Silgan Holdings Inc (SLGN) 2010 Q2 法說會逐字稿

Thank you for joining the Silgan Holdings second-quarter 2010 earnings conference call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Malcolm Miller, Vice President and Treasurer. Please go ahead, sir.

Thank you. Joining me from the Company today, I have Tony Allott, President and CEO, Bob Lewis, EVP and CFO, and Adam Greenlee, EVP and COO.

Before we begin the call today, we would like to make it clear that certain statements made on today's 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 10K for 2009 and other filings with the Securities and Exchange Commission. 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.

With that, let me turn it over to Tony.

Thank you, Malcolm. Welcome, everyone, to our second quarter of 2010 earnings conference call. Our agenda for this morning, as usual, is to review the financial performance for the second quarter, make a few comments about our outlook for 2010, and then Bob, Adam and I will be pleased to answer any questions that you may have.

As you saw on the press release, we had another solid quarter, delivering adjusted earnings per diluted share of $0.48, which exceeded the high end of our estimated range of $0.42 to $0.47 and compared favorably to a very strong prior year quarter.

Overall, I would say the quarter came together much as we had expected. On the positive side, there were some encouraging signs across our businesses which enabled us to deliver these earnings.

Our Food Can and Closure businesses again delivered on their cost savings initiatives and improved manufacturing performance. Our Closures business experienced improved volumes, both domestically and abroad, with total volumes up high single digits and our Plastic business continue to see volumes rebound somewhat, up mid single digits for the quarter, while at the same time suffering the anticipated effects of resin escalation.

As a result of the strength of our first-half performance and our positive outlook for the full year, we have confirmed our full-year guidance of adjusted earnings per diluted share in a range of $2.10 to $2.20. So we anticipate delivering another strong earnings year and have continued to position the Company well to create value for our shareholders.

With that, I will now turn it over to Bob to review the financial results in more detail and provide additional explanation around our earnings estimates for 2010.

Thank you, Tony. Good morning, everyone. As Tony highlighted, the second quarter of 2010 was another solid quarter as we delivered earnings slightly above our expectations and modestly better than a very robust second-quarter 2009.

We saw positive signs in each of our businesses with the Metal Food Containers and Closures businesses continuing to benefit from operational improvements and both our Closures business and our Plastic Container (sic -- see press release) business benefiting from improving volumes.

As anticipated, the second quarter also experienced a continued headwind as a result of the lagged pass-through of resin costs to our customers, as resin prices peaked during the quarter. As a result, we delivered second-quarter adjusted earnings per share of $0.48, up 4.3% from the prior-year quarter of $0.46.

In addition, we completed the refinancing of our senior secured credit facility on July 7, providing increased access to attractively priced capital. The credit facility was upsized to $1.4 billion, leaving us well positioned to pursue various alternatives to deploy capital.

On a consolidated basis, net sales for the second quarter of 2010 were $693.9 million, an increase of $4.4 million or 0.6%, primarily as a result of higher average selling prices in our Plastic Container business due to the pass-through of higher resin costs and volume improvements in both the Plastic Container and Closures businesses. These benefits were partially offset by lower average selling prices in the Metal Food Container (sic - see press release) business as a result of the pass-through of lower raw material costs and the effect of lower unit volumes in the Metal Food Container business as we saw a shift in the timing of customer demand.

Net income for the second quarter was $36.3 million or $0.47 per diluted share, compared to second quarter of 2009 net income of $34.8 million or $0.45 per diluted share.

Foreign exchange negatively impact earnings per diluted share by nearly 2 cents $0.02 on a year-over-year basis, largely as a result of transaction losses on euro-denominated accounts held at the corporate level as the average foreign exchange rate for the quarter moved from $1.36 in 2009 to $1.27 in the current quarter. Overall, we continue to believe we are effectively hedged, having financed the international businesses in their local currencies, and maintaining a business practice of balancing out cross-border activity to help mitigate the effects of currency on our earnings.

Interest expense for the quarter was largely unchanged versus the same period a year ago at $12 million. Capital expenditures for the second quarter of 2010 totaled $24 million, compared with $24.9 million in the prior-year quarter. On a year-to-date basis, capital expenditures totaled $48.1 million in 2010 versus $48.8 million in the prior year.

While we continue to anticipate capital spending for the full year to be in our normal range of $110 million to $140 million, we currently expect total spending to be towards the higher end of this range as we continue to identify good internal investment opportunities. Additionally, we paid a quarterly dividend of $0.105 per share in June with a total cash cost of $8.1 million.

I will now provide some specifics regarding the financial performance of our three business franchises. The Metal Food Container business recorded net sales of $378.1 million for the second quarter of 2010, a decrease of $27.2 million versus the prior-year quarter. This reduction was primarily a result of lower average selling prices due to the pass-through of lower raw material costs and lower unit volumes. The decline in unit volumes is principally a result of a shift in the timing of customer requirements.

Income from operations in the Metal Food Container business increased $2.2 million to $44 million for the second quarter of 2010 versus $41.8 million in the same period a year ago. The increase in operating income was result of ongoing cost control and continued manufacturing improvements, partially offset by the effect of lower unit volumes.

Net sales in the Closures business increased $11.2 million to $165.8 million for the quarter, primarily due to improved unit volumes as we saw some recovery in the domestic single-serve beverage markets, Europe experienced overall volume improvement. Unfavorable foreign currency translation of $5.5 million partially offset these gains.

Income from operations in the Closures business for the second quarter of 2010 increased $1.8 million to $24 million. The quarter benefited from increased unit volumes, ongoing cost reductions, and improved manufacturing efficiencies, partly offset by the impact from the lagged pass-through of increases in resin costs.

Net sales in the Plastic Container business increased 15.7% or $20.4 million to $150 million in the second quarter of 2010, primarily as a result of higher average selling prices due to the pass-through of resin cost increases, an increase in unit volumes, and favorable foreign currency translation of $3.9 million.

Operating income in plastics decreased $2 million as resin costs remained volatile during the quarter, both in terms of timing and magnitude of price increases which peaked during the quarter. As a result, operating income for the quarter was negatively impacted due to the lagged pass-through of these increased costs to our customers.

The quarter also experienced higher rationalization charges related to the shutdown of Port Clinton, Ohio facility announced in the first quarter of 2010. These decreases in operating income were partially offset by the effect of improved unit volumes during the quarter.

Turning now to our outlook for 2010, we are pleased with our first-half performance as we delivered adjusted earnings per diluted share of $0.88, an increase of $0.06 or 7.3% versus a very strong 2009. Based on our year-to-date performance and our outlook for the remainder of 2010, we are confirming our full-year estimate of adjusted net income per diluted share in the range of $2.10 to $2.20, which excludes the impact of rationalization charges, the estimated impact of the loss on early extinguishment of debt resulting from the refinancing of our credit facility, and the impairment of the remeasurement of net assets in Venezuela. This represents a mid-single-digit improvement over record 2009 earnings after giving effect to the $0.07 per diluted share impact, resulting from incremental interest costs associated with the recent refinancing.

Resin costs for our Plastic Container business and the plastic portion of our Closures business started to abate later in the second quarter. Therefore, we expect to benefit from the lagged pass-through of these resin price declines in the third quarter.

However, we will incur higher interest costs associated with the new credit facility, and we are cycling over a historically strong 2009 tax season. As a consequence, we are providing a third-quarter 2010 estimate of adjusted earnings per diluted share in the range of $0.85 to $0.95, which excludes rationalization charges and the loss on early extinguishment of debt.

Comparatively, we earned $0.96 per diluted share in the third quarter of 2009. Additionally, you should note that, given the magnitude of the third quarter and the potential impact of movements in harvest dates, the earnings of the back half of the year can shift between quarters.

We continue to forecast free cash flow for 2010 to be in a range of $85 million to $135 million after taking into account the $92 million pension contribution in the first quarter of 2010. As I indicated in my capital expenditure comments, our current forecast assumes modestly higher spending as we evaluate additional return dates projects. This additional spending could likely drive us toward the lower end of our free cash flow range.

That concludes our prepared comments. So we can now open it for Q&A. [Takeisha], I will turn it back to you to provide the directions for the Q&A session.

(Operator Instructions). Claudia Hueston with JPMorgan.

Thanks very much. I was hoping you could just talk a little bit about the trends in the single-serve beverage business. How do they move over the course of the quarter, and how -- what's sort of your level of optimism for recovery in that business in the second half?

Sure. Actually it was a good quarter for us in the second quarter in our single-serve beverage market. So we saw continued improvement through the quarter. I would say we also have a pretty strong backlog for that business as we are really right at the beginning of the summer season, which is our peak season for single-serve beverages.

So from a retail perspective, we also saw a pickup in convenience store sales, which is a primary retail location for our single-serve beverages. So some good data points pointing forward that we are going to have a good summer. The hot weather in the Midwest and on the East Coast will also help that business, as well. But we are feeling pretty good about our single-serve business right now.

Thanks very much, and then maybe if you could just elaborate a little bit on the food can volume trends and sort of what you're talking about from a customer timing perspective. That would be great.

Sure. Q2 volumes were down a little bit versus prior year, but as Bob had alluded to, the shortfall really is due to a couple of specific timing issues. And when you look at our food can business in total on a full-year basis, it is a very stable business, but when you try to dive down into quarterly requirements of our customers, it is not uncommon for those requirements to shift between quarters, kind of in our normal course of business.

I think Bob just alluded to the kind of pack shifting between Q3, Q4 that we talk about every year. So it wasn't uncommon that this happened.

The two specific examples I will give you is the first is a seasonal customer who normally takes their their products, their shipments towards the end of the month of June. Actually, those requirements fell in the first couple of weeks of July this year. So again, have no impact on our full-year estimate, either for that customer or for our business in total. So just simply a timing issue between the two quarters. And really a timing issue between a couple of weeks.

The second issue was really due to the lower promotional activity in the supermarket versus prior year, as our soup customers plan to focus those spending dollars closer to the soup season. So again, I would say no impact to our full-year estimate and, again, the business remains very stable. Just a matter of weeks in a couple of cases there.

Okay. That's perfect. So just as we think about the full year, sort of same, same overall expectations for growth (multiple speakers).

Correct.

Great. Thanks a lot.

(Operator Instructions). Ghansham Panjabi with Robert W. Baird.

I'm sorry I missed this, but what were volumes in Plastics and Closures?

Volumes in Plastic were up mid-single-digit versus prior year. Our closer volume was up more in the high-single-digit range.

And the closure of volume increase, was that pretty uniform between the US and Europe as well?

Actually it was. Mostly in the US was a result of our single-serve business that we just talked about, and in Europe was kind of a general lift in volumes. So maybe slightly heavier in Europe, but I'd say good in both locations.

And then switching to the Plastic Container business, did you end the second quarter fully caught up on your price pass-throughs, given that resin decline during the last couple of months of the quarter?

Let me answer it this way. We are passing through [lag] delays or the lag pass-through starts on July 1. So we are now passing through those increased costs that we've been suffering.

Okay. All right. Thank you.

Chip Dillon with Credit Suisse.

Good morning. On the Metal Food Containers, I know that the revenues were down 7%. Did you say they were roughly equal in terms of the impact of cost pass-throughs and volume declines? Hello?

(laughter). Sorry, Chip. On the Metal Food [Can] business, I guess, generally, I would say yes. The answer would be yes.

About 50-50. Okay. And I noticed that the guidance for the year is down $0.07 from what you had before. Is that just totally due to the interest, the incremental interest you talked about?

Yes. That is correct. That's the effect of the refinancing that closed on the $0.07 and the overall effect of that. What that doesn't include is the impact of the early extinguishment of the debt charge. That will be another $0.04 and that is kind of sits as a one-time items that we've (multiple speakers) guidance.

And so, does the ongoing interest impact would be relative to what we thought before? I mean, what would that be per year now? Should we model in, say, for next year?

Yes. Well I guess, ultimately, that depends upon upon the usage, but essentially what you have is a half-year effect of that closing of that facility. So then, you're just talking about timing of seasonality and the like.

So, I mean, what I'm asking is you wouldn't necessarily double the $0.07. I mean, if you kept everything equal, your balance sheet the same, it wouldn't be $0.14 incrementally, would it? That's too big, right?

No. Essentially, you would. If we left everything as it is now you would double that for the full year.

Okay.

Assuming rate is current. Right.

Got you. And then the last question is, I know in the past you've talked about as you've -- your balance sheet has got to be quite healthy and just given changes in tax laws next year, etc., or tax rates, I should say, any thought toward a more aggressive buyback like some of the other packaging companies are pursuing? Or is it something you are still looking at?

It's something we are still looking at. What we've said pretty clearly along for some time now is that we do think the balance sheet is at an inefficient point. There's no question about that that we are -- that we have several avenues to think about in terms of how to deal with that. One being kind of historically what we've done, which is acquisitions and [deploy] capital in those kinds of investments.

We continue to think that opportunity exists. The buyback which, as you noted, we now have an authorization for buyback. That, certainly, we wanted to have that as one of the avenues that we could pursue as we think about deploying cash. And then dividends which maybe speaks to your tax law part of your question.

All of those are possible avenues for us. What we've said is, well, this -- we are going to be looking at it through this year. Remember that, from a seasonality perspective, a fair amount of our cash comes in in the tail end of the year.

So we have a bit of time to evaluate and look at that. But we have said pretty clearly we see that as being a this-year event for us to begin to think about which of those avenues to go down.

Got you. Thank you very much.

Alton Stump with Longbow Research.

Thank you. Good morning. I think one or two of the major food retailers has been out talking recently about putting a fair amount of promotions behind this [soup] category in the last couple of months. I just want to get an idea of if you saw any boost to your volumes from that? Or could there be any foods during the other part of 3Q because of it?

But as we kind of answer the question on food can volumes in the quarter, we did outline timing of promotional activity as one of the items that we think is the shift from Q2 to Q3. So we did not experience any lift in Q2 around that promotional activity or lack of promotional activity and expect it to occur in Q3 and later in the year. And obviously, with no change to our full-year volume assumptions, we are essentially saying, yes, we think that that volume will come along with the promotion.

Okay. Great. That's all I had. Thanks.

Robert Kirkpatrick with Cardinal Capital.

Good morning. Could you talk a little bit about the increase in CapEx that you are expecting in terms of what types of return-based projects you're looking for? And help us understand that decision, please?

Yes. Maybe I will start and let Adam jump in to kind of clean it up for me. But essentially what we've done is, we've kind of gone back through the list of capital items that were put forth to the budget, and continue to look at opportunities for us to deploy cash in those areas to good return-based projects, using the same kind of return hurdles that we historically put forth. And the businesses have found some very good projects that lend itself to us, easing the reins, if you will, on capital to earn those kinds of returns.

So I will let Adam kind of take you through a couple of examples of what they would be.

Sure. And I think you really hit the nail right on the head, bob. It's really about getting the good returns for the capital dollars that we're going to spend.

What I would also say in our Plastics business, we have seen new business awards and new business opportunities come to us that do meet those stringent capital return requirements that we have always had. So, we have been successful with new business awards in our Plastics business this year.

Also, as we look at where we spent dollars in our Closures business, we also invested in the [hot fill], single-serve market pretty substantially over the last several years, and part of our requirements for 2010 includes additional investment there as well. So all good return projects, and so up to Bob's point, we did go back to the businesses and really say what else is out there that we can get a good return on and put into 2010 as well?

So the takeaway from that is, it is kind of all over the board. Just remember that when we make capital investments they are almost always specifically to a customer opportunity or something very direct. So it's -- the only case where there we kind of do and have historically done speculative capitals around capacity for easy open ends, and there is a possibility of some of them as well.

But most of it deals with specific projects. That is why you keep hearing the return side of the answer here.

And why were you able to go back this year and do this, as opposed to any of the past few years? Or is this more of a traditional thing that you've done?

Yes, I don't think it was anything unique about this year. I mean, keep in mind, we are kind of in the range of what we would consider normal. I think what you may be feeling more than anything is when we came into the year, we were still in a pretty difficult credit environment. We were thinking that it might be good to be really prudent around keeping a lid on capital, and as we got more comfortable with the business performance with the outlook of the credit markets, we just saw an opportunity to deploy some of that capital back to CapEx projects.

But this is ordinary course. I'm not sure I understand the question. I mean, this is just what we do is we invest behind customers and opportunities and so we are just saying that the prospects are on the growing side of that right now. We see the growth opportunities and investment opportunities building rather than shrinking at this point in time.

Great. Thank you very much, gentlemen.

[Alex O'Shea] with Goldman Sachs.

Good morning, guys. Can you help us quantify what the impact was last year from the really strong harvest season? In our model, we have your volumes up 7% last year, year over year, in (inaudible) food. If it is a more normal tax season, would it be fair to assume that the volume would be down 5% to 7% in the third quarter of this year, or would that be too aggressive?

Hang on for a second. (multiple speakers). I think you are probably being a little aggressive on that thinking. Now some of that deals with the shift we talked about, too. So we've never quantified exactly what that pack was, mostly because it's impossible for us to do that.

But it certainly drove a big chunk of the upside last year and, but we are also expecting a pretty good pack here. So you wouldn't expect to lose all of that. And then you've got some shifting going on. So from a modeling perspective I would say that number seems a little strong.

It seemed a little high, yes.

And from an operating earnings perspective, in that segment, assuming a more normal [pack] season and the operating earnings number would probably be modestly lower (multiple speakers))

Yes. That's correct.

That's helpful. And then, given how elusive acquisitions have been over the last number of years, is the Company now more focused potentially on putting more capital to work organically, potentially via greenfield expansion of Closures inside of North America or outside of North America?

No -- you actually asked quite a few questions in there, I think, but we look at all of the opportunities that come before us. And I think we've said this quite often is that there's a fairly sizable pipeline of M&A activity that we continue to cull through. We do deploy a very disciplined approach to acquisitions, and if we don't find targets that marry up against those disciplined targets, we are very happy to let them pass and deploy capital other spots.

So whether that is through things like organic CapEx like we just talked about, whether it's through other opportunities that may present itself or whether it is a return of capital to the shareholders, we think we are in a pretty good position to continue to create value for the shareholders. So again, that is our focus in terms of the way we think about deploying capital.

Okay and just lastly on share repurchase, would it be fair to assume that there may be seasonality in the way that Silgan goes about buying back stock that would be consistent with the seasonality and the working capital of the business?

Yes, I mean and as I think it that implies a regular and ongoing effort. We have not said that we are going to do that nor did we actually initiate an effort. We just got an authorization for that stuff.

It is a little hard to answer that question, but I think on a theoretical point, it is fair to say that we have seasons of the year where there's a fair amount of cash available to us and seasons of the year where we deploy a lot of cash. So there will be logic to that where are we going on a regular basis trying to buy shares that it would then have a flow to it.

Thank you very much.

Christopher Butler with Sidoti & Company.

Christopher Butler Good morning, everyone. Question on the Plastics side of the business again. Last time we saw plastic resin prices roll over the end of 2008, early 2009, you were able to put up double-digit operating margins for a quarter or two in this segment. Is that kind of the situation that we are looking at here in the second half of the year?

It's very close to it. It won't have the same magnitude effect, but we are in a very similar situation where we've had several quarters in a row of escalating resin costs, and now it's been a headwind for us for several quarters that has the potential to turn into a tailwind as we go forward. But we are passing through those costs that we've been suffering in the third quarter right now.

So we anticipate resin continuing to decline through the balance of this quarter and, essentially, the rest of the year. So it has the potential to be a tailwind, yes.

But I would say a double-digit operating rate, operating income rate is -- that might be open for a little more than we would be satisfied with. We would like to see a meaningful recovery here and are expecting it, quite frankly, in the back half. But I think you are going to -- you are going to have to give us time to get to those kind (sic) of numbers.

And as we look at the second quarter operating income, you've -- from Plastics, you had mentioned that there was some cost from the closed facility. Was that the $700,000 restructuring that was on the P&L?

That's right.

And shifting over to the balance sheet just quickly. Noticed that receivables seem to jump in excess of sales. Could you give us a little color there?

Yes, I'm not sure whether you are looking at the balance sheet or the cash flow. But essentially if you are looking at the cash flow statement, you'll see what appears to be a fairly sizable difference on a year-over-year basis. I think what that really deals with is kind of the timing of receivables around two issues.

You might remember, as we talked about 2009, we got a fairly sizable benefit because of the timing of cash collections around a couple of customers around year-end processing. So what that really had the effect of doing is benefiting 2009 at the expense of 2010. So we saw that a little bit.

And as well, you've got a similar impact of timing on the front end of 2009 around the 2008 year-end prebuy, particularly for cans and a little bit for Closures. Both of those items kind of benefiting '09's collection and creating that negative comparison against 2010.

I appreciate the clarification. Thanks for your time.

George Staphos with Bank of America Merrill Lynch.

Thanks. Good morning. I guess the first question that I had, you -- I think -- were ahead of your guidance for the second quarter. Yet you affirmed your guidance for the full year, realizing that a few pennies on the Silgan P&L is the equivalent of rounding error. I wanted to double check to see if there was any adjustment to the negative for any of your outlooks for the second half of the year?

No. I think it's just moving around. It's -- you are talking about a relatively small number. There is always a fair amount of breakage in all of this. We -- as I said, we are not looking at as good a pack as last year. We are counting on a pretty good pack. That will move around that a little bit. It is running a little late.

That increases the risk just a bit. And so those are -- those drive a slight difference.

Okay. One point of clarification, you said food can volumes were down a little bit in the quarter. Is a little bit less than 1% or how should we roughly size it?

It was down a couple of percent. So more than 1%, just a couple of percent.

Now, Adam, one of the issues that you sided with that your soup customers decided to promote more aggressively closer to soup season than in the second quarter which seems to make sense, just given when consumption occurs for soup. Would it -- why would it be normal that soup customers would promote more aggressively in the first or second quarter into 2Q?

I don't know that it would be normal for them to do that. It just is what happened last year. If you recall, last year, there was a more concerted effort by a couple of our soup customers to be out in the market more consistently through the year. And that has now changed. This year, they are focusing more on the soup season.

Going back to the capital -- the question of capital allocation. At one point during the call, you said you will begin to think about the larger capital allocation decision by the end of the year.

Does that mean you act by the end of the year or you will continue to study options at that point in time?

No, what I was trying to imply is that, what we have been saying for some time is we see this year as an event around that, where the balance sheet would you just gets (sic) even more conservative by the time you finish the year out. So our expectation is that we, you know, something will occur during the course of the year.

Okay. Tony, one question and observation. If I look at some of your peers who have announced more definite share repurchase programs -- and for that matter implemented them, begun to implement them -- you have seen a more immediate move in their share price performance to the better than perhaps what we have seen out of Silgan thus far this year. Realizing that you are studying share repurchases as well.

Yes.

Do you think your reinvestment opportunities would be that much different than your peers, and provide that much more incremental return in the future and, perhaps, why would that be?

I don't know if I would say that. That is harder for me to compare to our peers on that. I can say in our case that we feel like we've, as is typical with us, we have been very clear for a long period of time of what our strategy is and where we're going. We tend to be patient and methodical about this and many things.

And so, we are kind of going through an orderly process of figuring out the best way to do it. As I said, one thing that is a little bit different is our cash flows are a little bit different than certainly some of our peers. So we end up with a more liquid balance sheet at the end of the year versus the middle of the year than some.

But in any case, we have said from the beginning that it would be kind of a this year event. That is what we are on. We wanted to get through bank refinancing and make sure that that was off the table before we did anything else.

So I think if you go back and kind of read all the transcripts, we've been really transparent about the orderly process we're going through, which I recognize does test patience of everyone. And on the good side is if you are right about that and the value hasn't yet been created then that that still sits there in the future.

Tony, we're patient. We've covered you for the last decade. (Laughter) I guess the last question, I will turn it over, could you remind us if the acquisition horizon potentially for you could include metal rigid packaging and in markets that are not in North America? Thanks very much.

Thanks, George. Sure. I think we -- I would just say that it could include a lot of different things that add on to our businesses, our franchise as they exist today, or give us other avenues to sustainable competitive advantages in the consumer goods packaging area. So the answer to that is yes, but I don't want to make it sound like that is an exclusive answer. We look at a lot of opportunities.

Understand.

Yes.

Okay, thanks guys.

Chris Manuel with KeyBanc Capital Markets.

Good morning, gentlemen. Couple of questions for you and the first is, if I heard you're right, it sounded like the soup was down a little in the quarter for you and you talked about some of the changes in promotional activity.

As I am looking at last quarter's DMAI shipments, as I'm looking at total industry for both food and for soup, it looks like food cans are up about 2 points and soup up a point or so. It sounds more like timing, and I know that is what you're saying.

I just want to make sure that there is nothing with respect to market share that may have shifted, or maybe it's customers that one customer is picking up share versus another. Is there any, any of that kind of stuff going on, as well? Potentially?

No, we really don't think so. It's -- when you look at the CMI data, it's soup and miscellaneous foods. So there are other items that fall under the soup category as we generally talk about it from CMI. So there's pasta sauce in cans, etc., that fall under there. So I would say nothing really different other than timing for our soup customers.

We have very broad exposure to the soup market, branded, not branded. So it's, no, it's not about share its about the back category and in the grouping into the CMI report.

And then even as the food category as a whole, you guys were off a couple of points, the industry up a couple points. It sounds like you had a couple of quarters that just pushed back a few months. So as you finish the year, I think you had indicated your expectation was flattish for the full year? Is that right?

That's correct. That is correct. Yes.

All right, so that will kind of reverse itself. Next question, actually for Bob, if you are still there.

We didn't let him leave. (Laughter)

On the Plastic side, could you quantify for us how much you might have been behind in 2Q on residence so we get a sense of maybe what more normalized profitability might have been like there?

I will actually take that one. It's Adam. I don't have it right in front of me, but I would say it's somewhere close to $4 million, if you want to try to normalize it for the impact of resin.

Okay. That's good. And then, the last question I had was -- or two last questions. One is on new product launches, things of that nature. You talked about some increased activity, I think particularly in the plastic side. Are you seeing more recent date genes for new product launches, new product developments, things of that nature? Or is it more reworking of existing products, things of that type of reformulation going on?

I think as we have kind of been going through this economic cycle here, we did see a lot of restaging. So minor modifications to the packages as they were out there to maybe get some differentiation on the shelf.

What we're seeing now is more new packages kind of coming through the pipeline and our customers trying to get more differentiation on the shelf. So I would say that we saw restaging kind of leave the cause for the last year or so, and we're now starting to see new product launches in greater volumes than we had seen before. It doesn't mean we are getting all of them, but it is just the opportunities that are out there.

Right. Okay. That's helpful. And then the last question is one that will, I'm sure, Tony, will try your patience because you get this all the time. But as -- I've only covered you for six years, so I guess you could beat up on me.

But when you think about share repurchase or returning capital [shareholders], you announced a nice authorization, but as I kind of look at the size of the authorization you announced, in conjunction with the time that that would take place over, and I think about what your free cash flow is over that time, really that wouldn't so much as be a levering event, but a -- probably keep the leverage in a similar type profile if you were to use the cash for that.

As you think about options or choices for redeploying cash to shareholders, how do you think about something that may be more of a levering event, such as a one-time dividend versus a share repurchase? Or maybe if you could give a little color on the thought processes, one versus another, or both, or how those might fit into a credit facility, etc.

Yes. Well, first of all, I agree with your analysis. I think that the number we put out there which is a sizable number, but were we to execute that, it would not change the basic leverage situation that we're in. I think it would make the balance sheet a little bit more -- efficient, but that is about it.

We, again, that is why we have always said this is not binary. Our intention is to continue to take a core competency that we have, which is identifying, acquiring and consolidating good businesses to strengthen our franchises or to find other ones that meet the same criteria. It would be, I think, very unfortunate for the long-term shareholder were we to abandon that strategy. So we are not intending to do that at all.

The fact is, as you point out, we have got ourselves to a point where there is room to do a few different things, perhaps. And so all of this is just trying to give us a couple of levers to pull.

So, to your very specific question, we think about all of them and they are not exclusive. So you could do some buyback. You could do some dividend and you can do some acquisition, and so we are thinking about all of those elements.

But you're absolutely right and I want to be clear. We never said we were going to kind of come through this year and then decide the big term decisions about our future and kind of relever ourselves so that we couldn't stay on an acquisition track. That is not our thinking. Our only thinking is that there is room to do a little bit of a couple of different strategies as we go forward.

So the thought process though between here and year-end with respect to either executing on a share repurchase or some sort of a one-time dividend, how -- what's the feeling are the mood with respect to that or how do you balance those thoughts?

You just look at all of them, and look at -- as best you can -- at the opportunities that are before you and go through that path.

So, again, the goal is maximizing the value of shareholders. It is kind of as simple as that. And we are just trying to find the best way through that, and, again, to be sure that we can, while we're doing that, hold to the more long-term strategy of applying our competency towards growing maybe the underlying business.

Then the last question I had and I will move along is, on the acquisition side, I know you mentioned earlier that you are still looking at options and opportunities. But would you say that, as the backlog of potential opportunities you are looking at, is it greater, smaller today or have you --? Have purchasers' expectations come in at all? Anything of that nature, you know, is you handicap the prospect)

Yes. What I would say to you, and we've said this recognizing a couple of orders now, but we have got a very full pipeline of things that we are looking at. And I know we have said that several times now, but quite honestly, there's a lot of activity across the platforms and across consumer packaging, as Tony said, that we are looking at.

It's a disciplined approach and we are who we are. We are not going to abandon that discipline just for the sake of getting a deal done. It has got to make sense against the return nature and the risk of return for the shareholder there.

So I -- look, I handicap it as we have our nose to the grindstone. We are looking at a lot of things. I am optimistic that over some period of time we get something done, but if it doesn't, then we'll turn to the other alternatives and be very happy doing that because it creates good value for the shareholder.

That's perfect and it's good to hear from you. I thought maybe they banished you out of the room a little earlier. (Laughing).

(Operator Instructions). It appears we have no further questions at this time. Gentlemen, I'd like to turn the conference back over to you for any additional or closing remarks.

Right. Thank you very much. We thank you all for your time, and we look forward to talking to you about our third quarter when we get there. Thanks.

That concludes our conference for today. Thank you for your participation.