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Item 2. Management’s Discussion and Analysis

2023-11-02 compared with 2023-08-03 · 101 added, 89 removed, 172 unchanged (52% of the section changed)

14 unchanged sentences

The following table sets forth certain unaudited income statement data expressed as a percentage of net sales for the periods presented:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

Dispensing and Specialty Closures 31.0 % 29.2 % 36.5 % 35.8 %

13 unchanged sentences

Summary unaudited results of operations for the periods presented are provided below.

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(dollars in millions)

9 unchanged sentences

Consolidated $ 194.1 $ 219.4 $ 469.3 $ 520.8

In the second quarter of 2023, consolidated net sales were $1.43 billion, a decrease of $117.1 million, or 7.6 percent, as compared to the second quarter of 2022 primarily due to lower volumes across all segments, non-recurring net sales associated with Russia in the second quarter of 2022, a less favorable mix of products sold in the metal containers segment and lower average selling prices in the custom containers segment due primarily to the pass through of lower resin costs.

These decreases were partially offset by higher selling prices in the metal containers segment primarily related to the pass through of inflation in labor and other manufacturing costs and the impact from favorable foreign currency translation.

In the first six months of 2023, consolidated net sales were $2.85 billion, a decrease of $140.7 million, or 4.7 percent, as compared to the first six months of 2022 primarily due to lower volumes across all segments, non-recurring net sales associated with Russia in the first six months of 2022, the impact from unfavorable foreign currency translation, a less favorable mix of products sold in the metal containers segment and lower average selling prices in the custom containers segment due primarily to the pass through of lower resin costs.

These decreases were partially offset by price increases primarily related to inflation in other manufacturing costs and a more favorable mix of products sold in the dispensing and specialty closures segment.

In the third quarter of 2023, consolidated net sales were $1.80 billion, a decrease of $167.3 million, or 8.5 percent, as compared to the third quarter of 2022 primarily due to lower volumes across all segments, non-recurring net sales associated with Russia in the third quarter of 2022, and the unfavorable impact from the pass through of lower resin costs and a less favorable mix of products sold in the custom containers segment.

These decreases were partially offset by the impact from favorable foreign currency translation and a more favorable mix of products sold in the metal containers segment.

In the first nine months of 2023, consolidated net sales were $4.65 billion, a decrease of $308.0 million, or 6.2 percent, as compared to the first nine months of 2022 primarily due to lower volumes across all segments, non-recurring net sales

associated with Russia in the first nine months of 2022, the unfavorable impact from the pass through of lower resin costs in the custom containers segment and a less favorable mix of products sold in the metal containers and custom containers segments.

These decreases were partially offset by price increases primarily related to inflation in other manufacturing costs in the dispensing and specialty closures and metal containers segments, a more favorable mix of products sold in the dispensing and specialty closures segment and the impact from favorable foreign currency translation.

Gross Profit .

Gross profit margin decreased 0.2 percentage points to 17.5 percent in the second quarter of 2023 and increased 0.2 percentage points to 17.2 percent in the first six months of 2023 as compared to the same periods in 2022 primarily for the reasons discussed below in "Income before Interest and Income Taxes."

Gross profit margin increased 0.3 percentage points to 15.9 percent in the third quarter of 2023 and 0.3 percentage points to 16.7 percent in the first nine months of 2023 as compared to the same periods in 2022 primarily for the reasons discussed below in "Income before Interest and Income Taxes."

Selling, General and Administrative Expenses .

In the second quarter of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.1 percent as compared to 8.0 percent in the second quarter of 2022.

For the second quarter of 2023, selling, general and administrative expenses decreased $21.6 million to $102.2 million as compared to the second quarter in 2022.

In the first six months of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 7.2 percent as compared to 7.5 percent in the first six months of 2022.

For the first six months of 2023, selling, general and administrative expenses decreased $20.3 million to $203.5 million as compared to the first six months in 2022.

The decrease in selling, general and administrative expenses for each of the second quarter and first six months of 2023 was primarily due to the charge of $25.2 million for the settlement with the European Commission in the second quarter of 2022, partially offset by the write-off of a tax indemnity from a historical acquisition and higher expense for corporate development activities.

In the third quarter of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 4.7 percent as compared to 4.9 percent in the third quarter of 2022.

For the third quarter of 2023, selling, general and administrative expenses decreased $12.4 million to $84.3 million as compared to the third quarter in 2022 primarily due to effective cost management, reduced headcount and lower employee related costs.

In the first nine months of 2023, selling, general and administrative expenses as a percentage of consolidated net sales decreased to 6.2 percent as compared to 6.5 percent in the first nine months of 2022.

For the first nine months of 2023, selling, general and administrative expenses decreased $32.7 million to $287.8 million as compared to the first nine months in 2022 primarily due to the charge of $25.2 million for the settlement with the European Commission in the prior year period and effective cost management.

Other pension and postretirement expense (income) .

Other pension and postretirement expense in the second quarter of 2023 was $1.3 million, while other pension and postretirement (income) in the second quarter of 2022 was $(11.3) million.

Other pension and postretirement expense in the first six months of 2023 was $2.6 million, while other pension and postretirement (income) in the first six months of 2022 was $(22.7) million.

Other pension and postretirement expense in the third quarter of 2023 was $1.1 million, while other pension and postretirement (income) in the third quarter of 2022 was $(11.1) million.

Other pension and postretirement expense in the first nine months of 2023 was $3.7 million, while other pension and postretirement (income) in the first nine months of 2022 was $(33.7) million.

These period-over-period changes in other pension and postretirement expense (income) were the result of a lower pension asset balance in 2023 due to a lower rate of return on assets in 2022, higher pension plan interest cost and a decrease in the expected long-term rate of return on U.S.

3 unchanged sentences

Income before Interest and Income Taxes .

In the second quarter of 2023, income before interest and income taxes decreased by $14.0 million to $144.0 million as compared to $158.0 million in the second quarter of 2022, and margins decreased to 10.1 percent from 10.2 percent over the same periods.

The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, other pension and postretirement expense in the second quarter of 2023 as compared to other pension and postretirement income in the second quarter of 2022, the favorable impact in the second quarter of 2022 from an inventory management program and cost recovery of certain customer project expenditures in the dispensing and specialty closures segment, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, the write-off of a tax indemnity from a historical acquisition and higher expense for corporate development activities.

These decreases were partially offset by the charge of $25.2 million associated with the settlement with the European Commission in the second quarter of 2022, the favorable impact in the second quarter of 2023 from price increases primarily related to inflation in other manufacturing costs, a more favorable mix of products sold in the dispensing and specialty closures segment and lower rationalization charges.

Rationalization charges were $2.7 million and $3.4 million in the second quarters of 2023 and 2022, respectively.

In the first six months of 2023, income before interest and income taxes decreased by $26.2 million to $275.2 million as compared to $301.4 million in the first six months of 2022, and margins decreased to 9.7 percent from 10.1 percent over the same periods.

The decrease in income before interest and income taxes was primarily the result of lower volumes across all segments, other pension and postretirement expense in the first six months of 2023 as compared to other pension and postretirement income in the first six months of 2022, the favorable impact in the first six months of 2022 from an inventory management program and cost recovery of certain customer project expenditures in the dispensing and specialty closures segment, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, higher corporate expense related to the write-off of a tax indemnity from a historical acquisition and corporate development activities, and higher rationalization charges.

These decreases were partially offset by the $25.2 million charge for the settlement with the European Commission in the first six months of 2022, the favorable impact in the first six months of 2023 from price increases primarily related to inflation in other manufacturing costs and a more favorable mix of products sold

in the dispensing and specialty closures segment.

Rationalization charges were $6.8 million and $4.8 million in the first six months of 2023 and 2022, respectively.

In the third quarter of 2023, income before interest and income taxes decreased by $25.3 million to $194.1 million as compared to $219.4 million in the third quarter of 2022, and margins decreased to 10.7 percent from 11.1 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 the third quarter of 2022 from an inventory management program in the metal containers segment, other pension and postretirement expense in the third quarter of 2023 as compared to other pension and postretirement income in the third quarter of 2022, higher rationalization charges and a less favorable mix of products sold in the custom containers segment.

These decreases were partially offset by higher selling prices primarily related to inflation in other manufacturing costs in the dispensing and specialty closures and metal containers segments, a more favorable mix of products sold in the dispensing and specialty closures and metal containers segments and lower selling, general and administrative costs.

Rationalization charges were $6.4 million and $2.7 million in the third quarters of 2023 and 2022, respectively.

In the first nine months of 2023, income before interest and income taxes decreased by $51.5 million to $469.3 million as compared to $520.8 million in the first nine months of 2022, and margins decreased to 10.1 percent from 10.5 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 the first nine months of 2022 from an inventory management program in the dispensing and specialty closures and metal containers segments, other pension and postretirement expense in the first nine months of 2023 as compared to other pension and postretirement income in the first nine months of 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 period of certain customer project expenditures in the dispensing and specialty closures segment, higher rationalization charges and a less favorable mix of products sold in the custom containers segment.

These decreases were partially offset by the $25.2 million charge in the prior year period for the settlement with the European Commission, the favorable impact in the first nine months of 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.

Rationalization charges were $13.2 million and $7.5 million in the first nine months of 2023 and 2022, respectively.

Interest and Other Debt Expense .

In the second quarter of 2023, interest and other debt expense increased $18.1 million to $46.8 million as compared to $28.7 million in the second quarter of 2022.

In the first six months of 2023, interest and other debt expense increased $24.1 million to $83.6 million as compared to $59.5 million in the first six months of 2022.

These increases were primarily due to higher weighted average interest rates and the write-off of $3.5 million of accrued interest income associated with a historical acquisition tax indemnity.

The first six months of 2022 also included a loss on early extinguishment of debt of $1.5 million.

In the third quarter of 2023, interest and other debt expense increased $13.6 million to $47.3 million as compared to $33.7 million in the third quarter of 2022.

In the first nine months of 2023, interest and other debt

expense increased $37.6 million to $130.8 million as compared to $93.2 million in the first nine months of 2022.

The increases were primarily due to higher weighted average interest rates.

The first nine months of 2023 also included the write-off of $3.5 million of accrued interest income associated with a historical acquisition tax indemnity in the second quarter of 2023.

The first nine months of 2022 also included a loss on early extinguishment of debt of $1.5 million.

Provision for Income Taxes .

For the second quarters of 2023 and 2022, the effective tax rates were 18.8 percent and 28.4 percent, respectively.

For the first six months of 2023 and 2022, the effective tax rates were 21.3 percent and 26.6 percent, respectively.

The effective tax rates for the second quarter and first six months of 2023 were favorably impacted by the reversal of tax reserves associated with a historical acquisition indemnity which unfavorably impacted corporate and interest expense in both periods.

The effective tax rate in the second quarter and first six months of 2022 was unfavorably impacted by the non-deductible settlement with the European Commission.

For the third quarters of 2023 and 2022, the effective tax rates were 24.7 percent and 25.3 percent, respectively.

For the first nine months of 2023 and 2022, the effective tax rates were 22.7 percent and 26.0 percent, respectively.

The effective tax rate for the first nine months of 2023 was favorably impacted by the reversal of tax reserves associated with a historical acquisition indemnity which unfavorably impacted corporate and interest expense in such period.

The effective tax rate in the first nine months of 2022 was unfavorably impacted by the non-deductible settlement with the European Commission.

Non-GAAP Measures

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A reconciliation of such non-GAAP financial measures for the periods presented is provided below:

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

25 unchanged sentences

Dispensing and Specialty Closures Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 16.8 % 15.4 % 14.9 % 16.1 %

In the second quarter of 2023, net sales for the dispensing and specialty closures segment decreased $42.3 million, or 7.0 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately eight percent, including non-recurring net sales associated with Russia in the second quarter of 2022 of $5.4 million, partially offset by the impact of favorable foreign currency translation of approximately $3 million.

The decrease in unit volumes was principally the result of lower volumes for closures for food and beverage markets and non-recurring volumes associated with Russia, partially offset by volume growth in higher margin dispensing products.

In the first six months of 2023, net sales for the dispensing and specialty closures segment decreased $60.4 million, or 5.0 percent, as compared to the first six months of 2022.

This decrease was primarily the result of lower unit volumes of approximately seven percent, including non-recurring net sales associated with Russia in the first six months of 2022 of $9.4 million, and the impact of unfavorable foreign currency translation of approximately $9 million, partially offset by a more favorable mix of products sold and higher selling prices primarily related to inflation in other manufacturing costs.

In the third quarter of 2023, net sales for the dispensing and specialty closures segment decreased $16.4 million, or 2.8 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately three percent, including from non-recurring net sales associated with Russia in the third quarter of 2022 of $3.8 million, partially offset by the impact of favorable foreign currency translation of approximately $19 million.

The decrease in unit volumes was principally the result of lower volumes for closures for international food and beverage markets and non-recurring volumes associated with Russia, partially offset by volume growth in higher margin dispensing products.

In the first nine months of 2023, net sales for the dispensing and specialty closures segment decreased $76.8 million, or 4.3 percent, as compared to the first nine months of 2022.

This decrease was primarily the result of lower unit volumes of approximately six percent, including from non-recurring net sales associated with Russia in the first nine months of 2022 of $13.2 million, partially offset by a more favorable mix of products sold, the impact of favorable foreign currency translation of approximately $10 million and higher average selling prices primarily related to inflation in other manufacturing costs.

In the second quarter of 2023, adjusted EBIT of the dispensing and specialty closures segment decreased $23.4 million as compared to the second quarter of 2022, and adjusted EBIT margin decreased to 13.7 percent from 16.7 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the second quarter of 2022 from an inventory management program and cost recovery for certain customer project expenditures, lower unit volumes and the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, partially offset by higher selling prices primarily related to inflation in other manufacturing costs and a more favorable mix of products sold.

In the first six months of 2023, adjusted EBIT of the dispensing and specialty closures segment decreased $37.0 million as compared to the first six months of 2022, and adjusted EBIT margin decreased to 14.0 percent from 16.4 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the first six months of 2022 from an inventory management program and cost recovery for certain customer project expenditures, lower unit volumes, the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility and the impact of unfavorable foreign currency translation, partially offset by higher selling prices primarily related to inflation in other manufacturing costs and a more favorable mix of products sold.

In the third quarter of 2023, adjusted EBIT of the dispensing and specialty closures segment increased $5.4 million as compared to the third quarter of 2022, and adjusted EBIT margin increased to 16.8 percent from 15.4 percent over the same periods.

The increase in adjusted EBIT was primarily due to higher selling prices primarily related to inflation in other manufacturing costs, a more favorable mix of products sold and lower selling, general and administrative costs, partially offset by lower unit volumes.

In the first nine months of 2023, adjusted EBIT of the dispensing and specialty closures segment decreased $31.6 million as compared to the first nine months of 2022, and adjusted EBIT margin decreased to 14.9 percent from 16.1 percent over the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the first nine months of 2022 from an inventory management program and cost recovery for certain customer project expenditures, lower unit volumes and the unfavorable impact of higher costs related to labor challenges that impacted output at a U.S.

food and beverage closures facility, partially offset by a more favorable mix of products sold, higher selling prices primarily related to inflation in other manufacturing costs and lower selling, general and administrative costs.

Metal Containers Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 10.4 % 9.7 % 9.8 % 8.2 %

In the second quarter of 2023, net sales for the metal containers segment decreased $43.6 million, or 5.8 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately seven percent, including non-recurring net sales associated with Russia in the second quarter of 2022 of $20.1 million, and a less favorable mix of products sold, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs and the impact of favorable foreign currency translation of approximately $2 million.

The decrease in unit volumes was principally the result of non-recurring volumes associated with Russia and lower soup volumes due to a return to a more seasonal buying pattern.

In the first six months of 2023, net sales for the metal containers segment decreased $24.1 million, or 1.7 percent, as compared to the first six months of 2022.

This decrease was primarily the result of lower unit volumes of approximately three percent, including non-recurring net sales associated with Russia in the first six months of 2022 of $25.6 million, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $2 million, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs.

The decrease in unit volumes was principally the result of non-recurring volumes associated with Russia and lower volumes for soup, partially offset by higher volumes for pet food.

In the second quarter of 2023, adjusted EBIT of the metal containers segment increased $12.2 million as compared to the second quarter of 2022, and adjusted EBIT margin increased to 10.6 from 8.4 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs, partially offset by lower unit volumes and a less favorable mix of products sold.

In the first six months of 2023, adjusted EBIT of the metal containers segment increased $31.7 million as compared to the first six months of 2022, and adjusted EBIT margin increased to 9.3 percent from 6.9 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs, partially offset by a less favorable mix of products sold and lower unit volumes.

In the third quarter of 2023, net sales for the metal containers segment decreased $117.4 million, or 9.7 percent, as compared to the second quarter of 2022.

This decrease was primarily the result of lower unit volumes of approximately eleven percent, including from non-recurring net sales associated with Russia in the third quarter of 2022 of $16.5 million, partially offset by the impact of favorable foreign currency translation of approximately $8 million and a more favorable mix of products sold.

The decrease in unit volumes was principally the result of customer destocking during the quarter and non-recurring volumes associated with Russia.

In the first nine months of 2023, net sales for the metal containers segment decreased $141.5 million, or 5.4 percent, as compared to the first nine months of 2022.

This decrease was primarily the result of lower unit volumes of approximately six percent, including from non-recurring net sales associated with Russia in the first nine months of 2022 of $42.1 million, and a less favorable mix of products sold, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs and the impact of favorable foreign currency translation of approximately $6 million.

The decrease in unit volumes was principally the result of customer destocking during the period and non-recurring volumes associated with Russia.

In the third quarter of 2023, adjusted EBIT of the metal containers segment decreased $4.1 million as compared to the third quarter of 2022, while adjusted EBIT margin increased to 10.4 from 9.7 percent for the same periods.

The decrease in adjusted EBIT was primarily due to the favorable impact in the third quarter of 2022 from an inventory management program and lower unit volumes, partially offset by higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs, a more favorable mix of products sold and lower selling, general and administrative costs.

In the first nine months of 2023, adjusted EBIT of the metal containers segment increased $27.7 million as compared to the first nine months of 2022, and adjusted EBIT margin increased to 9.8 percent from 8.2 percent for the same periods.

The increase in adjusted EBIT was primarily due to higher average selling prices due to the lagged contractual pass through of inflation in labor and other manufacturing costs and lower selling, general and administrative costs, partially offset by the favorable impact in the prior year period from an inventory management program and lower unit volumes.

Custom Containers Segment

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 7.9 % 12.5 % 10.6 % 13.4 %

In the second quarter of 2023, net sales for the custom containers segment decreased $31.2 million, or 16.7 percent, as compared to the second quarter of 2022.

This decrease was principally due to lower volumes of approximately fourteen percent, the unfavorable impact from the pass through of lower resin costs and the impact of unfavorable foreign currency translation of approximately $2 million.

The decline in volumes was primarily due to the exiting of lower margin business that did not meet reinvestment criteria and lower demand for the personal care and food markets.

In the first six months of 2023, net sales for the custom containers segment decreased $56.2 million, or 14.8 percent, as compared to the first six months of 2022.

This decrease was principally due to lower volumes of approximately twelve percent, the unfavorable impact from the pass through of lower resin costs and the impact of unfavorable foreign currency translation of approximately $4 million, partially offset by price increases primarily related to inflation in other manufacturing costs.

The decline in volumes was primarily due to the exiting of lower margin business that did not meet reinvestment criteria.

In the second quarter of 2023, adjusted EBIT of the custom containers segment decreased $11.0 million as compared to the second quarter of 2022, and adjusted EBIT margin decreased to 11.9 percent from 15.8 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes, partially offset by cost savings and higher prices primarily related to inflation in other manufacturing costs.

In the first six months of 2023, adjusted EBIT of the custom containers segment decreased $14.4 million as compared to the first six months of 2022, and adjusted EBIT margin decreased to 11.9 percent from 13.9 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes, partially offset by cost savings and higher prices primarily related to inflation in other manufacturing costs.

In the third quarter of 2023, net sales for the custom containers segment decreased $33.5 million, or 18.3 percent, as compared to the third quarter of 2022.

This decrease was principally due to lower volumes of approximately ten percent, the unfavorable impact from the pass through of lower resin costs and a less favorable mix of products sold.

The decline in volumes was primarily due to customer destocking during the quarter.

In the first nine months of 2023, net sales for the custom containers segment decreased $89.7 million, or 15.9 percent, as compared to the first nine months of 2022.

This decrease was principally due to lower volumes of approximately eleven percent, the unfavorable impact from the pass through of lower resin costs, a less favorable mix of products sold and the impact of unfavorable foreign currency translation of approximately $4 million.

The decline in volumes was primarily due to the exiting of lower margin business that did not meet reinvestment criteria and customer destocking during the period.

In the third quarter of 2023, adjusted EBIT of the custom containers segment decreased $11.0 million as compared to the third quarter of 2022, and adjusted EBIT margin decreased to 7.9 percent from 12.5 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes and a less favorable mix of products sold.

In the first nine months of 2023, adjusted EBIT of the custom containers segment decreased $25.2 million as compared to the first nine months of 2022, and adjusted EBIT margin decreased to 10.6 percent from 13.4 percent over the same periods.

The decrease in adjusted EBIT was primarily attributable to lower volumes and a less favorable mix of products sold, partially offset by price increases primarily related to inflation in other manufacturing costs and cost savings.

CAPITAL RESOURCES AND LIQUIDITY

4 unchanged sentences

The Fourth Amendment also reduced the spread adjustments for Term SOFR borrowings.

For the six months ended June 30, 2023, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $758.7 million and cash and cash equivalents of $349.0 million (including the positive effect of exchange rate changes of $5.7 million) to fund cash used in operations of $811.7 million, net capital expenditures and other investing activities of $117.0 million, decreases in outstanding checks of $61.4 million, the repayment of long-term debt of $51.9 million, dividends paid on our common stock of $40.4 million and repurchases of our common stock of $31.0 million.

For the six months ended June 30, 2022, we used net borrowings of revolving loans of $698.9 million and cash and cash equivalents of $383.6 million to fund the redemption of our 4¾% Senior Notes for $300.0 million, cash used in operations of $351.9 million, decreases in outstanding checks of $225.9 million, net capital expenditures and other investing activities of $120.4 million, repurchases of our common stock of $39.4 million, dividends paid on our common stock of $36.7 million and the negative effect of exchange rate changes on cash and cash equivalents of $8.2 million.

At June 30, 2023, we had $738.0 million of revolving loans outstanding under the Credit Agreement.

After taking into account outstanding letters of credit, the available portion of revolving loans under the Credit Agreement at June 30, 2023 was $741.5 million.

For the nine months ended September 30, 2023, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $845.3 million and cash and cash equivalents of $278.5 million (including the positive effect of exchange rate changes of $0.5 million) to fund cash used in operations of $596.0 million, repurchases of our common stock of $183.9 million, net capital expenditures and other investing activities of $170.6 million, decreases in outstanding checks of $61.4 million, dividends paid on our common stock of $59.7 million, and the repayment of long-term debt of $52.7 million.

For the nine months ended September 30, 2022, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $529.3 million and cash and cash equivalents of $387.8 million to fund the redemption of our 4¾% Senior Notes and other foreign long-term debt for an aggregate of $300.3 million, decreases in outstanding checks of

$225.9 million, net capital expenditures and other investing activities of $161.6 million, cash used in operations of $117.5 million, dividends paid on our common stock of $54.3 million, repurchases of our common stock of $39.4 million and the negative effect of exchange rate changes on cash and cash equivalents of $18.1 million.

At September 30, 2023, we had $818.0 million of revolving loans outstanding under the Credit Agreement.

After taking into account outstanding letters of credit, the available portion of revolving loans under the Credit Agreement at September 30, 2023 was $660.5 million.

Because we sell metal containers and closures used in fruit and vegetable pack processing, we have seasonal sales.

20 unchanged sentences

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.

Outstanding trade accounts payables subject to this SCF program were approximately $321.9 million, $369.5 million and $346.8 million at June 30, 2023 and 2022 and December 31, 2022, respectively.

Outstanding trade accounts payables subject to this SCF program were approximately $294.1 million, $321.9 million and $346.8 million at September 30, 2023 and 2022 and December 31, 2022, respectively.

Guaranteed Securities

1 unchanged sentence

subsidiaries that also guarantee our obligations under the Credit Agreement, collectively the Obligor Group.

The following summarized financial information relates to the Obligor Group as of June 30, 2023 and December 31, 2022 and for the six months ended June 30, 2023.

The following summarized financial information relates to the Obligor Group as of September 30, 2023 and December 31, 2022 and for the nine months ended September 30, 2023.

Intercompany transactions, equity investments and other intercompany activity within the Obligor Group have been eliminated from the summarized financial information.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.5 billion and $1.4 billion as of June 30, 2023 and December 31, 2022 are not included in noncurrent assets in the table below.

June 30, 2023 Dec.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.5 billion and $1.4 billion as of September 30, 2023 and December 31, 2022 are not included in noncurrent assets in the table below.

30, 2023 Dec.

(Dollars in millions)

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Noncurrent liabilities 3,840.6 3,911.4

At June 30, 2023 and December 31, 2022, the Obligor Group held current receivables due from other subsidiary companies of $49.3 million and $72.4 million, respectively;

At September 30, 2023 and December 31, 2022, the Obligor Group held current receivables due from other subsidiary companies of $30.9 million and $72.4 million, respectively;

long-term notes receivable due from other subsidiary companies of $735.6 million and $730.0 million, respectively;

and current payables due to other subsidiary companies of $7.7 million and $7.9 million, respectively.

Six Months Ended June 30, 2023

Nine Months Ended

(Dollars in millions)

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Net income 174.0

For the six months ended June 30, 2023, net income in the table above excludes income from equity method investments of other subsidiary companies of $51.5 million.

For the six months ended June 30, 2023, the Obligor Group recorded the following transactions with other subsidiary companies:

For the nine months ended September 30, 2023, net income in the table above excludes income from equity method investments of other subsidiary companies of $87.6 million.

For the nine months ended September 30, 2023, the Obligor Group recorded the following transactions with other subsidiary companies:

sales to such other subsidiary companies of $37.3 million;

1 unchanged sentence

and net interest income from such other subsidiary companies of $26.7 million.

For the six months ended June 30, 2023, the Obligor Group received dividends from other subsidiary companies of $15.8 million.

For the nine months ended September 30, 2023, the Obligor Group received dividends from other subsidiary companies of $15.8 million.

Rationalization Charges

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We use a disciplined approach to identify opportunities that generate attractive cash returns.

Under our rationalization plans, we made cash payments of $8.9 million and $4.3 million for the six months ended June 30, 2023 and 2022, respectively.

Under our rationalization plans, we made cash payments of $10.5 million and $6.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Excluding the impact of our withdrawal from the Central States Pension Plan in 2019, remaining expenses and cash expenditures for our rationalization plans are expected to be $6.6 million and $9.9 million, respectively.

Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $0.9 million per year and be recognized annually through 2040, and remaining cash expenditures for the withdrawal liability related to the Central States Pension Plan are expected to be approximately $0.8 million in 2023 and $2.6 million annually thereafter through 2040.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2023 included elsewhere in this Quarterly Report.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2023 included elsewhere in this Quarterly Report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis