Rigid packaging solutions manufacturer Silgan Holdings (NYSE: SLGN) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.4% year on year to $1.54 billion. Its non-GAAP profit of $1.01 per share was 2.1% below analysts’ consensus estimates.

Is now the time to buy SLGN? Find out in our full research report (it’s free).

StockStory’s Take

Silgan Holdings’ second quarter results were met with a sharply negative market reaction, as investors digested broad-based headwinds despite top-line growth ahead of expectations. Management attributed performance to robust expansion in Dispensing and pet food packaging, but also highlighted setbacks in the North American beverage closures business, which faced weaker demand due to unusually wet and cool weather. CEO Adam Greenlee described the quarter as shaped by “significant organic growth in Dispensing and pet food markets,” but emphasized that “volumes for our North American Beverage Specialty Closure products, particularly in the hot fill markets, fell short of our expectations entering the quarter.” Additionally, the bankruptcy of a major Metal Containers customer contributed to operational caution and tempered the company’s near-term outlook.

Looking ahead, management lowered its earnings guidance, citing the dual impact of the beverage volume shortfall and the customer bankruptcy. Greenlee acknowledged that these issues are expected to weigh on earnings through the rest of the year, stating, “We now expect the adverse weather impact on our [hot fill beverage] Specialty Closures volumes in North America in the second and third quarters to impact segment adjusted EBIT by approximately $10 million for the year.” CFO Kim Ulmer added that the company’s cost reduction initiatives and continued growth in Dispensing and pet food products remain priorities, but cautioned that “the revision in our estimate of adjusted EPS is the result of lower volume expectations for Specialty Closures...and the impact associated with certain changes in the market due to a customer bankruptcy in Metal Containers.”

Key Insights from Management’s Remarks

Management pointed to strong execution in Dispensing and pet food as core positives, while discrete external factors drove the guidance cut and margin pressure in Q2.

• Dispensing segment momentum: Growth in the Dispensing and Specialty Closures segment was driven by the successful integration of the Weener acquisition and continued strength in fragrance, beauty, and personal care markets. Management noted accelerating new product launches and high demand for sampler platforms among prestige customers, with CEO Adam Greenlee highlighting a "sold out" position in samplers and strong volume acceleration expected in the second half.

• Pet food packaging strength: The Metal Containers business benefited from mid-single-digit growth in pet food packaging, reflecting ongoing demand in this resilient consumer staples category. Management described pet food as a "key strategic growth area" now representing roughly half of segment volume, and cited its role in offsetting softness elsewhere.

• North American beverage closures weakness: Beverage Specialty Closures volumes in North America declined due to unusually wet and cool weather, which reduced consumer demand for hot fill sports drinks and triggered lower promotional spending by customers. Greenlee described this as a rare event and noted that lost consumption occasions are unlikely to be recovered in the balance of the year.

• Customer bankruptcy impact: The recent bankruptcy of a major Metal Containers customer led to volume losses as some business shifted to third-party co-packers. Management has prepared contingency plans, emphasizing that Silgan's on-site and near-site production model remains competitively advantaged, but acknowledged an expected $10 million EBIT impact in the second half.

• Cost savings and contract pass-throughs: The company executed cost reduction initiatives, including the exit of lower-margin Custom Containers business and advanced raw material purchases to mitigate tariff impacts. Management stressed that most input cost increases are contractually passed through to customers, limiting direct margin risk from tariffs and inflation.

Drivers of Future Performance

Management’s outlook centers on continued growth in Dispensing and pet food, but is tempered by the lingering impacts of weather and customer bankruptcy.

• Dispensing and pet food resilience: The company expects high single-digit organic growth in Dispensing volumes and mid-single-digit gains in Metal Containers, underpinned by strong demand in fragrance, beauty, and pet food categories. Management sees these as the primary growth drivers for the remainder of the year despite external setbacks.

• Beverage closures and customer risk: Segment EBIT in Dispensing and Metal Containers will be pressured by approximately $20 million in combined headwinds from the hot fill beverage volume decline and the customer bankruptcy. Management believes the beverage volume impact is temporary, with a recovery expected in 2026, while the customer bankruptcy effect will depend on the outcome of restructuring and asset sales.

• Cost containment and capital allocation: Silgan is prioritizing cost reduction across its segments and leveraging its ability to pass through most input cost increases. Management reiterated a willingness to adjust production capacity if volumes remain depressed and confirmed that share repurchases remain a secondary capital allocation priority to M&A and deleveraging.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely monitor (1) the pace of recovery in North American beverage closure volumes as weather normalizes and promotional activity resumes, (2) the outcome of the Metal Containers customer bankruptcy and any resulting changes in volume or facility utilization, and (3) continued growth in Dispensing and pet food categories, which management identified as key strategic priorities. Execution on cost savings and raw material management will also be a focus.

Silgan Holdings currently trades at $46.74, down from $55.78 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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