Graham Packaging Announces Results for First Quarter 2010

YORK, Pa., May 4 /PRNewswire-FirstCall/ -- Graham Packaging Company Inc. (NYSE: GRM) today announced results for the quarter ended March 31, 2010.

Highlights

• Net Sales increased 4.2% to $585.6 million, compared with $561.9 million in the first quarter of 2009.
• Adjusted EBITDA(1) increased to $115.6 million, a 7.4% increase over the first quarter of 2009.  Last twelve months Adjusted EBITDA was $470.4 million.
• Total Debt, net of cash, decreased to $2,147.4 million from $2,289.1 million at the end of 2009.  The Company retired $196.2 million of debt during the first quarter of 2010.
• On April 5, 2010, the Company signed a share purchase agreement to acquire China Roots Packaging PTE Ltd., a plastic container manufacturing company located in Guangzhou, marking its entry into the Chinese market.
• The Company completed its Initial Public Offering raising $163.5 million.
• The Company currently expects Adjusted EBITDA for 2010 to be $475 million.

First Quarter 2010

Net sales for the first quarter of 2010 increased by 4.2% to $585.6 million due to the impact of exchange rates and higher volumes, as well as higher resin costs, which are passed on to customers.  Adjusted EBITDA for the quarter increased to $115.6 million, compared with $107.6 million in the first quarter of 2009.  Operating income decreased to $32.3 million from $62.0 million in the first quarter of 2009, primarily due to a one-time fee of $35.0 million to terminate a monitoring agreement, and $4.0 million in IPO bonuses and other IPO-related expenses.  Excluding these items, operating income increased by $9.4 million over the first quarter of 2009.

"We are extremely pleased with our first quarter performance," said CEO Mark Burgess.  "Unit volumes showed some improvement as a result of stronger end markets, success on international fronts, and increased market penetration.  Our adjusted EBITDA showed a 7.4% improvement over last year as a result of the volume improvements and our intense focus on productivity.  We continued to generate cash despite rising resin costs and demonstrated our commitment to de-leveraging by retiring a significant amount of debt.  Even more exciting is the expected acquisition of China Roots. This represents Graham's first foray into the vast Chinese market, and a terrific opportunity to serve our multinational customers in this important market."

By segment, sales in North America increased $16.6 million, or 3.4%, due to exchange rates, higher volumes and the increase in resin costs. Sales in Europe were up $1.9 million, or 3.4%, as lower volumes and resin costs partially offset favorable exchange rates.  Sales in South America rose $5.2 million due to increased volume and price increases.  During the first quarter of 2010, the Company continued to experience positive momentum in its drive to convert legacy packaging into Graham's technology-oriented performance packaging solutions.  This area remains a driver of future growth for the Company.

Interest expense for the quarter was $45.4 million, an increase of $5.7 million from the first quarter of last year, due to the increased interest rate on the term loans which were extended in May 2009.

The Company retired $196 million of term loan debt during the quarter.  Approximately $129 million of the retirement was funded by the IPO and the remaining $67 million was funded by cash on hand.

Initial Public Offering

During the first quarter of 2010, the Company completed the initial public offering of its stock.  The Company raised net proceeds of $163.5 million with the issuance of 18,232,267 shares of its stock at an initial offering price of $10 per share.  The Company contributed $128.9 million of the proceeds to its subsidiary, Graham Packaging Company, L.P., to pay down a portion of its term loans.  The remaining proceeds were used to pay other deal related costs including a fee for the termination of the monitoring agreement.

China Roots

As previously announced, the Company signed a share purchase agreement to acquire China Roots Packaging PTE Ltd., a plastic container manufacturing company located in Guangzhou, China.  China Roots operates a world-class container manufacturing plant in the Guangzhou Economic and Technological Development District producing plastic containers and closures for food, health care and petrochemical products.  Its customers include several global consumer product marketers.

2010 Outlook

For fiscal year 2010, the Company currently expects Adjusted EBITDA to be $475 million.

Conference Call Information

The Company will hold a conference call to discuss fiscal 2010 first quarter results at 5:00 p.m. EDT this afternoon. The call will be web cast live over the Internet from the company's web site at www.grahampackaging.com under "Investor Relations." Participants should follow the instructions provided on the web site for downloading and installing the necessary audio applications. The conference call also is available by dialing 866-362-5158 (domestic) or 617-597-5397 (international) and entering pass code 15637037.

Following the live conference call, a replay will be available one hour after the call. The replay also will be available on the company's website or by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering pass code 96450705. The telephonic replay will be available for thirty days.

About Graham Packaging

Graham Packaging, based in York, Pennsylvania, is a worldwide leader in the design, manufacture and sale of technology-based, customized blow molded plastic containers for the branded food and beverage, household, personal care/specialty and automotive lubricants product categories. The Company has an extensive blue-chip customer base that includes many of the world's largest branded consumer products companies. It produces more than 20 billion container units annually at 80 plants in North America, Europe and South America.

Graham Packaging is a leading U.S. supplier of plastic containers for hot-fill juice and juice drinks, sports drinks, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings, condiments and beers; the leading global supplier of plastic containers for yogurt drinks; a leading supplier of plastic containers for liquid fabric care products, dish care products and hard-surface cleaners; and the leading supplier in the U.S., Canada and Brazil of one-quart/liter plastic motor oil containers.

To learn more about Graham Packaging, please visit the Company's Web site at http://www.grahampackaging.com/. Graham Packaging uses its Web site as a channel of distribution for material Company information. Financial and other material information regarding Graham Packaging is routinely posted on the Company's Web site and is readily accessible.

Forward Looking Statements

Information provided and statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements only speak as of the date of this press release and Graham Packaging assumes no obligation to update the information included in this press release.  Such forward-looking statements include information concerning Graham Packaging's possible or assumed future results of operations.  These statements often include words such as "approximate," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions.  These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Graham Packaging's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Graham Packaging's control.  Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, without limitation, specific factors discussed herein and in other releases and public filings made by the Company (including the Company's filings with the Securities and Exchange Commission).  Although Graham Packaging believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements.  Unless otherwise required by law, Graham Packaging also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this press release.

The Company believes that the presentation of adjusted EBITDA and free cash flow provides investors with useful analytical indicators of our performance. Additionally, the Company uses adjusted EBITDA and free cash flow as key internal metrics.

SOURCE Graham Packaging Company Inc.