Silgan (NYSE:SLGN) reported second-quarter 2026 adjusted earnings per share of $0.98, above the midpoint of its guidance range but down $0.03 from the prior-year quarter, as lower adjusted EBIT was partly offset by lower interest expense.
Net sales rose 7% year over year to approximately $1.6 billion, largely reflecting the contractual pass-through of higher raw-material and other costs, particularly in the Metal Containers business. Total adjusted EBIT was $185 million, down 4% from the prior year. Chief Financial Officer Shawn Fabry said higher adjusted EBIT in Custom Containers was more than offset by increased corporate expense and lower EBIT in Metal Containers.
Dispensing business affected by Brazil softness
Sales in Silgan’s Dispensing and Specialty Closures segment increased 2% from the prior-year quarter, supported by higher cost pass-throughs and foreign-currency translation. Those factors were partly offset by lower volume and unfavorable product mix.
Segment unit volumes declined 1%, with weaker-than-expected conditions in Brazil contributing to the decline. Greenlee said volumes in Brazil fell approximately 15% year over year, while the balance of the segment was “essentially” flat. He attributed the decline to market conditions rather than lost share and said the company expects a similar Brazilian impact in the third quarter before recovery begins in the fourth quarter and continues into 2027.
Fabry said the combination of Brazil volume weakness and less favorable mix reduced second-quarter results by about $5 million. Despite that impact, adjusted EBIT in the segment was comparable with the prior year as favorable price over cost offset the volume and mix pressure.
Greenlee highlighted continued strong growth in fine-fragrance dispensing products, particularly in Europe. He said Silgan expects continued high-single-digit growth in fine-fragrance products globally and has substantial visibility into 2027 business because products launching then are already in commercialization and supported by long-term contracts.
The company also said its healthcare business, focused on nasal and ophthalmic applications, has expanded from about $200 million when management first discussed the opportunity to approximately $250 million. Greenlee said healthcare volume is expected to ramp in the second half, with a greater contribution anticipated in the fourth quarter.
Pet food growth offsets changing metal-container order timing
Metal Containers sales rose 13% year over year, driven by the pass-through of higher steel, aluminum and manufacturing costs. Volumes were flat, as a 7% increase in wet pet food container volumes was offset by an anticipated normalization of order patterns in the fruit-and-vegetable and soup markets.
Adjusted EBIT in the segment declined from the prior year, reflecting a less favorable sales mix. Higher sales of smaller pet food containers and lower sales of larger fruit and vegetable containers weighed on profitability.
Greenlee said vegetable and soup volumes each declined by double digits during the quarter, consistent with company expectations. The vegetable-market trend is related to the ownership change of a former customer’s assets and a new long-term supply agreement with the new owners. Under the new arrangement, cans will be sold closer to when they are filled rather than being produced throughout the year.
That shift is expected to make the third quarter a higher-volume period for the customer. Greenlee said the company expects low- to mid-single-digit volume growth in Metal Containers during the third quarter, aided by continued wet pet food growth and the order-timing benefit. He added that growing conditions for North American vegetables have been favorable, with expectations for the vegetable pack increasing modestly and potentially contributing more volume later in the season.
Custom Containers posts higher EBIT despite lower volume
Custom Containers sales increased 3% from the prior-year quarter due to favorable price and mix, partly offset by a 4% volume decline. The lower volume was expected and reflected the exit of lower-margin business as part of Silgan’s footprint optimization and cost-reduction program.
Adjusted EBIT for the segment increased year over year as favorable price over cost, including mix and savings from the footprint optimization, outweighed the volume decline. Management expects Custom Containers volumes to be comparable with prior-year levels for the full year after accounting for exited business, with comparable volumes higher in the second half as new business is commercialized.
Greenlee said the company experienced approximately $10 million of net unrecovered inflation in the second quarter, primarily related to resin. He said the impact unfolded as expected and is now behind the company, although Silgan does not have clear visibility on when resin prices may decline. If resin costs fall, the company expects that to provide a benefit.
Guidance maintained for second half
For the third quarter, Silgan expects adjusted EPS of $1.21 to $1.31 per diluted share, compared with $1.22 in the prior-year period. At the midpoint, the forecast assumes approximately $10 million of higher adjusted EBIT, interest expense of $50 million to $55 million, and a tax rate of about 25% to 26%.
For the full year, the company continues to expect low- to mid-single-digit adjusted EBIT growth, approximately $50 million in corporate expense, about $200 million in interest expense and a 25% to 26% tax rate. Its free-cash-flow estimate of approximately $450 million includes anticipated capital expenditures of about $310 million.
Management said it expects low- to mid-single-digit organic volume and mix growth in Dispensing and Specialty Closures, low-single-digit volume growth in Metal Containers, and low-single-digit comparable volume growth in Custom Containers. Greenlee said the company entered the second half with first-half performance slightly ahead of its original expectations and remained confident in its ability to meet its annual plan.
About Silgan (NYSE:SLGN)
Silgan Holdings Inc (NYSE: SLGN) is a leading supplier of rigid packaging solutions for consumer goods manufacturers. The company’s core business activities center on the design, production and distribution of metal and plastic containers, closures and dispense systems. Silgan serves a broad array of end markets, including food and beverage, home and personal care, health care and industrial products, providing both standard and custom packaging formats.
Founded in 1987 and headquartered in Stamford, Connecticut, Silgan has grown organically and through strategic acquisitions to establish a global manufacturing footprint.
