Kimberly I. Ulmer - VP and Controller Anthony J. Allott - President and CEO Robert B. Lewis - EVP and CFO Adam J. Greenlee - EVP and COO.

Christopher Manuel - Wells Fargo Securities, LLC. Deborah Jones - Deutsche Bank Adam Josephson - KeyBanc Capital Markets Alex Wang - Bank of America Securities Merrill Lynch Albert Kabili - Macquarie Research Mark Wilde - BMO Capital Markets Scott Gaffner - Barclays Capital Chip Dillon - Vertical Research Partners Ghansham Panjabi - Robert W.

Baird & Co. Incorporated Anthony Pettinari - Citigroup Inc. Alex Ovshey - Goldman Sachs Group Inc. Christopher Manuel - Wells Fargo Securities, LLC.

Thank you for joining Silgan Holdings' Third Quarter 2014 Earnings Conference Call. Today's call is being recorded. At this time I'd like to turn the call over to Kim Ulmer. Please go ahead..

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 today 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 2013 and other filings with the SEC.

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, I'll turn it over to Tony..

Thanks Kim. Welcome everyone, to our third quarter earnings call. As usual I'll make just a few brief comments, Bob will cover up in a little more detail on the financial performance and our outlook for the fourth quarter and then Bob, Adam and I will be happy to take any questions.

As you saw in the press release we delivered a strong third quarter with record adjusted earnings per share of $1.33, representing an 8.1% increase over a previous record quarter. Our Metal Container business performed well as a solid European performance and a good tomato pack, were partly offset by weaker vegetable and soup volumes in the quarter.

Our Closure business had a strong quarter as we benefited from improved volumes both organically and as a result of the Portola acquisition. We continue to be pleased with the ongoing integration of this business.

Our Plastic Container business continues to execute the strategy of repositioning our customer portfolio and saw volume gains in the quarter. Based on our year-to-date performance and the results of the improved vegetable pack season for the year we’re narrowing our full year estimate of adjusted earnings per share to a range of $3.10 to $3.20.

This represents an increase of 13.1% to 16.8% over a record 2013 performance. With that I'll turn it over to Bob to talk about the financial results in detail and provide explanations around our earnings estimates for 2014..

Thank you, Tony. Good morning everyone. As Tony highlighted we delivered record earnings for the third quarter of 2014. These results were in-line with our guidance as operating income in each of our businesses improved versus the prior year.

On a consolidated basis net sales for the third quarter of 2014 were $1,228.4 million, an increase of $60.5 million or 5.2% as increases in the closures and plastic container businesses were partially offset by a volume driven decline in the metal container business.

Net income for the third quarter was $83.3 million or $1.31 per diluted share compared to third quarter of 2013 net income of $77.2 million or $1.21 per diluted share.

Results for the third quarter 2014 included rationalization charges of $0.03 per diluted share and a net profit in Venezuela of $0.01 per diluted, or a total increase of adjusted earnings per share of $0.02, while results for the third quarter of 2013 included rationalization charges of $0.01 and cost attributable to announced acquisitions of $0.01 per diluted share, or a total increase to adjusted earnings per share of $0.02.

As a result we delivered record adjusted income per diluted share of $1.33 in the third quarter of 2014 versus $1.23 in the same period a year ago. Interest and other debt expense increased $2.3 million to $19.3 million for the quarter, primarily as a result of higher weighted average interest rates and higher average outstanding borrowings.

Capital expenditures for the third quarter of 2014 totaled $34.3 million compared to $26.9 million in the prior year quarter. Year-to-date capital expenditures totaled $94.3 million versus $79.9 million in the prior year.

Additionally we paid a quarterly dividend of $0.15 per share in September with a total cash cost of $9.7 million and repurchased shares during the quarter for a total purchase price of $16.9 million. I will now give you some specifics around the financial performance of each of the three business franchises.

The Metal Container business recorded net sales of $827.7 million for the third quarter of 2014, a decrease of $3.4 million versus the prior year quarter.

This decrease was primarily a result of lower unit volumes and the financial impact of customer contract renewals and extensions partially offset by the pass-through of higher raw material and other manufacturing cost.

Volumes were lower year-over-year as a result of declines in core vegetables and soups partially offset by volume gains in Europe and a stronger tomato pack in the U.S. Foreign currency was neutral for the quarter.

Income from operations in the Metal Container business was $112.2 million for the third quarter of ‘14 versus $108.3 million in the same period a year ago. The increase in operating income was primarily due to lower manufacturing and depreciation expense and better operating performance in Europe.

These gains were partially offset by lower unit volumes in the U.S. and the impact from customer contract renewals. Net sales in the closure business increased $55.8 million to $241 million for the quarter primarily due to an increase in unit volumes due to the inclusion of Portola and organic volume improvements in both the U.S. and Europe.

Foreign currency was neutral for the quarter in this segment as well. Income from operations in the Closure business for the second quarter of ‘14 increased $4.6 million to $27.7 million, primarily a result of the inclusion of Portola.

Net sales in the Plastic Container business were $159.7 million for the third quarter, an increase of $8.1 million versus the prior year quarter as volume improvements and the pass-through of higher raw material costs were partially offset by unfavorable foreign currency of $1.3 million.

Operating income increased $4.5 million to $13.1 million for the third quarter of ’14. This increase was primarily related to lower manufacturing and depreciation expenses, customer reimbursement for project cost and an increase in volumes. These gains were partially offset by higher rationalization charges in the quarter.

Turning now to our outlook for 2014 based on our year-to-date performance and the outlook for the seasonally smaller fourth quarter we are narrowing our estimate of adjusted net income per diluted share to reflect a $0.10 spread in the range.

As a result we are now providing fourth quarter 2014 estimates of $0.51 to $0.61 per diluted share and full year estimates of $3.10 to $3.20 per share, each of which excludes the impact from certain adjustments outlined in Table B of our press release.

These estimates compare to prior year results of $0.40 for the fourth quarter and $2.74 for the full year which represents a 13% to 17% improvement year-over-year.

We continue to forecast free cash generation to be approximately $200 million as we continue to invest in areas that will benefit the company over the long term and we continue to manage our working capital to an efficient and sustainable level.

In addition, we continue to seek capital deployment opportunities directed to yielding the best profitable return for our shareholders. As a consequence we continue to view internal capital investments and acquisitions as the best use of our cash flow.

That concludes our prepared comments, so we can open it up for Q&A and I'll turn it back to Jessica to provide directions for the Q&A session..

Thank you the question-and-answer session will be conducted electronically. (Operator Instructions). We’ll first go to Chris Manuel from Wells Fargo. .

Good morning gentlemen. .

Good morning Chris. .

A couple of questions for you, first could you maybe talk a little bit about what’s the differences were in the volumes globally and particularly in the food side and in the plastic side we’re looking in particular, but it sounds like there was quite a difference between maybe Europe and North America can you maybe update us to how [borders] and things are going there for product as well?.

Sure so I guess, well on the food, I’ll answer the main part, so you’re right that Europe and I cover this more, I know we’ll get a pack question but Europe was strong double-digit volume growth on the quarter.

That’s a combination of the strong pack which was really good kind of throughout our regions in Europe and as we continue to build the new plants we’re getting benefit on volume on that side. And so we’re down kind of in the three percentish range in the U.S. which we’ll talk more about so I guess it’s that net down 1.5% combined for food comps.

As to border issues, I think so far the volume have probably helped us a little bit and some of this is speculation but the pack volumes in Russia were strong. I think it would be logical to assume that anybody who could pack in that region for food would, given the import restrictions and so really not a huge impact on that.

I would say we are beginning to see and it’s a little bit around on the closure side, but we’re beginning to see some markets where there was export into Russia, where we’re now starting to see some slowdown on that, but that’s not heavy in the quarter that probably has a little bit more as we look at Q4 and out forwards from there. .

Okay could you maybe give us, I know this is a tough question, a sense of magnitude as to what that might be? Are we’re talking about, it’s a little across the closures platform something that might be a 1%, 2% volume headwind for that?.

No, it’s not that size. So I'm giving you a complete answer rather than trying to signal anything of meaning, it’s something we had to climb over but it’s not anywhere near that magnitude at this point. .

Okay, that’s helpful. Last question from, I think Rob’s prepared remarks, it sounds like he mentioned preferred uses of cash right here are acquisitions and internal funding elements. So it sounds like repurchase probably is not something that’s on the table right now.

Could you maybe give us a sense as to how you’re feeling about acquisitions and thoughts regarding whether the findings are attractive right now or likelihood that you be able to get some things accomplished in the next 12 months or so?.

Yeah, I think the underpinning here is that not a lot has really changed in our thought process. As we look forward to the end of the year our leverage will probably end up given the free cash flow generation that we would expect to generate here to the lower end of our range. There is quite a bit of activity in the M&A market right now.

As you may know there are also some larger properties that are coming to market. We would have some interest in looking at any and all of that activity. We certainly have room on our balance sheet given where the leverage will end.

None of that necessarily means that a deal will get done but given that there is activity out there that we think may have some opportunity to fit our platform we’re taking every opportunity to make sure we run the traps on that.

In the absence of that then we’ll turn our attention to some other form of return of capital which is what we’ve historically done.

So I think right now we’ve said this time and time again that we’re going to be very disciplined about the approach we take to spending capital and look for opportunities first to build the platform and earn good return and then in the absence of those opportunities over the longer term, return capital to shareholders..

This is Tony, Bob said it, but just to be clear you shouldn’t read anything we may have said as a shift in our opinion about acquisition versus buyback or anything else. It’s the same old, it is exactly where we have been in the past..

Okay, thank you..

We will now go to Debbie Jones from Deutsche Bank..

Hi, good morning.

I was hoping you could give us some color on the Van Can Company acquisition that you did and how that fits into your strategy?.

Sure, first of all a little bit about Van Can. They were a small can player in North America with two main production facilities. Their revenue last year was about $40 million, big market area for them is around protein, so chicken or fish and then they do chaffing dish heating cans and those are kind of the two larger market areas that they have.

Two plants, one in South Carolina, one in Tennessee both fit well into our system. And so the strategy around this if you will is basically just we see opportunities wherever possible to consolidate the can business. We’ve got kind of unprecedented knowledge around cans that we can bring to the business.

But we also think there is good people in those plants that fit in well with our system. So for us just a nice synergistic fit to what we do..

Okay, thanks that’s helpful and I guess my last question should be on plastics, how was that your performance versus expectations, your margins improved nicely, volume dropped pretty significantly and I am just curious what you think you can do going into 2015 as well in that business?.

Sure Debbie it’s Adam. I think we feel pretty good about where our plastics business is and the progress we have made thus far kind of in our portfolio rebalancing and kind of the go forward direction of that business. As you mentioned volumes were up about 5%.

So one thing I will say there is that we are now fully cycled over one of the larger legacy losses that we have been talking about in that portfolio rebalancing. So that fell off at the end of Q2. So you are getting a better look at the base business and I know we have said this before as well it’s going to be a little lumpy going forward.

Sometimes we’re going to feel better about certain quarters than others because we’ll have more wins versus losses. This happens to be one of those quarters where I think we are feeling little bit better about the business.

Regarding the margin expansion that we saw, we did have a partial reimbursement for project cost that we incurred for a specific customer who decided not to take an end product into the market.

So what I tell you about that is it’s not unusual that we would have a customer with that obligation, kind of contractually but it is a little bit unusual that we got that far along in the process and had a project cancelled that late in the game. But it did happen and so that’s what was reflected in the third quarter.

As we go forward I think I will just repeat what I said, it’s going to be a little lumpy with wins and losses kind of offsetting each other, hopefully more wins as we go forward but I think the strategic direction the business has set is paying dividends now and we expect continued growth going forward..

Okay great, that’s helpful..

Our next question comes from Adam Josephson from KeyBanc..

Thanks, good morning everyone..

Good morning Adam..

I will ask the obligatory pack question, since no one else has. So you mentioned on the last call that the pack in the Midwest was running a bit late. Obviously you mentioned in your press release that you are experiencing an early end to the pack season.

So Tony, Bob can you walk us through what happened exactly?.

Sure so just to be clear for everyone else, so Europe was good and probably about as good as you could hope, that’s part of the pack. The more important in terms of scale to us is on the U.S. side. So everything else I say will be dealing with the U.S. pack. In total our view for the year is the U.S.

pack will be down for the year and it was down on the quarter. So the part that everybody seemed -- to no one understands is that the tomato side was good and that is true, tomatoes were good on the West Coast. They were even better to the extent they are grown in the Midwest.

We’re little underrepresented in the Midwest, we’re more represented on the West Coast but despite the drought et cetera, very good on tomato. So we were up kind of a 5%-ish number.

Some people will reap bigger harvest numbers on that in tomato and we talked about this before but one of the things that’s not all of that goes in to can, a lot of that goes into bulk, paste et cetera and so for the future if you read about the blow out tomato pack I would just encourage everybody to understand that, that only some amount of that over is just going to get canned.

The good news is that it usually works on the bottom end too and we always say that we’re somewhat protected on a bad pack unless it’s right at the time of harvest. But short of that there’s always excess and so there’s enough for the cans too. So you just tend to kind of be more around normal on tomatoes.

And then fruit was particularly bad, West Coast again here. Yields were very low, particularly the late variety on fruits. So that was again West Coast, not a good pack for us at all this year. And then in the Midwest which is closer to your question what we had said on the second quarter call is that things went in late.

It had been very cold Northern region, and then it had been very wet you may recall, Minnesota, Wisconsin and so both peas and corns kind of got a late start to it. And as we said on second quarter call the only import of that is that it tends to put you in later into the season typically where you worry more about frost.

And as it happened we had in mid-September there was a soft frost in the Northern regions, again in early October there was a soft frost. So there never was a hard frost where everything stopped.

But what happened is yields started coming down as you got these soft frost and so finally just the yields were too low and most of our customers pulled off from going any further. So that affected corn, and then peas on the late side in a cold growing season.

And then finally I would just add one other one which is we have one of our large pack customers was going through an ownership transition at the same time and that customer chose, for reasons I am not sure I can answer entirely but chose not to promote this year on their products and so in addition to all these growing things we had one pack customer who just was not promoting and we saw some volume impact on that side.

But that kind of I think -- the net of it is you’ll find we are probably a little over represented on the shortfall on pack this year than the rest of the market.

And so it ends up being down from what was not a great pack last year most of which we look at we think there is some opportunity for improvement on a more typical year going forward from here. .

Thanks Tony.

Just a couple others, [warrants] you mentioned it was down, how much below your expectation was it and what would you attribute that shortfall toward the weakness to obviously, hey your large customer has been dealing with ongoing difficulties in growing their soup business but can you just elaborate on the soup volume decline?.

Sure first of all just for all of us to remember that the first part of last year soup was quite strong and we had said that we thought -- and that was coming primarily from one of our customers who have shut down one of their major filling facilities in the U.S.

So our feeling was there probably was some inventory shuffle going on, logistical challenges impacting that. And so we’re cycling a little bit against that in Q3, less so than Q1 and Q2 but a little bit, so some of the volume shortfall was just that fact.

And you’ll recall Q4 last year that all had a reverse and it was a fairly soft year in Q4 and so I think there is an opportunity for us to be up a bit year-on-year in the Q4 of ’14. But as to ’13 we were down partly due to that, partly just the volumes have been kind of a continuation of a long story.

If you look at condensed soup for example it’s used in cooking, less people cook at home. So there are just kind of some long-term trends issues that our customers are trying to get at, re-educating consumers on the value of soup and the opportunities for soup.

And again we’re somewhat hopeful overtime that they will be successful but our view has always been this is going to be kind of a flattish market in the near term, maybe even a bit of decline. So I hope that helps you. .

No, thanks I mean just one for Bob, just on the cash flow, your working capital year-to-date bit more of a drag than a year ago.

Any concern about your ability to hit your free cash flow guidance based on that?.

No, not really. I think what you’re seeing is just more about timing of where we came out of the year at a low point, building through the year. Keep in mind that we did pull out a fair bit of working capital at the end of last year. Our target this year is to see a little bit of a benefit this year but certainly not to the order of magnitude.

So I think what you’ve got is just some timing here and that will come back around in Q4 and that’s reflected in our guidance. .

Thanks Bob, thanks Tony. .

Thanks Adam. .

We’ll now go to George Staphos from Bank of America Merrill Lynch. .

Good morning it’s actually Alex Wang sitting in for George.

Maybe just to start off with regards to Europe I know we are still early in 4Q but are you seeing any change in activity seasonally adjusted whether it’s slowing, stable or accelerating or expectation for Europe?.

Sure thanks, Alex. First of all we are watching the economy like everybody else. I think I would put us in a cautious camp on Europe as we go forward. There is not much I can tell you in our numbers that show that right now. In fact as you can tell we had quite strong numbers thus far.

So that’s just partly on -- it makes sense that you got to be a little concerned. I also think the cycling against this year will hard next year just because of how good the growing season was. So as I sit here right now I think that it will be kind of the tough comp for us in Europe next year in any case.

And then we’ve just got to watch the kind of Russia, Ukraine issue, the Jordan Syrian issue. Those this year, really as I said, didn’t have much impact. It’s a little hard to figure out what that might mean for 2015..

No, appreciate that.

And then just following up on pension expense for next year and it’s still early read, but based on where rates are or given estimates we are thinking a couple of million dollars of increase, any color you can provide on that?.

Yes, I would say it’s hard to tell for a couple reasons right now but based on what we see today I would say the numbers that you are kind of thinking about are a little bit on the light side, maybe a lot on the light side, depending upon what happens. We have got a couple of things that will be headwinds for us.

One will likely be the discount rate which will run against us at least as we look at it today. There is also some proposed changes to the mortality tables which could have a meaningful impact. So I would say worse case if everything cuts against us we could see a headwind that could be $5 million or $10 million.

Now none of that, the mortality table changes have not been finalized and we’ll have to wait and see where the discount rates end up at the end of the year. So somewhere between zero and the $10 million is probably what we are looking at..

It’s very helpful.

And then just last question here on the closure margins given 2Q and 3Q performance should we assume that 4Q margins will also be down sort of the range of a 100 that for sure due to the mix of Portola? And then are there any other trends impacting closure margins other than the mix impact from Portola?.

No, it really was the impact of the Portola acquisition. If you look at Q3 I mean both of our U.S. and our European businesses had very good quarter. So volume was up, margins were in line with our expectations and as we have kind of said all along the Portola business does bring with it a lower margin rate.

So as you add those closures into the mix it brings it down. So I would expect that to continue going forward..

Great, thanks so much and good luck in the quarter..

Thanks Alex..

We will now go to Al Kabili from Macquarie..

Hi, thanks, good morning.

I guess Tony just your perspective on food can volumes and I hear you on the pack this year but it also just seems that some of the other categories are a bit soft as well and I am wondering just your thoughts on if you think this is just a general malaise in packaged food that we are seeing everywhere or if the can is losing share and why maybe you are not getting that trade down benefit perhaps as much this year as you might have had previously?.

Sure, thanks Al. I think to be honest with you we are -- our view is that this is kind of what we expected, that there is not really a surprise. First of all let’s cover history here for a minute that you had an increase in volumes last year which we talked about driven by really strong pack growth number and some of the soup we talked about.

We had some growth last year. It’s possible excluding Van Can that you will see some decline on the total for this year. The total build out will be somewhat flattish I think over that time period and I believe we’ve always sort of discussed by the way [I am only] telling about U.S.

and all that I think we have always discussed can business being kind of flattish that it does tend to lose share of stomach overtime and that’s been sort of the norm and that is much because of the food consumption patterns, if we eat out more, more fresh produce in store et cetera. And so I think that really that’s just a continuation of the same.

Against the point you make pack food as I just said it’s been quite strong over period of time. So we view that as an area that’s been growing.

I think the vegetable and tomato area have been kind of flattish overtime and just impacted by the packs and kind of what happens on the growing season and we spend a lot of time talking about that but really it only moves us kind of a dime on earnings year-by-year.

And then you look at the rest of the markets, maybe soup excepted from that and it seems kind of as we expected I think soup does have a challenge that clearly our customers are trying to figure out I think they do need to find ways to be more relevant to new generation. I think again as I said they are -- customers are finding ways to do that.

We are also out as an industry trying to help educate and promote the great attributes of using food cans in the home and so I think with a little bit of push there it can probably turn it to holding flat to up a little bit but that’s kind of our expectation for food can. .

Okay. .

We take cash from that and deploy into the business to lower our cost we’re elsewhere to drive return for shareholders and that’s kind of been the history of Siligan from the beginning. .

Okay I appreciate that, Tony and to the degree that soup, if it stays weak where you’re overweight what can you do to, within your control to maintain or slightly grow the earnings in the business, is this where Can Vision 2020 comes in or are there other few drivers that you have at your disposable within your control given the trends?.

Yeah great climb that’s a prologue. I mean the story on soup I just gave you is not new that’s been the trend line for the last decade. So the answer is that we continually work at our cost and drive down our cost.

We continually -- what’s little new on that is Can Vision 2020 what we’re really thinking more with our customer and with our suppliers, all the things that we can do to drive down the cost of package and to enhance if you will the opportunity for our customers to grow that package in their mix.

And so we’re doing that as well but it’s really just getting at cost all the time. The package is as we’ve talked about it before it’s so unique in its capability it’s low cost way to deliver great food, long shelf life.

So there are so many great attributes to the package but try to drive down on cost on that and that’s a big part and then as I said educating the consumer wherever we can and our customers can how good it is that it’s if you ask most consumers they think there’s preservatives in the can where there are and so the more we can help ourselves and our customers try to explain the people that there is no preservatives in the can then more you can get improve the prospects, so but yeah we keep driving back in at our costs all the time.

.

Okay I appreciate that Tony.

Just if we can switch gears to closures, it looks like all of the segment performance year-on-year is driven by our Portola and I'm wondering what the puts and takes were there and what we may expect organically over the next year and if we can see some organic improvement in that business you kind of talked about some caution around Europe to that point.

.

Sure and it’s Adam, Al. I guess I’ll go back and restate a little bit and what I said earlier I mean as we look at our kind of organic business both we were up in the U.S. and we were up in Europe in the quarter so both businesses organically had good quarters.

The primary driver for the quarter’s earnings increased versus the Portola acquisition so there’s really no other way to look about it. But as we go forward we continue to see really good opportunities in the organic business as well as the Portola business in the future and our prospects for closures continue to be very strong as we go forward. .

Okay all right. So the point on Europe food and the comps get tough next year just given how good the pack was what’s your view on current supply demand we’ve lost some margin over the last few years in Europe.

Is there opportunity how are you seeing things from a supply demand perspective and perhaps regaining some of that loss margin?.

Sure, I’ll answer this one then we’ll move to the next question. But so again remember that we are a little more Eastern focused and so in those markets you really have got a case where there is a fairly unsophisticated domestic supply and then you have got new entrants of ourselves and other multinationals coming in.

So there is pretty good demand for that kind of westernized quality of package if you will. And so that’s one half of it. I think if you look at the rest of Europe it seems like it’s a little bit better.

I think it will take time but I think you are beginning to see some rationalization and recognition amongst the industry there is got to be a reasonable margin balance. And so I think you are seeing modest headwind but that will take time..

Okay, thanks I will turn it over, thanks and good luck..

And we will now move to Mark Wilde from BMO Capital Markets..

Good morning.

Tony, any chance that we can get just a kind of a sense of what’s your utilization rate would be in the Western European can business?.

Well, I think we got at that last time. It is very hard -- you are talking just hours in Western Europe..

Well I am talking about and actually I am thinking more in kind of Eastern Europe and down into the Middle East where it sounds like you have had some facilities that have been underutilized.

So I am just trying to get a sense of where we are at right now?.

Got you. Yes, what I would tell you and the problem is you got individual lines for individual sizes of markets and so there is no one easy answer to that. But I would say that broadly speaking this year was a very good year and so we got fairly tight on capacity. If I take Russia as an example in the packing region of Russia we were extremely tight.

Jordan has definitely increased its utilization, now it could go a little bit more but you are now seeing more filling happening as Syrian packagers are moving into Jordan to fill. And so you are seeing advantage on that. There is some capacity there but it’s becoming less and less available.

So it’s tightening but the thing is remember these were smaller plants we put in that need to have more, at some point you need to increase the amount of lines et cetera to get full scale over the operating cost and that’s where the political issues becomes more sensitive because then you got to think about is it stable enough or I want to continue the path to put in more capacity in order to cover the overhead and that will be kind of the next step for us and by no means are those easy decisions at this point..

Okay, all right. And then one other question around cans and that is just you mentioned again in the release this morning the impact from these renegotiated contracts.

If we look out over the next kind of two to four quarters any further impact that you anticipate from more contracts coming up for renewal?.

Sure, I think we talked about it before. What we did late last year that in fact this year was a big growth of our contracts as it happened they were coming up and Can Vision 2020 forced a lot of conversations.

But there are certainly some more contracts that come up and that we are trying to get covered so the Can Vision 2020 ideas can be spread throughout the market. So yes I would expect there will be some more in 2015. I would expect it to be a smaller number for sure. But there will be a little bit more..

Okay, and then the last question I had is just back on the Portola, is there any reason structurally if we look out over two or three years that the Portola margins should be lower than your legacy closures business?.

Yes, I think fundamentally it’s a different market than our organic closures business and traditionally and certainly the dairy segment -- the price points on those closures are indeed lower as well. But historically they have carried slightly lower margin rates and that’s what we would anticipate going forward..

And Mark this is Bob, I think we’ll close the gap from where we are today just as we ring out the remaining part of the synergies but fundamentally Adam is right that the underlying margin is going to be slightly lower than where our vacuum closures sit today..

That does not mean the returns on capital are lower, I mean we again we think more returns on capital. So it’s you are getting loss dollar per revenue item but then the capital is you are getting a lot of output of these lines, so as apart to when price is little bit lower..

Yes, same point Tony that you made about the plastics business I think in the past..

Yes..

Okay, all right. Sounds good, thanks..

Thanks Mark..

We will now move to Scott Gaffner from Barclays Capital..

Good morning..

Good morning, Scott..

Just following up on the renegotiated contract, have you seen anything with those customers where you are still renegotiating, where they are actually delaying purchases? I don’t know if that’s something they could even do as they don’t carry that much inventory. I just wondered if that affected the demand from those customers and so forth..

Not at all and by the way we can do, because these are coming up as much as anything because of Can Vision 2020 efforts we’re not at the end of the contract where that even makes any sense for them. You’re really proactively working with them to getting longer term so that we can make the investments that make sense down the road.

So A I don’t think they could; B, they really have no incentive in this case to do that. .

Okay and speaking of the investments you mentioned I think you said before you said 94 million year-to-date on CapEx and the last number I recall it was that you thought you might spend a 160 million on CapEx since 2014 which would be a pretty big number in the fourth quarter.

Do you have those kind of projects in line for 4Q or is there something that’s going to push over in to 2015?.

Yeah, I think you’re on it. We did indicate that we would spend to the higher end of the range.

I think the good news is that we are seeing projects that will allow us to make those kind of investments I think the timing of when the cash flow actually go out the door will be determined here though I think we’ll get all the way to the high end of the range in Q4 that there maybe some opportunities there to scale back or have the benefit of not having the cash go out the door.

But I think the projects are ultimately on the docket and will get spent overtime. .

Okay and either mostly projects related to cost reduction or how would you characterize these projects?.

Yeah they’re -- broadly that’s right, that there are projects to get at cost reduction, they maybe logistical base, they maybe about the can itself. So there’s a broad -- we’re catching a lot with that answer but it is all Can Vision 2020’s whole point was drive down the cost of the package to enhance these competitive advantage against alternatives.

And so it’s all about cost at some point there now you may have a better package as you go through that as well but the drive here was to make a more competitive package. .

Okay, last question around resin, first of all what do you think as far as resin pricing and if it does come down in 2015 historically what’s been your ability to maintain or even expand margins in a declining resin environment? Thanks. .

Sure Scott, I’ll start with Q3 actually we did have a just a slight headwind in Q3 across both our plastics business and our closures business in 2014.

As we sit here today looking forward there are also increases coming out of sum in Q4 as well so it’s always been kind of a dynamic market towards the end of the year with primary resins kind of the run here, but as we go forward in the ’15 again projections vary but I’ll use your example of potentially declining resin market.

I mean we have contractual pass through of our raw material cost and those are increases and decreases and the tricky thing about resin versus some of our other raw materials is that the rise in the rate of and the timing of the rise which sets our pass through has to match exactly -- essentially the decline and the timing of the decline for us to be neutral.

So there’s always a little bit of movement on either side of that but for clarity we pass through both the increase and the decrease to our customers as we experience it through our pass through mechanisms. .

Okay, thank you. .

Thanks Scott. .

And we’ll now move to Chip Dillon from Vertical Research Partners. .

Hi good morning. .

Good morning Chip. .

When I look at the closures business could you just remind us the seasonality aspects of Portola does that -- is that pretty flat throughout the year or does the contribution vary in terms of the top line?.

The Portola acquisition the business that we acquired again is largely a dairy based business and so there is very little seasonality compared to the balance of our closure business and the acquired business. .

Okay and then I guess the second question is either you’re up close to a $1 billion in revenues there annually and when you think about I guess the closures businesses industry is really a lot of sub-industries and can you sense you have the capability that double that size maybe through acquisition without bumping up against any regulatory challenges or with that for you want to position where it might be challenging to double the business.

.

So I think we theoretically we could do that as there it's a very diverse business of closures. I mean you just sort of talk about the dairy closures versus our legacy business with the vacuum closure. So there is very different market and very different attributes and so I don't think that would be a particularly challenging thing to do. .

Okay. And then I guess just a last one, a quick follow up on the CapEx. Let's just say you push $10 million into next year.

I would imagine that next year's CapEx would still not be down It would probably be so let's say you did 150 , 155 what could we see a similar number next year and is that sort of a sustained run rate based on the projects you see and based on your current footprint. .

No I think that you could and first of all I would have encourage everybody to wait on this as much as possible until we get the get the end of the year and we're gone have a little more visibility of '15 for everyone.

But yeah theoretically that number could be up a fair amount more than that depending on all of these projects start hitting and make sense for us and customer are moving forward at the pace we've like to it could happen. Now it's pretty clear in '14 it happened over the later than we thought it was kind a happen.

So I suppose it could push a little more but it seems to be that '15 is going to get more of it..

Yeah Mark just to maybe add a little clarity to that. Remember we've kind a said that kind a 120 to 160 is a good range to think about our base business and that as we start to think about the Can Vision 2020 project that that will likely and at least in the near term as those projects get off the ground that will be incremental to that.

So I think it will largely depend upon where we are with some of the Can Vision 2020 projects with our customers and that's really I think to Tony's point that it could be incremental to the normal run rate. .

And just from a qualitative -- go ahead sorry. .

Let me Tony's one of the point which is that the -- we are talking about Can Vision 2020 which is a main driver but we've also been talking for a while about our plastic business and the fact that we are going through kind of a strategic shift to that business and pushing harder on a commercial side.

So I also think that you're gone begin to see some capital spend as we gain confidence and win customers on the plastics side as well..

And when you think about some of the Can Vision projects. Are they more required under your contracts or are they more of an opportunity given that you have these contracts. .

There are an opportunity to given that we have a contract and as I said in many cases we renew the contract in order to give us the run rate to make the investments in the first place. So there is really nothing about Can Vision 2020 that is required.

These are way out side opportunities for us to make more meaningful changes to the package and the cost of the package. But you're right that there are if we get more efficient there is contractual obligation to share that et cetera, but this is a very different kind of project. .

I see that's helpful thank you. .

And we'll now go to Ghansham Panjabi from Baird. .

Hey guys good morning. Get back to the acquisition commentary Bob that I think you had the various properties that may or may not come to the market.

How do you view diversifying your end markets as a priority for Silgan? I guess would you consider moving your exposure away from direct consumer and packaged food and maybe beverage and to something more industrial in nature. .

Well I think we've been pretty clear over a longer period of time that we viewed our universe at where we would play as rigid packaging for consumer goods. And I think there is anything about those markets that we would move away from.

I think as to are there other parts of that market that are different than what we have today we wouldn't be opposed to looking at those. But I think for us to get too far afield from the rigid packaging for consumer goods is not where we're likely having. .

Okay that’s helpful. And then just given the portfolio impact on closures and just wondered if you can give us an update as to what the end market distribution is for that specific segment now in terms of beverage. .

In terms of beverage I would say the vast majority of those of our closures continue to go to kind of the hot fill beverage. So are you talking about ready to drink teas you're talking about nutraceutical isotonics et cetera. The portfolio acquisition again was largely dairy based.

So probably a heavy weighed to the legacy closure business that we have and maybe 25% to 30% of the business going to the portal aside..

Okay and just one final on plastics, I mean volumes were down eight quarters in row for that business, very-very good quarter from a top line perspective in 3Q, I guess you've mentioned that you've sort of comp some market share losses or businesses was the way from, was there anything else was there some big contract wins in that business specific to 3Q and is that a good run rate going forward?.

What I would say is we've had contract wins throughout the course of the year, we've been on this re-bouncing the portfolio projects for sometime now. So we're seeing wins, previously you any got to see the drops throughout those wins as we were cycling over the legacy losses.

So we feel good about that and where we are but as we go forward again it's just the timing of wins versus the timing of losses and I don't want to say plan on that rate going forward but it all depends on the timing of wins and losses..

And the bigger wins take a long time and if you got to make capital investment et cetera those could be a year, maybe upward almost two.

So it's that part of the things we kind of have a better sighting of what’s in the backlog if you will for us and that's what has up keep saying this is going to be very inconsistent because we know that stuff is coming but we know it takes time, we know we're going to incur cost to get ready for it and in the mean time you got legacy, in some cases for walking away from and in another cases you got in the normal price challenges on that side.

So it really will not be a straight line and I know we keep saying it but that to we know it's true..

Okay. Thanks so much..

We'll now go to Anthony Pettinari from Citi..

Good morning. When you look at full year earnings, if you exclude the impact of Portola and lower D&A. Do you kind of think about your underlying EBIT as flat for the year and as you look at 2015, this year you had some contribution from Portola, last year from Rexam.

How do you think about the levers to grow earnings next year from a big picture perspective?.

Sure. I know we don't. We would tell you, we still see a improving year. You mentioned something -- points to that, but it still is an up year where no matter how you think about those items.

But there is a lot we are doing this year that made it a modest growth on the EBIT line, right? As we’ve talked about it lot we renewed a whole bunch of contracts for a long period of time for our can business, recognizing that going to give us an opportunity to spend against that to drive returns on future projects and we always do.

Just continued to take cost out share some of our customers have benefit some of that on our side as well. We've invested a lot of cost into Can Vision 2020. We've invested into our cans get you cooking, industry promotion for the Connecticut. So we've made a lot of investment there we think will drive improvement as we go forward.

We actually look at the year and feel pretty good given everything was going around us, in terms of that EBIT improvement. But that is the nature of our business, right. We always know there is going to be a challenges coming at us.

We are the kind of people that we know there is and we see those challenges so vividly and then we just get to work to try and figure out, what are we going to do to work ourselves around that and that's why there is budget process that we're not done with yet is so important, right because we know pension is going to be challenge, we know that plastic is going to be in transition next year and so that's clear to us.

But we also know that we got a long history of just looking internal and finding ways to overcome that. Some years that might be modest, some years is better than that but that's kind of the sausage making that happen..

Okay that's very helpful and given the contract renewals and Can Vision 2020, if you look at the three segments I mean do you expect maybe the most potential upside next year from the metal containers business or if you were to parse that into the three businesses, how should we think about them?.

I'd love to get through that sausage making first before I answer that but I understand your question. I think that... I think in terms of raw dollar drop so obviously the Can business is so big that's going to be an important part to an improvement period.

I think on a percentage basis, my own view is I think the closures businesses has got some real opportunities for it.

I think you are hearing out some plastics that we just it's too hard for us to Gage right now whether the legacy staff we’re adjusting is more powerful in ’15 and the new stuff coming on and we really don’t know the answer to that and we’re really much more focused on the long-term answer there.

And then the container business as I said we assumed there will be a little bit more contracts upcoming. This is the second pack year that was okay but not great and I think that it’s tempting to want to say therefore would be better next year but I will probably want to hold our powder on that a little bit and wait and see.

And so we got work to do in there and we’re going to keep spending at Can Vision 2020 so there are a lot of moving parts but in order to move the number a lot it have to be in containers to a degree. .

Okay, that’s helpful, I’ll turn it over. .

Thanks. .

So we’ll now move to Alex Ovshey from Goldman Sachs. .

Thank you, good morning guys. .

Good morning Alex. .

Couple of questions Tony on the U.S.

full can side as you look at your manufacturing footprint and you’re looking to 2015 do you think there is some opportunity there to continue to further consolidated manufacturing footprint and drive earnings improvement that way?.

Yeah I think there is opportunity for us to think about the footprint and the cost associated with that footprint.

Remember more and so now than never we’re thinking about the entire cost stream, so steel supply, to making of a can, to getting it to the customer et cetera so I think we are rather than adjusting with our plans and can we further consolidate our plans.

I think the thought is a little bigger here but yes we are looking and thinking about the overall footprint and that is a possibility. .

Okay, got you, thanks for that color.

And then on the plastics business can you remind us what your end market exposure is, what I'm most interested is food versus non-food and just incremental color on what you’re seeing in terms of end demand for the key categories in the plastics business?.

Sure I think if you look at the overall business I think demand has been okay. It hasn’t been a terrific year for demand that if you can go around the segment I think the food business is holding its own it’s probably about on par with last year.

I think where we’re seeing some good growth as a bit of healthcare and a little bit of our personal care products as well but we’re pretty well balanced around the wheel between those three categories as far as our exposure to those end markets and I think it’s a good indicator for the general economy is our plastics business because we do touch multiple end markets.

So I think we’re essentially seeing a little bit of growth in a couple of areas and right on the economic trends for the balance. .

I think in case this is the question because it came up in an earlier one I didn’t really address it, I think there’s sort of this broad question is the consumer weaker and where are you seeing that et cetera we would say that the plastics business is where we tend to see that the most and I think as Adam just said we did feel it there.

It’s not as clear to what’s or how we feel it in the can business but we do think consumer buying pattern is off and we do see that in the plastic side of that. .

Got you thanks Tony and thanks Adam appreciate it. .

We’ll now go to Chris Manuel from Wells Fargo. .

Good morning and thanks for taking the follow up.

A couple of areas is I wanted to focus in on, I mean the first is as you look forward in the next year and I think this question was asked maybe a little bit different way, you’ve done if your CapEx coming in towards the middle of a range 150ish, 160ish or something this year that still would imply you’ve had 75 million or so of growth oriented projects heading into next year.

So that would be pretty solid of an EBIT that could pertain.

If there were some things that were to slide as you suggested which areas would probably be in, would it be more in the plastics side, as you are continuing a repositioning would it more in the metal side as you get after some projects now, you’re getting kind of a base set with contracts in center or would it be more in the closure side, how would we think about that?.

[inaudible]..

Well for capital as you, I think of it as you put the capital to work you get the 15% to 20% return above your maintenance level for the next couple of years on that project.

So I'm kind of thinking is I'm putting my own estimates to get an assumption where might we see some of the return slide or your capital spend slide come from if that makes sense?.

Okay well the slide -- to answer the question the slide will primarily come out of the containers business, I would think because that’s where there is the highest level of complexity around the projects we're trying to do, as we're trying to encompass customers and ourselves and new technologies and so and that clearly is what slid in '14.

So I think that whichever period as you're talking about I think those are the most likely ones to slide. .

You are talking about metal containers or plastic containers?.

Sorry, metal, I'm sorry metal containers I mean using our internal lingo there, excuse me. It's our metal container business. .

Okay. And then what you're talking about for next year is potentially having something incremental beyond what the normal range is whether that's for Can Vision or something else is that correct. .

Yeah yes. .

Okay that's helpful. Next question I had was have you had any early discussions or color maybe from customers in the metal's business in particular regarding what pack might look like for '15 and beyond. There have been some real water shortages and issues and for this year most of the folks had water kind a sort of locked up and of the west coast.

Any sort of color as to what they might think for '15 given what they are able to procure for water and how that might pretend to -- I know there is a lot of speculation, but you see where I'm going. .

I do. There is sort of two parts to the broad question to answer. The first one the water part and then -- so it is definitely on everyone's mind. This year water was not that big of an issue. Bulk of our customers have access to well water.

So it would require someone telling them they can't use well water before that is likely to become a major problem. Now yields are little hurt by the well water but let’s put that aside for a minute. So it -- we’d have to still advance the problem further from here before it becomes an issue but it's clearly on everyone's mind.

Now this is a big industry for the west coast and so I -- that will be our decision for somebody if they get there. But that would clearly have real implication to us if that did develop. I think there is early, early days on that question right now though. .

The other part I would just say yeah because you asked a board question anything else you know about the pack make sure I did mentioned that we had a pack customer who was not promoting this year. It is our understanding that, that pack customer intends to get back to promoting next year.

So you could argue that that ought to be a bit plus to us assuming that happens and they had some success with that. .

Okay. Last question if I could if I wanted to ask something about plastics again and earlier you had referenced in response to the question that 2015 would be continue to be a transition year for the year.

And I was kind of for frankly and then partially given some previous commentary you had that if you did start to see some better returns out of the business sooner than later meaning this year and early next year that you might kind be thinking differently about it.

The -- so I guess my question is two-fold, one add some significant lump out the last few years out of the business. Are there more lumps that you envision happening over the next, call it 12 months or we had at a point now where we might actually see a few targeted adds to the business. .

Well there are ads in there. They've been as Adam said they're in the number but they didn't modest. So yeah I think you we are expecting to see noticeable ads to the business either new business coming on and investment against that new business or actually seeing the returns from that.

I believe what we said is that we saw that if you weren't seeing some of the volume impact by 2015 and clear signs of volume gains in 2015 that's what we were gone be concerned about. So I think that's what I believe has been the thought for a while.

Certainly that's our thought right now is that you already be seeing the volume coming through as we progress through next year but again it could be a projects coming in investments against those project that maybe bigger or longer term, but we'll certainly expect to be talking about those as they develop.

The other think I would just say partly because of the they had a pretty good year this year. And so you also if you talk about the growth from this year you also have the issue that you're coming off a pretty good performance in '14. .

Okay that's helpful. Last very quick question, could you help us quantify, it's sounds like in the quarter you've had a one-time kind a benefit maybe from a customer didn't go forward as you mentioned with the project that reimbursed you for tooling or what have you.

Could you maybe give us a sense as to what that was revenue EBIT so we can kind a think of what the base business would be like and as an ongoing run rate. .

Yeah Chris I think Adam said earlier. It is a contractual relationship it’s not uncommon for us to structure our contracts in that way so that if there is this kind of event that happens and it does happen from time to time that is recovery of cost there and in this particular case I won’t go into the details about the customer and the product.

In this particular case they choose not to take up product to the market and in the quarter there is a couple of millions of dollars of benefit that is offsetting some cross over both in the quarter and in previous periods as well..

Okay, thank you. Good luck..

One more point I will make their Chris is that the reimbursement we did have cost that were in access of the total reimbursement over the course of the project. So I don’t want you think that there is a big windfall in any particular period against it..

Okay, thank you..

And we will now go to Adam Josephson from KeyBanc..

Thanks for taking my follow-up. Bob just one more on pension I talked about the potential increase in expenses next year. Anything on contributions in light of you know the lower discount rates and changes to the mortality table.

I know your plans are basically fully funded and that your contributions this year are insignificant but any increase next year?.

Yeah, we really didn’t have any contribution to speak of at least again our U.S. plants obviously some of the more International plants we fund as we go some funding there. That will continue to be the case going forward but as to the U.S.

sponsored plans the change in discount rate and mortality table should have very little if any impact on our funding requirements and we are expecting that we won’t have any cash requirement next year either..

Okay, thanks. And just one on M&A just a kind of two part question one is how do you think of multiples today, do you consider them inflated or not particularly? And you know the second part is you have given the volatile economic condition that exists today.

Now how does that factor into your thinking in terms of where you might pursue acquisition particularly given what happened in Europe [inaudible] three years ago..

Sure I think I think we would say that the multiple seem a little high to us right now. Now obviously interest rates are lower and so you can afford a similar higher multiple but they seem pretty high it does seem like anybody has anything to sell is trying to sell right and that is usually in indication of something.

So you got that as a bit of challenge out there and then on volatility I think pretty obvious to us at least you know the risk discount for Europe to pick a region is higher than it has been at some time easier to Europe even more so and so that we were that factors into it, that doesn’t mean you wouldn’t do a deal there which has got you know you have to take a risk, just can’t look at it..

Given how low discount rates you are saying that offset to some or large extent the fact that multiples are a bit inflated at the momentum?.

I don’t know if I would say it will offset. Maybe I will come back to more fundamentally how we look at like multiples have not necessarily been the metric by which we view acquisitions. It really goes to what the cash on cash returns are.

Now obviously interest rates have some to do with that and none of that actually factors until you get to the risk side right so our view is still the same is that we want to generate good returns on that cash that we are putting into the acquisition opportunity and/or have opportunity to continue to invest in those acquisitions that will drive returns higher from where we sit..

Thanks Bob, thanks I appreciate it..

And we will now go to Mark Wilde from BMO Capital Markets..

I have got two follow-up.

One on FX, I was a little surprise on the quarter you know you called out little headwind in plastic because I would think that the FX issues will be kind of great as than the other two businesses so if you can talk about that? And also just how you are thinking about sort of FXs headwind or tailwind as we move into ’15?.

Yeah, Mark this is Bob. The impact was really around Canada, and Canadian dollar there.

Not much really happened in the quarter although we have seen we have seen a bit more of a move more recently that probably impacts Q4 more than anything and most of that falls for us on the top-line because remember we have got our funding, our financing in local currency as well so, we, probably different than many others don't have a lot of FX exposure.

Now big swings clearly from where we are can have some impact, but in very few quarters have we ever had a meaningful move in FX on the bottom line. .

Okay that's helpful. The other question I had was just going back to plastic, you acquired that Rexam business in I think about three or four years ago. It seemed like a move that would reposition plastics a little bit because the end markets were little different there.

It also sounded like that business had gotten off the kind of a slow start up with you guys. I wondered if you could update us on that piece of the plastics business. .

Hi Mark Tony. It's -- first of all I would say that our expectations for that business was always that it was gone be fairly slow on the top line there. There had been expectation to growing Europe or even internationally on that. That's still fits their budget.

This is a high price comparatively product and so you really need that stronger economic time for that. So from our perspective what's happened instead is we've not had investment capital which would have happened as they grow and so we've had pretty good cash flow from it and it's been pretty steady in terms of its performance.

And so we're pleased with that. I wouldn't -- that said the slower and negative around it. On the end market it is a food business and some of the rest of our legacy plastic business are food businesses. But the bulk of the rest of the plastic is more personal care other markets.

We are trying to growing in food in on both side but as I said on the Rexam piece that's only largely going come as there is international opportunities. .

Okay all right. That sounds good, good luck in the fourth quarter. .

Thanks Mark. Thanks. .

And it appears there are no further questions I'll turn the conference back over to Tony for any additional or closing remarks. .

Great, thank you Jessica for all your help and thank you all for listening in. We look forward to talking to you about our year end results in early February. .

This concludes today's presentation. Thank you for your participation..