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BWAY Holding Company Reports Strong Fourth Quarter and Full Year Fiscal 2009 Earnings and Cash Flow Results, and Confirms Fiscal 2010 Guidance
ATLANTA, Dec. 9 /PRNewswire-FirstCall/ -- BWAY Holding Company (NYSE: BWY), a leading supplier of general line rigid containers, today announced full year fiscal 2009 net income of $23.5 million, or $1.00 per diluted share compared to net income of $11.9 million, or $0.51 per diluted share for the prior year. Fourth quarter fiscal 2009 net income was $9.0 million, or $0.37 per diluted share compared to net income of $6.6 million, or $0.28 per diluted share for the prior year.
Adjusted net income (see accompanying reconciliations to GAAP financial measures) for fiscal 2009 was $31.0 million, or $1.32 per diluted share compared to adjusted net income of $16.6 million, or $0.71 per diluted share for fiscal 2008. Fourth quarter fiscal 2009 adjusted net income was $11.4 million, or $0.47 per diluted share compared to adjusted net income of $7.7 million, or $0.33 per diluted share for the prior year fourth quarter.
"Fiscal 2009 was a good year for BWAY from both a financial and strategic standpoint," said Ken Roessler, BWAY's President and CEO. "Despite the worst economic environment in decades, earnings and cash flow grew during the year primarily as a result of initiatives we took to effectively flex our operating schedules in reaction to lower volumes, and to reduce cost Company-wide. Our actions not only benefited fiscal 2009, but are also providing carry-over benefits and solid momentum for continued financial growth in fiscal 2010. Strong fiscal 2009 results, combined with the successful refinancing of our senior subordinated notes during the year, provided the foundation for execution on the add-on acquisition element of our strategy. The August acquisition of Central Can Company and the October acquisition of Ball Corporation's plastic pail plant in Georgia both fit well with the Company's strategy and are expected to provide meaningful sales and earnings growth for fiscal 2010 and beyond."
The Company also reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and certain items noted in the accompanying GAAP reconciliation) of $125.0 million for fiscal 2009 compared to $104.6 million for fiscal 2008. Adjusted EBITDA included non-cash stock based compensation of $1.0 million and $6.3 million for fiscal 2009 and 2008 respectively. Adjusted EBITDA for the fourth quarter fiscal 2009 was $36.2 million compared to $31.5 million for the fourth quarter of fiscal 2008.
Free cash flow (net cash provided by operating activities less capital expenditures as noted in the accompanying GAAP reconciliation) was $52.8 million for fiscal 2009 compared to $39.8 million for the year earlier period.
Mr. Roessler added, "Strong free cash flow results allowed BWAY to complete the recent acquisitions using accumulated cash, while at the same time lowering the Company's net debt leverage ratio of total debt, net of cash, to adjusted EBITDA."
Full Year Fiscal 2009 Results
Net sales for fiscal 2009 were $904.4 million, a decrease of 11.2% when compared to $1,019.0 million for fiscal 2008. The decrease was largely driven by weakness in the overall economy, and more specifically the downturn in housing related markets, which prevailed throughout the Company's fiscal year. The Company estimates that average volume declined by approximately 16% in fiscal 2009. The effect of lower volume on net sales was partially offset by net overall higher raw material cost driven selling prices. The Company believes that sales declines are indicative of market conditions and that it has not lost market share.
Gross margin (excluding depreciation and amortization) for fiscal 2009 was $148.9 million, or 16.5% of sales, compared to $130.0 million, or 12.8% of sales for fiscal 2008. A significant factor contributing to higher gross margin was the Company's cost reduction program implemented early in the fiscal year in response to substantial declines in market demand for its products, including the benefits from the closure of two manufacturing facilities in late fiscal 2008. Also contributing to higher gross margin were improved operating results in the Company's aerosol can business, deflation on certain non-raw material costs, and an inventory consumption benefit during the second fiscal quarter following steel cost increases on January 1, 2009.
During fiscal 2009, the Company recorded restructuring charges of $5.6 million primarily related to plant rationalizations and the Company's reorganization to eliminate operating divisions. During fiscal 2008 the Company recorded restructuring charges of $9.6 million primarily associated with the closure of two plants previously noted, one in each of the Company's metal and plastic packaging segments.
On April 6, 2009, BWAY Corporation, the Company's principal operating subsidiary, completed a refinancing of its $200 million 10% senior subordinated notes due October 2010. The refinancing was completed with the issuance of $228.5 million aggregate principal amount of 10% senior subordinated notes due April 2014. The new notes were issued at a discount to par yielding net proceeds of $200.0 million. During fiscal 2009 the Company recorded a loss on extinguishment of debt of $4.8 million, and $1.7 million of additional, or overlap interest, during the 30 day call period on the old notes following the issuance of the new notes, which was included in interest expense.
Interest expense for fiscal 2009 was $35.1 million compared to $35.3 million for fiscal 2008. Fiscal 2009 included the $1.7 overlap interest described above and additional interest on the new notes of approximately $3.4 million, which in total were more than offset by lower bank debt interest due to lower average borrowings and lower LIBOR based interest rates.
The Company recorded a provision for income taxes of $11.2 million on income before income taxes of $34.7 million for fiscal 2009, representing an effective tax rate of 32.3%. The fiscal 2009 provision included a favorable deferred rate change and other statutory adjustments totaling $1.2 million. During fiscal 2008, on income before income taxes of $13.2 million, the Company recorded a provision for income taxes of $1.3 million which included certain favorable adjustments.
Fiscal Fourth Quarter 2009 Results
Net sales for the fourth quarter of fiscal 2009 were $249.4 million compared to $284.0 million for the fourth quarter of fiscal 2008. Volumes declined by approximately 13% on average as the result of lower market demand reflecting general weakness in the economy. Volume declines were partially offset by higher average raw material driven selling prices, and the August acquisition of Central Can Company which added 3.0% in sales for the quarter.
Gross margin (excluding depreciation and amortization) for the fourth quarter of fiscal 2008 was $42.5 million or 17.0% of sales compared to $37.2 million or 13.1% of sales for the fourth quarter of fiscal 2008. The increase resulted primarily from successes under the Company's cost reduction program which gained significant momentum during fiscal 2009.
During the fourth quarter of fiscal 2009 the Company recorded a $2.7 million restructuring charge primarily related to plant rationalizations and the Company's initiative to eliminate operating divisions. During the fourth quarter of fiscal 2008 the Company recorded a $3.9 million restructuring charge primarily related to plant closures.
Fourth quarter fiscal 2009 provision for income taxes included a $1.0 million favorable adjustment related to a change in the deferred tax rate and to other statutory adjustments. Fourth quarter fiscal 2008 provision for income taxes included a $1.9 million favorable adjustment as a result of a correction related to deferred income taxes.
Business Segment Review
Metal Packaging Business Segment
Sales for the Company's metal packaging segment were $167.5 million for the fourth quarter of fiscal 2009 compared to $161.6 million for the same quarter last year. The increase resulted from higher raw material cost driven selling prices, largely offset by an approximate 12% decline in volume.
Metal segment earnings (excluding depreciation and amortization) were $29.6 million or 17.7% of sales for the fourth quarter of fiscal 2009 compared to $26.5 million or 16.4% of sales for the fourth quarter of fiscal 2008. The quarter benefited from actions taken by the Company to reduce cost over the past year, and from higher levels of productivity.
Plastic Packaging Business Segment
Sales for the Company's plastic packaging segment were $81.9 million for the fourth quarter of fiscal 2009 compared to $122.4 million for the fourth quarter of fiscal 2008. The decrease resulted from an approximate 15% decline in volume, and from lower raw material cost driven selling prices.
Plastic segment earnings (excluding depreciation and amortization) were $11.3 million or 13.8% of sales for the fourth quarter of fiscal 2009 compared to $8.2 million or 6.7% of sales for the fourth quarter of fiscal 2008. The effect of lower volume was more than offset by actions taken to reduce operating costs.
Corporate
Undistributed corporate expenses were $3.8 million for the fourth quarter of fiscal 2009 compared to $4.2 million for the fourth quarter of fiscal 2008.
Capital expenditures for fiscal 2009 were $18.5 million compared to $34.0 million in fiscal 2008 when the Company was investing in new plastic products.
Outlook for Fiscal 2010
The Company confirms its first fiscal quarter and full year fiscal 2010 earnings and cash flow guidance originally published on October 26, 2009 which included expected benefits from the Company's two recent acquisitions.
- First quarter fiscal 2010 (ending December 31, 2009) adjusted net income of $0.05 - $0.13 per diluted shared, compared to an adjusted net loss per diluted share of $(0.11) for the first quarter of fiscal 2009. The Company expects adjusted EBITDA of $22.0 - $25.0 million compared to $15.6 million for the first quarter last year.
- Full year fiscal 2010 adjusted net income per diluted share of $1.42 - $1.60 compared to $1.32 for fiscal 2009. Adjusted EBITDA is expected to be in the range of $138.0 - $142.0 million compared to $125.0 million for fiscal 2009.
- Full year fiscal 2010 free cash flow (net cash provided by operating activities less capital expenditures) is expected to be in the range of $55.0 - $60.0 million compared to $52.8 million for fiscal 2009. Full year fiscal 2010 capital expenditures, including estimated expenditures associated with the previously announced Chicago plant consolidation are expected to be $23.0 - $25.0 million.
Conference Call
The Company will hold a conference call on December 10th at 10:00 a.m. (Eastern Time) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are 800-299-7098, or for international 617- 801-9715, and the access passcode is 65312620. A replay of the conference call will be available until midnight on December 17, 2009. The dial-in numbers for the replay are 888-286-8010, or for international 617-801-6888, and the access passcode is 32261082.
About BWAY Holding Company
BWAY Holding Company is a leading North American manufacturer of general line rigid metal and plastic containers. The Company operates 20 plants throughout the United States and Canada serving industry leading customers on a national basis.
Cautionary Note Regarding Forward-Looking Statements
This document contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place reliance on these statements. Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of our business strategies. These statements often include words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", "seek", "will", "may" or similar expressions. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. As you read and consider this document, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Many factors could affect our actual financial results and could cause actual results to differ materially from those expressed in the forward-looking statements. Some important factors include competitive risk from other container manufacturers or self-manufacture by customers, termination of our customer contracts, loss or reduction of business from key customers, dependence on key personnel, changes in steel, resin, other raw material and energy costs or availability, product liability or product recall costs, lead pigment and lead paint litigation, increased consolidation in our end markets, consolidation of key suppliers, deceleration of growth in our end markets, increased use of alternative packaging, labor unrest, environmental, health and safety costs, management's inability to evaluate and selectively pursue acquisitions or inability to realize expected synergies from acquisitions completed, fluctuation of our quarterly operating results, an increase in interest rates, inability to repay or refinance the senior subordinated notes, restrictions in our debt agreements, fluctuations of the Canadian dollar, and the other factors discussed in our filings with the Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward-looking statements contained in this document might not prove to be accurate and you should not place undue reliance upon them. All forward- looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Measures
The Company provides financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (GAAP). Presentation of non-GAAP measures such as EBITDA, adjusted EBITDA, adjusted EBIT, free cash flow, adjusted free cash flow, adjusted net income and adjusted net income per diluted share provide investors with alternative methods for assessing our operating results in a manner that enables them to more thoroughly evaluate our performance. These non-GAAP measures also provide a baseline for assessing the Company's future results. BWAY management uses these non-GAAP measures for the same purpose. The non- GAAP measures included in this release are provided to give investors access to the types of measures that we use in analyzing our results.
BWAY's calculation of non-GAAP financial measures is not necessarily comparable to similarly titled measures reported by other companies. These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Schedules that reconcile non-GAAP financial measures used in this press release to GAAP financial measures are included with this news release.
Financial Information to Follow
BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Amounts in millions, except per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2009 2008 2009 2008
-------- -------- -------- --------
Statements of Operations:
-------------------------
Net sales $249.4 $284.0 $904.4 $1,019.0
Cost of products sold
(excluding depr. and amort.) 206.9 246.8 755.5 889.0
----- ----- ----- -----
Gross margin (excluding
depr. and amort.) 42.5 37.2 148.9 130.0
---- ---- ----- -----
Other costs and expenses
Depreciation
and amortization 12.3 12.1 44.8 46.8
Selling and administrative
expense 5.4 6.7 23.4 24.9
Loss on extinguishment
of debt - - 4.8 -
Restructuring charge 2.7 3.9 5.6 9.6
Interest expense, net 8.7 8.2 35.1 35.3
Other expense
(income), net 0.9 (0.3) 0.5 0.2
--- ---- --- ---
Total other costs
and expenses 30.0 30.6 114.2 116.8
---- ---- ----- -----
Income before income taxes 12.5 6.6 34.7 13.2
Provision for income taxes 3.5 - 11.2 1.3
--- --- ---- ---
Net income $9.0 $6.6 $23.5 $11.9
==== ==== ===== =====
Net income per share
Basic $0.41 $0.30 $1.07 $0.55
===== ===== ===== =====
Diluted $0.37 $0.28 $1.00 $0.51
===== ===== ===== =====
Shares - Basic (000s) 22,058 21,742 21,941 21,691
Shares -Diluted (000s) 24,069 23,515 23,419 23,388
Reconciliation of Adjusted
EBITDA to Net Income
--------------------------
Net income $9.0 $6.6 $23.5 $11.9
Interest expense, net 8.7 8.2 35.1 35.3
Provision for income taxes 3.5 - 11.2 1.3
Depreciation and amortization 12.3 12.1 44.8 46.8
---- ---- ---- ----
EBITDA 33.5 26.9 114.6 95.3
Adjustments:
Restructuring charge 2.7 3.9 5.6 9.6
Loss on extinguishment of debt - - 4.8 -
Bad debt expense adjustments - 0.7 - (0.3)
--- --- --- ----
Adjusted EBITDA 36.2 31.5 125.0 104.6
Less: Depreciation and
amortization 12.3 12.1 44.8 46.8
---- ---- ---- ----
Adjusted EBIT $23.9 $19.4 $80.2 $57.8
===== ===== ===== =====
Reconciliation of Net Income
to Adjusted Net Income
----------------------------
Net income $9.0 $6.6 $23.5 $11.9
Adjustments:
Restructuring charge 2.7 3.9 5.6 9.6
Loss on extinguishment of debt - - 4.8 -
Bad debt expense adjustments - 0.7 - (0.3)
Additional depreciation expense
associated with plant
closures 0.6 - 0.6 1.3
Benefit from income taxes
related to the above
adjustments (0.9) (1.6) (3.5) (3.6)
Correction to deferred
income taxes - (1.9) - (2.3)
--- ---- --- ----
Adjusted net income $11.4 $7.7 $31.0 $16.6
===== ==== ===== =====
Adjusted net income per
diluted share $0.47 $0.33 $1.32 $0.71
===== ===== ===== =====
Shares -Diluted (000s) 24,069 23,515 23,419 23,388
BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Amounts in millions)
Three Months Ended Twelve Months Ended
------------------ -------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2009 2008 2009 2008
-------- -------- -------- --------
Business Segment Information:
-----------------------------
Net sales
Metal packaging $167.5 $161.6 $590.1 $583.0
Plastic packaging 81.9 122.4 314.3 436.0
---- ----- ----- -----
Consolidated net sales 249.4 284.0 904.4 1,019.0
Income before income taxes
Segment earnings
(excluding depr.
and amort.)
Metal packaging 29.6 26.5 94.1 80.9
Plastic packaging 11.3 8.2 46.0 40.6
---- --- ---- ----
Total segment
earnings (excluding
depr. and amort.) 40.9 34.7 140.1 121.5
Depreciation and
amortization
Metal packaging 6.0 6.1 21.3 23.3
Plastic packaging 5.9 5.7 22.0 22.2
--- --- ---- ----
Total segment
depreciation and
amortization 11.9 11.8 43.3 45.5
Corporate depreciation
and amortization 0.4 0.3 1.5 1.3
--- --- --- ---
Consolidated
depreciation and
amortization 12.3 12.1 44.8 46.8
Corporate and other
expenses
Corporate
undistributed
expense 3.8 4.2 14.6 16.4
Loss on extinguishment
of debt - - 4.8 -
Restructuring charge 2.7 3.9 5.6 9.6
Interest expense, net 8.7 8.2 35.1 35.3
Other expense
(income), net 0.9 (0.3) 0.5 0.2
Consolidated income before
income taxes $12.5 $6.6 $34.7 $13.2
===== ==== ===== =====
As of
-----
Sept. 27, 2009 Sept. 28, 2008
-------------- --------------
Condensed Balance Sheets:
-------------------------
Assets
Cash and cash equivalents $88.7 $92.1
Accounts receivable, net of allow.
for doubtful accts. 103.8 113.3
Inventories, net 87.0 112.2
Other current assets 15.6 20.7
---- ----
Total current assets 295.1 338.3
Property, plant and equipment, net 160.9 141.9
Goodwill and other intangible
assets, net 388.4 393.2
Other assets 11.1 9.0
---- ---
Total Assets $855.5 $882.4
====== ======
Liabilities and Stockholders' Equity
Accounts payable $98.0 $149.8
Other current liabilities 63.3 52.4
Current portion of long-term debt 6.5 18.9
--- ----
Total current liabilities 167.8 221.1
Long-term debt (excluding current
portion) 395.8 402.4
Other long-term liabilities 93.6 85.2
Stockholders' equity 198.3 173.7
----- -----
Total Liabilities and Stockholders'
Equity $855.5 $882.4
====== ======
Twelve Months Ended
-------------------
Statements of Cash Flows: Sept. 27, 2009 Sept. 28, 2008
------------------------- -------------- --------------
Cash Flows From Operating
Activities
Net income $23.5 $11.9
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation 29.9 31.0
Amortization of other
intangibles 14.9 15.8
Amortization of debt issuance
costs 2.2 2.1
Amortization of debt discount 2.0 -
Benefit from doubtful accounts (0.7) (0.5)
Loss on disposition of property,
plant and equipment 0.1 0.2
Deferred income taxes (7.5) (8.3)
Stock-based compensation
expense 1.0 6.3
Loss on extinguishment of debt 4.8 -
Other 0.3 -
Changes in operating assets and
liabilities:
Accounts receivable 16.3 (6.2)
Inventories 31.3 (0.8)
Other assets 4.7 (5.1)
Accounts payable (61.3) 20.1
Other liabilities 4.9 5.0
Income taxes 4.9 2.3
--- ---
Net cash provided by operating
activities 71.3 73.8
---- ----
Cash Flows From Investing
Activities
Capital expenditures (18.5) (34.0)
Business acquisitions (27.7) -
Other - 0.4
--- ---
Net cash used in investing
activities (46.2) (33.6)
----- -----
Cash Flows From Financing
Activities
Proceeds from issuance of senior
subordinated notes 200.0 -
Repayment of senior subordinated
notes (200.0) -
Premium paid on call of senior
subordinated notes (3.3) -
Repayments of other long-term
debt (18.1) (1.9)
Principal repayments under
capital lease obligations (1.7) (0.2)
Proceeds from stock option
exercises 2.1 0.9
Excess tax benefits related to
share-based payments 0.6 0.1
Debt issuance costs incurred (5.5) -
---- ---
Net cash used in financing
activities (25.9) (1.1)
----- ----
Effect of exchange rate changes
on cash and cash equivalents (2.6) (0.4)
Net (decrease) increase in cash
and cash equivalents (3.4) 38.7
---- ----
Cash and cash equivalents,
beginning of period 92.1 53.4
---- ----
Cash and cash equivalents, end
of period $88.7 $92.1
===== =====
Fiscal Year Ended
-----------------
Sept. 27, 2009 Sept. 28, 2008
-------------- --------------
Reconciliation of net cash provided by
operating activities to adjusted free
cash flow:
--------------------------------------
Net cash provided by operating activities $71.3 $73.8
Capital expenditures (18.5) (34.0)
----- -----
Free cash flow 52.8 39.8
==== ====
SOURCE BWAY Holding Company
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