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

ATLANTA, Aug. 15, 2011 /PRNewswire/ -- BWAY Intermediate Company, Inc., a leading North American supplier of general line rigid containers, today reported net sales for the third quarter ended June 30, 2011 of $328.5 million, an increase of 13.8% compared to $288.7 million for the same quarter last year. The acquisitions of Plastican, Inc. in October 2010 and Phoenix Container, Inc. in December 2010 (the "Recent Acquisitions") accounted for $32.0 million of the increase with the remaining increase of $7.8 million resulting from higher raw material driven selling prices, partially offset by lower overall volume during the quarter. Excluding the effect of the Recent Acquisitions, overall volume for the quarter decreased 4.3% as compared to the third 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 reconciliation) for the third quarter of fiscal 2011 of $47.2 million compared to $40.8 million for the third quarter of fiscal 2010.

Commenting on third quarter results, Ken Roessler, BWAY's President and Chief Executive Officer stated that, "During the quarter we achieved solid year over year adjusted EBITDA growth despite weakness in market demand for many of the Company's products. The earnings growth was driven by our acquisitions over the last two years, including plant rationalization synergies being realized, and timely reductions in costs as demand declined.  Weak demand year over year experienced during the third quarter was driven by inventory de-stocking across the supply chain and across most market segments."

Third quarter gross margin (excluding depreciation and amortization) was $53.2 million compared to $42.2 million for the same period last year, which included $2.8 million of one-time costs associated with the June 2010 sale of the Company to affiliates of Madison Dearborn Partners, LLC (the "MDP Transaction").  Excluding the one-time costs included in the prior year, gross margin increased by $8.2 million largely as a result of contributions from the Recent Acquisitions and improved operating results for the Company's metal segment as discussed below.

Depreciation and amortization expense for the third quarter of fiscal 2011 was $22.7 million compared to $13.4 million for the same quarter last year. The increase is primarily attributable to higher depreciation and amortization resulting from the write-up of assets to fair value following the MDP Transaction, the Recent Acquisitions, and to the Company's ongoing capital expenditure program.

Selling and administrative expense was $6.1 million for the quarter compared to $7.3 million for the same quarter last year, which included $2.6 million of one-time costs associated with the MDP Transaction. Increases in expenses related to the Recent Acquisitions were partially offset by lower overall spending and favorable timing of certain expenses.

The Company recorded restructuring charges of $0.6 million and $0.5 million for the third 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. The Company finalized the closure of three manufacturing plants during fiscal 2010 and one plant in fiscal 2011.  In each case, production volume was moved into other of the Company's plants.

Third quarter interest expense was $12.6 million for fiscal 2011, compared to $9.7 million for the same period last year. The increase is attributable to a higher level of debt and associated higher average interest rates, resulting from the financing of the MDP Transaction.

Other expense for the third quarter was $0.4 million, including $0.2 million of foreign exchange loss. Other expense for the third quarter last year was $0.1 million, which included $0.3 million of foreign exchange loss.

During the third quarter last year, the Company recorded $25.0 million of merger transaction costs, and a $59.9 million loss on extinguishment of debt associated with the MDP Transaction.

Net income for the quarter was $5.3 million compared to a net loss of $54.1 million for the third quarter last year. This change is attributable to the items discussed above.

Business Segments

Metal Packaging

Sales for the Company's metal packaging segment were $194.3 million for the third quarter of fiscal 2011, compared to $178.9 million in the third quarter of fiscal 2010. The increase in sales was driven largely by higher selling prices driven by higher raw material costs and the December 2010 acquisition of Phoenix Container, Inc., partially offset by lower volume. Excluding the effect of the Phoenix Container acquisition, overall volumes decreased approximately 5.7% compared to the third quarter last year.

Metal packaging segment earnings (excluding depreciation and amortization) were $42.8 million, or 22.0% of segment sales for the third quarter of fiscal 2011, compared to $34.9 million, or 19.5% of segment sales for the same quarter of fiscal 2010. The third quarter of fiscal 2010 included $0.9 million of one-time costs related to the MDP Transaction. The increase is attributable in part to earnings from the Phoenix Container acquisition, including achievement of planned synergies, the year over year benefits associated with plant consolidations and cost reductions undertaken during fiscal 2010, and continued focus on productivity.

Plastic Packaging

Sales for the Company's plastic packaging segment were $134.2 million for the third quarter of fiscal 2011, compared to $109.8 million for the third quarter of fiscal 2010. The increase resulted largely from the October 2010 acquisition of Plastican, Inc. and higher selling prices driven by higher resin cost, partially offset by lower volume. Excluding the effect of the Plastican acquisition, overall volumes decreased approximately 2.0% compared to the third quarter of fiscal 2010.

Plastic packaging segment earnings (excluding depreciation and amortization) were $7.0 million, or 5.2% of segment sales for the third quarter of fiscal 2011, compared to $7.3 million, or 6.6% of segment sales for the same quarter of fiscal 2010. The third quarter of fiscal 2010 included $0.2 million of one-time costs related to the MDP Transaction. Although plastic segment earnings benefited from the October 2010 acquisition of Plastican, Inc., they continued to be negatively impacted by increasing resin costs and timing issues relating to passing the increases through to customers in the form of higher selling prices.

Corporate

Corporate undistributed expense was $2.7 million for the quarter compared to $7.3 million for the same quarter last year. The decrease is primarily attributable to $4.3 million of one-time costs associated with the MDP Transaction, which were included in the third quarter of fiscal 2010.

Long-term debt decreased during the third quarter by $10.7 million primarily as the result of a reduction in borrowings under the Company's revolving credit facility. At the end of the third quarter, the Company had approximately $70 million of undrawn revolver capacity.

Capital expenditures for the third quarter of fiscal 2011 were $10.8 million, compared to $6.9 million for the third 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 ongoing opportunistic investments for quality, cost reduction and productivity.

Outlook

Commenting on the Company's business outlook, Mr. Roessler went on to say that, "The weak level of market demand experienced during the third quarter has continued during our fourth fiscal quarter. Assuming no acceleration in customer inventory de-stocking from what we recently experienced, or further deterioration in economic fundamentals, our outlook for full year fiscal 2011 adjusted EBITDA is a range of $140.0 to $145.0 million compared to $140.9 million last year.

Despite weak market conditions and general economic uncertainty, the fundamentals of our business remain strong and we continue to focus on the elements of our business that have historically fueled earnings growth: productivity improvements, including assessing and executing plant consolidations, cost reduction initiatives, and improvements to our product offering and approach to enriching our business mix."

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 and our outlook for full year fiscal 2011 adjusted EBITDA. 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 the Registration Statement on Form S-4 (333-173712) of our parent company, BWAY Parent Company, Inc., 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.