BWAY Intermediate Company, Inc. Reports Sales And Net Loss For The Three Months Ended September 30, 2013

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Nov 14, 2013, 05:16 ET

ATLANTA, Nov. 14, 2013 /PRNewswire/ -- BWAY Intermediate Company, Inc. (the "Company"), a leading North American supplier of general line rigid containers, today reported sales and net loss for the three months ended September 30, 2013, which include the financial results of Ropak Packaging ("Ropak"), which the Company acquired on January 18, 2013. Net sales for the quarter ended September 30, 2013 were $364.4 million compared to $292.0 million in the same quarter last year. Net loss for the quarter ended September 30, 2013 was $0.3 million which compares to net income of $3.8 million for the three months ended September 30, 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 September 30, 2013 of $61.1 million compared to $42.9 million for the same period last year.

Consolidated net sales for the quarter ended September 30, 2013 increased $72.4 million, or 24.8%, to $364.4 million compared to the same period last year. The increase is primarily due to the effect of the Ropak acquisition and higher plastic pricing, which was partially offset by lower overall volumes.

Gross margin (excluding depreciation and amortization) was $63.8 million for the three months ended September 30, 2013 compared to $47.4 million for the prior year period. Excluding the effect of the Ropak acquisition, gross margin increased to 18.8% from 16.3% in the quarter ended September 30, 2013 and September 30, 2012, respectively. The percentage increase was largely attributable to effective management of the pass-through of raw material price changes, actions taken to reduce or eliminate lower margin accounts in the plastic packaging segment and lower operational costs as a result of our productivity initiatives. Additionally, the three months ended September 30, 2013 benefitted from achieving synergies associated with the Ropak acquisition.

Factors impacting net income that affect comparability for the three months ended September 30, 2013 and 2012 include $13.0 million of incremental amortization and depreciation primarily resulting from an increase in related fair values of fixed assets and definite lived intangible assets due to the purchase of the Company by private equity investment funds sponsored by Platinum Equity, LLC (the "Platinum Transaction") in November 2012 and the acquisition of Ropak in January 2013.

Business Segments

Metal Packaging

Sales for the Company's metal packaging segment for the three months ended September 30, 2013 were $177.3 million compared to $182.7 million in the same period last year. The decrease resulted from lower volumes driven by lower market demand and an unfavorable sales mix.

Metal packaging segment earnings (excluding depreciation and amortization) for the three months ended September 30, 2013 were $40.2 million compared to $37.1 million for the same period in 2012, with gross margin increasing to 23.0% versus 21.3% in the 2012 period. The effective pass-through of higher raw material costs, and costs savings associated with productivity initiatives were partially offset by the impact of lower volumes.

Plastic Packaging

Sales for the plastic packaging segment for the three months ended September 30, 2103 were $187.1 million compared to $109.3 million last year. The increase is primarily from the Ropak acquisition. Excluding the impact of the Ropak acquisition, plastic segment revenues decreased $7.7 million as volume decreases of $13.7 million driven partially by actions taken to reduce or eliminate lower margin accounts and lower market demand, were partially offset by higher net selling prices and a favorable product sales mix.

Plastic packaging segment earnings (excluding depreciation and amortization) for the three months ended September 30, 2013 were $20.0 million compared to $7.7 million in the same period last year. Excluding the Ropak acquisition, segment earnings were $10.6 million as margins improved to 11.3% 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, achieving synergies associated with the Ropak acquisition and leveraging our purchasing power and proactive actions related to lower margin accounts. The synergies from the Ropak acquisition include four plant consolidations which are nearing completion, achievement of procurement benefits, and cost savings associated with integration of administrative functions. Including the Ropak acquisition, margins were 12.3% for the current period. Also included in the three months ended September 30, 2013 was $1.7 million for one-time impacts related to plant realignment costs.

Corporate

Undistributed corporate expenses were $5.0 million for the three months ended September 30, 2013 compared to $3.6 million for the same period last year. The increase is primarily the result of an increase in professional fees related to identifying and executing business performance improvement initiatives.

Debt

The Company's total net debt at September 30, 2013 was $919.6 million. Current quarter interest expense increased $2.7 million compared to the quarter ended September 30, 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, including twelve months of Ropak's operation, (leverage) at September 30, 2013 was 4.2x. The Company had total liquidity, cash plus undrawn revolver capacity, of approximately $200.1 million as of September 30, 2013.

About BWAY Intermediate Company

The Company is a leading North American supplier of general line rigid containers. The Company currently 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.

<Financial Information to Follow>

BWAY Intermediate Company, Inc. and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
*(Dollars in millions)*


	Three Months Ended		Nine Months Ended
	Sept. 30, 2013	Sept. 30, 2012	Sept. 30, 2013	Sept. 30, 2012
Statements of Operations
Net sales	$ 364.4	$ 292.0	$ 1,110.9	$ 931.4
Cost of products sold (excluding depr. and amort.)	300.6	244.6	918.7	780.8
Gross margin (excluding depr. and amort.)	63.8	47.4	192.2	150.6
Other costs and expenses
Depreciation and amortization	36.5	23.5	106.8	66.9
Selling and administrative	8.6	6.2	30.1	19.0
Restructuring	3.7	0.2	10.8	1.2
Interest	14.6	11.9	43.6	36.3
Business acquisition costs	0.5	0.1	5.6	0.3
Management fee	1.3	-	3.8	-
(Gain) loss on disposition of equipment	(0.7)	0.1	(0.9)	(9.8)
Other income	(0.8)	(1.8)	(1.7)	(2.1)
Total other costs and expenses	63.7	40.2	198.1	111.8

Income (loss) before income taxes	0.1	7.2	(5.9)	38.8
Provision for (benefit from) income taxes	0.4	3.4	(1.3)	14.2
Net (loss) income	$ (0.3)	$ 3.8	$ (4.6)	$ 24.6


Reconciliation of Net (Loss) Income to Adjusted EBITDA
Net (loss) income	$ (0.3)	$ 3.8	$ (4.6)	$ 24.6
Interest expense	14.6	11.9	43.6	36.3
Provision for (benefit from) income taxes	0.4	3.4	(1.3)	14.2
Depreciation and amortization expense	36.5	23.5	106.8	66.9
EBITDA	51.2	42.6	144.5	142.0

Adjustments:
Restructuring expense	3.7	0.2	10.8	1.2
Business acquisition costs	0.5	0.1	5.6	0.3
Management fee	1.3	-	3.8	-
Gain on disposition of bottle equipment	-	-	-	(9.3)
Operations improvement expenses	2.5	-	8.6	-
Plant realignment costs	1.7	-	2.6	-
Temporary customer dislocation	0.3	-	2.9	-
Amortization of manufacturer's profit in inventory	-	-	0.8	-
Stock based compensation	-	0.3	-	1.0
Gain on derivatives	-	-	-	(0.1)
Foreign exchange gain/loss and other	(0.1)	(0.3)	0.9	3.2
Adjusted EBITDA	$ 61.1	$ 42.9	$ 180.5	$ 138.3

	Three Months Ended		Nine Months Ended
Business Segment Information	Sept. 30, 2013	Sept. 30, 2012	Sept. 30, 2013	Sept. 30, 2012
Net sales
Metal packaging	$ 177.3	$ 182.7	$ 549.8	$ 572.5
Plastic packaging	187.1	109.3	561.1	358.9
Consolidated net sales	364.4	292.0	1,110.9	931.4

Income (loss) before income taxes
Segment earnings (excluding depr. and amort.)
Metal packaging	40.2	37.1	119.8	119.5
Plastic packaging	20.0	7.7	59.7	22.6
Total segment earnings (excluding depr. and amort.)	60.2	44.8	179.5	142.1

Depreciation and amortization
Metal packaging	23.0	12.6	68.6	36.8
Plastic packaging	12.3	9.8	34.5	26.9
Total segment depreciation and amortization	35.3	22.4	103.1	63.7
Corporate depreciation and amortization	1.2	1.1	3.7	3.2
Consolidated depreciation and amortization	36.5	23.5	106.8	66.9

Corporate and other expenses
Corporate undistributed expenses	5.0	3.6	17.4	10.5
Restructuring	3.7	0.2	10.8	1.2
Interest	14.6	11.9	43.6	36.3
Business acquisition costs	0.5	0.1	5.6	0.3
Management fee	1.3	-	3.8	-
(Gain) loss on disposition of equipment	(0.7)	0.1	(0.9)	(9.8)
Other income	(0.8)	(1.8)	(1.7)	(2.1)

Consolidated income (loss) before income taxes	$ 0.1	$ 7.2	$ (5.9)	$ 38.8





Condensed Balance Sheets
	Sept. 30, 2013	Dec. 31, 2012 (Revised)
Assets
Cash and cash equivalents	$ 28.5	$ 2.2
Accounts receivable, net of allow. for doubtful accts.	179.0	102.3
Inventories	133.5	125.5
Other current assets	69.9	63.5
Total current assets	410.9	293.5

Property, plant and equipment, net	353.3	246.1
Goodwill and other intangible assets, net	1,270.6	1,151.7
Other assets	30.7	23.8
Total assets	$ 2,065.5	$ 1,715.1

Liabilities and Stockholder's Equity
Accounts payable	$ 107.0	$ 72.8
Other current liabilities	58.7	41.8
Current portion of long-term debt	7.3	4.7
Total current liabilities	173.0	119.3

Long-term debt (excluding current portion)	940.8	693.7
Other long-term liabilities	391.0	328.2
Shareholder's equity	560.7	573.9
Total liabilities and shareholder's equity	$ 2,065.5	$ 1,715.1