SILGAN HOLDINGS INC

Previous wording

With our acquisitions of Silgan Dispensing Systems, the Albéa Dispensing Business, Silgan Specialty Packaging and Silgan Unicep and through organic growth, we established ourselves as a leading worldwide manufacturer of dispensing systems and specialty closures for food, beverage, health care, garden, home, personal care, fragrance and beauty products. Since 2003, following our acquisition of the White Cap closures operations in the United States, net sales of our dispensing and specialty closures business have increased to $2.2 billion in 2023 as a result of acquisitions and organic growth, representing a compound annual growth rate of approximately 12.6 percent over that period. We intend to pursue further acquisition opportunities in the dispensing and specialty closures markets, including in dispensing systems, or in adjacent markets, such as our acquisitions of Silgan

Current wording

We are a leading worldwide manufacturer of dispensing systems and specialty closures for fragrance and beauty, food, beverage, personal and health care, home care and lawn and garden products. Since 2003, following our acquisition of the White Cap closures operations in the United States, net sales of our dispensing and specialty closures business have increased to $2.3 billion in 2024 as a result of both acquisitions and organic growth, representing a compound annual growth rate of approximately 12.1 percent over that period. We intend to pursue further acquisition opportunities in the dispensing and specialty closures markets, including in dispensing systems, such as our acquisition of Weener Packaging, or in adjacent markets, such as our acquisitions of Silgan Specialty Packaging and Silgan Unicep. Additionally, we expect to continue to generate organic growth in our dispensing and specialty closures business, particularly in dispensing systems. In 2024, net sales for our dispensing and specialty closures business increased approximately 4 percent as compared to 2023 primarily as a result of the acquisition of Weener Packaging in the fourth quarter of 2024 and higher volumes for dispensing products. Volume growth in dispensing products was offset by lower volumes for closures for food and beverage products, primarily due to customer destocking activities in the United States in the first half of 2024. For 2025, in addition to the full year benefit from the acquisition of Weener Packaging, we expect continued growth in our higher margin dispensing products and higher volume levels for our closures for food and beverage products as compared to 2024.

Previous wording

We are a leading manufacturer and supplier of metal containers in North America and Europe, primarily as a result of our acquisitions but also as a result of growth with existing customers. During the past 35 years, the metal food container market in North America has experienced significant consolidation primarily due to the desire by food processors to reduce costs and focus resources on their core operations rather than self-manufacture their metal food containers. Our acquisitions of the metal food container manufacturing operations of Nestlé, Dial, Del Monte, Birds Eye, Campbell, Pacific Coast and Purina Steel Can reflect this trend. We estimate that approximately ten percent of the market for metal food containers in the United States is still served by self-manufacturers. Despite a relatively flat market, we increased our share of the market for metal food containers in the United States primarily through acquisitions and growth with existing customers, particularly in the growing pet food market. Since 1987, net sales of our metal containers business have increased to $3.1 billion, representing a compound annual growth rate of approximately 7.2 percent. We also enhanced our business by focusing on providing customers with high levels of quality and service, a more sustainable solution for their packaging needs and value-added features such as our Quick Top® easy-open ends, shaped metal food containers and alternative color offerings for metal food containers. In 2023, unit volumes for our metal containers business decreased by approximately 7 percent as compared to 2022 primarily as a result of customer destocking activities in the second half of 2023 and non-recurring volumes from $54.3 million of net sales in 2022 associated with Russia. For 2024, we expect that volumes for our metal containers will improve over 2023, primarily driven by growth in pet food products, despite continued customer destocking activities in certain end markets in the first half of 2024.

Current wording

We are a leading manufacturer and supplier of metal containers in North America and Europe, primarily as a result of our acquisitions but also as a result of growth with existing customers. During the past 36 years, the metal food container market in North America has experienced significant consolidation primarily due to the desire by food processors to reduce costs and focus resources on their core operations rather than self-manufacture their metal food containers. Our acquisitions of the metal food container manufacturing operations of Nestlé, Dial, Del Monte, Birds Eye, Campbell, Pacific Coast and Purina Steel Can reflect this trend. We estimate that approximately six percent of the market for metal food containers in the United States is still served by self-manufacturers. Despite a relatively flat market, we increased our share of the market for metal food containers in the United States primarily through acquisitions and growth with existing customers, particularly in the growing pet food market. Since 1987, net sales of our metal containers business have increased to $2.9 billion, representing a compound annual growth rate of approximately 6.7 percent. We also enhanced our business by focusing on providing customers with high levels of quality and service, a more sustainable solution for their packaging needs and value-added features such as our Quick Top® easy-open ends, shaped metal food containers and alternative color offerings for metal food containers. In 2024, net sales for our metal containers business decreased by approximately 8 percent as compared to 2023 primarily as a result of the contractual pass through of lower raw material costs and a less favorable mix due to higher volumes of smaller containers for pet food markets and lower volumes of containers for fruit and vegetable markets. The decrease in volume for fruit and vegetable markets was driven by both the planned reduction in volumes by a large pack customer to reduce its working capital and severe weather in 2024 that negatively impacted and prematurely ended the fruit and vegetable packs. For 2025, we expect that volumes for our metal containers will improve over 2024, primarily driven by growth in pet food products and improved volumes for the fruit and vegetable markets.

Previous wording

We have improved the market position of our custom containers business since 1987, with net sales increasing to $626 million in 2023, representing a compound annual growth rate of approximately 5.6 percent over that period. We achieved this improved market position primarily through strategic acquisitions as well as through organic growth. The custom container market of the consumer goods packaging industry continues to be highly fragmented. We have focused on the segment of this market where custom design and decoration allows customers to differentiate their products such as in personal care. We may pursue further acquisition opportunities in markets where we believe that we can successfully apply our acquisition and value-added operating expertise and strategy. In 2023, volumes in our custom containers business decreased 9 percent as compared to 2022 primarily due to customer destocking activities in the second half of 2023 and the non-renewal of contract business that did not meet reinvestment criteria. For 2024, we expect to commercialize new business wins during the year which should offset continued customer destocking activities in the first half of 2024.

Current wording

We have improved the market position of our custom containers business since 1987, with net sales increasing to $649.6 million in 2024, representing a compound annual growth rate of approximately 5.5 percent over that period. We achieved this improved market position primarily through strategic acquisitions as well as through organic growth. The custom container market of the consumer goods packaging industry continues to be highly fragmented. We have focused on the segment of this market where custom design and decoration allows customers to differentiate their products such as in personal care. We may pursue further acquisition opportunities in markets where we believe that we can successfully apply our acquisition and value-added operating expertise and strategy. In 2024, net sales in our custom containers business increased 4 percent as compared to 2023 primarily due to higher volumes largely due to the commercialization of new business awards and a more favorable mix of products sold. For 2025, we expect volumes for our custom containers segment will improve over 2024 levels, primarily driven by the annualization of new business awards from 2024 as well as additional new business awards.

Previous wording

We have improved the operating performance of our plant facilities through the investment of capital for productivity improvements, manufacturing efficiencies, manufacturing cost reductions and the optimization of our manufacturing facilities footprints. Our acquisitions and investments have enabled us to rationalize plant operations and decrease overhead costs through plant closings and downsizings and to realize manufacturing efficiencies as a result of optimizing production scheduling. In late 2023, we announced a comprehensive cost reduction initiative to achieve $50 million of cost savings over the next two years from footprint rationalizations and other cost reduction actions in all of our businesses. As part of this initiative, we have already closed two dispensing and specialty closures manufacturing facilities and one metal container manufacturing facility to date, relocating volumes from such facilities to other facilities, and we have announced the closing of an additional metal container manufacturing facility and a custom container manufacturing facility from which volumes will be relocated to other facilities.

Current wording

We have improved the operating performance of our plant facilities through the investment of capital for productivity improvements, manufacturing efficiencies, manufacturing cost reductions and the optimization of our manufacturing facilities footprints. Our acquisitions and investments have enabled us to rationalize plant operations and decrease overhead costs through plant closings and downsizings and to realize manufacturing efficiencies as a result of optimizing production scheduling. In late 2023, we announced a comprehensive cost reduction initiative to achieve $50 million of cost savings over the following two years from footprint rationalizations and other cost reduction actions in all of our businesses. As part of this initiative, we have already closed three dispensing and specialty closures manufacturing facilities, two metal container manufacturing facilities and one custom container manufacturing facility to date, relocating volumes from such facilities to other facilities, and we have announced the closing of an additional custom container manufacturing facility in 2025. In addition, as part of this initiative we have taken, and are continuing to take, actions to optimize production at several other manufacturing facilities across our network. As a result of this initiative, we realized approximately $20 million of cost savings in 2024, and we expect to realize additional cost savings in 2025 of approximately $30 million.

Previous wording

Historically, we have used leverage to support our growth and increase shareholder returns. Our stable and predictable cash flow, generated largely as a result of our long-term customer relationships and generally recession resistant business, supports our financial strategy. We intend to continue using reasonable leverage, supported by our stable cash flows, to make value enhancing acquisitions. In determining reasonable leverage, we evaluate our cost of capital and manage our level of debt to maintain an optimal cost of capital based on current market conditions. If acquisition opportunities are not identified over a long period of time, we may use our cash flow to repay debt, repurchase shares of our common stock or increase dividends to our stockholders or for other permitted purposes. In February 2021, we amended our Credit Agreement to provide us with additional flexibility to, among other things, issue new senior secured notes, and we issued $500.0 million aggregate principal amount of our 1.4% Notes and used the proceeds therefrom to prepay $500.0 million of outstanding term loans under our Credit Agreement. In September and October 2021, we funded the purchase price for Silgan Specialty Packaging, Silgan Unicep and Easytech with revolving loan borrowings under our Credit Agreement. In November 2021, we further amended our Credit Agreement to extend maturity dates by more than three years, increase our revolving loan facility from $1.2 billion to $1.5 billion, borrow $1.0 billion in new term loans to refinance outstanding term and revolving loans under our Credit Agreement that were used to fund the three acquisitions completed in 2021 and the acquisition of the Albéa Dispensing Business in 2020, and provide us with additional flexibility with regard to our strategic initiatives. In March 2022, we redeemed all $300.0 million aggregate principal amount of our outstanding 4¾% Notes with revolving loan borrowings under our Credit Agreement and cash on hand. You should also read Notes 3 and 9 to our Consolidated Financial Statements for the year ended December 31, 2023 included elsewhere in this Annual Report.

Current wording

Historically, we have used leverage to support our growth and increase shareholder returns. Our stable and predictable cash flow, generated largely as a result of our long-term customer relationships and generally recession resistant business, supports our financial strategy. We intend to continue using reasonable leverage, supported by our stable cash flows, to make value enhancing acquisitions. In determining reasonable leverage, we evaluate our cost of capital and manage our level of debt to maintain an optimal cost of capital based on current market conditions. If acquisition opportunities are not identified over a long period of time, we may use our cash flow to repay debt, repurchase shares of our common stock or increase dividends to our stockholders or for other permitted purposes. In March 2022, we redeemed all $300.0 million aggregate principal amount of our outstanding 4¾% Notes with revolving loan borrowings under our Credit Agreement and cash on hand. In October 2024, we funded the purchase price for Weener Packaging with €868.0 million of term and revolving loan borrowings under our Credit Agreement, including a €700.0 million incremental term loan, and cash on hand. In November 2024, we amended our Credit Agreement to extend maturity dates to November 2029 for revolving loans and November 2030 for term loans, to refinance term and revolving loan borrowings which were used to fund the purchase price for Weener Packaging with a new €900.0 million term loan and to provide us with additional flexibility to pursue our strategic initiatives. You should also read Notes 3 and 9 to our Consolidated Financial Statements for the year ended December 31, 2024 included elsewhere in this Annual Report.

Previous wording

To the extent we utilize debt for acquisitions or other permitted purposes in future periods, our interest expense may increase. Further, since the revolving loan and term loan borrowings under our Credit Agreement bear interest at floating rates, our interest expense is sensitive to changes in prevailing rates of interest and, accordingly, our interest expense may vary from period to period. After taking into account interest rate swap agreements that we entered into to mitigate the effect of interest rate fluctuations, at December 31, 2023, we had $675.3 million of indebtedness, or approximately 20 percent of our total outstanding indebtedness, which bore interest at floating rates. Over the course of the year, we also borrow revolving loans under our revolving loan facilities which bear interest at floating rates to fund our seasonal working capital needs. Accordingly, during 2023 our average outstanding variable rate debt, after taking into account the average outstanding notional amount of our interest rate swap agreements, was approximately 34 percent of our total outstanding indebtedness. You should also read Note 10 to our Consolidated Financial Statements for the year ended December 31, 2023 included elsewhere in this Annual Report for information regarding our interest rate swap agreements.

Current wording

To the extent we utilize debt for acquisitions or other permitted purposes in future periods, our interest expense may increase. Further, since the revolving loan and term loan borrowings under our Credit Agreement bear interest at floating rates, our interest expense is sensitive to changes in prevailing rates of interest and, accordingly, our interest expense may vary from period to period. After taking into account interest rate swap agreements that we entered into to mitigate the effect of interest rate fluctuations, at December 31, 2024, we had $790.4 million of indebtedness, or approximately 19 percent of our total outstanding indebtedness, which bore interest at floating rates. Over the course of the year, we also borrow revolving loans under our revolving loan facilities which bear interest at floating rates to fund our seasonal working capital needs. Accordingly, during 2024 our average outstanding variable rate debt, after taking into account the average outstanding notional amount of our interest rate swap agreements, was approximately 29 percent of our total outstanding indebtedness. You should also read Note 10 to our Consolidated Financial Statements for the year ended December 31, 2024 included elsewhere in this Annual Report for information regarding our interest rate swap agreements.

Previous wording

In light of our strategy to use leverage to support our growth and optimize shareholder returns, we have incurred and will continue to incur significant interest expense. For 2023, 2022 and 2021, our aggregate interest and other debt expense before loss on early extinguishment of debt as a percentage of our income before interest and income taxes was 29.1 percent, 21.0 percent and 18.8 percent, respectively.

Current wording

In light of our strategy to use leverage to support our growth and optimize shareholder returns, we have incurred and will continue to incur significant interest expense. For 2024, 2023 and 2022, our aggregate interest and other debt expense before loss on early extinguishment of debt as a percentage of our income before interest and income taxes was 32.3 percent, 29.1 percent and 21.0 percent, respectively.

Previous wording

Net Sales. Consolidated net sales were $6.4 billion in 2022, representing a 12.9 percent increase as compared to 2021 primarily as a result of higher average selling prices due to the pass through of higher raw material and other inflationary costs, higher volumes in the dispensing and specialty closures segment and a more favorable mix of products sold in the custom containers segment, partially offset by lower volumes in the metal containers and custom containers segments and the impact of unfavorable foreign currency translation.

Current wording

Net Sales. Consolidated net sales were $5.9 billion in 2024, representing a 2.2 percent decrease as compared to 2023 primarily due to the unfavorable impact from the pass through of lower raw material costs in the metal containers and dispensing and specialty closures segments, lower organic volumes in the dispensing and specialty closures segment and a less favorable mix of products sold in the metal containers segment. These decreases were partially offset by the inclusion of net sales from Weener Packaging, which was acquired in the fourth quarter of 2024, a more favorable mix of products sold in the dispensing and specialty closures and custom containers segments and higher volumes in the custom containers segment.

Previous wording

Gross Profit. Gross profit margin increased 0.1 percentage points to 16.3 percent in 2022 as compared to 16.2 percent in 2021 for the reasons discussed below in “Income before Interest and Income Taxes.”

Current wording

Gross Profit. Gross profit margin increased 0.7 percentage points to 17.3 percent in 2024 as compared to 16.6 percent in 2023 for the reasons discussed below in “Income before Interest and Income Taxes.”

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses as a percentage of consolidated net sales decreased 0.2 percentage point to 6.5 percent for 2022 as compared to 6.7 percent in 2021. Selling, general and administrative expenses increased $38.9 million in 2022 as compared to 2021. The increase in selling, general and administrative expenses was principally a result of a charge of $25.2 million for the settlement with the European Commission, the inclusion of a full year of expenses from the acquisitions completed late in the third quarter and in the fourth quarter of 2021, and inflation in such expenses and an increase in travel related expenses in 2022 as compared to 2021.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses as a percentage of consolidated net sales increased 1.1 percentage point to 7.5 percent for 2024 as compared to 6.4 percent in 2023. Selling, general and administrative expenses increased $53.7 million in 2024 as compared to 2023. The increase in selling, general and administrative expenses was primarily due to $28.4 million of costs attributed to announced acquisitions, the inclusion of selling, general and administrative expenses from Weener Packaging incurred in the fourth quarter of 2024 and insurance proceeds received in 2023.

Previous wording

Interest and Other Debt Expense. Interest and other debt expense before loss on early extinguishment of debt for 2023 was $173.3 million, an increase of $47.0 million as compared to $126.3 million for 2022 due primarily to higher weighted average interest rates, partially offset by a loss on early extinguishment of debt of $1.5 million in 2022.

Current wording

Interest and Other Debt Expense. Interest and other debt expense for 2024 was $167.4 million, a decrease of $5.9 million as compared to $173.3 million for 2023 due to lower average borrowings and lower weighted average interest rates, partially offset by a loss on early extinguishment of debt of $1.1 million in 2024.

Previous wording

Income before Interest and Income Taxes. Income before interest and income taxes for 2023 decreased by $6.6 million as compared to 2022, while margin increased to 9.9 percent from 9.4 percent over the same periods. The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, the favorable impact in 2022 from inventory management programs in the metal containers and dispensing and specialty closures segments, other pension and postretirement expense in 2023 as compared to other pension and postretirement income in 2022, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S. food and beverage closures facility, cost recovery in the prior year of certain customer project expenditures in the dispensing and specialty closures segment and a less favorable mix of products sold in the custom containers segment. These decreases were partially offset by lower rationalization charges, the $25.2 million charge in 2022 for the settlement with the European Commission, the favorable impact in 2023 from price increases primarily related to inflation in other manufacturing costs in all segments, a more favorable mix of products sold in the dispensing and specialty closures segment and lower selling, general and administrative costs across all segments. Income before interest and income taxes included rationalization charges of $8.4 million and $74.1 million in 2023 and 2022, 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 Pension Plan in 2019. Rationalization charges in 2023 included a rationalization credit of $17.7 million related to a loss recovery from Oesterreichische Kontrollbank Aktiengesellschaft, or OeKB, an Austrian entity that provides financial services including credit insurance, in respect of such net assets in Russia.

Current wording

Income before Interest and Income Taxes. Income before interest and income taxes for 2023 decreased by $6.6 million as compared to 2022, while margin increased to 9.9 percent from 9.4 percent over the same periods. The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, the favorable impact in 2022 from inventory management programs in the metal containers and dispensing and specialty closures segments, other pension and postretirement expense in 2023 as compared to other pension and postretirement income in 2022, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S. food and beverage closures facility, cost recovery in the prior year of certain customer project expenditures in the dispensing and specialty closures segment and a less favorable mix of products sold in the custom containers segment. These decreases were partially offset by lower rationalization charges, the $25.2 million charge in 2022 for the settlement with the European Commission, the favorable impact in 2023 from price increases primarily related to inflation in other manufacturing costs in all segments, a more favorable mix of products sold in the dispensing and specialty closures segment and lower selling, general and administrative costs across all segments. Income before interest and income taxes included rationalization charges of $8.4 million and $74.1 million in 2023 and 2022, 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 Pension Plan in 2019. Rationalization charges in 2023 included a rationalization credit of $17.7 million related to a loss recovery from OeKB in respect of such net assets in Russia.

Previous wording

Generally accepted accounting principles in the United States are commonly referred to as GAAP. A non-GAAP financial measure is generally defined as a financial measure that purports to measure financial performance, financial position or liquidity but excludes or includes amounts that could not be so adjusted in the most comparable GAAP measure. Adjusted EBIT and adjusted EBIT margin are unaudited supplemental measures of financial performance that the Company uses, which are not required by, or presented in accordance with, GAAP and therefore are non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to income before interest and income taxes or any other measures derived in accordance with GAAP. Such non-GAAP financial measures should not be considered in isolation or as a substitute for any financial data prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. The Company uses such non-GAAP financial measures because it considers them to be important and useful supplemental measures of its and its segments’ financial performance which provide a more complete understanding of the Company and its segments than could be obtained absent such non-GAAP financial measures. The Company believes that it is important and useful to present these non-GAAP financial measures because they allow for a better period-over-period comparison of results by removing the impact of items that, in management’s view, do not reflect the Company’s or its segments’ core operating performance. Management uses these non-GAAP financial measures to review and analyze the operating performance of the Company and its segments. Investors and others are urged to review and consider carefully the adjustments made by management to the most comparable GAAP financial measure to arrive at these non-GAAP financial measures.

Current wording

Generally accepted accounting principles in the United States are commonly referred to as GAAP. A non-GAAP financial measure is generally defined as a financial measure that purports to measure financial performance, financial position or liquidity but excludes or includes amounts that could not be so adjusted in the most comparable GAAP measure. Adjusted EBIT and adjusted EBIT margin are unaudited supplemental measures of financial performance that the Company uses, which are not required by, or presented in accordance with, GAAP and therefore are non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to income before interest and income taxes or any other measures derived in accordance with GAAP. Such non-GAAP financial measures should not be considered in isolation or as a substitute for any financial data prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. The Company uses such non-GAAP financial measures because it considers them to be important and useful supplemental measures of its and its segments’ financial performance which provide a more complete understanding of the Company and its segments than could be obtained absent such non-GAAP financial measures. The Company believes that it is important and useful to present these non-GAAP financial measures because they allow for a better period-over-period comparison of results by removing the impact of items that, in management’s view, do not reflect the Company’s or its segments’ core operating performance and including the Company's share of the net operating results of its affiliates which are joint ventures. Management uses these non-GAAP financial measures to review and analyze the operating performance of the Company and its segments. Investors and others are urged to review and consider carefully the adjustments made by management to the most comparable GAAP financial measure to arrive at these non-GAAP financial measures.

Previous wording

Adjusted EBIT, a non-GAAP financial measure, means income before interest and income taxes excluding, as applicable, acquired intangible asset amortization expense, other pension expense (income) for U.S. pension plans, rationalization (credits) charges, the impact from charges for the write-up of acquired inventory required under purchase accounting, the charge for the European Commission settlement and costs attributed to announced acquisitions. Adjusted EBIT margin, a non-GAAP financial measure, means adjusted EBIT divided by segment net sales.

Current wording

Adjusted EBIT, a non-GAAP financial measure, means income before interest and income taxes excluding, as applicable, acquired intangible asset amortization expense, other pension (income) expense for U.S. pension plans, rationalization charges (credits), the impact from charges for the write-up of acquired inventory required under purchase accounting, the charge for the European Commission settlement and costs attributed to announced acquisitions and including, as applicable, equity in earnings of affiliates, net of tax. Adjusted EBIT margin, a non-GAAP financial measure, means adjusted EBIT divided by segment net sales.

Previous wording

Acquired intangible asset amortization expense is a non-cash expense related to acquired operations that management believes is not indicative of the ongoing performance of the acquired operations. Since the Company’s U.S. pension plans are significantly over funded and have no required cash contributions for the foreseeable future based on current regulations, management views other pension expense (income) from the Company’s U.S. pension plans, which excludes service costs, as not reflective of the operational performance of the Company or its segments. While rationalization costs are incurred on a regular basis, management views these costs more as an investment to generate savings rather than period costs. The write-up of acquired inventory required under purchase accounting is viewed by management as part of the acquisition and is a non-cash charge that is not considered to be indicative of the ongoing performance of the acquired operations. The charge for the European Commission settlement is nonrecurring and non-operational and relates to prior years and is not indicative of the ongoing cost structure of the Company or its segments. Costs attributed to announced acquisitions consist of third party fees and expenses that are viewed by management as part of the acquisition and not indicative of the ongoing cost structure of the Company.

Current wording

Acquired intangible asset amortization expense is a non-cash expense related to acquired operations that management believes is not indicative of the ongoing performance of the acquired operations. Since the Company’s U.S. pension plans are significantly over funded and have no required cash contributions for the foreseeable future based on current regulations, management views other pension (income) expense from the Company’s U.S. pension plans, which excludes service costs, as not reflective of the operational performance of the Company or its segments. While rationalization costs are incurred on a regular basis, management views these costs more as an investment to generate savings rather than period costs. The write-up of acquired inventory required under purchase accounting is viewed by management as part of the acquisition and is a non-cash charge that is not considered to be indicative of the ongoing performance of the acquired operations. The charge for the European Commission settlement is nonrecurring and non-operational and relates to prior years and is not indicative of the ongoing cost structure of the Company or its segments. Costs attributed to announced acquisitions consist of third party fees and expenses that are viewed by management as part of the acquisition and not indicative of the ongoing cost structure of the Company. The Company's management views the operating performance of its affiliates which are joint ventures as part of the Company's operating performance and therefore believes that the Company's share of the net operating results of its affiliates which are joint ventures should be included in the Company's adjusted EBIT.

Previous wording

In 2022, net sales for the dispensing and specialty closures segment increased $156.2 million, or 7.2 percent, as compared to 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 one percent, partially offset by the impact of unfavorable foreign currency translation of approximately $106 million. The increase in unit volumes was primarily the result of higher unit volumes for beauty and fragrance and dispensing products, including from the acquisitions completed in 2021. This increase was partially offset by volume decreases in closures for certain food and beverage markets as compared to record volumes in 2021, primarily due to customer pre-buy activity in the fourth quarter of 2021 in advance of significant metal inflation in 2022, 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.

Current wording

In 2024, net sales for the dispensing and specialty closures segment increased $83.0 million, or 3.7 percent, as compared to 2023. This increase was primarily the result of the acquisition of Weener Packaging in the fourth quarter of 2024 and a more favorable mix of products sold, partially offset by lower organic unit volumes of two percent, the pass through of lower raw material costs and the impact of unfavorable foreign currency translation of approximately $6 million. The decrease in unit volumes was principally the result of lower unit volumes for closures for food and beverage markets primarily due to customer destocking priorities in the first half of 2024.

Previous wording

In 2021, we used proceeds from new term loans under our Credit Agreement of $1.0 billion and from the issuance of the 1.4% Notes of $499.7 million, cash provided by operating activities of $556.8 million and increases in outstanding checks of $141.7 million to fund repayments of long-term debt of $900.0 million, the purchase price for the acquisitions of Silgan Specialty Packaging, Silgan Unicep and Easytech for an aggregate $745.7 million, net capital expenditures and other investing activities of $230.3 million, dividends paid on our common stock of $62.5 million, debt issuance costs of $11.1 million, net repayments of revolving loans of $9.3 million, repurchases of our common stock of $8.6 million under our stock-based compensation plan, the repayment of principal amounts under finance leases of $1.3 million and to increase cash and cash equivalents (including the negative effect of exchange rate changes of $7.5 million) by $221.9 million.

Current wording

In 2024, we used cash provided by operating activities of $721.9 million, proceeds from the incurrence of debt of $983.6 million to fund the acquisition of Weener Packaging, net of cash acquired, for $921.6 million, net capital expenditures and other investing activities of $254.7 million, the repayment of long-term debt of $100.0 million, dividends paid on our common stock of $82.1 million, decreases in outstanding checks of $75.6 million, the repayment of principal amounts under finance leases of $27.6 million, net repayments of revolving loans of $18.1 million, repurchases of our common stock of $9.3 million, debt issuance costs of $8.4 million and to increase cash and cash equivalents (including the negative effect of exchange rate changes of $28.2 million) by $179.9 million.

Previous wording

At December 31, 2023, we had $3.44 billion of total consolidated indebtedness and cash and cash equivalents on hand of $642.9 million. In addition, at December 31, 2023, we had outstanding letters of credit of $21.5 million and no outstanding revolving loan borrowings under our Credit Agreement.

Current wording

At December 31, 2024, we had $4.15 billion of total consolidated indebtedness and cash and cash equivalents on hand of $822.9 million. In addition, at December 31, 2024, we had outstanding letters of credit of $20.5 million and no outstanding revolving loan borrowings under our Credit Agreement.

Previous wording

Under our Credit Agreement, we have available to us $1.5 billion of revolving loans under a multi-currency revolving loan facility. Revolving loans under our Credit Agreement may be used for working capital and other general corporate purposes, including acquisitions, capital expenditures, dividends, stock repurchases and refinancings and repayments of other debt. Revolving loans may be borrowed, repaid and reborrowed under the revolving loan facilities from time to time until November 9, 2026. At December 31, 2023, after taking into account outstanding letters of credit of $21.5 million, borrowings available under the revolving loan facilities of our Credit Agreement were $1.48 billion. Under our Credit Agreement, we also have available to us an uncommitted multi-currency incremental loan facility in an amount of up to an additional $1.25 billion (which amount may be increased as provided in our Credit Agreement), which may take the form of one or more incremental term loan facilities, increased commitments under the revolving loan facilities and/or incremental indebtedness in the form of senior secured loans and/or notes, and we may incur additional indebtedness as permitted by our Credit Agreement and our other instruments governing our indebtedness. You should also read Notes 3 and 9 to our Consolidated Financial Statements for the year ended December 31, 2023 included elsewhere in this Annual Report.

Current wording

Under our Credit Agreement, we have available to us $1.5 billion of revolving loans under a multi-currency revolving loan facility. Revolving loans under our Credit Agreement may be used for working capital and other general corporate purposes, including acquisitions, capital expenditures, dividends, stock repurchases and refinancings and repayments of other debt. Revolving loans may be borrowed, repaid and reborrowed under the revolving loan facilities from time to time until November 4, 2029. At December 31, 2024, after taking into account outstanding letters of credit of $20.5 million, borrowings available under the revolving loan facilities of our Credit Agreement were $1.48 billion. Under our Credit Agreement, we also have available to us an uncommitted multi-currency incremental loan facility in an amount of up to an additional $1.5 billion (which amount may be increased as provided in our Credit Agreement), which may take the form of one or more incremental term loan facilities, increased commitments under the revolving loan facilities and/or incremental indebtedness in the form of senior secured loans and/or notes, and we may incur additional indebtedness as permitted by our Credit Agreement and our other instruments governing our indebtedness. You should also read Notes 3 and 9 to our Consolidated Financial Statements for the year ended December 31, 2024 included elsewhere in this Annual Report.

Previous wording

For our customer-based SCF arrangements, we negotiate the terms of such SCF arrangements with the applicable financial institutions providing such SCF arrangements independent of our agreements with our customers. Under such SCF arrangements, we elect to sell our receivables for the applicable customer to the applicable financial institution on a non-recourse basis at a discount or credit spread based upon the creditworthiness of such customer. Such customer is then obligated to pay the applicable financial institution with respect to such receivables on their due date. Upon any such sale, we no longer have any credit risk with respect to such receivables, and we will have accelerated our receipt of cash in respect of such receivables thereby reducing our net working capital. Payments in respect of receivables sold under such SCF arrangements are reflected in net cash provided by operating activities in our Consolidated Statements of Cash Flows. Separate from such SCF arrangements, we generally maintain the contractual right with customers in respect of which we have entered into SCF arrangements to require shorter payment terms or require our customers to negotiate shorter payment terms as a result of changes in market conditions, including changes in interest rates and general market liquidity, or in some cases for any reason. Approximately 12 percent and 21 percent of our annual net sales for the years ended December 31, 2023 and 2022, respectively, were subject to customer-based SCF arrangements. Based on our estimate, we improved our days sales outstanding by approximately 22 days for 2023 as a result of such customer-based SCF arrangements.

Current wording

For our customer-based SCF arrangements, we negotiate the terms of such SCF arrangements with the applicable financial institutions providing such SCF arrangements independent of our agreements with our customers. Under such SCF arrangements, we elect to sell our receivables for the applicable customer to the applicable financial institution on a non-recourse basis at a discount or credit spread based upon the creditworthiness of such customer. Such customer is then obligated to pay the applicable financial institution with respect to such receivables on their due date. Upon any such sale, we no longer have any credit risk with respect to such receivables, and we will have accelerated our receipt of cash in respect of such receivables thereby reducing our net working capital. Payments in respect of receivables sold under such SCF arrangements are reflected in net cash provided by operating activities in our Consolidated Statements of Cash Flows. Separate from such SCF arrangements, we generally maintain the contractual right with customers in respect of which we have entered into SCF arrangements to require shorter payment terms or require our customers to negotiate shorter payment terms as a result of changes in market conditions, including changes in interest rates and general market liquidity, or in some cases for any reason. Approximately 12 percent of our annual net sales for each of the years ended December 31, 2024 and 2023 were subject to customer-based SCF arrangements. Based on our estimate, we improved our days sales outstanding by approximately 24 days for 2024 as a result of such customer-based SCF arrangements.

Previous wording

For our suppliers, we believe that we negotiate the best terms possible, including payment terms. In connection therewith, we initiated a SCF program with a major global financial institution. Under this SCF program, a qualifying supplier may elect, but is not obligated, to sell its receivables from us to such financial institution. A participating supplier negotiates its receivables sale arrangements directly with the financial institution under this SCF program. While we are not party to, and do not participate in the negotiation of, such arrangements, such financial institution allows a participating supplier to utilize our creditworthiness in establishing a credit spread in respect of the sale of its receivables from us as well as other applicable terms. This may provide a supplier with more favorable terms than it would be able to secure on its own. We have no economic interest in a supplier’s decision to sell a receivable. Once a qualifying supplier elects to participate in this SCF program and reaches an agreement with the financial institution, the supplier independently elects which individual invoices to us that they sell to the financial institution. All of our payments to a participating supplier are paid to the financial institution on the invoice due date under our agreement with such supplier, regardless of whether the individual invoice was sold by the supplier to the financial institution. The financial institution then pays the supplier on the invoice due date under our agreement with such supplier for any invoices not previously sold by the supplier to the financial institution. Amounts due to a supplier that elects to participate in this SCF program are included in accounts payable in our Consolidated Balance Sheet, and the associated payments are reflected in net cash provided by operating activities in our Consolidated Statements of Cash Flows. Separate from this SCF program, we and suppliers who participate in this SCF program generally maintain the contractual right to require the other party to negotiate in good faith the existing payment terms as a result of changes in market conditions, including changes in interest rates and general market liquidity, or in some cases for any reason. Approximately 12 percent of our Cost of Goods Sold in our Consolidated Statements of Income for the years ended December 31, 2023 and 2022, were subject to this SCF program. At December 31, 2023, outstanding trade accounts payables subject to this SCF program were approximately $330.2 million.

Current wording

For our suppliers, we believe that we negotiate the best terms possible, including payment terms. In connection therewith, we initiated a SCF program with a major global financial institution. Under this SCF program, a qualifying supplier may elect, but is not obligated, to sell its receivables from us to such financial institution. A participating supplier negotiates its receivables sale arrangements directly with the financial institution under this SCF program. While we are not party to, and do not participate in the negotiation of, such arrangements, such financial institution allows a participating supplier to utilize our creditworthiness in establishing a credit spread in respect of the sale of its receivables from us as well as other applicable terms. This may provide a supplier with more favorable terms than it would be able to secure on its own. We have no economic interest in a supplier’s decision to sell a receivable. Once a qualifying supplier elects to participate in this SCF program and reaches an agreement with the financial institution, the supplier independently elects which individual invoices to us that they sell to the financial institution. All of our payments to a participating supplier are paid to the financial institution on the invoice due date under our agreement with such supplier, regardless of whether the individual invoice was sold by the supplier to the financial institution. The financial institution then pays the supplier on the invoice due date under our agreement with such supplier for any invoices not previously sold by the supplier to the financial institution. Amounts due to a supplier that elects to participate in this SCF program are included in accounts payable in our Consolidated Balance Sheet, and the associated payments are reflected in net cash provided by operating activities in our Consolidated Statements of Cash Flows. Separate from this SCF program, we and suppliers who participate in this SCF program generally maintain the contractual right to require the other party to negotiate in good faith the existing payment terms as a result of changes in market conditions, including changes in interest rates and general market liquidity, or in some cases for any reason. Approximately 12 percent of our Cost of Goods Sold in our Consolidated Statements of Income for each of the years ended December 31, 2024 and 2023 were subject to this SCF program. At December 31, 2024, outstanding trade accounts payables subject to this SCF program were approximately $303.7 million.

Previous wording

On March 4, 2022, our Board of Directors authorized the repurchase by us of up to an aggregate of $300.0 million of our common stock by various means from time to time through and including December 31, 2026. In 2023, we repurchased a total of 3,893,098 shares of our common stock at an average price per share of $44.86, for a total purchase price of $174.6 million. In 2022, we repurchased an aggregate of 786,235 shares of our common stock at an average price per share of $40.80, for a total purchase price approximately $32.1 million. As of December 31, 2023, we had approximately $93.3 million remaining for the repurchase of our common stock under this authorization.

Current wording

On March 4, 2022, our Board of Directors authorized the repurchase by us of up to an aggregate of $300.0 million of our common stock by various means from time to time through and including December 31, 2026. In 2024, we did not repurchase any of our common stock under such authorization. In 2023, we repurchased a total of 3,893,098 shares of our common stock at an average price per share of $44.86, for a total purchase price of $174.6 million. In 2022, we repurchased an aggregate of 786,235 shares of our common stock at an average price per share of $40.80, for a total purchase price approximately $32.1 million. As of December 31, 2024, we had approximately $93.3 million remaining for the repurchase of our common stock under this authorization.

Previous wording

•capital expenditures of approximately $240.0 million in 2024, and thereafter annual capital expenditures of approximately the same amount which may increase as a result of specific growth or specific cost savings projects;

Current wording

•capital expenditures of approximately $300.0 million in 2025, and thereafter annual capital expenditures of approximately the same amount which may increase as a result of specific growth or specific cost savings projects;

Previous wording

•principal payments of bank term loans and revolving loans under our Credit Agreement and other outstanding debt agreements and obligations (excluding finance leases) of $852.7 million in 2024, $106.7 million in 2025, $603.7 million in 2026, $653.2 million in 2027, and $1.16 billion thereafter;

Current wording

•principal payments of bank term loans and revolving loans under our Credit Agreement and other outstanding debt agreements and obligations (excluding finance leases) of $712.4 million in 2025, $592.5 million in 2026, $181.1 million in 2027, $1.30 billion in 2028, and $1.33 billion thereafter;

Previous wording

•payments of approximately $135 million for federal, state and foreign tax liabilities in 2024, which may increase annually thereafter; and

Current wording

•payments of approximately $130.0 million for federal, state and foreign tax liabilities in 2025, which may increase annually thereafter; and

Previous wording

(3)Purchase obligations represent commitments for capital expenditures of $35.9 million. Obligations that are cancellable without penalty are excluded.

Current wording

(3)Purchase obligations represent commitments for capital expenditures of $36.0 million. Obligations that are cancellable without penalty are excluded.

Previous wording

At December 31, 2023, we also had outstanding letters of credit of $21.5 million that were issued under our Credit Agreement.

Current wording

At December 31, 2024, we also had outstanding letters of credit of $20.5 million that were issued under our Credit Agreement.

Previous wording

Because we have indebtedness which bears interest at floating rates, our financial results will be sensitive to changes in prevailing market rates of interest. As of December 31, 2023, we had $3.44 billion of indebtedness outstanding, of which $975.3 million bore interest at floating rates. Historically, we have entered into interest rate swap agreements to mitigate the effect of interest rate fluctuations. As of December 31, 2023, we have four U.S. dollar interest rate swap agreements outstanding, each for $75.0 million notional principal amount, which mature in 2026. Depending upon future market conditions and our level of outstanding variable rate debt, we may enter into additional interest rate swap or hedge agreements (with counterparties that, in our judgment, have sufficient creditworthiness) to hedge our exposure against interest rate volatility.

Current wording

Because we have indebtedness which bears interest at floating rates, our financial results will be sensitive to changes in prevailing market rates of interest. As of December 31, 2024, we had $4.15 billion of indebtedness outstanding, of which $1.8 billion bore interest at floating rates before giving effect to any interest rate swap agreements. Historically, we have entered into interest rate swap agreements to mitigate the effect of interest rate fluctuations. As of December 31, 2024, we have $300.0 million aggregate notional principal amount of U.S. dollar interest rate swap agreements outstanding, which mature in 2026, and €685.0 million aggregate notional principal amount of Euro interest rate swap agreements outstanding, which mature at various times through 2030. Depending upon future market conditions and our level of outstanding variable rate debt, we may enter into additional interest rate swap or hedge agreements (with counterparties that, in our judgment, have sufficient creditworthiness) to hedge our exposure against interest rate volatility.

Previous wording

The following summarized financial information relates to the Obligor Group as of and for the year ended December 31, 2023. Intercompany transactions, equity investments and other intercompany activity within the Obligor Group have been eliminated from the summarized financial information. Investments in our subsidiaries that are not part of the Obligor Group of $1.6 billion as of December 31, 2023 are not included in noncurrent assets in the table below.

Current wording

The following summarized financial information relates to the Obligor Group as of and for the year ended December 31, 2024. Intercompany transactions, equity investments and other intercompany activity within the Obligor Group have been eliminated from the summarized financial information. Investments in our subsidiaries that are not part of the Obligor Group of $2.1 billion as of December 31, 2024 are not included in noncurrent assets in the table below.

Previous wording

At December 31, 2023, the Obligor Group held current receivables due from other subsidiary companies of $35.6 million; long-term notes receivable due from other subsidiary companies of $748.8 million; and current payables due to other subsidiary companies of $10.9 million.

Current wording

At December 31, 2024, the Obligor Group held current receivables due from other subsidiary companies of $33.0 million; long-term notes receivable due from other subsidiary companies of $1.1 billion; and current payables due to other subsidiary companies of $19.0 million.

Previous wording

For the year ended December 31, 2023, net income in the table above excludes income from equity method investments of other subsidiary companies of $123.8 million. For the year ended December 31, 2023, the Obligor Group recorded the following transactions with other subsidiary companies: sales to such other subsidiary companies of $49.5 million; net credits from such other subsidiary companies of $28.9 million; and net interest income from such other subsidiary companies of $36.4 million. For the year ended December 31, 2023, the Obligor Group received dividends from other subsidiary companies of $15.8 million.

Current wording

For the year ended December 31, 2024, net income in the table above excludes income from equity method investments of other subsidiary companies of $106.1 million. For the year ended December 31, 2024, the Obligor Group recorded the following transactions with other subsidiary companies: sales to such other subsidiary companies of $52.3 million; net credits from such other subsidiary companies of $34.8 million; and net interest income from such other subsidiary companies of $41.6 million. For the year ended December 31, 2024, the Obligor Group received dividends from other subsidiary companies of $12.3 million.

Previous wording

We continually evaluate cost reduction opportunities across each of our segments, including rationalizations of our existing facilities through plant closings and downsizings. We use a disciplined approach to identify opportunities that generate attractive cash returns. In late 2023, we announced a comprehensive cost reduction initiative to achieve $50 million of cost savings over the next two years from footprint rationalizations and other cost reduction actions in all of our businesses. As part of this initiative, we have already closed two dispensing and specialty closures manufacturing facilities and one metal container manufacturing facility to date, relocating volumes from such facilities to other facilities, and we have announced the closing of an additional metal container manufacturing facility and a custom container manufacturing facility from which volumes will be relocated to other facilities.

Current wording

In 2024, we recognized rationalization charges of $59.5 million primarily related to the comprehensive cost reduction initiative we announced in late 2023 to achieve cost savings over the following two years from footprint rationalizations and other cost reduction actions in all of our segments. As part of this initiative, we have already closed three dispensing and specialty closures manufacturing facilities, two metal container manufacturing facilities and one custom container manufacturing facility to date, relocating volumes from such facilities to other facilities, and we have announced the closing of an additional custom container manufacturing facility in 2025. In addition, as part of this initiative we have taken, and are continuing to take, actions to optimize production at several other manufacturing facilities across our network.

Previous wording

Under our rationalization plans, we made cash payments of $16.3 million, $9.0 million and $9.9 million in 2023, 2022 and 2021, respectively. Excluding the impact of our withdrawal from the Central States Pension Plan discussed above, remaining cash expenditures for our rationalization plans are expected to be $15.7 million. You should also read Note 4 to our Consolidated Financial Statements for the year ended December 31, 2023 included elsewhere in this Annual Report.

Current wording

Under our rationalization plans, we made cash payments of $34.3 million, $9.0 million and $9.9 million in 2024, 2023 and 2022, respectively. Excluding the impact of our withdrawal from the Central States Pension Plan discussed above, remaining cash expenditures for our rationalization plans are expected to be $10.9 million. You should also read Note 4 to our Consolidated Financial Statements for the year ended December 31, 2024 included elsewhere in this Annual Report.

Previous wording

Our pension expense and obligations are developed from actuarial valuations. Two critical assumptions in determining pension expense and obligations are the discount rate and expected long-term return on plan assets. We evaluate these assumptions at least annually. Other assumptions reflect demographic factors such as retirement, mortality and turnover and are evaluated periodically and updated to reflect our actual experience. Actual results may differ from actuarial assumptions. The discount rate represents the market rate for non-callable high-quality fixed income investments and is used to calculate the present value of the expected future cash flows for benefit obligations under our pension benefit plans. A decrease in the discount rate increases the present value of benefit obligations and increases pension expense, while an increase in the discount rate decreases the present value of benefit obligations and decreases pension expense. A 25 basis point change in the discount rate would have a countervailing impact on our annual pension expense by approximately $1.1 million. For 2023, we decreased our domestic discount rate to 5.3 percent from 5.6 percent to reflect market interest rate conditions. We consider the current and expected asset allocations of our U.S. pension benefit plans, as well as historical and expected long-term rates of return on those types of plan assets, in determining the expected long-term rate of return on plan assets. A 25 basis point change in the expected long-term rate of return on plan assets would have a countervailing impact on our annual pension expense by approximately $2.0 million. In 2023, we decreased our expected long-term rate of return on plan assets from 6.9 percent to 5.5 percent due to changes we made in 2023 in the investment allocations for our U.S. pension plans, which are overfunded with plan assets of approximately 134 percent of projected benefit obligations at December 31, 2023, to a liability driven investment strategy that more closely matches plan assets with plan liabilities primarily using long duration fixed income securities. Our expected long-term rate of return on plan assets will remain at 5.5 percent in 2024.

Current wording

Our pension expense and obligations are developed from actuarial valuations. Two critical assumptions in determining pension expense and obligations are the discount rate and expected long-term return on plan assets. We evaluate these assumptions at least annually. Other assumptions reflect demographic factors such as retirement, mortality and turnover and are evaluated periodically and updated to reflect our actual experience. Actual results may differ from actuarial assumptions. The discount rate represents the market rate for non-callable high-quality fixed income investments and is used to calculate the present value of the expected future cash flows for benefit obligations under our pension benefit plans. A decrease in the discount rate increases the present value of benefit obligations and increases pension expense, while an increase in the discount rate decreases the present value of benefit obligations and decreases pension expense. A 25 basis point change in the discount rate would have a countervailing impact on our annual pension expense by approximately $1.0 million. For 2024, we increased our domestic discount rate to 5.7 percent from 5.3 percent to reflect market interest rate conditions. We consider the current and expected asset allocations of our U.S. pension benefit plans, as well as historical and expected long-term rates of return on those types of plan assets, in determining the expected long-term rate of return on plan assets. A 25 basis point change in the expected long-term rate of return on plan assets would have a countervailing impact on our annual pension expense by approximately $1.9 million. Our expected long-term rate of return on plan assets will remain at 5.5 percent in 2025. As of December 31, 2024, our U.S. pension plans are overfunded with plan assets of approximately 137 percent of projected benefit obligations. Given the overfunded status of our U.S. pension plans, we made changes to the investment allocations for our U.S pension plans at the end of 2023 to a liability driven investment strategy that more closely matches plan assets with plan liabilities primarily using long duration fixed income securities.