Q3 2025 Silgan Holdings Inc Earnings Call

Speaker #3: Good day . And welcome to the Silgan Holdings . Third quarter 2020 Earnings call . Today's conference is being recorded . At this time , I'd like to turn the conference over to Mr. Alex Hutter , vice President of Investor Relations .

Operator: The conference will begin shortly. Please stand by. The conference will begin shortly. Please stand by. The conference will begin shortly. Please stand by. The conference will begin shortly. Please stand by. The conference will begin shortly. Please stand by. Th

Speaker #3: Please go ahead , sir .

Speaker #4: Thank you , and good morning . Joining me on the call today are Adam Greenlee president and CEO Philippe Chevrier , EVP and COO .

Alexander Hutter: Thank you, Anna, and good morning. Joining me on the call today are Adam Greenlee, President and CEO, Philippe Chevrier, EVP and COO, Bob Lewis, EVP Corporate Development and Administration, and Kimberly Ulmer, SVP and CFO. Before we begin the call today, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. These forward-looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks, including but not limited to those described in the company's annual report on Form 10-K for 2024 and other filings with the Securities and Exchange Commission. Therefore, the actual results of operation or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements.

Speaker #4: Bob Lewis , EVP , Corporate Development and Administration . And Kim Ulmer , SVP and CFO . Before we begin the call today , we would like to make it clear that certain statements made on this conference call may be forward looking statements .

Speaker #4: These forward looking statements are made based upon management's expectations and beliefs concerning future events impacting the company and therefore involve a number of uncertainties and risks , including , but not limited to , those described in the company's annual Report on Form 10-K for 2024 and other filings with the Securities and Exchange Commission .

Speaker #4: Therefore, the actual results of operations or financial condition of the company could differ materially from those expressed or implied in the forward-looking statements.

Speaker #4: In addition , commentary on today's call may contain references to certain non-GAAP financial metrics , including adjusted Ebit , adjusted EBITDA , free cash flow and adjusted net income per diluted share or adjusted EPs .

Alexander Hutter: In addition, commentary on today's call may contain references to certain non-GAAP financial metrics, including adjusted EBIT, adjusted EBITDA, free cash flow, and adjusted net income per diluted share or adjusted EPS. A reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's press release under the non-GAAP financial information portion of our Investor Relations section of our website at silganholdings.com. With that, I'll turn it over to Adam.

Speaker #4: A reconciliation of these metrics , which should not be considered substitutes for similar GAAP metrics , can be found in today's press release under the non-GAAP Financial Information portion of our of our Investor Relations section of our website at Silgan Holdings .

Speaker #4: Com . With that , I'll turn it over to Adam .

Speaker #5: Thank you , Alex , and we'd like to welcome everyone to Silgan's third quarter earnings call . Our third quarter results continue to show the resilience of our business model .

Adam Greenlee: Thank you, Alex, and we'd like to welcome everyone to Silgan Holdings' third quarter earnings call. Our third quarter results continue to show the resilience of our business model, the success of our strategic initiatives, and the power of our unique portfolio of products as we delivered another quarter of strong financial performance. Our teams executed well during the quarter and adapted our operating plans to the changing market conditions we identified midyear, delivering on our strategic growth initiatives including meaningful organic growth in high value dispensing products and metal containers for pet food, achieving our cost reduction goals, and working closely with our customers to meet their unique needs as we head into the end of the year and begin to plan for 2026.

Speaker #5: The success of our strategic initiatives and the power of our unique portfolio of products contributed to another quarter of strong financial performance.

Speaker #5: Our teams executed well during the quarter and adapted our operating plans to the changing market conditions . We identified mid-year . Delivering on our strategic growth initiatives , including meaningful organic growth and high value dispensing products and metal containers for pet food .

Speaker #5: Achieving our cost reduction goals and working closely with our customers to meet their unique needs . As we head into the end of the year and begin to plan for 2026 , we delivered 10% adjusted EPs growth through the first three quarters of the year , returned over $120 million in cash to our shareholders through dividends and share repurchases .

Adam Greenlee: We delivered 10% adjusted EPS growth through the first three quarters of the year, returned over $120 million in cash to our shareholders through dividends and share repurchases, successfully integrated the Vayner acquisition, and are on track to reduce leverage to near the midpoint of our range. Just over 12 months after closing the acquisition, our Dispensing and Specialty Closures segment delivered another quarter of significant year over year growth and record adjusted EBIT in the third quarter with nearly 40% growth in dispensing product sales and continued success in the markets we serve. Our team successfully responded to the anticipated decline in sports drinks volumes following more subdued first half volumes for these products.

Speaker #5: Successfully integrated the Vagner Acquisition and and are on track to reduce leverage to near the midpoint of our range , just over 12 months after closing the acquisition .

Speaker #5: Our Dispensing and Specialty Closures segment delivered another quarter of significant year-over-year growth and record adjusted EBIT in the third quarter, with nearly 40% growth in dispensing product sales and continued success in the markets we serve.

Speaker #5: Our teams successfully responded to the anticipated decline in sports , drink volumes following more subdued first half volumes . For these products . We've completed the integration of Vagner and have one additional contractual volume based on the combined power of our innovation teams .

Adam Greenlee: We've completed the integration of Vayner and have won additional contractual volume based on the combined power of our innovation teams, complementary portfolios of products, and the new product technology this acquisition brings to our platform. Our long term customer relationships continue to expand as the execution and focus of our teams remains a key competitive advantage in our markets to drive organic growth that outpaces our peers in the end markets we serve. Our core high end fragrance and beauty business continues to win in the market with 15% organic growth in fragrance volumes in the third quarter, and we are seeing incremental opportunities in healthcare and pharma end markets that should contribute more meaningfully in 2026.

Speaker #5: Complementary portfolios of products and the new product technology that's acquisition brings to our platform , our long term customer relationships continue to expand as the execution and focus of our teams remains a key competitive advantage in our markets .

Speaker #5: To drive organic growth that outpaces our peers and the end markets we serve . Our core high end fragrance and beauty business continues to win in the market , with 15% organic growth in fragrance volumes in the third quarter , and we are seeing incremental opportunities in healthcare and pharma end markets that should contribute more meaningfully in 2026 .

Speaker #5: Our metal containers business delivered strong volume growth of 4% as expected, with a 10% increase in products for pet food markets and a partial recovery in the fruit and vegetable markets.

Adam Greenlee: Our metal containers business delivered strong volume growth of 4% as expected, with a 10% increase in products for pet food markets and a partial recovery in the fruit and vegetable markets as our team successfully navigated the impact of the bankruptcy of one of our large fruit and vegetable customers during the quarter and executed on our cost reduction plan in custom containers. Our teams continue to build on our commercial success as comparable volumes grew 4% after adjusting for the impact of lower margin business exited to achieve our cost savings initiatives and continue to deliver exceptional operating performance as they execute on our cost reduction plans. As expected, our adjusted EBIT margins expanded 180 basis points, largely as a result of these cost reductions, and we're on track to have a record year of adjusted EBIT and adjusted EBITDA for custom containers.

Speaker #5: As our team successfully navigated the impact of the bankruptcy of one of our large fruit and vegetable customers during the quarter, we executed on our cost reduction plan in custom containers.

Speaker #5: Our teams continue to build on our commercial success as comparable volumes grew 4% after adjusting for the impact of lower-margin business exited to achieve our cost savings initiatives. We continued to deliver exceptional operating performance as they execute on our cost reduction plans.

Speaker #5: As expected , our adjusted Ebit margins expanded 180 basis points , largely as a result of these cost reductions . And we're on track to have a record year of adjusted Ebit and adjusted EBITDA for custom containers .

Speaker #5: Turning to our expectations for the balance of 2025 , we are adjusting our outlook to reflect higher interest expense and a higher tax rate and lower volumes in our dispensing and specialty closures and custom container segments for for certain personal care and home care products .

Adam Greenlee: Turning to our expectations for the balance of 2025, we are adjusting our outlook to reflect higher interest expense and a higher tax rate and lower volumes in our dispensing and specialty closures and custom container segments for certain personal care and home care products in the fourth quarter. As 2025 has progressed, it has become clear that North American consumer trends have become more bifurcated, with certain high end products continuing to perform very well, while other products appear to have been impacted by a subset of the North American consumer that is stretched by both inflation and muted wage growth. As a result, some consumers are being more selective with their purchases and focusing their buy around essential low cost goods like shelf stable food cans and delaying purchase decisions for products that may be more sensitive to promotional activity like hard surface cleaners or hand lotions.

Speaker #5: In the fourth quarter , as 2025 has progressed , it has become clear that North American consumer trends have become more bifurcated , with certain high end products continuing to perform very well , while other products appear to have been impacted by a subset of the North American consumer that is stretched by both inflation and muted wage growth .

Speaker #5: As a result , some consumers are being more selective with their purchases and focusing their buy around essential , low cost goods like shelf stable food cans and delaying purchase decisions for products that may be more sensitive to promotional activity , like hard surface cleaners or hand lotions .

Speaker #5: On the other hand , the high end consumer continues to drive growth . For instance , in the Fragrance and beauty markets where we are expecting another quarter of double digit fragrance volume growth in the fourth quarter .

Adam Greenlee: On the other hand, the high end consumer continues to drive growth, for instance in the fragrance and beauty markets where we are expecting another quarter of double digit fragrance volume growth in the fourth quarter. As a result of these trends, demand for some of the products for which consumers are being more selective with their purchases, predominantly for the personal care and home care markets in our dispensing and specialty closures and custom container segments, while they are growing, they appear to have been below the levels our customers were anticipating throughout 2025. Our customers remain committed to growing volumes in these products and end markets over time, and we remain very well positioned to capture that growth.

Speaker #5: As a result of these trends , demand for some of the products for which consumers are being more selective with their purchases , predominantly for the personal care and home care markets .

Speaker #5: In our dispensing specialty , dispensing and specialty closures and custom container segments . While they are growing , they appear to have been below the levels our customers were anticipating throughout 2025 .

Speaker #5: Our customers remain committed to growing volumes in these products and end markets over time, and we remain very well positioned to capture that growth.

Speaker #5: But given the growth trend in 2025 fell below expectations, our customers have shifted priorities in the fourth quarter to more closely align their inventories exiting the year with the levels of demand they have experienced throughout 2025.

Adam Greenlee: Given the growth trend in 2025 fell below expectations, our customers have shifted priorities in the fourth quarter to more closely align their inventories exiting the year with the levels of demand they have experienced throughout 2025. As a result, we are now expecting Dispensing and Specialty Closures and Custom Containers volumes to decline by a mid single digit % in the fourth quarter and have proactively taken the step of reducing our own inventories in the fourth quarter as well. Outside of these specific products, we have seen signs of stabilization in the North American sports drink closures market as we enter the fourth quarter, and it appears the challenges we saw in the market earlier this year have been contained in the second and third quarters.

Speaker #5: As a result , we are now expecting dispensing and specialty closures and custom containers volumes to decline by a mid-single digit percentage in the fourth quarter and have proactively taken the step of reducing our own inventories in the fourth quarter as well .

Speaker #5: Outside of these specific products , we have seen signs of stabilization in the North American sports drink closures market . As we enter the fourth quarter , it appears the challenges we saw in the market earlier this year have been contained to the second and third quarters .

Speaker #5: As we expected , our expectations , are expectations for metal containers . Volume and profit are unchanged and we're on track to grow volume by mid-single digit percentage in the fourth quarter and full year , driven primarily by mid to high single digit growth in pet food and higher fruit and vegetable pack volumes .

Adam Greenlee: As we expected, our expectations for Metal Containers volume and profit are unchanged, and we're on track to grow volume by a mid single digit % in the fourth quarter and full year, driven primarily by mid to high single digit growth in pet food and higher fruit and vegetable pack volumes. Before I turn it over to Kim to discuss our financial results and outlook, I want to take a few minutes to provide some high level commentary on each of our businesses. Our Dispensing and Specialty Closures segment has provided tremendous organic and inorganic growth for our company over the past decade, and while the growth rates of some of the products in our portfolio this year have fallen short of our and our customers' expectations, nothing has changed about the way we think about the growth in this segment.

Speaker #5: Before I turn it over to Kim to discuss our financial results and outlook , I want to take a few minutes to provide some high level commentary on each of our businesses , our dispensing and specialty Closures segment is providing tremendous organic and inorganic growth for our company over the last over the past decade .

Speaker #5: And while the growth rates of some of the products in our portfolio this year have fallen short of our and our customers' expectations, nothing has changed about the way we think about growth in this segment.

Speaker #5: The dispensing products in this segment , which represent approximately 65% of sales and 75% of adjusted EBITDA post the acquisition , are expected to grow by at least a mid-single digit rate .

Adam Greenlee: The dispensing products in this segment, which represent approximately 65% of sales and 75% of adjusted EBITDA post the Vayner acquisition, are expected to grow by at least a mid single digit rate, and with above average portfolio margins for these products, should provide mix enhancement to this segment. Our growth in this segment is underpinned by a long pipeline of product innovation and customer portfolio additions, which we believe will drive above market growth rates as our teams continue to compete and win in the marketplace. The food and beverage products in this segment have historically shown modest growth driven by new customer acquisitions or product innovations from our existing and new customers.

Speaker #5: And with above average portfolio margins for these products , should provide mixed enhancement to this segment . Our growth in this segment is underpinned by a long pipeline of product innovation and customer portfolio additions , which we believe will drive above market growth rates as our teams continue to compete and win in the marketplace .

Speaker #5: The food and beverage products in this segment have historically shown modest growth , driven by new customer acquisitions or product innovations from our existing and new customers .

Speaker #5: While the beverage innovation in the category over the past few years has been somewhat below historical levels that we would typically see in the segment, we still believe the category is a stable one for Silgan. As we continue to be well positioned with the major players in this category as a key strategic partner from an inorganic perspective, we continue to see significant opportunities to expand our dispensing and specialty closures business in new and existing end markets through acquisitions with similar growth and financial profiles to the businesses we have acquired over the past eight years.

Adam Greenlee: While the beverage innovation in the hotfill category over the past few years has been somewhat below historical levels that we would typically see in the segment, we still believe the category is a stable one for Silgan and as we continue to be well positioned with the major players in this category as a key strategic partner from an inorganic perspective, we continue to see significant opportunities to expand our Dispensing and Specialty Closures business in new and existing end markets through acquisitions with similar growth and financial profiles to the businesses we have acquired over the past eight years with mid-20s % EBITDA margins and mid single digit organic growth.

Speaker #5: With mid 20s percentage EBITDA margins and mid-single digit organic growth , our metal container segment has been the benchmark of the Silgan portfolio since our inception and within our portfolio generates among the highest returns of any of our businesses as a result of the relatively stable nature of overall demand over time , the resilience of the profit profile through all economic circumstances due to our contractual cost pass through's and relatively low cash requirements to operate this customer partnership model that results in street and strong free cash flow generation over time .

Adam Greenlee: Our Metal Containers segment has been the benchmark of the Silgan portfolio since our inception and within our portfolio generates among the highest returns of any of our businesses as a result of the relatively stable nature of overall demand over time. The resilience of the profit profile through all economic circumstances due to our contractual cost pass throughs and relatively low cash requirements to operate this customer partnership model that results in strong free cash flow generation over time. We have significantly improved the profitability of this business through cost reductions and organic growth and currently see opportunity for both continued growth opportunities in our pet food markets and further cost reductions in this business.

Speaker #5: We have significantly improved the profitability of this business through cost reductions and organic growth and currently see opportunity for both continued growth opportunities in our pet food markets and further cost reductions in this business .

Speaker #5: While 2024 and 2025 have presented some unique challenges with regard to one customers specific financial situation , we believe it is likely that our customers business will emerge stronger than it has been over the past several years .

Adam Greenlee: While 2024 and 2025 have presented some unique challenges with regard to one customer's specific financial situation, we believe it is likely that our customer's business will emerge stronger than it has been over the past several years once this process is complete. However, should our volumes remain at the current levels for this customer, we see a potential cost reduction opportunity of at least $10 million over the next couple of years as we align capacity with demand. Our customer partnerships remain a key differentiator for Silgan in the marketplace as these long term arrangements provide tremendous stability to the business as well as a significant growth opportunity as clearly demonstrated in the pet food market.

Speaker #5: Once this process is complete , however , should our volumes remain at the current levels for this customer , we see a potential cost reduction opportunity of at least $10 million over the next couple of years .

Speaker #5: As we align capacity with demand, our customer partnerships remain a key differentiator for Silgan in the marketplace. These long-term arrangements provide tremendous stability to the business as well as a significant growth opportunity, as clearly demonstrated in the pet food market.

Speaker #5: As a reminder , approximately 90% of our metal containers business is under long term contracts , which typically range from 5 to 10 years in length and excluding the volumes from the customer that is currently undergoing a reorganization .

Adam Greenlee: As a reminder, approximately 90% of our Metal Containers business is under long term contracts which typically range from 5 to 10 years in length and excluding the volumes from the customer that is currently undergoing a reorganization. Approximately 90% of our contractual volume is with large, blue chip customers, nearly all of whom are investment grade rated publicly traded companies under contracts that extend through the next several years. We continue to believe this unique business creates exceptional value for our shareholders, driven by its stable earnings, low capital requirements, strong free cash flow generation, superior returns, and growth. In fact, after continuing to see strong growth in our differentiated aluminum products for the pet food segment, in 2024 and 2025, we anticipate investing in additional capacity in 2026 to support continued contractual volume growth with our long term partners.

Speaker #5: Approximately 90% of our contractual volume is with large blue-chip customers, nearly all of whom are investment-grade rated. These are publicly traded companies under contracts that extend through the next several years.

Speaker #5: We continue to believe this unique business creates exceptional value for our shareholders , driven by its stable earnings , low capital requirements and strong free cash flow generation .

Speaker #5: Superior returns and growth . In fact , after continuing to see strong growth in our differentiated aluminum products for the pet food segment in 2024 and 2025 , we anticipate investing in additional capacity in 2026 to support continued contractual volume growth with our long term partners , our custom containers business has demonstrated the value we provide in the small and medium run length market , delivering consistently strong operating performance and a best in class service model , and is on track to deliver another year of record profit .

Adam Greenlee: Our Custom Containers business has demonstrated the value we provide in the small and medium run length market, delivering consistently strong operating performance and a best in class service model, and is on track to deliver another year of record profit. As we look to the future for this business, we see significant opportunities to expand as our service model continues to resonate in the markets we serve. We have long said that this market, which is the most fragmented market we participate in, would benefit from consolidation, and with some of that consolidation having taken place already, we believe we are well positioned as a differentiated, value added player in this market. While the growth in this business can be somewhat episodic and lumpy from year to year, the long term trajectory and the growth of this business is clear.

Speaker #5: As we look to the future for this business, we see significant opportunities to expand as our service model continues to resonate in the markets we serve.

Speaker #5: We have long said that this market , which is the most fragmented market we participate in , would benefit from consolidation and with some of that consolidation , having taken place already , we believe we are well positioned as a differentiated value added player in this market .

Speaker #5: While the growth in this business can be somewhat episodic and lumpy from year to year , the long term trajectory and the growth of this business is clear .

Speaker #5: We remain focused on the opportunities that lie ahead for the company and are confident in our ability to execute on our plan. As the structural changes and evolution in our portfolio have positioned us to drive growth in our business in the near term and long term.

Adam Greenlee: We remain focused on the opportunities that lay ahead for the company and are confident in our ability to execute on our plan as the structural changes and evolution in our portfolio have positioned us to drive growth in our business in the near term and long term. While some of the market developments in 2025 have not been as predictable as in the past, we remain excited with the incremental opportunities that have materialized during the year, and we are focused on delivering strong free cash flow and achieving our deleveraging objectives into the year end. As we begin to look into next year, we continue to see tailwinds in our business and anticipate higher earnings and free cash flow in 2026. With that, Kim will take you through the financials for the quarter and our estimates for the fourth quarter and full year of 2025.

Speaker #5: While some of the market developments in 2025 have not been as predictable as in the past , we remain excited with the incremental opportunities that we have that have materialized during the year , and we are focused on delivering strong free cash flow and achieving our deleveraging objectives into the year end .

Speaker #5: As we begin to look into next year, we continue to see tailwinds in our business and anticipate higher earnings and free cash flow in 2026.

Speaker #5: With that , Kim will take you through the financials for the quarter and our estimates for the fourth quarter and full year of 2025 .

Speaker #6: Thank you , Adam . As Adam highlighted , we reported another quarter of strong financial results in the third quarter that were consistent with our expectations , with continued success in our dispensing business and the execution of our cost reduction plan .

Kimberly Ulmer: Thank you, Adam. As Adam highlighted, we reported another quarter of strong financial results in the third quarter that were consistent with our expectations, with continued success in our dispensing business and the execution of our cost reduction plan more than offsetting headwinds in sports drinks volumes and metal containers price cost in the quarter. Net sales of $2 billion increased 15% from the prior year period, driven primarily by growth in dispensing products, including the addition of the Vayner business and the contractual pass through of higher raw material and other manufacturing costs.

Speaker #6: More than offsetting headwinds in sports drinks volumes and metal containers . Price costs in the quarter , net sales of $2 billion increased 15% from the prior year period , driven primarily by growth in dispensing products , including the addition of the Vaynerx business and the contractual pass through of higher raw material and other manufacturing costs .

Speaker #6: Total adjusted Ebit for the quarter of $221 million increased by 8% on a year over year basis , driven by strong growth in dispensing products , including from the acquisition of Vaynerx .

Kimberly Ulmer: Total adjusted EBIT for the quarter of $221 million increased by 8% on a year-over-year basis, driven by strong growth in dispensing products, including from the acquisition of Vayner, improved price cost in custom containers, higher volumes in metal containers, and the benefits of our cost reduction efforts, which were partially offset by expected lower volumes for sports drinks in North America and unfavorable price cost including mix in metal containers. Adjusted EPS of $1.22 was slightly above the prior year quarter, as the improvement in adjusted EBIT was mostly offset by higher interest expense and a higher tax rate. Turning to our segments, third quarter sales in our Dispensing and Specialty Closures segment increased 23% versus the prior year period, primarily as a result of the inclusion of the sales from Vayner and higher volumes of high value dispensing products as anticipated.

Speaker #6: Improved price cost in custom containers . Higher volumes in metal containers , and the benefits of our cost reduction efforts , which were partially offset by expected lower volumes for sports drinks in North America and unfavorable price cost , including mix in metal containers .

Speaker #6: Adjusted EPs of $1.22 was slightly above the prior year quarter , as the improvement in adjusted Ebit was mostly offset by higher interest expense and a higher tax rate .

Speaker #6: Turning to our segment, third quarter sales in our Dispensing and Specialty Closures segment increased 23% versus the prior year period, primarily as a result of the inclusion of the sales from Vaynerx and higher volumes of high-value dispensing products.

Speaker #6: As anticipated , volumes for food and beverage closures declined 5% during the quarter , driven by a double digit decline in North American hot fill products , predominantly for sports drinks .

Kimberly Ulmer: Volumes for food and beverage closures declined 5% during the quarter, driven by a double-digit decline in North American hot fill products, predominantly for sports drinks. Record third quarter 2025 Dispensing and Specialty Closures adjusted EBIT increased $18 million or 19% versus the prior year period as a result of the contribution from Vayner and higher organic volumes of high value dispensing products. In our Metal Containers segment, sales increased 13% versus the prior year period as a result of favorable price mix due to the contractual pass through of higher raw material and other costs, higher unit volumes of 4%, and a 1% benefit from foreign currency translation.

Speaker #6: Record third quarter 2025 dispensing and specialty closures adjusted Ebit increased $18 million , or 19% , versus the prior year period . As a result of the contribution from Vaynerx and higher organic volumes of high value dispensing products and our metal container segment sales increased 13% versus the prior year period .

Speaker #6: As a result of favorable price mix due to the contractual pass through of higher raw material and other costs , higher unit volumes of 4% , and a 1% benefit from foreign currency translation volume growth during the quarter was the result of 10% growth in product for pet food markets , which represents approximately half of our unit volumes in metal containers and higher volumes for fruit and vegetable markets , which was partially offset by lower volumes for supermarkets due to the timing of orders in 2025 , metal containers adjusted Ebit decreased slightly as a result of less favorable price costs , including mix .

Kimberly Ulmer: Volume growth during the quarter was the result of 10% growth in products for pet food markets, which represents approximately half of our unit volumes in Metal Containers, and higher volumes for fruit and vegetable markets, which was partially offset by lower volumes for soup markets due to the timing of orders in 2025. Metal Containers adjusted EBIT decreased slightly as a result of less favorable price costs, including mix in the current year quarter, due to less favorable production efficiencies associated with inventory management in the quarter. In Custom Containers, sales increased 1% compared to the prior year quarter, driven by improved price mix in the current year quarter. Unit volumes were comparable to the prior year, including the impact of lower margin business exited as a result of a planned footprint optimization to achieve the previously announced cost reduction goals.

Speaker #6: In the current year quarter due to less favorable production efficiencies associated with inventory management . In the quarter . In custom containers , sales increased 1% compared to the prior year quarter , driven by improved price mix in the current year quarter , unit volumes were comparable to the prior year , including the impact of lower margin .

Speaker #6: Business exited as a result of a planned footprint optimization . To achieve the previously announced cost reduction goals . Excluding the lower margin business exited to achieve cost reduction plans , volumes increased 4% .

Kimberly Ulmer: Excluding the lower margin business exited to achieve cost reduction plans, volumes increased 4%. Custom Containers adjusted EBIT increased 15% as compared to the third quarter of 2024 due to favorable price cost, including mix, primarily as a result of cost savings initiatives. Turning to our outlook for the fourth quarter of 2025, we are providing an estimate of adjusted earnings in the range of $0.62 to $0.72 per diluted share. Fourth quarter earnings are expected to be negatively impacted by the reduction in volumes for the North America personal care and home care markets, as Adam discussed, and the related impact of under absorbed costs as we take extended downtime and reduce our inventories. The total impact of lower volumes, extended downtime, and associated inventory reductions in the fourth quarter is expected to be a $25 million headwind in the quarter versus our prior estimates.

Speaker #6: Custom containers , adjusted Ebit increased 15% as compared to the third quarter of 2024 , due to favorable price costs , including mix , primarily as a result of cost savings initiatives .

Speaker #6: Turning to our outlook for the fourth quarter of 2025 , we are providing an estimate of adjusted earnings in the range of $0.62 to $0.72 per diluted share .

Speaker #6: Fourth quarter earnings are expected to be negatively impacted by the reduction in volumes for the North American personal care and home care markets , as Adam discussed , and the related impact of under absorbed costs as we take extended downtime and reduce our inventories , the total impact of lower volumes extended downtime and associated inventory reductions in the fourth quarter is expected to be a $25 million headwind in the quarter versus our prior estimates .

Speaker #6: In addition , fourth quarter earnings are expected to be negatively impacted by higher interest expense related to the recent Eurobond issuance , as well as a higher than expected tax rate due to the geographical mix of profit dispensing , specialty closures and custom containers .

Kimberly Ulmer: In addition, fourth quarter earnings are expected to be negatively impacted by higher interest expense related to the recent euro bond issuance, as well as a higher than expected tax rate due to the geographical mix of profit in Dispensing and Specialty Closures and Custom Containers. Fourth quarter volumes are expected to decline by a mid single digit % while metal containers volumes are expected to grow by a mid single digit % driven by continued strong growth in pet food and higher fruit and vegetable volumes. From a segment perspective, we now expect a high single digit % increase in total adjusted EBIT in 2025 driven primarily by an approximately 15% increase in Dispensing and Specialty Closures.

Speaker #6: Fourth quarter volumes are expected to decline by a mid-single digit percentage , while metal containers volumes are expected to grow by a mid-single digit percentage , driven by continued strong growth in pet food and higher fruit and vegetable volumes .

Speaker #6: From a segment perspective , we now expect a high single digit percentage increase in total adjusted Ebit in 2025 , driven primarily by an approximately 15% increase in dispensing and specialty closures .

Speaker #6: Adjusted Ebit with custom containers , adjusted Ebit up approximately $10 million year over year . Our expectations for metal containers remain unchanged , and we continue to expect approximately $10 million of year over year improvement in adjusted Ebit in the segment for the year .

Kimberly Ulmer: Adjusted EBITDA with Custom Containers adjusted EBIT up approximately $10 million year over year, our expectations for Metal Containers remain unchanged and we continue to expect approximately $10 million of year over year improvement in adjusted EBIT in the segment for the year. Based on our current earnings outlook for 2025, we are maintaining our estimate of free cash flow of approximately $430 million, a 10% increase from the prior year. As a result of earnings growth and working capital improvement, we continue to expect capital expenditures of approximately $300 million. That concludes our prepared comments and we'll open the call for questions. Anna, would you kindly provide the directions for the question and answer session?

Speaker #6: Based on our current earnings outlook for 2025 , we are maintaining our estimate of free cash flow of approximately $430 million , a 10% increase from the prior year .

Speaker #6: As a result of earnings growth and working capital improvement . We continue to expect capital expenditures of approximately $300 million . That concludes our prepared comments , and we'll open the call for questions .

Speaker #6: Anna , would you kindly provide the directions for the question and answer session ?

Speaker #3: Yes , ma'am . Thank you . If you would like to ask a question , please signal by pressing Star One on your telephone keypad .

Operator: Yes, ma'am. Thank you. If you would like to ask a question, please signal by pressing STAR 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment. Once again, that is STAR 1 if you would like to ask a question. We'll take our first question from Ghansham Panjabi with Baird.

Speaker #3: If you are using a speakerphone , please make sure your mute is turned off to allow your signal to reach our equipment . Once again , that is star one .

Speaker #3: If you would like to ask a question . We'll take our first question from Ghansham Panjabi with Baird .

Speaker #7: Yeah . Thank you . Good morning everybody . You know , Adam , just kind of zooming out a little bit and kind of , you know , looking back over the last three years when you had a previous sort of inventory destocking cycle , etc.

[Analyst]: Yeah, thank you. Good morning everybody. Adam, just kind of zooming out a little bit and looking back over the last three years when you had a previous sort of inventory destocking cycle, etc. This seems like the second iteration, almost a double dip if you will, in terms of volume improvement and then, you know, some level of a decline, etc. What do you attribute this towards this go around and how does this go around compare to the first iteration back in 2022 and 2023?

Speaker #7: , you know , this seems like the second iteration , almost a double dip , if you will , in terms of volume improvement .

Speaker #7: And then , you know , some level of decline , etc. . What do you sort of attribute this towards this go around , and how does this go around compared to the first iteration back in 2022 and 2023 ?

Adam Greenlee: Hey, thank you. I think it's a really good question because I think there are some very stark differences between what is occurring in the fourth quarter now versus kind of what we were dealing with in the very broad destocking post-pandemic cycle that we dealt with in 2023. Maybe I'll start with 2023 and just talk about, you know, that was a broad-based decycle post-pandemic that really affected all of our products and, you know, pretty well described I think throughout the portfolio. I think about what's going on in 2025. I'll just start with last quarter and say, you know, we did have a large customer bankruptcy. Unfortunately, that's had a negative impact to our 2025 earnings. We had very poor weather that affected the sports drink category.

Speaker #5: Awesome . Thank you . It's I think it's a really good question because I think there are some very stark differences between what is occurring in the fourth quarter .

Speaker #5: Now versus kind of what we were dealing with in the very broad destocking post pandemic cycle that we dealt with in in 2023 .

Speaker #5: I maybe I'll start with 2023 and just talk about , you know , that was a broad based cycle post pandemic that really affected all of our products .

Speaker #5: And , you know , pretty , pretty well described , I think throughout the portfolio . And then I think about what's going on in 2025 , and I'll , I'll just start with last quarter and say , you know , we did have a a large customer bankruptcy .

Speaker #5: Unfortunately that's had a negative impact to our our 25 earnings . We had very poor weather that affected the sports drink category . We've already talked about those , but those are very unique .

Adam Greenlee: We've already talked about those, but those are very unique one-off instances that we think affected two of our key markets: fruit and veg fresh pack and then our sports drinks category. I think the difference now is the kind of bifurcation of consumer activity. Right. We've got our high value, high end products continue to do well that are targeted kind of at a higher income consumer. I think the lower to mid-tier of income consumer is really struggling. You know, I mentioned earlier that, you know, between inflation and maybe some muted wage growth, they're trying to stretch dollars at point of purchase. We're seeing it. We've talked for many, many years that the food can business is a bit of an indicator of the broader economy.

Speaker #5: One-off instances that we think affected two of our key markets: the fruit and vegetable fresh pack, and then our sports drinks category.

Speaker #5: And really , I think the difference now is , is the kind of the bifurcation of consumer activity , right . So we've got , you know , our high value high end products continue to do well that are targeted kind of a higher income consumer .

Speaker #5: I think the the lower to mid tier of of income consumer is really struggling . You know , I mentioned earlier that you know , between inflation and maybe some muted wage growth .

Speaker #5: You know they're trying to stretch dollars at the at point of purchase . And you know we're seeing it you know gone from I think we've talked for many many years that you know the food can business is a bit of a an indicator of the broader economy .

Speaker #5: We are seeing strength in food cans as those consumers that are making that purchase point and decision and trying to stretch the dollars moving into categories like shelf stable cans for nutrition .

Adam Greenlee: We are seeing strength in food cans as those consumers that are making that purchase point and trying to stretch the dollars are moving into categories like shelf-stable cans for nutrition. It's pretty consistent with what we've seen in the past. Likewise, we see in some products we've specifically called out kind of hard surface cleaners and hand soaps and lotions and some of the other products that move into our personal care categories. Those are non-discretionary, but in fairness, those can be stretched. You can move that purchase from one month to another. Whereas when you're feeding your family and you're stretching those dollars, that purchase point decision becomes pretty clear. Again, we're seeing it. I think collectively, the market in general, we've taught consumers to buy on promotion.

Speaker #5: So it's pretty consistent with what we've seen in the past . And then likewise , we see , you know , in some products we've specifically called out kind of hard surface cleaners and hand soaps and lotions and some of the other products that move into our personal care categories .

Speaker #5: You know , those are non-discretionary . But in fairness , those can be stretched , right ? You know , you can you can move that that purchase from one month to another , whereas when you're feeding your family and you're stretching those dollars that that purchase point decision becomes pretty clear .

Speaker #5: And again , we're seeing it . We've also I think collectively , you know , the market in general , we've talked consumers to buy on promotion .

Speaker #5: And , you know , if there's not promotional activity that that is moving volume or is very focused on moving volume , we have seen consumers be reticent to to make that purchase .

Adam Greenlee: If there's not promotional activity that is moving volume or is very focused on moving volume, we have seen consumers be reticent to make that purchase and purchase decision. We're seeing effective promotional activities drive volume, much like we've seen to some degree in our wet pet food category.

Speaker #5: And purchase decisions. We're seeing effective promotional activities drive volume, much like we've seen to some degree in our wet pet food category.

Speaker #7: Okay . That's helpful . And then just a related question . You know , within the last three months , last three months ago , you called out weakness in food and beverage closures in North America .

[Analyst]: Okay, that's helpful. Just a related question, within the last three months, three months ago, you called out that weakness in food and beverage closures in North America. Now it's personal care, home care. Do you see that broadening to perhaps even pet food? Is that a risk as you kind of think about how the sequencing will work through the early part into 2026? Thank you.

Speaker #7: Now it's personal care home care . Do you see . That broadening to perhaps even pet food ? I mean , is that a risk as you kind of think about , you know , how the sequencing will work through the early part of into 2026 ?

Speaker #7: Thank you .

Speaker #5: Yeah . So so to answer your question directly , no , we don't . And , you know , we just delivered 10% growth in Q3 .

Adam Greenlee: Yeah, to answer your question directly, no, we don't. We just delivered 10% growth in Q3 in our pet food segment. We're expecting high single digit growth in the fourth quarter, which we communicated on the last call as well. Pet food is playing out exactly as we thought it would for the year. We're looking at mid single digit growth in the containers business, the metal containers business. Really everything is playing out exactly as we expected. I'll go back to your point on food and beverage. We were very specific that that conversation, while we talked about food and beverage, was very specific to sports drinks and related to the really bad weather and wet weather that really limited the drink occasions for those products in the early part of the summer.

Speaker #5: And our our pet food segment . We're expecting high single digit growth in the fourth quarter , which we communicated on the last call as well .

Speaker #5: So pet food is playing out exactly as we thought it would for the year . We're looking at mid-single digit growth in the containers business .

Speaker #5: The metal containers business—so really everything is playing out exactly as we expected. I'll go back to your point on food and beverage again.

Speaker #5: You know , we were very specific that that conversation while we talked about food and beverage , it was very specific to sports drinks and related to the really bad weather and wet weather that really limited the drink occasions for those products .

Speaker #5: In the early part of the summer . And our customers responded to that with further inventory reductions because they were not getting the sell through because the drink occasions were limited .

Adam Greenlee: Our customers responded to that with further inventory reductions because they were not getting the sell through because the drink occasions were limited. They also pulled back their promotional dollars and allocated them to other categories. I just think it's different and I think it's much different than it was in 2023. Back to your earlier question, we think it's isolated to these specific instances. It's the bifurcation of the consumer, and the consumer that's stretching the dollar is making those purchase point decisions and focused on low cost nutrition at this point.

Speaker #5: They also pulled back their promotional dollars and allocated them to other categories . So I just think it's different and I think it's much different than it was in 23 .

Speaker #5: Back to your earlier question , and we think it's isolated to these specific instances . So , you know , it's back to it's the bifurcation of the consumer and the consumer that's stretching the dollar is making those purchase point decisions .

Speaker #5: And focus on low cost nutrition . At this point .

Speaker #7: Okay . Very good . Thank you .

[Analyst]: Okay, very good. Thank you.

Speaker #5: Sure . Thank you .

Operator: Sure.

Adam Greenlee: Thank you.

Speaker #3: We'll now take our next question from George Staphos with Bank of America .

Operator: We'll now take our next question from George Staphos with Bank of America.

Speaker #8: Hi everyone . Thanks for the details . Thanks for taking my questions . I guess the first question I had , even though it's it's not surprising given , you know , the ultimate release today .

[Analyst]: Hi everyone, thanks for the details. Thanks for taking my questions. I guess the first question I had, even though it's not surprising given the ultimate release today, Adam, why did DSC miss on what was, I think at one point in time you said mid to high 20% revenue growth for the quarter. I didn't hear a specific comment there. I don't think I did. I had a couple of follow-ons in terms of what's going on with the business and your vantage point.

Speaker #8: Adam , why did DSC miss on what was I think at one point in time you said mid to high 20s revenue growth for the quarter .

Speaker #8: I didn't hear kind of a specific commentary . I don't think I did . And that had a couple of follow ons in terms of what's going on with the business and your vantage point .

Speaker #5: Sure . Yeah . You're right , George . So I think we guided kind of mid to high 20s and delivered something like 2223 .

Adam Greenlee: Sure. Yeah, you're right, George. I think we guided kind of mid to high 20s and delivered something like 22, 23. It was really the late September change that we were seeing some pressure in the personal care and home care market. The change started to really show in our numbers kind of late in the month of September. As we really pressed hard for additional forecast clarity and visibility with our customers, that's what led to the ultimate reduction here for Q4 as well.

Speaker #5: It was really the the late September change that we were seeing some pressure in the personal care and home care market . So you know , really the the change started to really show in our numbers kind of late in the month of September .

Speaker #5: And as we really pressed hard for additional forecast clarity and visibility with our customers , that's what led to the ultimate reduction here for for Q4 as well .

Speaker #8: Okay . So look , just on that point , it's kind of a minor point , but since you already were seeing signs of this in late September .

[Analyst]: Okay, just on that point, it's kind of a minor point, but since you already were seeing signs of this in late September, did you ever think about what were your considerations in terms of maybe just doing a guidance reduction or pre-announcement recognizing the third quarter was coming in in line, the fourth quarter was going to look a lot better different versus what was implied for the fourth quarter in your prior guidance?

Speaker #8: Did you ever think about what what were your considerations in terms of maybe just , you know , doing a guidance reduction or preannouncement , recognizing the third quarter was coming in in line ?

Speaker #8: The fourth quarter was going to look a lot different versus what was implied for the fourth quarter . In your prior guidance ?

Speaker #5: Yeah . So , I mean , certainly some conversation around that , George , but maybe just to reiterate what you said , our third quarter came in exactly with our expectations .

Adam Greenlee: Yeah, so I mean certainly some conversation around that, George, but maybe just to reiterate what you said, our third quarter came in exactly with our expectations, and in fairness we were trending ahead of the third quarter prior to this conversation regarding personal care and home care products. It takes a little bit of time to work with our customers, to work all the way through their forecast. Obviously, as I would relay the information here, George, we're really good a week out. We're great a week out, we're really good a month out. As we get kind of further and further out with our customers, it takes more time for them to aggregate their forecast information and for us to then react to it.

Speaker #5: And in fairness , we were trending ahead of the third quarter prior to this conversation regarding personal care and home care products , it takes a little bit of time to to work with our customers , to to work all the way through their forecast .

Speaker #5: Obviously , you know , as I as I would relay the information here , George , we're really good a week out . We're great a week out , we're really good a month out .

Speaker #5: And as we get kind further and further out with our customers , it takes more time for them to aggregate their forecast information and for us to then react to it .

Speaker #5: So while we did see volumes starting to soften in late September , we didn't have forecast until the kind of , you know , first , probably late first week , second week of October from our customers .

Adam Greenlee: While we did see volumes starting to soften in late September, we didn't have forecast until the kind of, you know, first, probably late first week, second week of October from our customers, and then we're putting our plans together and did not feel it was within the timeline to talk about it prior to this call.

Speaker #5: And then we're putting our plans together and and did not feel it was within the timeline to to talk about it prior to this call .

Speaker #8: Okay . No . That's fair . It's just given the volatility that we've seen in equities over the last number of quarters with variation from performance and guidance .

[Analyst]: Okay, no, that's fair. It's just given the volatility that we've seen in equities over the last number of quarters with variation from performance and guidance, that's kind of what drives the question. We understand. If we look at the pre-tax amount of $25 million and it's what we were getting and very, very simplistically apply the mid single digit % to the revenue in Dispensing and Specialty Closures and Custom Containers, I wind up with a relatively high incremental margin. I know you're saying there's decrementals from overhead absorption and so on, but can you give us a bit more color in terms of how much is the absorption versus the impact from earnings and how does that split across the segments and is it pretty even on the mid single digit decline I think you said for both segments?

Speaker #8: You know , that's what kind of what drives the question . We understand . So if we look at the the pre-tax amount of 25 million and that's what we were getting .

Speaker #8: And you know very , very simplistically apply the mid-single digit to the revenue in DSC . And custom containers . I wind up with a relatively high incremental margin .

Speaker #8: Now , I know you're saying there's decrementals from overhead absorption and so on , but can you give us a bit more color in terms of how much is the absorption versus the impact from earnings ?

Speaker #8: And how does that split across the segments ? You know , and is it pretty even on the mid-single digit decline ? I think you said for both segments .

Speaker #5: Yeah . So I think maybe try to carve into that . George . So of the 25 million , I think you can think about 20 million in DSC and 5 million in custom containers .

Adam Greenlee: Yeah. I think maybe to carve into that, George, the $25 million, I think you can think about $20 million in Dispensing and Specialty Closures and $5 million in Custom Containers. This will apply to both businesses because we did take proactive actions to mitigate the impact here and make sure we secured our free cash flow to obtain our deleveraging goals for the year. Of the $25 million, I'd say it's probably half of that related to volume and half of it's related to us taking cost out and reducing our own inventories in response to the customer forecast change. It's kind of a 50/50, and I think that the volume is not a permanent reduction by any stretch and we'll expect to recover that in future periods.

Speaker #5: And then as , as this will apply to both businesses because we we did take proactive actions to , to mitigate kind the impact here and make sure we secured our free cash flow to , to obtain our deleveraging goals for the year .

Speaker #5: So of the 25 , I'd say it's it's probably half of that is going to be related to volume and half of it's going to be related to kind of us taking cost out .

Speaker #5: And reducing our own inventories in response to the customer forecast change . So it's kind of a 5050 . And , you know , I think that , you know , the volume is not a permanent reduction by any stretch .

Speaker #5: And we'll expect to recover that in future periods . The lost inventory or the the impact of the inventory is kind of a one time gain that we likely aren't going to recover .

Adam Greenlee: The lost inventory or the impact of the inventory is kind of a one-time gain that we likely aren't going to recover.

Speaker #8: Okay . My last one , I'll turn it over . So , you know , if we take the midpoint of your guidance for this year , it's 3.71 .

[Analyst]: Okay, my last one I'll turn over. If we take the midpoint of your guidance for this year, it's $3.71. That means you're trading right now roughly at less than 10 times trailing 12 month. I know you're not guiding on 2026, we'll take it if you have it, but we assume we'll have to wait till February for that. If we assume any growth at all, you're at nine times and that's the lowest valuation Silgan's been at, I think, in 20 years, even with your dispensing acquisitions. Clearly, it's a very skeptical market out there relative to Silgan. I recognize the market's been volatile, period.

Speaker #8: And so that means you're trading right now roughly at , you know , less than ten times trailing 12 month . And while I know you're not guiding on 26 .

Speaker #8: We'll take it if you have it . But we assume we'll have to wait till February for that . You know , we assume any growth at all .

Speaker #8: You're at nine times , and that's the lowest valuation silicon's been at . I think , in 20 years . Even with your dispensing acquisitions .

Speaker #8: So , you know , clearly it's a very skeptical market out there relative to Silgan . Recognize the market's been volatile period . So what mile markers are you going to tell investors here .

[Analyst]: What mile markers are you going to tell investors here and now and analysts that we should hold you to in terms of fourth quarter and Q1 to mark your progress and to gain, kind of to Ghansham's question as well, gain more faith in the outlook for the next year. Thanks guys and good luck in the quarter.

Speaker #8: And now . And an analyst that we should hold you to in terms of fourth quarter and one ? Q to mark your progress and to to gain , you know , it's kind of a conscience question as well .

Speaker #8: Gain more faith in the outlook for the next for the next year . Thanks , guys , and good luck in the quarter .

Speaker #5: Sure . Thanks , George . Hey , look . Performance matters and we'll take full ownership and accountability of of the performance of the business .

Adam Greenlee: Sure, thanks George. Performance matters and we'll take full ownership and accountability of the performance of the business. You're right, we're not providing 2026 outlook yet or Q1 guidance. If you're looking for a marker, I think it's very clear that we need to deliver the fourth quarter as we've discussed here already on the call and you saw in the press release. I think holding us accountable and we're holding ourselves accountable for delivering the free cash flow deleveraging as we've talked about. Again, unfortunately it's not the growth that we anticipated for 2025, but delivering a year of growth in 2025 while setting ourselves up for growth not only in adjusted EPS for 2026 but also in free cash flow.

Speaker #5: So you're right . We're not providing 26 outlook yet or Q1 guidance . So if you're looking for a marker I think it's very clear that we need to deliver the fourth quarter as as we've discussed here already on the call .

Speaker #5: And you saw in the press release , so I think holding us accountable and we're holding ourselves accountable for delivering the free cash flow , deleveraging , as we've talked about .

Speaker #5: And again , unfortunately , it's not the growth that we anticipated for 2025 , but delivering a year of growth in 2025 . While setting ourselves up for growth , not only in EPs for 26 , but also in free cash flow .

Speaker #8: So one Q should we be looking at low to mid single digit growth across the platform ? That's what I was kind of getting at .

[Analyst]: Should we be looking at low to mid single digit growth across the platform in Q1? That's what I was kind of getting at. Thanks, guys. Sorry about that because I know fourth quarter, it is what it is, but yeah, thanks, George.

Speaker #8: Thanks , guys . Sorry about that because I know fourth quarter . It is what it is . But .

Speaker #5: Yeah thanks George . And we're just not going to comment on on outlook for Q1 at this point .

Adam Greenlee: We're just not going to comment on outlook for Q1 at this point.

Speaker #8: Understood . Thank you guys .

[Analyst]: Understood. Thank you, guys.

Speaker #3: We'll take our next question from Matt Roberts with Raymond James.

Operator: We'll take our next question from Matt Roberts with Raymond James.

Speaker #9: Hey, good morning, everybody. Thanks for the time. Adam, I was wondering if you could help parse that down a bit more. First, could you isolate the revenue mix, exposure to just those personal and home care products, and how much those markets are expected to be down?

[Analyst]: Hey, good morning everybody. Thanks for the time. Adam, was wondering in Dispensing and Specialty Closures if you could help parse it down a bit more. First, could you isolate the revenue mix exposure to just those personal and home care products and how much those markets are expected to be down? Fragrance, that continues to shine, is that just general demand resilience or how much of that 15% growth was really innovation ahead of holiday releases? Lastly, within that segment, you did say healthcare and pharma could contribute more meaningfully in 2026. How much growth do you think that could bring in 2026?

Speaker #9: Fragrance that continues to shine ? Is that just general demand resilience , or how much of that 15% growth was really innovation ahead of holiday releases ?

Speaker #9: And then lastly , within that segment , you did say healthcare and pharma could contribute more meaningfully in 26 . How much growth do you think that could bring in 2026 ?

Speaker #5: Got it . So do the last one quickly for you , Matt . You know the healthcare and pharma for 26 . We'll be talking about that on our next call when we're providing guidance for 26 .

Adam Greenlee: Got it. Do the last one quickly for you, Matt. The healthcare pharma for 2026, we'll be talking about that on our next call when we're providing guidance for 2026. We've got contractual wins that will impact 2026 favorably, and we'll get into that in a little more detail in the future. Back to the beginning of the question for personal care and home care products. Again, how about this from a volume perspective. We were guiding to kind of mid single digit growth for Q4 and now expect a mid single digit decline in volumes for Q4 versus prior year. That's kind of the magnitude. It's sort of an average margin for the portfolio. You rightly highlighted the fragrance business. As we said on the last call, we were expecting double digit growth in Q3. We delivered that.

Speaker #5: So we've got contractual wins that will will impact 26 favorably . And we'll get into that in a little more detail in the future period .

Speaker #5: Back to your beginning of the question . You for personal care and and home care products again , how about this from a volume perspective ?

Speaker #5: We were guiding to kind of mid-single digit growth for Q4 . And now expect a mid-single digit decline in volumes for Q4 versus prior year .

Speaker #5: So that's kind of the magnitude . It's sort of an average margin for the portfolio . And then you rightly highlighted the fragrance business .

Speaker #5: You know , again , as we said on the last call , we were expecting double digit growth in Q3 . We delivered that .

Speaker #5: We're expecting double digit growth in Q4 as well . And our positioned for nice growth in 26 . And the reasons why , I think you touched on a couple of them .

Adam Greenlee: We're expecting double digit growth in Q4 as well, and are positioned for nice growth in 2026. The reasons why, I think you touched on a couple of them. One, we continue to win a disproportionate amount of the new product launches in the space where we compete and win every single day. That's in the premium end of the fragrance and beauty market. A lot of product innovation from our teams, and that's winning and being rewarded in the marketplace. As our customers continue to innovate, we are being chosen as the partner of choice to help them get their products to market. That's been a successful story really since we've been probably all the way back to the Albea acquisition in 2020 or 2021, excuse me. That is set up for continued growth going forward.

Speaker #5: One , we continue to win a disproportionate amount of the new product launches in the space where we compete and win every single day .

Speaker #5: And that's in the premium end of of the fragrance and beauty market . So a lot of product innovation from from our teams .

Speaker #5: And that's winning and being rewarded in the marketplace . And then as our customers continue to innovate , we are being chosen as the partner of choice to help them get their products to market .

Speaker #5: And , you know , that's been a successful story really , since we've been probably all the way back to the acquisition and 2020 or 2021 .

Speaker #5: Excuse me . And you know , that is set up for continued growth going forward . And I think as we've talked , Matt , you know , once you're kind of it's it's not pharma .

Adam Greenlee: I think as we've talked, Matt, once you're kind of, it's not pharma, it's not healthcare, but it's pretty darn close. Once you're specced in, you have a long runway with those product launches that occur, and we benefit in the long term. Again, continue to win a disproportionate amount of the new product launches being made by customers as well.

Speaker #5: It's not healthcare , but it's pretty darn close . Once you're specked in you have a long runway with those those product launches that occur .

Speaker #5: And so we benefit in the long term . But again , continue to win a disproportionate amount of the new product launches being made by customers as well .

Speaker #4: Matt . Just one point of clarification . The margins on these products for personal care , home care , their average for dispensing , which is obviously higher for the overall portfolio of DSC .

Alexander Hutter: Matt, just one point of clarification. The margins on these products for personal care, home care, they're average for Dispensing and Specialty Closures, which is obviously higher for the overall portfolio of Dispensing and Specialty Closures. There's mix involved as well.

Speaker #4: So there's there's mix involved as well . .

Speaker #9: That makes sense . Thank you both . There . And then as a follow up on Vayner , so you've had that for 12 months now .

[Analyst]: That makes sense. Thank you both there. As a follow up on Vayner, you've had that for 12 months now. Could you break out what the trailing 12 month revenue and EBITDA contribution was from that business? Any update on the $20 million in synergies achieved to date? It sounded like personal and home care was isolated to North America. Is that really in legacy products or any impact on the Vayner portfolio given it has, I think, about a third U.S. exposure? Thanks again for taking the questions.

Speaker #9: Could you break out with the trailing 12 month revenue and EBITDA contribution was from that business ? Any update on the 20 million in synergies achieved to date ?

Speaker #9: And it sounded like personal and home care was isolated to North America . Is that really a legacy products or any impact on the portfolio given it has ?

Speaker #9: I think about a third U.S. exposure. Thanks again for taking the questions.

Speaker #5: Yeah , great questions . And really the the personal care and home care impact was in the legacy business . So that's that's the traditional Silgan side of of our dispensing closures business .

Adam Greenlee: Yeah, great questions. Really, the personal care and home care impact within the legacy business, so that's the traditional Silgan side of our Dispensing and Specialty Closures business. Vayner, Matt, honestly, it's fully integrated. It's nearly impossible now. Yes, we have a standalone P&L, but we've made investments into their facilities that would have gone into legacy Silgan facilities. It really is difficult to try to break anything out there. What I'll say is that the product portfolio that came over with the acquisition continues to perform really well and, you know, right in line, if not slightly ahead of expectations in many of the cases. The synergies, yeah. Very detailed synergy estimate that we come up with. We do bottoms up synergies. The phasing is very specific, so there are no surprises.

Speaker #5: So you know Matt , honestly it's fully integrated . It's it's nearly impossible now . Yes we have a standalone PNL but we've made investments into their facilities that would have gone into legacy .

Speaker #5: Silgan facilities. So, it really is difficult to try to break anything out there. What I'll say is that the product portfolio that came over with the acquisition continues to perform really well.

Speaker #5: And , you know , right in line , if not slightly ahead of expectations . And many of the cases and I'm trying to think the sentences .

Speaker #5: Yeah, so you know, we have a very detailed synergy estimate that we come up with. We do bottoms-up synergies, and the phasing is very specific.

Speaker #5: So there are no surprises . So we've delivered exactly what we expected from a synergy standpoint . And really have another six ish months to deliver the remaining synergies .

Adam Greenlee: We've delivered exactly what we expected from a synergy standpoint and really have another 6ish months to deliver the remaining synergies. Right on track. I think it's $20 million of the $25 million have been delivered and we're in good shape to deliver the balance.

Speaker #5: So right on track I think it's 20 of the 25 million have been delivered . And we're in good shape to deliver the balance .

Speaker #9: Excellent . Thank you again .

Operator: Excellent.

[Analyst]: Thank you again.

Speaker #3: Our next question will come from Gabe Haiti with Wells Fargo Securities .

Operator: Our next question will come from Gabe Hajde with Wells Fargo Securities.

Speaker #10: Hey good morning guys . Thanks for taking the question , Adam . I'm trying to reconcile , I think in your your comments , you said you expect 20 , 26 free cash flow to be up from 2025 , appreciating that you guys , it sounds like are obviously whittling down .

[Analyst]: Hey, good morning guys. Thanks for taking the question, Adam. I'm trying to reconcile, I think in your comments you said you expect 2026 free cash flow to be up from 2025. Appreciating that you guys, it sounds like, are obviously whittling down. I think you said some of your own inventories this year and historically speaking we've kind of seen an inverse relationship with production, EBITDA and cash flow. Right. If you're ramping up earnings, typically cash flow is going to go the opposite direction and vice versa. Unless the business is in wind down or something like that, I'm curious how you're thinking about or what the levers are to grow cash flow in 2026 versus 2025.

Speaker #10: I think you said some of your own inventories this year and historically speaking , we've kind of seen an inverse relationship with production , EBITDA and cash flow .

Speaker #10: Right ? So if you're ramping up earnings , typically cash flow is going to go the opposite direction . And vice versa . So and unless the business is in wind down or something like that , I'm curious how you're thinking about or what the levers are to grow cash flow in 26 v 25 .

Speaker #5: Yeah , and I don't disagree with what you said , Gabe . I think for us , as we're looking at 26 , it's continued improvements in working capital and incremental programs that will execute next year .

Adam Greenlee: Yeah, I don't disagree with what you said, Gabe. I think for us as we're looking at 2026, it's key. Continued improvements in working capital and incremental programs that we'll execute next year, frankly, just as we have been doing for the last several years. There's always room to improve, but we've got specific working capital initiatives that we'll be executing in 2026.

Speaker #5: Frankly , just as we have been doing for the last several years . So a there's always room to improve , but we've got specific working capital initiatives that we'll be executing in 26 .

Speaker #10: Okay . And then I guess maybe to George's point on communications as it relates to expectations and things like that , outside of of giving us a view about earnings for next year or guidance on volumes , is there anything that you can think of to do that would instill some confidence and conviction in sort of the strategy ?

[Analyst]: Okay. I guess maybe to George's point, on communications as it relates to expectations and things like that, outside of giving us a view about earnings for next year or guidance on volumes, is there anything that you can think of to do that would instill some confidence and conviction in the strategy? I do believe that Dispensing and Specialty Closures should be a faster growing, higher margin segment. You guys have spent a lot of time and effort over the past three to five years to reposition the business. I'm just curious from your perspective if there are other considerations to instill some confidence.

Speaker #10: Because I do believe , you know , that DSC should be a faster , growing , higher margin segment . You guys have spent a lot of time and effort over the past 3 to 5 years to reposition the business .

Speaker #10: So I'm just curious , from your perspective , if there are other considerations to instill some confidence ?

Speaker #5: Sure , Gabe , I look , it's I think performance matters delivery upon expectations matters . You know , I think if we take a half a step back and , and talk about our businesses , you know , dispensing especially closures is still growing and is delivering tremendous organic growth and inorganic growth opportunities for the business .

Adam Greenlee: Sure, Gabe. I think performance matters, delivery upon expectations matters. If we take a half a step back and talk about our businesses, dispensing and specialty closures is still growing and is delivering tremendous organic growth and inorganic growth opportunities for the business. I think it's some of the legacy applications that have been a bit of a challenge in 2025, specifically metal containers has done exactly what we expected it to for the year. We're going to have another record year of performance in our custom container segment. I think.

Speaker #5: I think it's some of the legacy applications that have have been a bit of a challenge in 2025 , specifically , metal containers has done exactly what we expected it to for the year , and we're going to have another record year of performance in our our custom container segment .

Speaker #5: So , you know , I think , you know , just how we communicate that to the market . And , you know , we talked I think even on the last call about , you know , as we think about giving guidance for 2026 , it's likely that we're going to be a little more conservative as far as our outlook of of what we'll be delivering for the business to try to take into account more of the unknown things , like a customer bankruptcy and , you know , whether that impacted a specific product .

[Analyst]: You know.

Adam Greenlee: Just how we communicate that to the market. We talked, I think even on the last call, about as we think about getting guidance for 2026, it's likely that we're going to be a little more conservative as far as our outlook of what we'll be delivering for the business to try to take into account more of the unknown things like a customer bankruptcy and whether that impacted a specific product.

Speaker #10: Okay , maybe anything on on the capital redeployment side , I know leverage is a consideration , but .

[Analyst]: Okay, maybe anything on the capital redeployment side? I know leverage is a consideration, but.

Speaker #5: Yeah . You know , look , capital allocation is a is a focus for us . Certainly here in our corporate office all the time .

Adam Greenlee: Yeah, you know, look, capital allocation is a focus for us certainly here in our corporate office all the time. We did buy back about $60 million worth of shares in the third quarter. Clearly, we thought there was a dislocation in the market and we were opportunistic with that. We continue to evaluate our capital allocation all the time. Again, I'll just say we thought there was a dislocation in Q3 and we were opportunistic with that. Yeah, Gabe, I think what's not said in that is that our leverage point is kind of drifting back toward the midpoint of the range after we've fully integrated the Vayner acquisition. What that means is that we're.

Speaker #5: And so , you know , we did buy back about $60 million worth of of of shares . And the third quarter clearly we thought there was a dislocation in the market .

Speaker #5: And we were opportunistic with that . You know , we continue to evaluate our capital allocation all the time . And you know , again , I'll just say we thought there was a dislocation in Q3 and we were opportunistic with that .

Speaker #4: Yeah .

Speaker #5: Gabe .

Speaker #4: I think what what's not said in that is that our leverage point is , is kind of drifting back toward the midpoint of the range after we've fully integrated the Vayner acquisition .

Speaker #4: So , so what that means is that we're well positioned to continue looking for M&A opportunities to deploy capital and continue to grow the business .

Alexander Hutter: Positioned to continue looking for M&A opportunities to deploy capital and continue to grow the business.

Speaker #10: Thank you .

[Analyst]: Thank you.

Speaker #3: We'll take our next question from Mike Rocklin with Truist Securities .

Operator: We'll take our next question from Mike Roxland with Truist Securities.

Speaker #11: Yeah . Thanks , everyone , for taking my questions . Adam , can you tell us why you think North America hotmail beverage is a good market to be in ?

[Analyst]: Yeah, thanks everyone for taking my questions. Adam, can you tell us why you think North America hot fill beverage is a good market to be in? Obviously it's facing some issues this year. It seems like it only started to recover from a volume perspective last year from destocking, and at the same time one of your peers is looking to exit. I would love to get just any color you have about why you think it's a business that makes sense to be in.

Speaker #11: You know , obviously it's facing some issues this year . It seems like it only starts to recover from a volume perspective last year from destocking .

Speaker #11: And at the same time , one of your peers is looking to exit . So I would love to get just any color you have about why you think this is a business that makes sense to be in .

Speaker #5: Yeah , it's always been a really good business for Silgan . Very stable . I think . You know , if you go back a decade , growth rates were a little bit more accelerated than we've gotten to today .

Adam Greenlee: Yes, it's always been a really good business for Silgan. Very stable. I think if you go back a decade, growth rates were a little bit more accelerated than we've gotten to today. It is still a growing market and we think that we're very well positioned with the largest players in that market. When we think about sports drink specifically, it's really not a commodity beverage. It's a higher volume beverage than some of the specialty applications that we deal with, but nothing close to kind of the CFD water markets from a volume standpoint. Those packages are differentiated, the beverages themselves are differentiated and there's a lot of technology that goes into the packaging around those products. The closures that we provide to the North American beverage market, particularly for these hot filled beverages, is a technologically advanced solution versus some of the other more commoditized products.

Speaker #5: But it is still a growing market . And we think that we're very well positioned with the the largest players in that market .

Speaker #5: You know , and we think about sports drinks specifically . It's it's really not a commodity beverage . It's a higher volume beverage than some of the specialty applications that we deal with .

Speaker #5: But nothing close to kind of the CSB water markets from a volume standpoint . So . Those packages are differentiated . The beverages themselves are differentiated , and there's a lot of technology that goes into the packaging around those products .

Speaker #5: So the closures that we provide to the North American beverage market , particularly for these hot filled beverages , is is a technologically advanced solution versus some of the other more commoditized products .

Speaker #5: And we believe we get value from providing the Silgan service model along with really technologically advanced closure systems for that beverage market.

Adam Greenlee: We believe we get value for providing the Silgan service model along with really technologically advanced closure systems for that beverage market. We've always thought it's a good market, Mike, and it's provided really stable growth over time. None of us had anticipated the weather challenge that the sports drinks category was going to face earlier in the year. We think it's isolated to the year for the most part. I'd tell you volume played out in the second and third quarter. Ultimately, as we expected, fourth quarter volumes have stabilized and we think that the inventory correction took place in Q2 and late Q2 and Q3 as we had discussed previously.

Speaker #5: So , you know , we've always thought it's a good market . Mike . And , you know , it's provided really stable growth over time .

Speaker #5: And you know , none of us had anticipated the weather challenge that the sports drinks category was going to face earlier in the year .

Speaker #5: We think it's isolated to the year. You know, for the most part, I'd tell you volume played out in the second and third quarters.

Speaker #5: Ultimately, as we expected, fourth quarter volumes have stabilized, and we think that the inventory correction took place in Q2 and late Q2 and Q3, as we had discussed previously.

[Analyst]: Got it. If I heard you correctly or Kim correctly, there was double-digit decline volumes in hospital for sports drinks in Q3. That was in line with your expectations.

Speaker #11: So if I heard you correctly or Kim correctly , there was a double digit decline in volumes in hospital for sports drinks in three Q so that was in line with our .

Speaker #4: Expectations .

Speaker #5: Yeah . So right at 10% food and beverage and DSC was down , call it 5% . And the hot beverage portion sports drinks was down 10% .

Adam Greenlee: Yeah, so right at 10%, food and beverage and Dispensing and Specialty Closures was down, call it 5%, and the hot filled beverage portion, sports drinks, was down 10%. That was right in line with where we expected it to be.

Speaker #5: But that was right in line with where we expected it to be .

Speaker #11: Gotcha . Okay . Thank you . Just one quick follow up . You know , in terms of metal containers that any update on the customer going through bankruptcy volumes came in better than we were expecting ?

[Analyst]: Gotcha. Okay, thank you for that. Just one quick follow-up. In terms of metal containers, any update on the customer going through bankruptcy? Volumes came in better than we were expecting, certainly in the quarter. Kudos to you guys for driving significant increases in pet food. Just wondering where that metal container bankruptcy stands and whether the $10 million adjusted EBIT impact you mentioned last quarter is still relevant for 2H. Do you have any sense of what that impact could be for 2026?

Speaker #11: Certainly in the quarter . Kudos to you guys for for driving increase in pet food . But just wondering where that metals container bankruptcy stands and whether the $10 million Ebit impact you mentioned last quarter is still relevant for shape ?

Speaker #11: And do you have any sense of what that impact could be for 2026 ?

Speaker #5: Yeah . So I you know , metal containers had a really good third quarter write volume came in right . As expected . Not only for the pet food market , as you mentioned , Mike , but also for the customer that was going through the bankruptcy .

Adam Greenlee: Yeah. Metal containers had a really good third quarter. Volume came in right as expected, not only for the pet food market, as you mentioned, Mike, but also for the customer that was going through the bankruptcy. We don't have an update. Timing would indicate at this point that there should be some indication of resolution to the bankruptcy proceeding, call it around year end. We think as we go into 2026, we'll have much greater clarity. I just want to make it really clear that customer did exactly what they said they were going to do in Q3 and volumes were right in line with our expectations. There's a little bit of rollover into Q4. Some of the pack went a little bit later than the September date for Q3 that we typically talk about. I think everything is going essentially as planned.

Speaker #5: So really we don't have an update. You know, we can tell you timing would indicate at this point that there should be some indication of resolution to the bankruptcy proceeding.

Speaker #5: Call it around year end . So , you know , we think as we go into 26 , we'll have much greater clarity .

Speaker #5: But just want to make it really clear that customer did exactly what they said they were going to do in Q3 , and volumes were right in line with our expectations .

Speaker #5: There's a little bit of rollover into Q4 . As you know , some of the pack went a little bit later . Then the September date for Q3 that we typically talk about .

Speaker #5: So I think everything is going essentially as planned . I think the thing that we want to make really clear is , you know , we think we're probably at a low point with volume for that customer given what happened in 24 and in 25 , there could be a potential where , you know , a new owner wants to to grow the business and put put support behind that brand .

Adam Greenlee: The thing that we want to make really clear is we think we're probably at a low point with volume for that customer. Given what happened in 2024 and in 2025, there could be a potential where a new owner wants to grow the business and put support behind that brand. That'd be a great thing because we'll be able to utilize the capacity that essentially we put on hold for this customer in a requirements based contract. If that doesn't happen, if we just maintain the volume that we have right now, again, I think as I said earlier today, we're going to look to take out costs and I think that's kind of at least in the $10 million range. As I sit here now, it won't all be in 2026, but that's kind of the magnitude that we see at the current volume level.

Speaker #5: That'd be a great thing because we'll be able to to utilize the capacity that essentially we put on hold for this customer in a requirements based contract .

Speaker #5: If that doesn't happen , if we just maintain the volume that we have right now , again , I think as I said earlier today , you know , we're going to look to take out cost .

Speaker #5: And I think that's kind of at least in the $10 million range. As I sit here now, it won't all be in 2026.

Speaker #5: But that's kind of the magnitude that we see at the current volume level .

Speaker #11: Got a very clear Adam. Thank you.

[Analyst]: Very clear. Adam, thank you.

Speaker #3: Your next question will come from Jeff Zukas with J.P. Morgan .

Operator: Our next question will come from Jeff Zekauskas with J.P. Morgan.

Speaker #12: Thanks very much. You have a lower outlook for the fourth quarter, but your free cash flow for the year is unchanged.

[Analyst]: Thanks very much. You have a lower outlook for the fourth quarter, but your free cash flow for the year is unchanged. Why is that, or what are the compensatory mechanisms to generate the same amount of free cash flow this year?

Speaker #12: Why? Why is that? What are the compensatory mechanisms to generate the same amount of free cash flow this year?

Speaker #5: Yeah . So Jeff , we you know , obviously with the reduction from our customers , we look to drive cost out of our system in Q4 .

Adam Greenlee: Yeah, so Jeff, obviously with the reduction from our customers, we look to drive costs out of our system in Q4. As we take additional downtime, that's going to allow for us to reduce our inventory as well. It's a couple of components of working capital improvements, but it's really driven by inventory reductions that we're taking, I'll just say proactively as a response to our customers reducing demand in Q4.

Speaker #5: And as we take additional downtime , obviously that that's going to allow for us to reduce our inventory as well . So really it's a couple of components of working capital improvements , but its really driven by inventory reductions that we're taking .

Speaker #5: I'll just say proactively as a response to our customers reducing demand in Q4 .

Speaker #12: Propylene values have really come down and I would think that this might be an opportunity in your dispensing business to to build inventories that do the polypropylene and propylene changes , make a difference to that business ?

[Analyst]: Propylene values have really come down, and I would think that this might be an opportunity in your dispensing business to build inventories. Do the polypropylene and propylene changes make a difference to that business?

Speaker #5: It does. And I think you've got it exactly right. It is the business that has the most impact. And I'll come back to that in a second.

Adam Greenlee: It does, and I think you've got it exactly right. It is the business that has the most impact. I'll come back to that in a second. Our Custom Containers business is very tight on their pass through mechanisms, and there isn't much benefit or detriment to moves in resin. I say the same thing about our food and beverage closures. When you get to the Dispensing and Specialty Closures business, while we've made improvements in reducing the lag, they still exist. We are a little more subject to kind of a quarterly lag, maybe a little bit longer in some cases. We kind of have a benefit or detriment depending upon how resin's moving. This most recent change is a pretty significant one.

Speaker #5: You know , our custom containers business is very tight on their pass through mechanisms . And , you know , there isn't much benefit or detriment to moves in resin .

Speaker #5: I'd say the same thing about our food and beverage closures . When you get to the dispensing systems business , you know , while we've made improvements in reducing the lags , they still exist .

Speaker #5: So we are a little more subject to , you know , kind of a quarterly lag , maybe a little bit longer in some cases .

Speaker #5: And so we we kind of have a benefit or detriment depending upon how resins moving this most recent change is a pretty significant one .

Speaker #5: And we have included a couple hundred thousand of of upside in our forecast for the most recent change that just happened . I maybe late last week and the resin market .

Adam Greenlee: We have included a couple hundred thousand of upside in our forecast for the most recent change that just happened maybe late last week in the resin market. I think you've got it right. That's the business that gets impacted, and polypropylene is their largest component of resin buy in that business.

Speaker #5: So I think you've got it right that that's the business that gets impacted, and polypropylene is their largest component of resin buy in that business.

[Analyst]: Great, thanks so much.

Speaker #12: Thanks so much .

Speaker #3: Our next question will come from Arun Viswanathan with RBC Capital Markets .

Operator: Our next question will come from Arun Viswanathan with RBC Capital Markets.

Speaker #13: Great . Thanks for taking my question . Hope you guys are well and apologize if this was asked earlier , but I guess I just wanted to ask about the , you know , the last few quarters we've had a few discrete items show up and , you know , they were I guess , you know , did you contemplate potentially pre-announcing those items at all ?

Adam Greenlee: Great.

[Analyst]: Thanks for taking my question. Hope you guys are well and apologies if this was asked earlier. I just wanted to ask about the last few quarters. We've had a few discrete items show up. Did you contemplate potentially pre-announcing those items at all? Maybe that would help frame that they are kind of one time in nature. Did you contemplate that this time around as well or no, I don't.

Speaker #13: And , you know , maybe that would help kind of frame , you know , that they are kind of one time in nature .

Speaker #13: Did you did you contemplate that this time around as well , or . No .

Speaker #5: I don't . We talked about a little bit earlier , Arun , and I think the message I was trying to convey was really while we did see some softening in a couple of the markets , personal care and home care products , you know , in dispensing and specialty closures and custom containers .

Adam Greenlee: We talked about it a little bit earlier, Arun, and I think the message I was trying to convey was really while we did see some softening in a couple of the markets, personal care and home care products in Dispensing and Specialty Closures and Custom Containers very late in September, it wasn't until we got all the way through the October, early October forecast cycle. This was the second week, late first week, early second week of October that we were running through those numbers and then had to do our kind of reaction and what we were going to proactively do at Silgan Holdings to respond to the reduced demand requirements from our customers in Q4.

Speaker #5: Very late in September , it wasn't until we got all the way through the October early October forecast cycle . So this was a , you know , second late first week , early second week of October that we were running through those numbers and then had to do our our kind of reaction and , and what we were going to proactively do at Silgan to respond to the reduced demand requirements from our customers in Q4 .

Speaker #5: So , you know , I just I would say Q3 , we delivered exactly what we said we were going to do and that that was very well known to us as we exited September and nothing to talk about .

Adam Greenlee: I would say Q3 we delivered exactly what we said we were going to do and that was very well known to us as we exited September and nothing to talk about there. The Q4 forecasting process was pretty dynamic given the magnitude of the change and working with our customers and internally at Silgan Holdings to make sure we got that right.

Speaker #5: There . And the Q4 forecasting process was pretty dynamic given the magnitude of the change and working with our customers and and internally at Silgan to make sure we got that right .

Speaker #14: Okay, thanks for that. And then.

[Analyst]: Okay, thanks for that.

[Analyst]: I guess on a related or not necessarily related, but along the lines of clarifying what's in each business, is there a way to kind of segment out maybe within Dispensing and Specialty Closures how much of that business you would consider as highly cyclical or prone to some more of this volatility versus the portion that is maybe higher growth and less cyclical? I think that the sports drink side, while you've highlighted a number of positives, also does exhibit some of that cyclicality. Whereas fragrance in some other markets maybe, maybe more structural growers. Could you help kind of frame that maybe into buckets for Dispensing and Specialty Closures and maybe even Metal Containers? I imagine Metal Containers is not so much included there because it's a little bit more mature. Maybe for Dispensing and Specialty Closures that would be helpful.

Speaker #13: I guess on a related note , or not necessarily related , but along the lines of of clarifying what's in each business , is there a way to kind of segment out maybe within DSC , how much of that business you would consider as highly cyclical or , you know , prone to , to , to some more of these ?

Speaker #13: You know , this volatility versus the portion that is maybe higher growth and less cyclical . You know , I think that the sports drink side , you know , while you've highlighted a number of positives , also does exhibit some of that cyclicality , whereas you know , fragrance and some other markets maybe , you know maybe more structural growers .

Speaker #13: So could you help kind of frame that maybe into buckets for , for DSC and maybe even metal container . I imagine is not so much included there because it's a little bit more mature .

Speaker #13: But but yeah , maybe for DSC that would be helpful .

Speaker #5: Yeah . I mean , Arun , here's how we think about our dispensing and specialty closures segment . It's basically all of it .

Adam Greenlee: Yeah, I mean, Arun, here's how we think about our Dispensing and Specialty Closures segment. It's basically all of it are consumer stable products. We really don't view any of that business as being cyclical in nature. Yes, we've had a couple of one-time instances here, like really bad weather that affected the sports drinks category. I think the reality is, if it hasn't been clear yet, I'll just try to say it one more time. This inventory correction is our customers' growth. They are growing. They did not grow in 2025 as much as they had anticipated. This Q4 correction is kind of moving from a mid to high single-digit growth expectation for those categories back to a mid single-digit growth or maybe a low single-digit growth in certain products. It's fixing, running through the year with higher expectations for growth. They're still growing.

Speaker #5: Are consumer staple products . So you know , we really don't view any of that business as being cyclical in nature . Yes .

Speaker #5: We've had a couple of of won time instances here . Like really bad weather that affected the sports drinks category . And you know , I think the reality is , you know , if it hasn't been clear yet , I'll just try to say it one more time .

Speaker #5: This inventory correction is our customers growth . They are growing . They did not grow in 2025 as much as they had anticipated .

Speaker #5: So this Q4 correction is kind of moving from a mid to high single digit growth expectation for those categories . Back to a mid-single digit growth , or maybe a low single digit growth in certain products .

Speaker #5: So , you know , it's kind of it's fixing running through the year with higher expectations for growth . They're still growing . So you know , that's what we've been working through with our customers .

Adam Greenlee: That's what we've been working through with our customers. I really don't think that our products are cyclical in nature. I agree with your point. I think how I would probably try to bucket that, I'm looking around the table to my team and say we think we have a bifurcated consumer right now and that's what's driving this activity. The higher-end consumer is doing exceptionally well and is buying products and driving growth for our company. The mid to lower-end consumer is really thinking hard about where they're spending their dollars and how they're stretching those dollars. We get the benefit to your very point in our Metal Containers business because nutrition and low-cost nutrition is a really important item for all consumers, particularly for that portion of the consumer portfolio. We have product in personal care, we do home care products like Hard Surface Cleaners.

Speaker #5: So I , I really don't think that our products are cyclical in nature . I agree with your point . I think , you know , how I would probably try to bucket that .

Speaker #5: And I'm looking around the table to my team and say , we think we have a bifurcated consumer right now . And that's what's driving this activity .

Speaker #5: The higher end consumer is doing exceptionally well and is buying products and driving growth for our company . The mid to lower end consumer is really thinking hard about where they're spending their dollars and how they're stretching those dollars .

Speaker #5: We get the benefit to your very point in our metal containers business because nutrition and low cost nutrition is a really important item for all consumers .

Speaker #5: But particularly for that , that portion of the consumer portfolio . So , you know , I mean , we have products and personal care .

Speaker #5: We do , you know , home care products like hard surface cleaners . We think those those products continue to get purchased . It just maybe they're purchased a month later .

Adam Greenlee: We think those products continue to get purchased. It just maybe they're purchased a month later. We'll see what happens with 2026 and tax initiatives from the U.S. administration. I do think no tax on tips, I do think no tax on overtime is a very clear response trying to provide some support to that lower and mid-tier consumer that is trying to stretch dollars today.

Speaker #5: You know , we'll see what happens with with 2026 . And and you know , tax initiatives from the US administration . But I do think no tax on tips .

Speaker #5: I do think no tax on overtime is a very clear response . Trying to provide some support to that lower and mid tier consumer that is trying to stretch dollars today .

Speaker #14: Okay . Thanks for that . And then just lastly .

[Analyst]: Okay, thanks for that. Lastly, on the free cash flow, the $430 million sounds, you know, very respectful in light of what's going on. I know that you're taking an inventory hit right now in Q4. Just two things. Would you say that the inventory reduction that you're proactively pursuing will address all of that and maybe it lingers a little bit into Q1 but does get you a substantial part of the way there? Given that you will be generating that level of free cash flow, could you potentially more aggressively pursue share buyback just given what's going on with the stock here today and more recently.

Speaker #13: On the free cash flow . So the for 30 sounds . You know , very respectable in light of what's going on . And you know I know that you're taking a inventory hit right now in Q4 .

Speaker #13: Just two things . So would you say that the inventory reduction that , you know , you're proactively pursuing will address , you know , all of that and maybe it lingers a little bit into Q1 , but does does get you substantial part of the way there .

Speaker #13: And then, given that you will be generating that level of free cash flow, could you potentially more aggressively pursue share buybacks, just given what's going on with the stock here today?

Speaker #13: And, and more recently, thanks.

[Analyst]: Thanks.

Speaker #5: Yeah . So we do think the inventory reduction both for our customers and for us is going to be limited to Q4 and to your point , a big part of us being able to deliver the $430 million of free cash flow , I think as we sit here today again , we talked a little bit about capital deployment and capital allocation .

Adam Greenlee: Yeah. We do think the inventory reduction both for our customers and for us is going to be limited to Q4. To your point, Arun, it's a big part of us being able to deliver the $430 million of free cash flow. I think as we sit here today, again, we talked a little bit about capital employment and capital allocation. I'll just repeat what I said earlier that we repurchased $60 million of shares in the third quarter because we thought the market was dislocated. I think we have the ability to consider capital allocation in any of the tools that we have in our toolkit. I think as Bob said very clearly, we're getting back to the midpoint of our leverage ratio by the end of the year. We've got flexibility whether it be for M&A activity or for share repurchase activity.

Speaker #5: You know , I'll just repeat what I said earlier that , you know , we we repurchased $60 million of shares in the third quarter because we thought the market was dislocated .

Speaker #5: And , you know , I think we have the ability to to consider capital allocation in any of the tools that we have in our , toolkit .

Speaker #5: And I think , as Bob said , you know , very clearly , we're we're getting back to the midpoint of our , our leverage ratio by the end of the year .

Speaker #5: So we've got flexibility , whether it be at for M&A activity , whether it be for share repurchase activity . We aren't announcing anything by any stretch today .

Adam Greenlee: We aren't announcing anything by any stretch today. I think all things are on the table as we move forward and focusing on delivering the most value to our shareholders.

Speaker #5: But you know, I think all things are on the table as we move forward, focusing on delivering the most value to our shareholders.

Speaker #15: Thanks .

[Analyst]: Thanks.

Speaker #3: Well, now take our next question from Anthony Pettinari with Citi.

Operator: We'll now take our next question from Anthony Pettinari with Citi.

Speaker #16: Hi . Good morning . You know , following up on Aaron's question , is it possible to talk a little bit more about what your dispensing and specialty closures customers are saying about the weakness in personal care and home care ?

[Analyst]: Good morning. Following up on Arun's question, is it possible to talk a little bit more about what your Dispensing and Specialty Closures customers are saying about the weakness in personal care and home care? I mean, are they expecting volume growth in 2026, or are they changing product mix or promotions or strategies to grow volumes? Just wondering how they're, kind of, what they're sharing about maybe volume outlook and, you know, do they see this as sort of a speed bump or an adjustment or something that could be kind of longer duration?

Speaker #16: I mean , are they expecting volume growth in 26 or are they changing product mix or promotions or strategies to grow volumes ? Just wondering how they're kind of what they're sharing about .

Speaker #16: Maybe volume, outlook, and, you know, do they see this as sort of a speed bump or an adjustment, or something that could be kind of longer duration?

Speaker #5: Yeah . So I think just to cut right to the chase , Anthony , it is it is an adjustment to , to to where we have been .

Adam Greenlee: Yeah. I think just to cut right to the chase, Anthony, it is an adjustment to where we have been. Those markets and those customers are delivering growth in 2025. I just want to try to be really clear about that. It just is going from a mid to high single digit expectation to a low to mid single digit expectation. That adjustment for the year is occurring all in Q4. These are growing markets, they are growing categories, they are growing products, and the expectation is very clearly that they will grow in 2026 as well. I think what I would say is from a conservative standpoint, I would say you would think about them growing in the low to mid single digits in 2026 versus the original expectation for 2025 of mid to high.

Speaker #5: Right . So those markets are and those customers are delivering growth in 2025 . Just want to try to be really clear about that .

Speaker #5: It it just is going from a mid to high single digit expectation to a low to mid single digit expectation . And and that adjustment for the year is occurring all in Q4 .

Speaker #5: So, these are growing markets. They are growing categories. They are growing products. And the expectation is very clearly that they will grow in 2026 as well.

Speaker #5: And I think what I would say is from a conservative standpoint , I would say you would think about them growing in the low to mid single digits in 2026 versus the original expectation for 25 of mid to high .

Speaker #5: So that's probably an adjustment that we're thinking about as we turn to 2026. Even though we're not giving guidance yet, that's how we're thinking about these specific markets.

Adam Greenlee: That's probably the adjustment that we're thinking about as we turn to 2026, even though we're not giving guidance yet, that's how we're thinking about these specific markets.

Speaker #16: Okay okay . That's very helpful . And then just switching gears to metal containers , is there any dialogue with metal containers customers on rising metal costs or are you seeing any kind of push out of buying into 26 potentially , you know , is anyone waiting for tariffs maybe to get pulled back or some kind of move in metal ?

[Analyst]: Okay, that's very helpful. Just switching gears to metal containers, is there any dialogue with metal containers customers on rising metal costs, or are you seeing any kind of push out of buying into 2026 potentially? Is anyone waiting for tariffs maybe to get pulled back or some kind of move in metal? I'm just curious if you've seen any kind of push from Q3 to Q4, maybe Q4 into 2026 on metal.

Speaker #16: I'm just curious if you've seen any kind of push from 3 to 4 cu , maybe for CU into 26 on metal .

Speaker #4: Yeah .

Speaker #5: So yeah , I mean , as I think you know , Anthony , you know , the metal component is the largest cost component of of a metal food can .

Adam Greenlee: Yeah, I mean, as I think you know, Anthony, the metal component is the largest cost component of a metal food can. It is literally a daily conversation with our customers and a really important one. Maybe to get to the end of the question, no push out from Q3 to Q4. For us in our franchise customer model, they pay the same value for the can in January that they're going to pay in November. We don't see that within the year, kind of product moving between quarters. I think maybe there's two things to talk about as we think about turning the calendar to 2026.

Speaker #5: So it is literally a daily conversation with our customers . And a really important one . So maybe to get to the end of the question .

Speaker #5: So so no push out from Q3 to Q4 . You know , for us and our franchise customer model , you know , they pay the same value for the can in January that they're going to pay in November .

Speaker #5: So really , we don't see that within the year kind of of product moving between quarters . I think maybe there's two things to talk about as we think about turning the calendar to 26 .

Speaker #5: Yes, I think we're going to have, maybe hopefully, we'll see more clarity on what happens from a tariff perspective and kind of the rulings that are expected between now and the end of the year from the court system.

Adam Greenlee: Yes, I think we're going to have maybe, hopefully we'll see more clarity on what happens from the tariff perspective and the rulings that are expected between now and the end of the year from the court system that is probably, you know, would drive some activity, I would think, if the courts overturn the tariffs. I think the other component is right now we're looking at sizable increases in the raw materials on the steel side of the Metal Containers business for 2026. In fairness, we're actually having pre-buy conversations with some customers ahead of inflation that we're all expecting for 2026 outside of whatever court rulings happen between now and then. That's more of the conversation versus trying to push orders out into 2026 at this point.

Speaker #5: That is probably , you know , would drive some activity . I would think if if the courts overturn the tariffs , I think the other component is right now , we're looking at sizable increases in the raw materials on the steel side of of the metal containers business for 26 .

Speaker #5: So, you know, in fairness, we're actually having pre-buy conversations with some customers ahead of inflation that we're all expecting for 2026.

Speaker #5: Outside of whatever court rulings happen between now and then, so that's more of the conversation versus trying to push orders out into 2026 at this point.

Speaker #16: Okay . That's very helpful . I'll turn it over .

[Analyst]: Okay, that's very helpful. I'll turn it over.

Speaker #3: We'll now take a question from Daniel Rizzo with Jefferies.

Operator: We'll now take a question from Daniel Rizzo with Jefferies.

Speaker #17: Hey , guys . Thanks for putting me in . So , so back in , you mentioned that these are legacy issues with the with the destocking .

[Analyst]: Hey guys, thanks for fitting me in. You mentioned that these are legacy issues with the destocking. I was wondering if back in 2008, 2009, the Great Recession, we saw something similar and how long it lasted during that kind of downturn.

Speaker #17: I was wondering if back in 2000 and eight , 2009 , the Great Recession , we saw something similar and how long it lasted during that , that kind of downturn .

Speaker #5: 2008 2009 what I do remember about that and you're testing me , Dan , because that was quite a few years ago . Metal containers volume was accelerating into the Great Recession .

Adam Greenlee: 2008, 2009, what I do remember about that, and you're testing me, Dan, because that was quite a few years ago, metal containers volume was accelerating into the Great Recession. Right. That's sort of what I was mentioning earlier, that for a very long time at Silgan, metal containers was an indicator of economic activity because you would see as times got tougher, metal food cans were the beneficiary of that and we're seeing that to some degree now. I'm trying to think of how the other categories performed then. I just would say as consumers stretch dollars without knowing specifically, Dan, I would assume that it was a very similar kind of phenomenon that impacted our Custom Containers segment at that time and probably our beverage segment of our closures business prior to Dispensing and Specialty Closures joining Silgan in 2017.

Speaker #5: Right . So that's that's sort of what I was mentioning earlier , that , you know , for a very long time at Silgan , Metal Containers was an indicator of economic activity because you would see as time got tougher , metal food cans were the beneficiary of that .

Speaker #5: And we're seeing that to some degree now . So I , I'm trying to think of how the other categories perform then I just would say as consumers stretch dollars without knowing specifically , Dan , I would assume that it was a very similar kind of phenomenon that impacted our custom container segment at that time .

Speaker #5: And probably our beverage segment of our closures business . Prior to dispensing , joining , joining Silgan in 2017 .

Speaker #17: All right . And then conversely , if , if credit is eased and the consumer is seeing some relief , how long till that kind of flows through to your customers then to you guys , is it relatively quick or does it take a couple of quarters , or how should we think about that ?

[Analyst]: If credit is eased and the consumer is seeing some relief, how long till that kind of flows through to your customers then to you guys? Is it relatively quick or does it take a couple quarters, or how should we think about that if things were to improve for the consumer because of that?

Speaker #17: If things were to improve for the consumer because of that?

Speaker #5: Well , and I missed the first part of your question . So .

Adam Greenlee: I missed the first part of your question.

Speaker #17: If credit if credit if credit eases and the consumer is .

[Analyst]: If credit eases and the consumers.

Speaker #5: Yeah , I do think that that again , you're talking about the consumer that's making a purchase point decision of of feeding their family or buying that , you know , hard surface cleaner in a given month .

Adam Greenlee: I do think that again you're talking about the consumer that's making a purchase point decision of feeding their family or buying that hard surface cleaner in a given month. I think you take a little bit of that pressure off and ultimately that consumer, because these are not cyclical products, they're consumer staples. I think they buy both products and that's what we've seen for a very long time. If you provide that relief to those consumers, I do think purchase patterns return more to normal as we've seen for many years in this business.

Speaker #5: So I think you take a little bit of that pressure off and ultimately that consumer , because these are not cyclical products . They're consumer staples .

Speaker #5: I think they buy both products, and that's what we've seen for a very long time. So, if you provide that relief to those consumers, I do think purchase patterns return more to normal.

Speaker #5: As we've seen for for many years in this business .

Speaker #17: And I'm just curious, is there a time frame that we should think about regarding how fast it flows through to you specifically?

[Analyst]: Is there a time frame that we should think about how fast it flows through to you specifically?

Speaker #5: I think that would flow through pretty quickly . If the consumer is , you know , has relief and is less worried about stretching that dollar .

Adam Greenlee: I think that would flow through pretty quickly if the consumer has relief and is less worried about stretching that dollar. I think those decisions get made at the purchase point. Right then, it's pretty quick.

Speaker #5: I think those decisions get made at the purchase point . Right then . It's pretty quick .

Speaker #17: Thank you very much .

[Analyst]: Thank you very much.

Speaker #3: Well , now take a follow up from George Stauffer's with Bank of America .

Operator: We'll now take a follow-up from George Staphos with Bank of America.

Speaker #8: Hey guys . Thanks for taking the follow on . I'll just keep it to one since it's late , you know , so as you look out to next year and I know you're not guiding per se , but you did say you do expect low to mid single digit growth in dispensing and specialty metal should do at least as well as this year .

[Analyst]: Hey guys, thanks for taking the follow on. I'll just keep it to one since it's late. As you look out to next year, I know you're not guiding per se, but you did say you do expect low to mid single digit growth in Dispensing and Specialty Closures and Metal Containers should do at least as well as this year, assuming you have a new owner of the affected customer, which would mean that volumes are at least flat. I forget exactly what you said on Custom Containers, but what would be the reasons why you wouldn't have growth in 2026 in volumes and in earnings versus 2025? Recognizing you're not giving formal guidance here, what is the biggest at this juncture concern you have? Would it be uncertainty in tariffs? Although in some ways that could actually help you.

Speaker #8: Assuming you have a new owner of the affected customer, which would mean that volumes are at least flat, I forget exactly what you said on custom, but what would be the reasons why you wouldn't have growth in 2026 and volumes in an earnings versus 2025?

Speaker #8: Recognizing you're not giving formal guidance here, what is the biggest concern you have at this juncture? Would it be uncertainty in tariffs?

Speaker #8: Although in some ways that could actually help you, what would it be? And should we at least expect some growth next year?

[Analyst]: What would it be and should we at least expect some growth next year? Thanks, guys, and good luck in the quarter. Thanks for taking my question.

Speaker #8: Thanks guys and good luck in the quarter . Thanks for taking my question .

Speaker #5: Thanks , George . You know , I think as we're putting the building blocks together for 26 and as you alluded to and we said earlier , we're not done yet .

Adam Greenlee: Thanks, George. I think as we're putting the building blocks together for 2026 and as you alluded to and we said earlier, we're not done yet. You're right. I think you've got some of the positives there. Some of the headwinds we're going to face are increased interest expense. Obviously, we've got the new bonds. We'll have a full year of the new 4.25% bonds that we just issued in Europe. Our investment grade bonds, the 1.4% notes, come due in April. We'll probably be very opportunistic just as we were in 2025 as we think about refinancing those bonds. At 1.4%, even if we're utilizing our revolver, we're going to have negative arbitrage on that rate as well. Interest expense will be a headwind and we're going through the development of exactly what that headwind looks like.

Speaker #5: But you know , you're right . I think you've got some of the positives there . I think , you some of the headwinds we're going to face is , is increased interest expense .

Speaker #5: Obviously we've got the new bonds . We'll have a full year of the new four and a quarter bonds that we just issued in Europe .

Speaker #5: Our investment grade bonds , the 1.4% notes come due in April . So , you know , we'll probably be very opportunistic . Just as we were in 2025 as we think about refinancing those bonds .

Speaker #5: But at 1.4% , even if we're , you know , utilizing our revolver , you know , we're going to have negative arbitrage on that rate as well .

Speaker #5: So interest expense will be a headwind . And we're going through the the , the development of , of exactly what that headwind looks like .

Speaker #5: I think tax will continue to be a slightly different profile for us going forward . We you know , with the Vayner acquisition , we've got quite a bit more income outside of the United States .

Adam Greenlee: I think tax will continue to be a slightly different profile for us going forward with the Vayner acquisition. We've got quite a bit more income outside of the U.S. and the U.S. is our lowest cost tax jurisdiction for many, many years. It will continue to be our largest tax jurisdiction, but we have more growth outside of the U.S. at higher tax rates. I think it's going to probably be north of 25% without giving you guidance yet. We'll see where we wind up as we get through the business planning process. I think you had the rest of the components right. I'll go back to what I said at the beginning of the call. Nothing's changed as far as how we as a company think about the growth profile of our Dispensing and Specialty Closures business.

Speaker #5: And the US is our lowest cost tax jurisdiction for many , many years . That was it will continue to be our largest tax jurisdiction .

Speaker #5: But we have more growth outside of the US at higher tax rates . So , you know , I think it's going to probably be north of 25 without giving you guidance yet .

Speaker #5: And we'll see where we wind up as we get through the business planning process . And I think you had the rest of the components , right .

Speaker #5: You know , I'll go back to what I said at the beginning of the call . Nothing's changed as far as how we as a company think about the growth profile of our dispensing , especially closure business .

Speaker #5: Nothing has changed about how we think about the growth profile of our metal containers business, and nothing has changed about how we think about the growth profile of our custom containers business.

Adam Greenlee: Nothing has changed about how we think about the growth profile of our Metal Containers business. Nothing has changed about how we think about the growth profile of our Custom Containers business. We have very unique instruments or attributes this year that are impacting our performance. Unfortunately, we're dealing with that as we speak, but we don't anticipate those repeating in 2026.

Speaker #5: We have very unique instruments or attributes this year that are impacting our performance and you know , unfortunately , we're dealing with that as we speak .

Speaker #5: But, you know, we don't anticipate those repeating in 2026.

Speaker #8: Thanks so much , Adam .

[Analyst]: Thanks so much, Adam.

Speaker #18: Sure .

Adam Greenlee: Sure.

Speaker #3: And that does conclude our question-and-answer session for today. I'd like to turn the conference back over to Mr. Adam Greenlee for any additional or closing comments.

Operator: That does conclude our question and answer session for today. I'd like to turn our conference back over to Mr. Adam Greenlee for any additional or closing comments.

Speaker #5: Thank you . Anna , we appreciate everyone's interest in the company and we look forward to sharing our fourth quarter and full year 2025 results in January .

Adam Greenlee: Thank you, Alexander. We appreciate everyone's interest in the company. We look forward to sharing our fourth quarter and full year 2025 results in January.

Operator: That does conclude today's conference. We thank you all for your participation. You may now disconnect.