Berry Plastics Group, Inc. Reports September Quarter and Fiscal Year 2012 Results

  Berry Plastics Group, Inc. Reports September Quarter and Fiscal Year 2012
  Results

Business Wire

EVANSVILLE, Ind. -- November 26, 2012

Berry Plastics Group, Inc. (NYSE:BERY) today reported results for the
September quarter and fiscal year 2012:

  *Net sales decrease of 2 percent versus September 2011 quarter
  *Adjusted free cash flow of $159 million for the September 2012 quarter
  *Fiscal year 2012 Adjusted EBITDA of $803 million with the leverage ratio
    (net debt/Adjusted EBITDA) at 4.9x (pro forma for the IPO), a reduction of
    1.2x from fiscal year 2011
  *Operating EBITDA increased 13 percent and Operating EBITDA margin
    increased to 17.6 percent from 15.3 percent in the September 2011 quarter
  *Adjusted net income (loss) per share of $0.34 for the quarter compared to
    ($0.04) in September 2011

“Berry’s improved product mix, aggressive cost reduction initiatives, and
lower costs for raw materials, coupled with higher prices in certain of our
product segments, allowed us to achieve record earnings and reduce our
leverage,” said Jon Rich, Chairman and CEO of Berry Plastics. “While we are
pleased with our overall performance, the weakening global economic
environment will present challenges to our industry and to Berry.”

September Quarter and Fiscal Year 2012 Results
For the quarter ended September 2012, the Company’s net sales declined by 2
percent to $1,204 million from $1,229 million. The decrease in sales was
related to the pass through of lower raw material costs and our decision to
exit certain low margin business partially offset by sales from acquired
businesses and a slight market share gain in certain segments.

                    Quarterly Period Ended (Unaudited)
  Net Sales (in          September 29,   October     $ Change   % Change
  millions)              2012              1, 2011
  Rigid Open Top         $    318        $  356      $  (38 )   (11  %)
  Rigid Closed                352             307           45        15   %
  Top
  Engineered                  352             368           (16 )     (4   %)
  Materials
  Flexible                   182          198        (16 )   (8   %)
  Packaging
  Total Net              $    1,204      $  1,229    $  (25 )   (2   %)
  Sales
                                                                      

For fiscal year 2012, net sales increased by 4 percent to $4,766 million from
$4,561 million in fiscal year 2011. The increase in sales was primarily
related to acquisitions, partially offset by the Company’s decision to exit
certain low margin business.

                    Fiscal Year Ended (Unaudited)
  Net Sales (in          September 29,   October     $ Change   % Change
  millions)              2012              1, 2011
  Rigid Open Top         $    1,229      $  1,261    $  (32 )   ( 3  %)
  Rigid Closed                1,438           1,053         385       37   %
  Top
  Engineered                  1,362           1,451         (89 )     ( 6  %)
  Materials
  Flexible                   737          796        (59 )   ( 7  %)
  Packaging
  Total Net              $    4,766      $  4,561    $  205    4    %
  Sales
                                                                           

Capital Structure and Adjusted Free Cash Flow
In October 2012 the Company used the proceeds from its IPO to repurchase its
11 percent Senior Subordinated Notes due in September 2016. The ratio of net
debt of $3,958 million to the Adjusted EBITDA for the four quarters ended
September 29, 2012 of $803 million was 4.9x at the end of the September 2012
quarter when factoring in the impact from the IPO. The actual ratio at the end
of September 29, 2012 quarter was 5.5x. Adjusted free cash flow was $159
million for the September 2012 quarter and $279 million for fiscal year 2012.

                             September 29, 2012          October 1, 2011
(in millions)                    Actual       Pro Forma
(Unaudited)
Term loan                        $  1,134    $  1,134       $   1,146
Revolving line of credit             73            73              195
First Priority Senior
Secured Floating Rate                681           681             681
Notes
8¼% First Priority Notes             370           370             370
Second Priority Senior
Secured Floating Rate                210           210             210
Notes
9½% Second Priority                  500           500             500
Notes
Senior Unsecured Term                39            39              56
Loan
9¾% Second Priority                  800           800             800
Notes
10¼% Senior Subordinated             127           127             127
Notes
11% Senior Subordinated              455           —               455
Notes
Debt discount, net                   (9    )       (9    )         (13     )
Capital leases and other             91            91              100
Cash and cash                      (87   )    (58   )        (42     )
equivalents
Net Debt                         $  4,384   $  3,958      $   4,585   
                                                               

Outlook
“Our strategic actions are allowing us to continue to strengthen the Company’s
balance sheet, maintain significant liquidity, and generate substantial free
cash flow,” said Rich. “Going forward, we will continue to execute on our
strategies to further reduce our overall debt leverage, pursue innovative
organic growth opportunities, identify value adding acquisitions that can be
accretive to shareholder value, and take steps to grow our business
internationally.”

Investor Conference Call
The Company will host a conference call on Tuesday, November 27, 2012, at 9:00
a.m. CST to discuss its September quarter and fiscal year 2012 results. The
telephone number to access the conference call is (866) 847-7864 (domestic),
or (703) 639-1430 (international), and use conference ID 1596079. The call
will last approximately one hour. Interested parties are invited to listen to
a live webcast by visiting the Company’s Investor Relations page at
www.berryplastics.com. Replay of the conference call can also be accessed on
the Investor Relations page of the website.

About Berry Plastics
Berry Plastics Group, Inc. is a leading provider of value-added plastic
consumer packaging and engineered materials delivering high-quality customized
solutions to our customers with annual net sales of $4.8 billion in fiscal
2012. With world headquarters in Evansville, Indiana, the Company’s common
stock is listed on the New York Stock Exchange under the ticker symbol BERY.
For additional information, visit the Company’s website at
www.berryplastics.com.

Forward Looking Statements
Statements in this release that are not historical, including statements
relating to the expected future performance of the Company, are considered
“forward looking” and are presented pursuant to the safe harbor provisions of
the Securities Litigation Reform Act of 1995. Forward-looking statements
include statements concerning the Company’s plans, objectives, goals,
strategies, future events, future revenues or performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions,
business trends, and other information that is not historical information.
Actual results in future periods may differ materially from forward-looking
statements made today because of a number of risks and uncertainties,
including various economic and competitive factors, the Company’s ability to
pass through raw material price increases to its customers, its ability to
service debt, the availability and cost of plastic resin, the impact of
changing environmental laws, changes in the level of the Company’s capital
investment, the results and integration of acquired business, our reliance on
unpatented know-how and trade secrets and the risks set forth in the “Risk
Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and
other sections of our reports filed or furnished with the Securities Exchange
Commission. You should not place undue reliance on our forward-looking
statements. We undertake no obligation to update any forward-looking
statements to reflect changes in underlying assumptions or factors, new
information, future events or other changes. Additional important information
about the Company’s business is set forth in the Company’s various filings
with the SEC and the information discussed today should be considered
alongside the information contained in those filings.



Berry Plastics Group, Inc.

Consolidated Statements of Operations

(Unaudited)

(in millions, except per share data)


                      Quarterly Period Ended     Fiscal Year Ended
                          September     October 1,     September    October 1,
                          29,          2011           29,         2011
                          2012                         2012
Net sales                 $  1,204     $ 1,229        $ 4,766     $ 4,561
Costs and
expenses:
Cost of goods                977          1,037          3,949        3,878
sold
Selling, general
and                          81           75             308          275
administrative
Amortization of              28           26             109          106
intangibles
Restructuring and
impairment                   1            185            31           221
charges
Other operating             10         13           44         39     
expenses
Operating income             107          (107   )       325          42
(loss)
                                                                    
Other expense                (6     )     (6     )       (7     )     61
(income)
Interest expense,           81         84           328        327    
net
Net income (loss)
before income                32           (185   )       4            (346   )
taxes
Income tax                  9          7            2          (47    )
expense (benefit)
Net income (loss)         $  23        $ (192   )     $ 2         $ (299   )
                                                                    
                                                                    
Net income (loss)
per share:
Basic                     $  0.28       $ (2.29  )     $ 0.02         (3.55  )
Diluted                      0.26         (2.29  )       0.02         (3.55  )
                                                                    
Weighted-average
number of shares
outstanding: (in
thousands)
Basic                        83,202       83,876         83,435       84,121
Diluted                      89,131       83,876         86,644       84,121
                                                                    

                                                             
                                                                    
Berry Plastics Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions)
                                                                    
                                                                    
                                                  September 29,     October 1,
                                                  2012              2011
Assets:
Cash and cash equivalents                         $   87            $  42
Accounts receivable, net                              455              543
Inventories                                           535              578
Other current assets                                  90               92
Property, plant and equipment, net                    1,216            1,250
Goodwill, intangibles and other assets               2,642          2,712 
Total assets                                      $   5,025        $  5,217 
                                                                    
Liabilities and stockholders' deficit
Current liabilities, excluding debt                   606              638
Current and long-term debt                            4,471            4,627
Other liabilities                                     400              403
Redeemable shares                                     23               16
Stockholders’ deficit                                (475   )        (467  )
Total liabilities and stockholders'               $   5,025        $  5,217 
deficit
                                                                             



Berry Plastics Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in millions)


                                              Fiscal Year Ended
                                                  September 29,   October 1,
                                                  2012              2011
                                                                    
Net cash from operating activities                $   479           $  327
                                                                    
Cash Flows from Investing Activities:
Additions to property, plant and                      (230   )         (160  )
equipment
Proceeds from sale of assets                          30               5
Acquisitions of business, net of cash                (55    )        (368  )
acquired
Net cash from investing activities                    (255   )         (523  )
                                                                    
Cash Flows from Financing Activities:
Proceeds from long-term borrowings                    2                995
Purchase of common stock                              (6     )         (2    )
Repayment of long-term borrowings                     (175   )         (880  )
Debt financing costs                                 —              (23   )
Net cash from financing activities                   (179   )        90    
Effect of currency translation on cash                —                —
Net increase (decrease) in cash and cash              45               (106  )
equivalents
Cash and cash equivalents at beginning of            42             148   
period
Cash and cash equivalents at end of               $   87           $  42    
period
                                                                             



Berry Plastics Group, Inc.

Condensed Consolidated Financial Statements

Segment Information

(Unaudited)

(in millions)


                        Quarterly Period Ended    Fiscal Year Ended
                            September    October 1,     September   October 1,
                            29,         2011           29,        2011
                            2012                        2012
Net Sales:                                                       
Rigid Open Top              $   318      $  356         $  1,229    $  1,261
Rigid Closed Top                352         307            1,438       1,053
Engineered                      352         368            1,362       1,451
Materials
Flexible Packaging             182        198          737        796   
Total                       $   1,204    $  1,229      $  4,766    $  4,561 
                                                                    
Operating Income
(Loss):
Rigid Open Top              $   46       $  53          $  159      $  155
Rigid Closed Top                32          20             95          77
Engineered                      28          (85   )        70          (71   )
Materials
Flexible Packaging             1          (95   )       1          (119  )
Total                       $   107      $  (107  )     $  325      $  42    
                                                                    
Depreciation and
Amortization:
Rigid Open Top              $   23       $  28          $  90       $  102
Rigid Closed Top                34          26             135         95
Engineered                      20          17             71          72
Materials
Flexible Packaging             16         20           59         75    
Total                       $   93       $  91         $  355      $  344   
                                                                    
Restructuring and
Impairment Charges:
Rigid Open Top              $   —        $  1           $  —        $  2
Rigid Closed Top                1           6              10          8
Engineered                      —           101            21          124
Materials
Flexible Packaging             —          77           —          87    
Total                       $   1        $  185        $  31       $  221   
                                                                    
Other Operating
Expenses:
Rigid Open Top              $   1        $  (10   )     $  6        $  (13   )
Rigid Closed Top                4           2              28          18
Engineered                      4           10             13          23
Materials
Flexible Packaging             2          17           13         21    
Total                       $   11       $  19         $  60       $  49    
                                                                    
Operating EBITDA:
Rigid Open Top              $   70       $  72          $  255      $  246
Rigid Closed Top                71          54             268         198
Engineered                      52          43             175         148
Materials
Flexible Packaging             19         19           73         64    
Total                       $   212      $  188        $  771      $  656   
                                                                             



Berry Plastics Group, Inc.

Reconciliation Schedules

(Unaudited)

(in millions)


                       Quarterly Period Ended     Fiscal Year Ended
                           September     October 1,     September     October
                           29,          2011           29,          1,
                           2012                         2012          2011
                                                                   
                                                                      
Net income (loss)          $  23         $  (192  )     $  2          $ (299 )
                                                                      
Add: interest                 81            84             328          327
expense
Add: income tax              9           7            2          (47  )
expense (benefit)
EBIT                       $  113           (101  )     $  332          (19  )
                                                                      
Add: depreciation             93            91             355          344
and amortization
Add: restructuring            1             185            31           221
and impairment
Add: other expense           5           13           53         110  
Operating EBITDA           $  212         188        $  771        656  
^(1)
                                                                      
Add: pro forma                —                            6
acquisitions
Add: unrealized              3                          26    
cost savings
Adjusted EBITDA            $  215                      $  803   
^(1)
                                                                      
                                                                      
Cash flow from
operating                  $  201        $  122         $  479        $ 327
activities
Additions to
property, plant,             (42   )      (31   )       (200  )     (155 )
and equipment, net
Adjusted free cash         $  159       $  91         $  279       $ 172  
flow
                                                                      
                                                                      
Net income (loss)          $  0.26       $  (2.29 )
per share-diluted:
Restructuring and
impairment charges            0.01          2.11
(net of tax)
Other operating
expenses (net of             0.07        0.14  
tax)
Adjusted net
income (loss) per          $  0.34      $  (0.04 )
share
                                                                      
                                                                      

^(1)  Adjusted EBITDA should not be considered in isolation or construed as an
alternative to our net income (loss) or other measures as determined in
accordance with GAAP. In addition, other companies in our industry or across
different industries may calculate Adjusted EBITDA and the related definitions
differently than we do, limiting the usefulness of our calculation of Adjusted
EBITDA as a comparative measure. EBIT, Operating EBITDA and Adjusted EBITDA
are among the indicators used by the Company’s management to measure the
performance of the Company’s operations and thus the Company’s management
believes such information may be useful to investors. Such measures are also
among the criteria upon which performance-based compensation may be based.

Contact:

Berry Plastics Group, Inc.
Investor Contact:
Dustin Stilwell, 812-306-2964
dustinstilwell@berryplastics.com
or
Media Contact:
Eva Schmitz, 812-306-2424
evaschmitz@berryplastics.com
 
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