BWAY Intermediate Company, Inc. Reports Sales And Net Income For The Three Months Ended March 31, 2013

ATLANTA, May 15, 2013 /PRNewswire/ -- BWAY Intermediate Company, Inc. (the "Company"), a leading North American supplier of general line rigid containers, today reported sales and net income for the three months ended March 31, 2013, which include the financial results of Ropak Packaging ("Ropak") acquired on January 18, 2013.  Net sales for the quarter ended March 31, 2013 were $354.0 million compared to $309.7 million in the same quarter last year and net income for the quarter ended March 31, 2013 was $2.6 million which compares to net income of $11.9 million for the three months ended March 31, 2012.  Factors resulting in changes to net sales and net income are discussed below.

The Company also reported Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and adjusted for certain other items noted in the accompanying non-GAAP reconciliation), for the quarter ended March 31, 2013 of $50.7 million compared to $44.3 million for the same period last year.

Consolidated net sales for the quarter ended March 31, 2013 increased $44.3 million, or 14.3%, to $354.0 million compared to the same period last year.  The increase is primarily due to the effect of the Ropak acquisition, which generated sales of $61.9 million from January 19, 2013 through March 31, 2013.  Also impacting the comparability of net sales was the sale of the Company's plastic bottle business in March 2012 that accounted for $6.2 million of revenue in the prior year period. 

Gross margin (excluding depreciation and amortization) was $56.5 million for the three months ended March 31, 2013 and includes $0.8 million of non-cash expenses resulting from Ropak inventory adjustments resulting from purchase accounting compared to $48.4 million for the prior year period.  Excluding the effect of the Ropak acquisition and the March 2012 sale of the plastic bottle business, gross margin increased to 16.2% from 15.9% in the quarter ended March 31, 2013 and March 31, 2012, respectively.  The percentage increase was largely attributable to effective management of the pass-through of raw material price changes, a stronger sales mix and actions taken to reduce or eliminate lower margin accounts in the plastic packaging segment.

Factors impacting net income that affect comparability for the three months ended March 31, 2013 and 2012 include a $9.3 million gain on the sale of the Company's plastic bottle business in March 2012 and pre-tax costs associated with the acquisition of Ropak and the purchase of the Company by private equity investment funds sponsored by Platinum Equity, LLC (the "Platinum Transaction") in November 2012 of $12.5 million, which principally included:

• $4.6 million of Ropak acquisition costs;
• $2.7 million of purchase accounting adjustments consisting of $0.8 million of non-cash expenses resulting from purchasing accounting adjustments to inventory; and $1.9 million of incremental depreciation expense resulting from purchase accounting adjustments which increased the fair value of fixed assets and definite-lived intangible assets;
• $1.7 million of professional fees and expenses for cost savings and productivity improvement projects initiated by our equity sponsor;
• $1.3 million of expenses for quarterly management advisory services provided to the Company by Platinum Equity Advisors, LLC; and
• $0.5 million of professional fees and expenses primarily due to changing our fiscal year end in February 2013 from September 30 to December 31.

Business Segments

Metal Packaging
Sales for the Company's metal packaging segment for the three months ended March 31, 2013 were $183.1 million compared to $188.8 million in the same period last year. The decrease resulted from lower volumes of 4.2% and was partially offset by a stronger sales mix and the effective pass-through of higher raw material costs.

Metal packaging segment earnings (excluding depreciation and amortization) for the three months ended March 31, 2013 were $37.3 million compared to $37.7 million for the same period in 2012, with gross margin remaining 20.9% in both periods.  Lower volumes were offset by a stronger mix and the effective pass-through of higher raw material costs.

Plastic Packaging
Sales for the plastic packaging segment for the three months ended March 31, 2103 were $170.9 million compared to $120.9 million last year. The increase is primarily from the Ropak acquisition. Excluding the impact of the Ropak acquisition and the sale of the bottle business, plastic segment revenues decreased $5.7 million as volume decreased 4.9% driven partially by actions taken to reduce or eliminate lower margin accounts.  Lower volumes were partially offset by a stronger sales mix. 

Plastic packaging segment earnings (excluding depreciation and amortization) for the three months ended March 31, 2013 were $14.8 million compared to $7.7 million in the same period last year. Excluding the Ropak acquisition and the sale of the bottle business, segment earnings were $8.0 million compared to $7.7 million in the same period last year and margins improved to 8.4% from 7.9%.  This increase resulted from actions taken by the Company which include productivity improvement initiatives, changes in policies and practices with regard to passing through changes in resin prices and proactive actions related to lower margin accounts. Including the Ropak acquisition, margins were 10.7% for the current period. 

Corporate
Undistributed corporate expenses were $4.7 million for the three months ended March 31, 2013 compared to $3.2 million for the same period last year.  The increase is primarily a result of an increase in professional fees of $1.7 million related to identifying and executing business performance improvement initiatives.

Depreciation and Amortization
In the quarter ended March 31, 2013, depreciation and amortization expense increased to $23.6 million, an increase of $1.9 million compared to the quarter ended March 31, 2012.  The increase was primarily attributable to the acquisition of Ropak.

Debt
As a result of the Ropak acquisition, the Company's total net debt at March 31, 2013 increased to $970.6 million from $696.2 million as of December 31, 2012.  Current quarter interest expense increased $1.3 million compared to the quarter ended March 31, 2012 primarily due to increased borrowings used to finance the acquisition of Ropak and the Platinum Transaction, partially offset by a lower overall cost of debt.  The ratio of net debt (total debt less cash) to the trailing twelve months of adjusted EBITDA (leverage) at March 31, 2013 was 4.8x. The Company had total liquidity, cash plus undrawn revolver capacity, of approximately $173.6 million as of March 31, 2013.

On May 13, 2013 BOE Intermediate Holding Corporation (the "Issuer"), the indirect parent of the Company and an affiliate of private equity investment funds sponsored by Platinum Equity, LLC completed an offering to borrow $285 million aggregate principal amount of senior PIK toggle notes due 2017 at an interest rate of 9.00%/9.75%.  This borrowing is not secured by the assets of the Company.  The proceeds of the offering are intended to pay a special dividend to the stockholders of the Issuer's parent, including Platinum Equity, and to pay certain costs and expenses related to the offering.

About BWAY Intermediate Company
The Company is a leading North American supplier of general line rigid containers. The Company operates 25 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 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) 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. The Company'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.

The Company'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.

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SOURCE BWAY Intermediate Company, Inc.