Silgan Holdings Inc Q3 FY2024 Earnings Call

Good day, and welcome to the Silgan Holdings Third Quarter 2024 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Alex Hutter. Please go ahead.

Thank you, and good morning. Joining me on the call today are Adam Greenlee, President and CEO; Bob Lewis, EVP, Corporate Development and Administration; and Kim Ulmer, SVP and CFO. Before we begin the call today, we would like to make it clear that certain statements made on this conference call may be forward-looking statements. 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 2023 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. In addition, commentary on today's call may contain references to certain non-GAAP metrics, including adjusted EBIT, free cash flow and adjusted net income per diluted share. A reconciliation of these metrics, which should not be considered substitutes for similar GAAP metrics, can be found in today's press release and under the non-GAAP Financial Information portion of the Investor Relations section of our website at silganholdings.com. With that, let me turn it over to Adam.

Thank you, Alex, and we'd like to welcome everyone to Silgan's third quarter 2024 earnings call. I'd like to begin today's call by welcoming the approximately 4,000 new Silgan team members who recently joined our company through our acquisition of Weener Packaging. We're excited to have you join the Silgan team for what we can accomplish together as we continue to build momentum as the leading global dispensing solutions partner for the world's most iconic brands. The Weener acquisition brings advanced product and manufacturing technologies that will help bolster our innovation pipeline and represents a clear and logical extension of Silgan's existing capabilities in the dispensing market. We believe the acquisition will drive organic growth, margin expansion, and financial accretion for our shareholders and create significant value as we integrate the business, create efficiencies, and generate cash to deleverage back to our target range by the end of next year. Turning now to our results. The third quarter continued to showcase the success of our long-term strategic growth initiatives with some fantastic operational and commercial successes in our businesses in another quarter of resilient financial performance. We continue to see strong volume trends in each segment and overall margin improvement driven by growth in our dispensing products and the benefit of our cost reduction programs. In our segments, Dispensing and Specialty Closures delivered record third quarter adjusted EBIT with record volume and double-digit growth in our global dispensing products. Our commitment to innovation, customer service, and operational excellence continues to drive our success as our teams capitalized on this winning business strategy. As a result, we continue to gain traction with new and existing customers in our core high-end fragrance and beauty and home care markets. And we are seeing incremental opportunities now in healthcare and pharmaceutical markets as well. Our dispensing momentum remains strong into year-end as we execute on our near- and long-term priorities in this rapidly growing high-value portion of our business. In the Food and Beverage portion of the segment, consumer demand for our products remains strong, and our European closures volume grew by a mid-single-digit percentage in the quarter. However, promotional activity, particularly for isotonic beverages in North America, was less impactful than our customers had anticipated, and as a result, the recovery in these volumes will be more prolonged than initially anticipated. While consumers are managing their purchases more closely as a result of inflation, it remains clear that consumer preferences have not changed when it comes to these products, and our customers remain focused on driving sales volume back to more normal levels. While volumes are below our expectations in these specific products, the financial impact of the shortfall is more than offset by the favorable mix impact of our dispensing products. With the seasonal peak for hot-filled products now behind us, this headwind should be less meaningful to our results as we move into the fourth quarter and beyond as we enter 2025. In Metal Containers, our teams once again validated our leadership position in the market by successfully extending our decade-long exclusive supply relationship with our largest customer through a long-term contract extension. This customer, who is also Silgan's very first customer, represents a significant portion of our growing pet food business. During the quarter, pet food, which represents approximately half of our volumes in our Metal Containers business, continued to show accelerating volume trends and grew by a high single-digit percentage, and we continue to see market growth for these products. Demand in the soup category also remained strong as volumes recover from the prior year destocking impacts, but volumes for fruit and vegetable markets fell below prior year levels and below our expectations when we entered the quarter. While we are expecting lower pack volumes in the quarter as a result of a large pack customer reducing their pack plan in 2024 to manage their working capital. Adverse weather disruptions negatively impacted harvest yields and caused the pack season to come to an early conclusion this year. As a result, our pack volumes in 2024 were at historically low levels. While these weather events have impacted our segment results in the second half of 2024, we believe that the fruit and vegetable market is positioned for a strong recovery in 2025. Our Custom Container segment delivered another quarter of strong results in the third quarter, with 5% volume growth, primarily as a result of the commercialization of new business awards. In addition, our teams continue to validate our competitive advantage in this business with additional wins in the market that will benefit the segment in 2025 and beyond. As we now move into the fourth quarter, we continue to believe the Company is positioned to deliver volume and profit growth for the year, but have narrowed the range of our EPS estimates primarily to reflect the impact of lower pack volumes in 2024. For the fourth quarter, we expect Dispensing and Specialty Closures volume mix to grow by a low to mid-single-digit rate with high single-digit growth in dispensing products, driving better profitability for the segment through improved mix. In Metal Containers, we continue to expect mid-single-digit growth in pet food, which represents approximately half of our volume, but with the impact of severe weather on pack volumes, we now expect full year volume to be comparable to 2023 levels. Custom Containers volumes are expected to grow by a low to mid-single-digit percentage in 2024 as market demand continues to recover and new business wins provide incremental volume and profit contribution throughout the remainder of the year. The market has continued to evolve in 2024 and has presented our company with both exciting opportunities and new challenges, and we believe our winning business strategy, our focus, the excellence of our teams, and our unwavering commitment to our founding principles have uniquely positioned the Company to drive significant growth in the near term and for many more years into the future. As we move close to year-end and begin shifting our focus to 2025, with the Weener acquisition now complete, the continuing success of our long-term strategic initiatives and the full benefits of our cost savings programs flowing to the bottom line, we are well positioned to deliver significant earnings growth in 2025. In addition, pack volumes in our Metal Container segment should improve in 2025 from historically low levels in 2024. But given that our customers are still in the very early stages of planning for the 2025 pack, it's too early to know how much of a recovery the industry will experience. Nonetheless, even without factoring in an improvement in pack volumes in 2025, we believe we are well positioned to deliver double-digit EPS growth in 2025 and meet or exceed our prior record for adjusted EPS of $4.01. With that, Kim will take you through the financials for the quarter and our estimates for the fourth quarter and full year 2024.

Thank you, Adam. As Adam discussed, we delivered strong growth in the third quarter as a result of the success of our strategic initiatives, but our adjusted EPS results fell below the midpoint of our expected range, mostly due to the impact of softer pack volumes in Metal Containers. Net sales of approximately $1.8 million declined 3% from the prior year period driven primarily by the pass-through of lower raw material costs, mostly in our Metal Container business. Total adjusted EBIT for the third quarter of $206 million decreased by 4% on a year-over-year basis due to the impact of lower pack volumes in our Metal Container segment, which offset higher adjusted EBIT in the Dispensing and Specialty Closures and Custom Container segments. Adjusted net income per diluted share was $1.21, a 4% increase from $1.16 in the prior year quarter with higher adjusted EBIT in Dispensing and Specialty Closures and Custom Containers, lower interest costs, a lower tax rate, partially offset by lower adjusted EBIT in Metal Containers. Turning to our segments. Sales in our Dispensing and Specialty Closures segment increased 1% versus the prior year quarter primarily as a result of higher volume mix of 2%, which was partially offset by the pass-through of lower raw material costs. The increase in volume mix is primarily due to double-digit volume growth in dispensing products, which resulted in favorable mix. Third quarter Dispensing and Specialty Closures adjusted EBIT increased $1.4 million versus the prior year period with favorable price cost and mix, partially offset by the unfavorable impact of foreign currency. The positive volume and mix impact of double-digit growth in our dispensing products was partially offset by the limited success of our customers' promotional activity in the hot-filled beverage volumes in North America, particularly in isotonic beverages which cost us approximately $5 million versus the prior year period. In our Metal Container segment, sales declined 7% versus the prior year quarter, primarily due to the pass-through of lower raw material costs and less favorable mix, which was partially offset by higher volumes of 2%. Products for pet food markets grew by a high single-digit percentage, and products for soup recovered to more normal levels following the destocking trends in the third quarter of 2023. Volumes for fruit and vegetable pack products, many of which were high-value large cans for products like tomatoes, declined by a low teen percentage and significantly impacted our mix of products sold in the quarter. Metal Container adjusted EBIT was below the prior year quarter due largely to the previously discussed impact of volume and mix associated with the reduction in pack volumes in the third quarter of 2024. Relative to our expectations entering the quarter, the shortfall in pack volumes and the associated negative mix cost us approximately $10 million in the quarter. In Custom Containers, sales increased 6% compared to the prior year quarter, driven by a 5% increase in volumes, primarily as a result of the commercialization of new business awards during the quarter. Custom Containers adjusted EBIT increased $8.2 million as compared to the third quarter of 2023, driven by more favorable price cost, including mix and higher volumes. Looking ahead to the fourth quarter of 2024, we are providing an estimate of adjusted earnings in the range of $0.70 to $0.88 per diluted share as compared to $0.63 in the prior year period. The 32% year-over-year improvement in adjusted earnings for the fourth quarter at the midpoint of the range is driven primarily by improvement in the Dispensing and Specialty Closures segment as well as cost reductions, strong operating performance and a small benefit from the inclusion of Weener Packaging. Fourth quarter adjusted EBIT is expected to be approximately $25 million above prior year levels in Dispensing and Specialty Closures, with improved volume mix and price cost and the inclusion of Weener Packaging in the segment. Fourth quarter Metal Containers volumes are expected to be below the prior year level with high single-digit growth in pet food more than offset by the early end of the pack compared to a strong late pack in 2023. Metals Containers adjusted EBIT is expected to be comparable to the prior year period as a result of improved price/cost as the segment continues to benefit from cost reduction programs. Fourth quarter adjusted EBIT in the Custom Container segment is expected to be above prior year levels as a result of low single-digit volume growth primarily from the continued benefit from new business wins. Due to the shortfall in third quarter earnings as a result of lower volumes from the early end of the pack and the resulting negative mix implications, we are narrowing our estimate of adjusted net income per diluted share for the full year to a range of $3.55 to $3.65, a 6% increase at the midpoint of the range as compared to $2.40 in 2023. This estimate includes the Weener acquisition as of the closing date, corporate expense of approximately $30 million, interest expense of approximately $170 million, an adjusted tax rate of 23% to 24%, and a weighted average share count of approximately 107 million shares. From a segment perspective, adjusted EBIT is expected to grow by a low single-digit percentage in 2024, driven by a double-digit percentage increase in Dispensing and Specialty Closures and growth in the Custom Container segment. Adjusted EBIT in the Metal Container segment is expected to be below the prior year record level by approximately $35 million to $40 million, primarily due to a double-digit decline in pack volumes in 2024, which negatively impacts volume mix and costs. Based on our current earnings outlook for 2024, we are confirming our estimate of free cash flow of approximately $375 million with CapEx of approximately $255 million in 2024. That concludes our prepared comments, and we'll open up the call for questions. Jennifer, would you please kindly provide the directions for the question-and-answer session.

Thank you. And we'll go first to George Staphos with Bank of America.

This is for George. I appreciate the insights on metal and understand it might be premature to provide a forecast for 2025. However, regarding customer and dispensing, what feedback are you getting from your customers for next year at this point? Can you share what you anticipate in terms of volume trends?

Sure. I think we'll start by noting that there haven't been any changes in the long-term trends we've observed in both dispensing and Custom Containers. We are in the early stages of our budget process for 2025 and have gathered some preliminary insights. Our customers are returning to volume, particularly focusing on volume in the food and beverage sectors of Dispensing and Specialty Closures as we look ahead to 2025. This aligns with our long-term expectations. You can expect DSC to grow in the mid-single-digit range, while Custom Containers is likely to be in the low single-digit range. Custom Containers has been positively impacted by new business wins, and we are experiencing continued success in that market as well as in Dispensing and Specialty Closures.

Got it. Okay. And congrats on closing banner. And I guess now that you've had that business and perhaps gotten your arms around it. I guess, what base needs to be done in terms of integrating that? And then also as we sit here today and think about your capital priorities, I guess, what will be kind of a focus from here?

Sure. I mean, I'll jump in and then Bob can finish up. But just we did close on the Weener acquisition 15 days ago. So, we are hard at work getting the integration activities kicked off and underway. And as just as a reminder, we did say the synergies and the full integration will be more on the 18-month timeline. So, as we sort of close out 2025, we should be getting the full benefit, near the full benefits of the acquisition.

Yes, Kash. And I'll jump in on the what's next, if you will, in terms of capital allocation. Obviously, Adam is right, our focus is on an efficient integration here. But given the experience of our team and I think the quality of the team that came along with the Weener acquisition, we feel really good that that will go smoothly and that we'll get to that pretty quickly. The business will generate a fair bit of free cash flow on a go-forward basis, which will allow us to delever pretty quickly, not that this is an overly leveraging transaction anyway. But with the deleverage, that puts us right back in the spot where we can be thinking about how we strategically allocate capital to continue down the path of M&A. I think I've said this before, and I still believe it, that I think we remain competitively advantaged in that market. And I think that there will certainly be opportunities for us to be thinking about in the next 12 to 18 months. And that we would find attractive. And I think given our leverage profile, our access to and our cost of funds as well as our ability to act swiftly and close a deal quickly and bring synergy opportunities to the table are really in our advantage. So, I think our first and foremost priority is to get this fully integrated and operate the business effectively, but pretty quickly turn the barrel towards what's next from that perspective.

And then as we think about impact in 2025 for Weener. On the Weener acquisition announcement call, we talked about 10% accretion post-synergy. And once we are back with our cash generation to our targeted leverage ratios, we should get just over half of the accretion in 2025, and then we'll have full accretion beyond that.

Next to Anthony Pettinari with Citi.

This is Gregory asking for Anthony. My first question is about metal inventories. You mentioned that a large produce packer destocked due to the early end of this year’s pack season. Can you provide some context on how this pack season compares historically? I know you said it was approaching historical lows, but additional numbers would be very helpful. Also, how long should we expect the destocking to affect volumes in that end market?

Sure. Just to remind you, at the beginning of this year, one of our major pack customers decreased their pack plan by 30%. This is what you referred to regarding destocking. We believe that situation has worked through the market during this pack season. They should return next year with a more normal pack. We're still in the early stages of that process, so we don't have a pack plan yet, but consumer preference and demand for these products remain strong. In fact, we noticed scanner data showing an increase in canned vegetable consumption as we entered the second half of the year. This gives you an idea of what happened with our pack this year. Additionally, during the packing on the West Coast, particularly for tomatoes and food products, early rains caused delays, and then excessive summer heat negatively affected pack quality and yields. The same issue occurred with core vegetables in our Midwest products where early rains delayed the packs, followed by dry weather that further reduced yields. Ultimately, our customers decided to end the pack earlier than anticipated in September due to poor quality and low yields. I’ve been here a long time, and this was by far the worst pack I’ve seen at Silgan. That's a complete overview of how the pack season unfolded. It had a negative effect on Q3. Also, keep in mind that last year the pack extended late into Q4, which benefited us then, but that won't happen again in 2024.

We'll go next to Ghansham Panjabi with Baird.

Adam, I just kind of want to go back to your comment about the promotional activity, I think, was specific to the closures. But what are you trying to get across that the customers were basically not seeing the level of uptake that would have assumed with the promotional activity picking up? Or did I mishear that?

No, I think you are correct. The message I want to convey is that the results are mixed. I'll start with the positive aspect first. In pet food, we are experiencing significant promotional activity, which is successfully driving volume. We expected volume growth and the utilization of promotions to achieve that, and it is indeed happening in pet food. On the other hand, the situation is different for isotonic and hot-fill beverages. The encouraging news, Ghansham, is that about 67% of products in Q3 were sold on promotion, marking an all-time high for the isotonic segment for our customers. However, this did not lead to the growth that our customers had anticipated as we entered Q3. The reality is that, due to the inflation passed onto consumers over the past couple of years, the absolute price point and total value of the promotional efforts did not result in the expected growth. So, while we succeeded in pet food, we were less successful in driving volume in the isotonic segment as we had hoped.

Got you. Regarding your comments about 2025, you mentioned that dispensing closure volumes are expected to rise in the mid-single digits and that custom volumes are projected to increase slightly. Are you anticipating that there will be a boost related to promotional activities? Additionally, could you provide more details on the variances? I know you’ve finished your planning period, but in relation to your statements about EPS showing double-digit growth and being close to the high watermark?

Sure. Regarding our long-term outlook for custom and dispensing businesses, there have been no changes to our thesis. In fact, we believe we have exceeded expectations in 2024, and we are gaining strong momentum as we continue our planning process. With respect to dispensing products, we anticipate another quarter of double-digit growth in Q3 and forecast high single-digit growth in Q4. We expect healthy growth in dispensing products next year as well. In terms of custom containers, we are seeing the benefits of larger business wins we achieved early in the year, along with strong market performance. Overall, we feel optimistic about the momentum in these two areas as we look toward 2025. As we move into 2025, Weener will play a significant role, alongside the positive impact of our cost savings initiatives next year. We anticipate double-digit growth for dispensing products, organic growth in dispensing specialty closures, and organic growth in custom containers, all before we fully evaluate the packaging outlook for next year.

We'll go next to Jeff Zekauskas with JPMorgan.

You said you renewed your long-term contracts with your largest metal container customer. Were there any changes in contractual terms? That is, was it neutral or positive or negative relative to your previous contract? Or how is the contract different if it was different?

And what I'd say, we won't get into the details of any of our specific contracts. What I'll tell you about this one, it is our largest customer for the entire company. It's also the largest customer for the Metal Container segment. It is also a customer we've been doing business with since day one at Silgan. So, this is another in a long series of renewals that we've had. So, the contract is going to be very consistent with prior contracts. Again, primarily focused on our growing pet food business. So really think about this one, Jeff, in terms of us continuing to invest to support their growth. And so, by doing so, we need to secure the volume over a long period of time. So, very typical with our prior extensions, think of long term in the metal container side of the business between 7 and 10 years, think about exclusive supply relationships. And I would just say economics will be very similar to what we have in the current agreement.

And secondly, if you didn't have the reversal of tax reserves in the quarter, what would your tax rate have been?

It would have been in the normal 25% range.

We'll go next to Matt Roberts with Raymond James.

Looking at the DSC segment, could you maybe give a little color on how Prestige fragrance volumes are tracking and your outlook on that product in particular in 4Q and 2025? I know you've seen good growth there. I would think comps get tougher as that becomes a greater mix of the segment, but really just wondering what you're seeing there or if there are any pockets of lower demand? Or is that still proving out to be relatively inelastic?

Yes, still really pleased with the performance, particularly of that high-end segment for our fragrance and beauty products. And as we said, demand continues to be very strong for those products. Again, another quarter of double-digit growth in Q3 for our dispensing products and expecting more not only for Q4 but more into 2025. So, I think we've got an advantage position in that market, really focused on innovation, meeting our unique needs of the customers in that segment, frankly, better than anybody else and being rewarded with new product launches as well as the staples that we have in the high-end fragrance and beauty market that just continue to perform year after year. So, we're anticipating continued good growth. We have invested to support growth in that market and feel really good about it. And again, this is one that is very much focused on innovation and adding further enhancements to the consumer experience, which, as you can probably imagine, does indeed start with our sprayer on the high-end fragrance and beauty products.

I understand, thank you very much, Adam. Looking ahead at the health care sector, I remember you mentioned a combined $200 million in revenue post-Weener. Though it's still a small part of our portfolio, health care is expanding. Aside from growth in the high-end market, are there specific products or technologies that could help us gain market share in health care? Additionally, are there particular health care markets where you believe Silgan has a strong opportunity to succeed?

Yes, it's a great question. It all goes back to what I mentioned earlier about fragrance, beauty, and other high-end dispensing markets. We have an innovation pipeline that's designed to help our customers enhance their business and meet consumer demands in these areas. You're right that it's a $200 million revenue stream for us, with strong positions in both the Americas and Europe. I believe we have the potential for continued growth and will pursue organic growth and investment opportunities. Currently, we are focused on ophthalmic and nasal markets, and as we look toward innovation and service models to support that market, we can apply our existing knowledge and technology to other segments in healthcare and pharmaceuticals. We're excited about the growth potential ahead.

Yes, Matt, I would jump in here too and say, look, the growth of the health care business for us has come in a very structured way around our M&A strategy. So, it's not that we're necessarily out there elephant hunting in that side. We found businesses that bring niche businesses to us in the health care market, and that's something that we would continue to focus on over the longer term. Very similar to the way the whole Dispensing and Specialty Closures business has grown out of line.

Next to Gabe Hajde with Wells Fargo.

This is Alex on for Gabe. I was wondering if you could maybe walk through or just talk about the consumer health across your different geographies and maybe kind of talking about more promotions or where you're seeing more promotions across the different end markets for those geographies and what your expectations are in '25 as it relates to what you've been hearing from your customers?

Sure. As we think about Europe, in particular, we'll start in that geography, really, food and beverage is a large part of our Dispensing and Specialty Closures segment, dispensing products as well. And we've seen nice growth in the European segment. As far as promotional activity in Europe, we're not seeing a whole lot of promotional activity. What we're seeing is a bit of a trade to private label and private label continuing to expand and grow in those markets. If you think about the U.S. market and specifically for Dispensing and Specialty Closures, you've got a much broader array of markets. Certainly, our traditional food and beverage market plus a bit of fragrance, personal care, home care products, et cetera and really delivering good growth with the exception of isotonics, call it, in Q3. The promotional activity, we talked about, isotonics not working as well as we would have liked. We're seeing nice success in promotional activity in other home care and personal care and lawn care products. So, I think as we then rotate into 2025 and think about how our customers are going to go to market. We do believe our customers continue to focus on volume growth and have specific initiatives for volume growth that will include promotional activity. So again, I think it will be more targeted in the U.S. with specific products. And I'll say more dollars behind the promotional activity to really garner the interest of the consumer. And I think that's all built into our general thinking for 2025 as well.

And another question on just simply pricing outlook into 2025? How are you guys thinking about that?

Yes. It's still early. We're definitely in the middle of negotiations. Obviously, we're a large buyer globally, particularly in the U.S. and Europe. I would say we were anticipating deflation in the U.S. market. The U.S. market is the highest cost template market in the world. So, there was a little bit of catch-up there that we were thinking was going to take place. Maybe that deflation has lessened just a bit. We're still thinking flat to down in the U.S. And for Europe, we're thinking stable prices at this point for the European market in template.

Got it. If I could ask one last question, I believe you raised your capital expenditures slightly and are guiding for somewhat lower earnings, yet you maintained your free cash flow projection. Can you explain what the offset for those changes is?

We maintained our $375 million in free cash flow and adjusted our guidance to reflect the higher end of the range. We anticipate benefits in working capital that should help counterbalance any additional costs we expect. Most of these benefits are related to inventory, particularly regarding the levels needed for our container business.

And then in the CapEx piece of that, we did include the Weener CapEx as we now roll forward our guidance for the remainder of the year.

We'll go next to Arun Viswanathan with RBC Capital Markets.

Congratulations on the progress. I have a question about DSC. It's surprising to see the continued strength in beauty, which seems different from the scanner data. Is this perhaps related to your customer mix, particularly the high end performing well? Could you clarify how you are performing compared to general industry trends in closures?

Yes. Arun, I think you've got it exactly right. It is that high end part of the market where we play. Again, for our business, it's really at the prestige high-end level of the market. We don't play a whole lot in the mass market that might be experiencing different performance. So, it's a part of the market that does indeed reward innovation and the service levels that we provide to our customers, and that is a winning strategy for us and continues to deliver very positive results, both on the bottom line and through the volume as well.

Okay. It seems like you and many others experienced significant destocking last year and earlier this year, which appears to have settled down. Now, we're noticing some deflation and possibly a slight increase in at-home consumption. Is that right? Are your customers expressing optimism about potentially higher consumer volumes? Are they increasing their promotions? You mentioned the large customer in metal—are they also showing signs of renewed optimism regarding more at-home consumption? Do you view this as potential upside for yourselves in 2025?

Yes. So, I think, Arun, what I would say is destocking for our business did indeed end. So, we've now seen two quarters with the positive volume and inflection that we were anticipating. So, I think we have moved past that for all intents and purposes. As far as increased at-home consumption, et cetera, I think we're still a little early in that process. We have scanner data that shows in-home consumption is actually up a little bit as we came in through the third quarter. And then our largest customer that you mentioned, that's one where consumer demand has continued to be really strong. That food products, right? The destocking happened at the beginning of the year, a little bit into Q2, but it's done. And all through that destocking activity, consumer demand, the consumer preference remained very strong for our products and their products. So, as we sit here, we think we're looking at continued positive consumer sentiment and demand for our products that really the underlying levels were always good through destocking as well. So, feeling pretty good about it. We'll see how the rest of the year plays out. But our customers are noticing that underlying demand has remained strong through that entire process.

Next to Michael Roxland with Truist Securities.

This is Niccolo Piccini on behalf of Mike Roxland. First, it seems you may have had some additional containers this quarter. Could you provide a timeline for when those might become available for commercial use or share any other details on that?

Sure. Obviously, the two we talked about earlier in the year were large kind of contractual items. What I'd tell you about the ongoing wins is a little bit smaller in scale, much more kind of in the day-to-day combat of the business. That is just kind of normal ebb and flow of the business. But I would tell you that we are winning business and custom containers at a rate that is eclipsing the market growth that we see elsewhere in the category. So, those will have positive contributions in 2025. But I'll just say they were smaller in scale than the two large business work that we commercialized earlier in 2024.

Got it. And then just I appreciate the color on CapEx. Maybe going forward past 24 and has grown with customers as we focus and maybe later on growing in health care plus Weener. How do you see CapEx evolving?

Well, again, we're in the process of rolling up. I don't think there's anything fundamentally that's changed, obviously, with Weener we're going to add their CapEx requirements to our portfolio and support their ongoing growth. They've been growing at a good clip, and we'll continue to support that. I think as we talk about opportunities and dispensing and specialty and what health care brings, we'll address those as they come, but there's nothing specific that we're thinking about. And I think maybe just in a broader scope, just for our three segments, you probably should think about kind of DSC and CapEx, something like 5% to 6% of revenue, maybe Custom Containers around that 5% of revenue perspective. and Metal Containers in the 3% to 4% of revenue.

And at this time, there are no further questions.

Great. Thank you, Jennifer. I appreciate everyone's interest in our third quarter results, and we look forward to discussing the fourth quarter and full year results later in January.

This does conclude today's conference. We thank you for your participation.