2.0 percent, as compared to $708.6 million in 2021. This increase was principally due to higher average selling prices, including the pass through of higher resin and other inflationary costs, and a more favorable mix of products sold, partially offset by lower volumes of approximately 8 percent and the impact of unfavorable foreign currency translation of approximately $5 million. The decline in volumes was primarily due to higher volumes in the prior year as a result of increased demand related to the pandemic and subsequent inventory corrections throughout the supply chain in 2022, particularly for home, personal care and lawn and garden products.
Segment income of Custom Containers in 2022 was $92.5 million, an increase of $0.1 million as compared to $92.4 million in 2021, while segment margin decreased to 12.8 percent from 13.0 percent over the same periods. The increase in segment income was primarily attributable to higher average selling prices, the favorable year-over-year comparative impact from the delayed pass through of resin costs and strong operating performance. These increases were partially offset by lower volumes and inflation in manufacturing and selling, general and administrative costs.
Contact:
Alexander Hutter
Tel: (203) 406-3187
SILGAN HOLDINGS INC. 
