Silgan Holdings (NASDAQGS: SLGN) Victor Murthi Vignesh Murali Wei Yan Date Presented: April

Screening Process

Presenting – Silgan Holdings Inc. (NASDAQ: SLGN) 23 year old company headquartered in Stamford, CT. Market Cap $ 2.3 Billion One of the top manufacturers and sellers of metal and plastic consumer goods packaging products revenues : approx. $ 3 billion 3 business segments ▫Metal and Aluminum Food Containers (63%) ( largest in US) ▫Closures ( Lids and Caps ) (20%) ▫Plastic Containers (17%) Business OneSource Link

Industry Containers and Packaging Industry (NAICS: ) Non-cyclical industry due to diverse use for products Expected to grow 1-2% each year until 2013 (Datamonitor) ▫Plastic packaging expected to grow 3-5% Low barriers to entry, buyer is medium high and yet substitute products are low Global Metal, Glass & Plastic Packaging Report. Rep. no Datamonitor, Mar Web. 21 Apr

Industry Trends ▫Highly competitive despite slow growth ▫Rising costs: High price of raw materials and production reducing margins ▫Niche markets: Customized packaging for diverse clientele  Medical goods packaging expected to grow 5% each year(Datamonitor) Global Metal, Glass & Plastic Packaging Report. Rep. no Datamonitor, Mar Web. 21 Apr

SWOT StrengthsWeaknesses 1.Strong market presence 2. Good established customer base ( Coke, Campbell soup) 1.High leverage 2.Declining operating margins 3.Declining market share OpportunitiesThreats 1.Strategic Acquisitions 2.Growing opportunities in the packaging industry 3. Niche markets 1.Slowdown in US economy 2.Higher Competition 3.Environmental Costs

Macroeconomic Factors Prices of raw materials Increase in demand for biodegradable plastic as well as aluminum/ copper have driven up prices and pressured margins Derived Demand Demand depends on demand for other products such as food and beverages, medical supplies and chemicals. Demand for these products are projected to increase in the near-term future Emerging Markets As industrial activity in developing economies picks up, so does demand for goods to store and transport raw materials and finished goods.

Company NameMarket Capitalization Total RevenueTotal Debt/Capital % Bemis Co. Inc. (NYSE:BMS) 3, , Greif, Inc. (NYSE:GEF) 2, , Sonoco Products Co. (NYSE:SON) 3, , Temple-Inland Inc. (NYSE:TIN) 2, , Silgan Holdings Inc. (NASDAQ: SLGN) 2, , Competitor Analysis

Greif, Inc: A global producer of industrial packaging products. The Company operates in three business segment: Industrial Packaging; Paper Packing: and Land Management. In July 2009, the company completed the acquisition of Ennis Containers, Inc. Competitor Analysis

Sonoco Products Company, Inc: Provides industrial and consumer packaging products, and packaging services in North and South America, Europe, Australia, and Asia. The Company operates in four segments: Consumer Packaging, Tubes and Cores/Paper, Packaging Services Competitor Analysis

Bemis Company, Inc: Manufactures and sells flexible packaging products and pressure sensitive materials in the United States, Canada, Mexico, South America, Europe, and Asia. The company operates in two segments, Flexible Packaging and Pressure Sensitive Materials. Competitor Analysis

Temple-Inland, Inc: Manufactures and sells corrugated packaging and building products primarily in the United States and Mexico. The Corrugated Packaging segment serves customers operating in the food, beverage, paper, glass containers, chemical, appliance, and plastics industries. Temple-Inland’s Building Products segment offers various products, including lumber, gypsum wallboard, particleboard, medium density fiberboard, and fiberboard. Competitor Analysis

Profitability Leverage Efficienc y Company Name Gross Margin % Net Income Margin % ROE %ROA % Total Debt/Capi tal % EBIT / Interest Exp. Total Asset Turnover Bemis Co. Inc Greif, Inc Sonoco Products Co Temple- Inland Inc Peer Average Silgan Holdings Inc Ratio analysis

Growth Liquidity Company Name Net Income, 1 Yr Growth % Total Revenues, 1 Yr Growth % Quick Ratio FQ Current Ratio FQ Avg. Cash Conversion Cycle Bemis Co. Inc. (11.4) (7.0) Greif, Inc. (6.9) (21.5) Sonoco Products Co. (8.0) (12.7) Temple- Inland Inc. (7.0) (7.9) Peer Average (8.32) (12.3) Silgan Holdings Inc (1.7) Ratio analysis

Relative Valuation P/SalesTEV/EBITDATEV/EBITTrailing P/ETrailing P/B Min Mean Max Price Range : $32.42 – $91.04

DuPont Analysis

DCF Valuation - Revenue Metal Food container ▫“Cash cow”, growing at 5-year CAGR of 3.5% ▫Count for 66% of revenue, organic growth is mature but it able to past on raw material cost to customers ▫Projected to grow at 5-year CAGR of 3.5% Closure ▫Grow through acquisition, with CAGR of 17.18% ▫Organic grow is around 12%, projected to be decreasing to 8% over 5 years period. Plastic container ▫Organic growth is around 5 – 6%. Projected to be stable in 6% range.

DCF Valuation – Income Statements Cost of goods sold ▫Around 87% in the past but decrease to 85% due to increase in “manufacturing efficiency”, projected to fluctuate from 85% to 86% SG&A ▫Around 4.5% in the past but increase to 5.25% due to currency translation impact, projected to be around 5% Interest expense ▫Interest coverage ratio is 4.23 in 2005 but increase to 6 in 2009 due to higher leverage for acquisition. Projected to increase from 6 due to debt repayment Income tax expense ▫Income tax is projected around 35%

DCF Valuation – Balance Sheets Account receivable ▫Receivable turnover is around 15 – 16, projected to be stable Inventory ▫Inventory turnover is around 6 – 7, projected to be 6.7 Net capital investment ▫Positive number, meaning they have to spend more for Capex in the future, projected to be -0.5% of revenue

DCF Valuation - WACC

DCF Valuation - FCFF

5 Year Stock Price

Management Assessment Founded in 1987 by current Co-Chairmen of the Board: Phil Silver and Greg Horrigan. Grow through organic growth and acquisitions, able to increase overall share of the U.S. metal food container market from approximately 10% in 1987 to approximately half of the market in 2009 Communicative in explaining operating result.

Ownership Composition

Portfolio Correlation

Recommendation Stable “value” company with clean balance sheet and strong cash flow. Good management experienced in both improving organic growth and acquisition growth Low correlation with other holdings, stock price has been increasing six fold in the past 5 years. Suggestion: watch list.