BWAY Intermediate Company, Inc. Reports Sales And Net Loss For The Three Months Ended December 31, 2012

ATLANTA, March 26, 2013 /PRNewswire/ -- BWAY Intermediate Company, Inc., (the "Company") a leading North American supplier of general line rigid containers, today reported net sales for the quarter ended December 31, 2012 of $236.5 million, compared to $248.4 million in the same quarter last year.  The net loss for the three months ended December 31, 2012 was $35.8 million, which includes $34.4 million of expenses, adjusted for related tax benefits, associated with the November 5, 2012 acquisition of the Company by affiliates of Platinum Equity and certain members of the Company's management ("Platinum Transaction") which compares to a net loss of $2.9 million for the three months ended December 31, 2011. Factors resulting in changes to net sales and net loss 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 GAAP reconciliation) for the quarter ended December 31, 2012 of $30.5 million compared to $29.1 for the same period last year.

In the quarter ended December 31, 2012, consolidated net sales decreased 4.8% to $236.5 million compared to the same period last year.  Excluding the effect of the sale of the Company's bottle business, the decrease is primarily due to lower overall volumes which decreased approximately 3.4%, primarily as a result of lower market demand, and was partially offset by the pass-through of higher raw material costs.  

During the three months ended December 31, 2012, the Company recorded $45.4 million of pre-tax costs associated with the acquisition of the Company and $11.3 million of additional pre-tax purchase accounting expenses related to the Platinum Transaction, which principally included:

• $10.9 million of merger transaction costs which include special compensation payouts resulting from the Platinum Transaction and certain other related expenses;
• $13.0 million of accelerated stock-based compensation expense, of which $9.4 million and $3.6 million were in selling and administrative expenses and costs of sales, respectively;
• $21.0 million related to extinguishment of debt associated with the Platinum Transaction.   The loss included the write-off of unamortized debt issuance costs and unamortized original issue discount on the Company's 2010 Term Loans and certain legal and other professional fees and expenses; and
• $11.3 million of purchase accounting adjustments consisting of $8.4 of non-cash expenses resulting from purchasing accounting adjustments to inventory; and $2.9 million of incremental depreciation and amortization expense resulting from purchase accounting adjustments which increased the fair value of fixed assets and definite-lived intangible assets.

The Company also recorded $5.0 million of expenses for the monitoring fee paid to Platinum Equity Advisors, LLC for management advisory services provided to the Company.

Gross margin (excluding depreciation and amortization) was $22.6 million for the three months ended December 31, 2012 and includes $3.6 million of accelerated stock-based compensation expense resulting from the Platinum Transaction and $8.4 million of non-cash expenses resulting from purchasing accounting adjustments to inventory.  Excluding these items, gross margin was $34.6 million compared to $34.1 million for the same period last year.  The increase  was largely attributable to effective management of the pass-through of raw material price changes and was partially offset by lower volumes and a weaker sales mix.

Business Segments

Metal Packaging

Sales for the Company's metal packaging segment for the three months ended December 31, 2012 were $149.5 million compared to $153.8 million in the same period last year. The decrease resulted from lower volumes and a weaker product sales mix which was partially offset by effective pass-through of raw material driven selling prices.

Metal packaging segment earnings (excluding depreciation and amortization) for the three months ended December 31, 2012 were $21.7 million compared to $29.0 million for the same period in 2011. Excluding $6.5 million of non-cash expenses resulting from purchasing accounting adjustments to inventory, segment earnings were $28.2 million for the current quarter.  Lower volumes of 4.6%, weaker product sales mix and costs associated with changing the Company's year-end to December 31 were offset by effective management of raw material cost change pass-through. 

Plastic Packaging

Sales for the plastic packaging segment for the three months ended December 31, 2012 were $87.0 million compared to $94.6 million last year. Excluding the effect of the sale of the Company's bottle business, volume on the remaining products declined by 1.3% driven primarily by actions taken to reduce or eliminate lower margin accounts. 

Plastic packaging segment earnings (excluding depreciation and amortization) for the three months ended December 31, 2012 were $2.7 million compared to $2.5 million in the same period last year. Excluding $1.9 million of non-cash expenses resulting from purchasing accounting adjustments to inventory, segment earnings were $4.6 million for the current quarter.  The increase in plastic packaging segment earnings resulted from actions taken by the Company to improve margins in this segment, including 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, partially offset by costs associated with changing the Company's year-end to December 31.

Corporate

Undistributed corporate expenses were $16.3 million for the three months ended December 31, 2012 compared to $3.0 million for the same period last year.  The increase is primarily attributable to $13.0 million of accelerated stock-based compensation expense resulting from the Platinum Transaction.

Purchase accounting adjustments associated with the Platinum Transaction were recorded in a number of balance sheet accounts during the three months ended December 31, 2012, most notably affecting goodwill and other intangible assets, long-term debt, and stockholder's equity.

As a result of the Platinum Transaction, the Company's total debt at December 31, 2012 increased to $698.4 million from $637.8 million as of September 30, 2012.  The ratio of net debt (total debt less cash) to adjusted EBITDA (leverage) at December 31, 2012 was 4.1. The Company had total liquidity, cash plus undrawn revolver capacity, of approximately $141.0 million as of December 31, 2012.

Loss before income taxes for the quarter was $64.2 million reflecting the impact of the Platinum Transaction costs, compared to loss before income taxes for the same quarter last year of $5.1 million. The effective tax rates were 44% and 43% for the three months ended December 31, 2012 and 2011, respectively.  The effective tax rate for the three months ended December 31, 2012 was higher than the statutory rate because certain transaction costs incurred during the period were not deductible for tax purposes. The effective tax rate for the three months ended December 31, 2011 was higher than the statutory rate as a result of the domestic production deduction taken during the period. 

About BWAY Intermediate Company

The Company is a leading North American supplier of general line rigid containers. As of December 31, 2012, the Company operated 22 plants throughout the United States and Canada serving industry leading customers on a national basis. On January 18, 2013, the Company acquired Ropak Packaging, which operates six manufacturing facilities in the United States and Canada.  Subsequent to the Ropak Packaging acquisition, the Company announced the closure of two its preexisting facilities and will move related production into the Company's current manufacturing facilities.

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.