What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-02 · 61 added, 132 removed, 141 unchanged (58% of the section changed)

4 unchanged sentences

As a result, the actual results of our operations or our financial condition could differ materially from those expressed or implied in these forward-looking statements.

We are a leading manufacturer of sustainable rigid packaging solutions for the world's essential consumer goods products.

We currently produce dispensing and specialty closures for food, beverage, health care, garden, home, personal care, fragrance and beauty products;

steel and aluminum containers for human and pet food and general line products;

and custom designed plastic containers for personal care, food, health care, pharmaceutical, household and industrial chemical, pet food and care, agricultural, automotive and marine chemical products.

We are a leading manufacturer and supplier of sustainable rigid packaging solutions for the world's essential consumer goods products.

We currently produce dispensing and specialty closures for the fragrance and beauty, food, beverage, personal and health care, home care and lawn and garden markets;

steel and aluminum containers for pet and human food and general line products;

and custom designed plastic containers for the pet and human food, consumer health and pharmaceutical, personal care, home care, lawn and garden and automotive markets.

We are a leading worldwide manufacturer of dispensing and specialty closures, a leading manufacturer of metal containers in North America and Europe, and a leading manufacturer of custom containers in North America for a variety of markets.

3 unchanged sentences

RESULTS OF OPERATIONS

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

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

The following table sets forth certain unaudited income statement data expressed as a percentage of net sales for the three months ended March 31 :

Dispensing and Specialty Closures 40.7 % 40.9 %

12 unchanged sentences

Net income 4.2 % 5.1 %

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

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

Summary unaudited results of operations for the three months ended March 31 are provided below.

(dollars in millions)

9 unchanged sentences

Consolidated $ 111.7 $ 131.2

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.

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023

In the first quarter of 2024, consolidated net sales were $1.32 billion, a decrease of $101.3 million, or 7.1 percent, as compared to the first quarter of 2023 primarily due to lower volumes across all segments, the unfavorable impact from the pass through of lower raw material costs in the metal containers segment and a less favorable mix of products sold in the dispensing and specialty closures segment.

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

Gross Profit .

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."

Gross profit margin increased 0.2 percentage points to 17.0 percent in the first quarter of 2024 as compared to the same period in 2023 primarily for the reasons discussed below in "Income before Interest and Income Taxes."

Selling, General and Administrative Expenses .

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 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.

pension plan assets in 2023 from 2022.

The expected long-term rate of return on pension plan assets was decreased from 6.9 percent in 2022 to 5.5 percent in 2023 due to planned changes in investment allocations for our U.S.

pension plans, which are overfunded with plan assets of approximately 129 percent of projected benefit obligations at December 31, 2022, to a liability driven investment strategy that more closely matches plan assets with plan liabilities primarily using long duration bonds.

In the first quarter of 2024, selling, general and administrative expenses as a percentage of consolidated net sales increased to 7.6 percent as compared to 7.1 percent in the first quarter of 2023.

For the first quarter of 2024, selling, general and administrative expenses decreased $0.9 million to $100.5 million as compared to the first quarter of 2023.

Income before Interest and Income Taxes .

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.

In the first quarter of 2024, income before interest and income taxes decreased by $19.5 million to $111.7 million as compared to $131.2 million in the first quarter of 2023, and margins decreased to 8.5 percent from 9.3 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 unfavorable impact of selling higher cost metal inventory from the prior year due to lower metal costs in 2024, higher rationalization charges and a more favorable mix of products sold in the custom containers segment, partially offset by improved operating and cost performance in all segments.

Rationalization charges were $11.7 million and $4.1 million in the first quarters of 2024 and 2023, respectively.

Interest and Other Debt Expense .

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.

In the first quarter of 2024, interest and other debt expense increased $1.8 million to $38.6 million as compared to $36.8 million in the first quarter of 2023.

This increase was primarily due to higher weighted average interest rates.

Provision for Income Taxes .

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.

For the first quarters of 2024 and 2023, the effective tax rates were 24.5 percent and 23.8 percent, respectively.

Non-GAAP Measures

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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.

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 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.

pension plans and rationalization charges.

Adjusted EBIT margin, a non-GAAP financial measure, means adjusted EBIT divided by segment net sales.

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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 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 on-going 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 on-going 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 on-going cost structure of the Company.

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

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

A reconciliation of such non-GAAP financial measures for the three months ended March 31 is provided below:

(Dollars in millions)

2 unchanged sentences

Acquired intangible asset amortization expense 11.9 11.8

Other pension expense (income) for U.S.

Other pension (income) expense for U.S.

pension plans (0.3) 0.1

4 unchanged sentences

Acquired intangible asset amortization expense 0.3 0.3

Other pension expense (income) for U.S.

Other pension (income) expense for U.S.

pension plans (0.6) 0.4

4 unchanged sentences

Acquired intangible asset amortization expense 1.1 1.1

Other pension expense (income) for U.S.

Other pension (income) expense for U.S.

pension plans (0.3) 0.4

2 unchanged sentences

Loss before interest and income taxes (EBIT) $ (7.5) $ (6.0)

European Commission settlement — — — 25.2

Adjusted EBIT $ (7.5) $ (6.0)

1 unchanged sentence

Dispensing and Specialty Closures Segment

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 14.5 % 14.3 %

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.

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 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.

In the first quarter of 2024, net sales for the dispensing and specialty closures segment decreased $44.0 million, or 7.6 percent, as compared to the first quarter of 2023.

This decrease was primarily the result of lower unit volumes of approximately seven percent and a less favorable mix of products sold, partially offset by the impact of favorable foreign currency translation of approximately $5 million.

The decrease in unit volumes was principally the result of lower volumes for closures for food and beverage markets due to customer destocking priorities.

In the first quarter of 2024, adjusted EBIT of the dispensing and specialty closures segment decreased $5.1 million as compared to the first quarter of 2023, while adjusted EBIT margin increased to 14.5 percent from 14.3 percent over the same periods.

The decrease in adjusted EBIT was primarily due to lower unit volumes and the unfavorable impact of selling higher cost inventory from the prior year in our European metal closures operations due to lower metal costs in 2024, partially offset by improved manufacturing productivity.

Metal Containers Segment

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 7.3 % 7.8 %

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.

In the first quarter of 2024, net sales for the metal containers segment decreased $53.0 million, or 7.9 percent, as compared to the first quarter of 2023.

This decrease was primarily the result of lower unit volumes of approximately five percent and the pass through of lower raw material costs, partially offset by a more favorable mix of products sold and the impact of favorable foreign currency translation of approximately $2 million.

The decrease in unit volumes was principally the result of customer destocking across several categories in the first quarter of 2024 as compared to very strong customer demand in the first quarter of 2023.

In the first quarter of 2024, adjusted EBIT of the metal containers segment decreased $7.4 million as compared to the first quarter of 2023, and adjusted EBIT margin decreased to 7.3 percent from 7.8 percent for the same periods.

The decrease in adjusted EBIT was primarily due to the unfavorable impact of selling higher cost inventory from the prior year in our European operations due to lower metal costs in 2024 and lower unit volumes, partially offset by lower selling, general and administrative costs.

Custom Containers Segment

Three Months Ended Nine Months Ended

30, 2023 Sept.

30, 2022 Sept.

30, 2023 Sept.

(Dollars in millions)

4 unchanged sentences

Adjusted EBIT margin 12.3 % 11.9 %

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.

In the first quarter of 2024, net sales for the custom containers segment decreased $4.3 million, or 2.6 percent, as compared to the first quarter of 2023.

This decrease was principally due to lower volumes of approximately three percent primarily due to customer destocking during the quarter.

In the first quarter of 2024, adjusted EBIT of the custom containers segment increased $0.1 million as compared to the first quarter of 2023, and adjusted EBIT margin increased to 12.3 percent from 11.9 percent over the same periods.

The increase in adjusted EBIT was primarily attributable to a more favorable mix of products sold, partially offset by lower volumes.

CAPITAL RESOURCES AND LIQUIDITY

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Our liquidity requirements arise from our obligations under the indebtedness incurred in connection with our acquisitions and the refinancing of that indebtedness, capital investment in new and existing equipment, the funding of our seasonal working capital needs and other general corporate uses.

On June 22, 2023, we and certain of our subsidiaries entered into the Fourth Amendment with the lenders party to the Credit Agreement and Wells Fargo Bank, National Association, as administrative agent under the Credit Agreement.

The Fourth Amendment amended the Credit Agreement to provide for the transition from LIBOR based interest rates to SOFR (Secured Overnight Financing Rates) and SONIA (Sterling Overnight Index Average) based interest rates and to provide for standard interest rate benchmark replacement language.

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

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.

For the three months ended March 31, 2024, we used net borrowings of revolving loans of an aggregate of $582.4 million and cash and cash equivalents of $334.3 million to fund cash used in operations of $547.8 million, decreases in outstanding checks of $160.6 million, the repayment of long-term debt of $100.0 million, net capital expenditures and other investing activities of $72.5 million, dividends paid on our common stock of $21.1 million, repurchases of our common stock of $7.7 million, the repayment of principal amounts under finance leases of $0.3 million and the negative effect of exchange rate changes on cash and cash equivalents of $6.7 million.

For the three months ended March 31, 2023, we used net borrowings of revolving loans and proceeds from other foreign long-term debt of an aggregate of $757.2 million and cash and cash equivalents of $84.6 million (after the positive effect of exchange rate changes of $3.8 million) to fund cash used in operations of $631.8 million, net capital expenditures and other investing activities of $67.0 million, decreases in outstanding checks of $61.4 million, the repayment of long-term debt of $50.7 million, dividends paid on our common stock of $20.6 million, repurchases of our common stock of $13.4 million and the repayment of principal amounts under finance leases of $0.7 million.

At March 31, 2024, we had $580.0 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 March 31, 2024 was $899.4 million.

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

8 unchanged sentences

Supply Chain Finance Program

We believe that we negotiate the best terms possible with our suppliers, including payment terms.

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, qualifying suppliers may elect, but are not obligated, to sell their receivables from us to such 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 receivables sale 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 in establishing other applicable terms.

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.

5 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 $294.1 million, $321.9 million and $346.8 million at September 30, 2023 and 2022 and December 31, 2022, respectively.

Outstanding trade accounts payables subject to this SCF program were approximately $252.6 million, $318.4 million and $330.2 million at March 31, 2024 and 2023 and December 31, 2023, 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 September 30, 2023 and December 31, 2022 and for the nine months ended September 30, 2023.

The following summarized financial information relates to the Obligor Group as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024.

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 September 30, 2023 and December 31, 2022 are not included in noncurrent assets in the table below.

30, 2023 Dec.

Investments in subsidiaries of Silgan that are not part of the Obligor Group of $1.6 billion as of March 31, 2024 and December 31, 2023 are not included in noncurrent assets in the table below.

March 31, 2024 Dec.

(Dollars in millions)

3 unchanged sentences

Noncurrent liabilities 3,103.0 3,123.8

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;

At March 31, 2024 and December 31, 2023, the Obligor Group held current receivables due from other subsidiary companies of $23.8 million and $35.6 million, respectively;

long-term notes receivable due from other subsidiary companies of

$731.0 million and $748.8 million, respectively;

and current payables due to other subsidiary companies of $10.9 million and $10.9 million, respectively.

Nine Months Ended

Three months ended

March 31, 2024

(Dollars in millions)

2 unchanged sentences

Net income 33.9

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:

For the three months ended March 31, 2024, net income in the table above excludes income from equity method investments of other subsidiary companies of $21.3 million.

For the three months ended March 31, 2024, the Obligor Group recorded the following transactions with other subsidiary companies:

sales to such other subsidiary companies of $14.2 million;

1 unchanged sentence

and net interest income from such other subsidiary companies of $9.5 million.

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

For the three months ended March 31, 2024, the Obligor Group did not receive dividends from other subsidiary companies.

Rationalization Charges

1 unchanged sentence

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

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.

Under our rationalization plans, we made cash payments of $11.8 million and $5.1 million for the three months ended March 31, 2024 and 2023, 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 $8.1 million and $14.3 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 nine months ended September 30, 2023 included elsewhere in this Quarterly Report.

Remaining expenses for the accretion of interest for the withdrawal liability related to the Central States Pension Plan are expected to average approximately $0.8 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 $2.6 million annually through 2040.

You should also read Note 3 to our Condensed Consolidated Financial Statements for the three months ended March 31, 2024 included elsewhere in this Quarterly Report.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis