BWAY Holding Company Announces First Quarter Fiscal 2010 Earnings Results and Plant Rationalization, Reaffirms Annual Guidance
ATLANTA, Feb. 8 /PRNewswire-FirstCall/ -- BWAY Holding Company (NYSE: BWY), a leading North American supplier of general line rigid containers, today reported net income for the first quarter of fiscal 2010 of $0.8 million, or $0.03 per diluted share, compared to a net loss of $(2.7) million or $(0.13) per diluted share for the first quarter of fiscal 2009. The Company's first fiscal quarter has historically been the weakest of the year due to seasonal fluctuations in demand. Adjusted net income (see accompanying reconciliations to GAAP financial measures) for the first quarter of fiscal 2010 was $3.2 million, or $0.13 per diluted share compared to an adjusted net loss for the year-earlier period of $(2.2) million, or $(0.11) per diluted share.
The Company also reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and certain other items noted in the accompanying GAAP reconciliation) of $26.0 million for the first quarter of fiscal 2010 compared to $15.6 million for the same period last year.
Revenues were $219.0 million for the first quarter of fiscal 2010, increasing 3.1% when compared with revenue of $212.5 million for the same quarter of fiscal 2009. The year-over-year increase in sales was primarily attributable to the August 2009 acquisition of Central Can Company and the October 2009 acquisition of Ball Corporation's plastic pail business, and to higher selling prices resulting from raw material cost increases passed through to customers. Overall sales volume for the quarter, excluding the effect of acquisitions, declined approximately 4% compared with the first quarter of fiscal 2009, which had the benefit of increased customer orders in advance of the significant tin plate steel increase announced for January 1, 2009.
Ken Roessler, President and Chief Executive Officer stated that, "Our first quarter earnings reflect the accruing benefits of our efforts over the past 18 months to reduce cost and improve operating efficiencies. Although market demand declined, the year-over-year variance was substantially lower than we have experienced in recent quarters."
Mr. Roessler went on to say, "We made progress during the quarter in pursuing rationalization synergies from our Central Can acquisition. Our Brampton, Ontario steel pail plant is now closed and production has been transferred to the Central Can facility (BWAY's new 'Chicago plant'). The majority of the equipment and business of our Chicago-Kilbourn plant has been moved to the Chicago plant, and we expect Kilbourn to be fully shutdown during the second fiscal quarter.
"We have completed our evaluation of plant rationalization opportunities associated with the October 2009 acquisition of Ball Corporation's plastic pail business located in Georgia (BWAY's new 'Atlanta Plant'). A key element of our evaluation is the decision to close our Toccoa, Georgia plastic packaging plant and relocate the equipment and operations to the Atlanta plant. The rationalization, which is expected to be completed during the third fiscal quarter, is expected to generate annual synergies estimated at $3.0 million, which will be phased-in during the second half of fiscal 2010. We expect to record restructuring charges of approximately $1.4 million during the remainder of fiscal 2010 associated with plant closures, including this initiative."
Gross margin (excluding depreciation and amortization) for the quarter was $32.1 million, or 14.7% of sales, compared to $20.4 million, or 9.6% of sales in the year-earlier period. Continued benefits from Company-wide cost reductions, improved aerosol results, and deflation on certain input costs more than offset the impact of lower volumes during the quarter.
Depreciation and amortization for the quarter was $13.7 million compared to $11.1 million for the same quarter last year. The increase was primarily due to the recent acquisitions, and to $1.1 million of accelerated depreciation associated with plant rationalizations.
The Company recorded a restructuring charge during the first quarter of $2.0 million primarily associated with the closure of the Company's Brampton, Ontario facility and Kilbourn plant in Chicago, Illinois. Volumes and certain equipment from the closed facilities have been transferred to the Chicago plant.
Interest expense increased from $8.2 million for the first quarter of 2009 to $8.9 million for the first quarter this year. The increase resulted from higher interest on the Company's senior subordinated notes refinanced during fiscal 2009, partially offset by lower LIBOR based interest rates on the Company's bank debt.
Metal Packaging
Sales for the Company's metal packaging segment were $143.1 million for the first quarter of fiscal 2010, including the effects of recent acquisitions, compared to $130.9 million in the year-earlier period. The increase was largely due to the Central Can Company acquisition, and to higher selling prices resulting from raw material cost increases passed through to customers. Excluding the effects of acquisitions, overall volumes declined by approximately 6% compared to the first quarter last year.
Metal packaging segment earnings (excluding depreciation and amortization) were $20.4 million, or 14.3% of segment sales for the first quarter of fiscal 2010 compared to $11.5 million, or 8.8% of segment sales for the same quarter of fiscal 2009. The Company's metal segment continues to benefit from cost reduction and productivity initiatives.
Plastic Packaging
Sales for the Company's plastic packaging segment were $75.9 million for the first quarter of fiscal 2010, including the effects of recent acquisitions, compared to $81.6 million for the year-earlier period. The decrease resulted largely from an overall decline in volume, excluding the effect of acquisitions, of approximately 2%, and to lower selling prices resulting from raw material cost decreases passed through to customers.
Plastic packaging segment earnings (excluding depreciation and amortization) were $9.8 million, or 12.9% of segment sales for the quarter, compared to $6.8 million, or 8.3% of segment sales for the first quarter of fiscal 2009. The increase is primarily attributable to the company's cost reduction and productivity improvement initiatives.
Corporate
Cash and cash equivalents decreased from $88.7 million at the beginning of the quarter to $16.8 million at the end of the first fiscal quarter. The decrease resulted from cash used to fund the acquisition of Ball Corporation's plastic pail business, seasonal increases in working capital typical of the first fiscal quarter, and other operating requirements.
First quarter capital expenditures were $5.5 million, including $2.8 million associated with plant rationalizations, compared to $3.4 million for the same period of fiscal 2009.
Outlook for Fiscal 2010
"We continue to base our guidance for fiscal 2010 on the assumption that market demand will be flat with fiscal 2009," stated Mr. Roessler. "We anticipate increases in adjusted earnings and cash flow driven by the full year benefit of actions taken during fiscal 2009 to reduce cost and increase productivity, as well as by new initiatives. We expect to realize an increase in adjusted EBITDA for the second fiscal quarter of 2010, as compared to 2009, which included a significant benefit from consuming lower cost inventory following a substantial increase in steel cost on January 1, 2009."
With regard to specific guidance, the Company provides the following:
- Second fiscal quarter 2010 (ending March 31, 2010) adjusted net income of $0.29 - $0.34 per diluted share compared with an adjusted net income per diluted share of $0.40 for the second quarter of fiscal 2009. Second quarter fiscal 2010 includes higher interest expense related to the fiscal 2009 refinance of the Company's senior subordinated debt, and higher depreciation and amortization attributable to recent acquisitions, together equal to $0.10 per diluted share for the second quarter. The Company expects adjusted EBITDA of $33.0 - $35.0 million compared with $32.8 for the second quarter last year.
- Previously released guidance reaffirmed for full-year fiscal 2010 (ending September 30, 2010) of adjusted net income per diluted share of $1.42 - $1.60 compared with $1.32 for fiscal 2009, and adjusted EBITDA of $138.0 - $142.0 million compared with $125.0 million last year.
- Previously released guidance reaffirming for full year fiscal 2010 free cash flow (net cash provided by operating activities less capital expenditures) guidance of $55.0 - $60.0 million compared with $52.8 million for fiscal 2009. Previously stated capital expenditure guidance of $23 - $25 million is increased to $26 - $28 million to reflect the rationalization of the Company's Toccoa, Georgia plant.
Conference Call
The Company will hold a conference call tomorrow morning, February 9, 2010, at 10:00 a.m. (EST) 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 800-706-7748, or for international 617-614-3473 and the access passcode is 85218743. A replay of the conference call will be available until midnight on February 16, 2010. The dial-in numbers for the replay are 888-286-8010, or for international 617-801-6888 and the access passcode is 18577781.
About BWAY Holding Company
BWAY Holding Company is a leading North American supplier of general line rigid 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, and are subject to substantial risks, uncertainties and assumptions. 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. Many factors could affect our actual performance and results and could cause actual results to differ materially from those expressed in the forward-looking statements. Please refer to our Form 10-K filing for the fiscal year ended September 27, 2009, and our other filings with the United States Securities and Exchange Commission, for a discussion of other factors that may affect future performance or results.
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 financial measures such as, but not limited to "EBITDA," "adjusted EBITDA," "EBIT," "adjusted EBIT," gross margin (excluding depreciation and amortization) "adjusted net income (loss)," and "adjusted net income (loss) per diluted share" provide investors with an alternative method for assessing the Company's operating results in a manner that enables them to more thoroughly evaluate the Company's performance. These non-GAAP financial measures provide a baseline for assessing the Company's future earnings expectations. BWAY's management uses these non-GAAP financial measures for the same purpose. The non-GAAP financial measures included in this news release are provided to give investors access to the types of measures that the Company uses in analyzing its results.
BWAY's calculation of non-GAAP financial measures is not necessarily comparable to similarly titled measures reported by other companies. These non-GAAP financial 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 these non-GAAP financial measures to GAAP financial measures are included with this news release.
Financial Information to Follow
BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Dollars in millions, except per share data)
Three Months Ended
------------------
Dec. 31, 2009 Dec. 28, 2008
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Statements of Operations:
-------------------------
Net sales $219.0 $212.5
Cost of products sold (excluding depr. and amort.) 186.9 192.1
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Gross margin (excluding depr. and amort.) 32.1 20.4
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Other costs and expenses
Depreciation and amortization 13.7 11.1
Selling and administrative 5.7 5.6
Restructuring 2.0 0.7
Interest, net 8.9 8.2
Business acquisition costs 0.5 -
Other 0.4 (0.8)
--- ----
Total other costs and expenses 31.2 24.8
---- ----
Income (loss) before income taxes 0.9 (4.4)
Provision for (benefit from) income taxes 0.1 (1.7)
--- ----
Net income (loss) $0.8 $(2.7)
==== =====
Net income (loss) per share
Basic $0.04 $(0.13)
===== ======
Diluted $0.03 $(0.13)
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Shares - Basic (000s) 22,219 21,865
Shares - Diluted (000s) 24,239 21,865
Reconciliation of Adjusted EBITDA to Net Income
(Loss)
-----------------------------------------------
Net income (loss) $0.8 $(2.7)
Interest expense, net 8.9 8.2
Provision for (benefit from) income taxes 0.1 (1.7)
Depreciation and amortization 13.7 11.1
---- ----
EBITDA 23.5 14.9
Adjustments:
Restructuring expense 2.0 0.7
Business acquisition costs 0.5 -
--- ---
Adjusted EBITDA 26.0 15.6
Less: Depreciation and amortization 13.7 11.1
---- ----
Adjusted EBIT $12.3 $4.5
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Reconciliation of Net Income (Loss) to Adjusted
Net Income (Loss)
-----------------------------------------------
Net income (loss) $0.8 $(2.7)
Adjustments:
Restructuring expense 2.0 0.7
Accelerated depreciation 1.1 -
Business acquisition costs 0.5 -
Benefit from income taxes related to the
above adjustments (1.2) (0.2)
---- ----
Adjusted net income (loss) $3.2 $(2.2)
==== =====
Adjusted net income (loss) per diluted share $0.13 $(0.11)
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Shares - Diluted (000s) 24,239 21,865
BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Dollars in millions)
Three Months Ended
------------------
Dec. 31, 2009 Dec. 28, 2008
------------- -------------
Business Segment Information:
-----------------------------
Net sales
Metal packaging $143.1 $130.9
Plastic packaging 75.9 81.6
---- ----
Consolidated net sales 219.0 212.5
Income (loss) before income taxes
Segment earnings (excluding depr. and amort.)
Metal packaging 20.4 11.5
Plastic packaging 9.8 6.8
--- ---
Total segment earnings (excluding depr.
and amort.) 30.2 18.3
Depreciation and amortization
Metal packaging 6.7 5.4
Plastic packaging 6.6 5.4
--- ---
Total segment depreciation and amortization 13.3 10.8
Corporate depreciation and amortization 0.4 0.3
--- ---
Consolidated depreciation and amortization 13.7 11.1
Corporate and other expenses
Corporate undistributed expenses 3.8 3.5
Restructuring 2.0 0.7
Interest, net 8.9 8.2
Business acquisition costs 0.5 -
Other 0.4 (0.8)
---- ------
Consolidated income (loss) before income taxes $0.9 $(4.4)
==== ======
Dec. 31, 2009 Sept. 27, 2009
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Condensed Balance Sheets:
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Assets
Cash and cash equivalents $16.8 $88.7
Accounts receivable, net of allow. for
doubtful accts. 101.3 103.8
Inventories, net 103.1 87.0
Other current assets 18.5 15.6
---- ----
Total current assets 239.7 295.1
Property, plant and equipment, net 167.6 160.9
Goodwill and other intangible assets, net 404.0 388.4
Other assets 10.6 11.1
---- ----
Total Assets $821.9 $855.5
====== ======
Liabilities and Stockholders' Equity
Accounts payable $86.0 $98.0
Other current liabilities 43.1 63.3
Current portion of long-term debt 0.5 6.5
--- ---
Total current liabilities 129.6 167.8
Long-term debt (excluding current portion) 397.9 395.8
Other long-term liabilities 93.5 93.6
Stockholders' equity 200.9 198.3
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Total Liabilities and Stockholders' Equity $821.9 $855.5
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SOURCE BWAY Holding Company
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