BWAY Intermediate Company, Inc. Reports Sales and Earnings for the Second Quarter of Fiscal 2011

ATLANTA, May 12, 2011 /PRNewswire/ -- BWAY Intermediate Company, Inc., a leading North American supplier of general line rigid containers, today reported net sales for the second quarter ended March 31, 2011 of $302.3 million, an increase of 21.9% compared to $248.0 million for the same quarter last year. The acquisitions of Plastican, Inc. in October of 2010 and Phoenix Container, Inc. in December of 2010 (the "Recent Acquisitions") accounted for $27.4 million of the increase with the remaining $26.9 million coming from increased volume and higher raw material driven selling prices. Excluding the effect of the Recent Acquisitions, overall volume for the quarter increased 6.2% over the second quarter of fiscal 2010.

The Company also reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and certain other items noted in the accompanying GAAP reconciliation) for the second quarter of fiscal 2011 of $40.6 million compared to $35.1 million for the second quarter last year. The increase in adjusted EBITDA is attributable to higher average gross margins and lower selling and administrative expenses as discussed below.

Second quarter gross margin (excluding depreciation and amortization) was $44.8 million compared to $40.1 million for the same period last year.  The increase is attributable to the Company's metal packaging segment which reported higher quarter over quarter volume, a successful pass-through of the January 1 tinplate steel cost increase, and the benefit of consuming lower cost steel in inventory at the beginning of the quarter, including steel purchased in advance of the January 1 price increase.

Depreciation and amortization expense for the second quarter of fiscal 2011 was $22.0 million compared to $13.1 million for the same quarter last year. The increase is primarily attributable to higher depreciation and amortization resulting from a write-up of assets to fair value following the June 2010 sale of the Company to affiliates of Madison Dearborn Partners, LLC (the "MDP Transaction"), the Recent Acquisitions, and to recent capital expenditures.

Selling and administrative expense was $4.3 million for the quarter compared to $5.0 million for the same quarter last year. Increases in expenses related to the Recent Acquisitions were more than offset by lower overall spending and favorable timing of certain expenses.

The Company recorded restructuring charges of $0.5 million and $0.7 million for the second quarter of fiscal 2011 and 2010, respectively. The charges were primarily related to previously announced plant closures, a key synergy of acquisitions completed by the Company over the past two years. During fiscal 2010 the Company finalized the closure of three manufacturing plants and moved production volume into other of the Company's plants. During the second quarter of fiscal 2011, the Company completed the closure of a plastic packaging segment plant located in Phoenix, AZ, which was part of the October 2010 Plastican, Inc. acquisition.  Volume and equipment from the plant were moved primarily to BWAY's Cedar City, UT plant. The Company will maintain a warehouse in Phoenix, AZ to serve local customers.

Second quarter interest expense was $13.9 million for fiscal 2011, compared to $8.8 million for the same period last year. The increase is attributable to a higher level of debt, with associated higher average interest rates, resulting from the financing of the MDP Transaction.

Other (income) expense for the second quarter was $(0.4) million including $(1.1) million of foreign exchange gain and $0.4 million of expense associated with the February 2011 amendment to the Company's credit agreement discussed below. Other (income) expense for the second quarter last year was $0.4 million which was largely related to foreign exchange loss.

Net income for the quarter was $1.5 million compared to $4.4 million for the second quarter last year. The decrease is attributable to the items discussed above.

Business Segments

Metal Packaging

Sales for the Company's metal packaging segment were $180.9 million for the second quarter of fiscal 2011, compared to $155.5 million in the year-earlier period. The increase in sales was driven largely by an increase in volume, higher raw material cost driven selling prices, and the December 2010 acquisition of Phoenix Container, Inc. Excluding the effects of the acquisition, overall volumes increased approximately 9.8% compared to the second quarter last year.

Metal packaging segment earnings (excluding depreciation and amortization) were $35.7 million, or 19.7% of segment sales for the second quarter of fiscal 2011, compared to $29.3 million, or 18.8% of segment sales for the same quarter of fiscal 2010. The increase is largely attributable to the favorable effect of higher quarter over quarter volume, a successful pass-through of the January 1 tinplate steel cost increase, and the benefit of consuming lower cost steel in inventory at the beginning of the quarter, including steel purchased in advance of the January 1 price increase.

Plastic Packaging

Sales for the Company's plastic packaging segment were $121.4 million for the second quarter of fiscal 2011, compared to $92.5 million for the second quarter of fiscal 2010. The increase resulted largely from the October 2010 acquisition of Plastican, Inc. and higher resin cost driven selling prices. Excluding the effect of the Plastican acquisition, volume was essentially flat compared to the second quarter of fiscal 2010.

Plastic packaging segment earnings (excluding depreciation and amortization) were $7.3 million, or 6.0% of segment sales for the second quarter of fiscal 2011, compared to $8.9 million, or 9.6% of segment sales for the same quarter of fiscal 2010. The decrease in segment earnings resulted primarily from a continuing trend of increasing resin cost and timing issues relating to passing the increases through to customers in the form of higher product prices. The Company has taken, and has plans to take a number of steps to reduce or eliminate pass through timing delays, and to recover other inflationary costs in its plastic packaging segment.

Corporate

Long-term debt decreased during the second quarter by $11.5 million primarily as the result of a reduction in borrowings under the Company's revolving credit facility. At the end of the second quarter the Company had approximately $60.5 million of undrawn revolver capacity.

During the second quarter the Company completed an amendment to its credit agreement which provided for, among other changes, lower interest rates and the elimination or easing of certain restrictive covenants.

Capital expenditures for the second quarter of fiscal 2011 were $9.4 million, compared to $6.9 million for the second quarter last year. The increase is primarily due to the implementation of SAP in the Company's metal packaging segment plants, expenditures related to plant rationalizations, and opportunistic investments in the Company's plastic packaging segment.

About BWAY Intermediate Company. Inc.

BWAY Intermediate Company, Inc. is a leading North American supplier of general line rigid containers. The Company operates 23 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 press release, 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 annual report for the fiscal year ended September 30, 2010, posted on our website at www.bwaycorp.com and our documents filed with the United States Securities and Exchange Commission, including Form S-4, 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 press release 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) and "adjusted net income (loss)," 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 press 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.

SOURCE BWAY Intermediate Company, Inc.