Berry Plastics Group, Inc. Reports First Quarter 2013 Results

  Berry Plastics Group, Inc. Reports First Quarter 2013 Results

Business Wire

EVANSVILLE, Ind. -- January 31, 2013

Berry Plastics Group, Inc. (NYSE:BERY) today reported results for its fiscal
first quarter 2013 referred to below as the December 2012 quarter:

  *Achieved a record for any first fiscal quarter with a December 2012
    quarter Adjusted EBITDA of $176 million and LTM Adjusted EBITDA of $812
    million with the leverage ratio (net debt/Adjusted EBITDA) at 4.9x, a
    reduction of 1.1x from the December 2011 quarter
  *Operating EBITDA increased 5 percent and Operating EBITDA margin increased
    to 16.1 percent from 14.4 percent in the December 2011 quarter
  *Announced the intention to obtain commitments for $1 billion of First Lien
    Senior Secured Term Loans to redeem the Company’s Second Priority Senior
    Secured Floating Notes due 2014, First Priority Senior Secured Floating
    Rate Notes due 2015, and 10¼% Senior Subordinated Notes due 2016
  *Adjusted net income (loss) per share of $0.08 for the quarter compared to
    ($0.05) in the December 2011 quarter
  *Adjusted free cash flow of $44 million for the December 2012 quarter

“Berry achieved an Operating EBITDA record for any December quarter, despite
the continuation of challenges related to the overall state of the economy,”
said Jon Rich, Chairman and CEO of Berry Plastics. “The year-over-year
improvements for the December quarter were achieved primarily through
manufacturing improvements, aggressive cost reduction actions taken throughout
2012 and also in the current quarter, sourcing savings, and pricing actions
taken to capture the value of our products.”

December 2012 Quarter Results
For the quarter ended December 2012, the Company’s net sales declined by 6
percent to $1,072 million from $1,137 million, primarily related to the pass
through of lower raw material costs. Physical volumes were flat for the
December 2012 quarter versus December 2011 quarter in spite of weak demand
resulting from ongoing sluggish economic activity including some modest
effects from Hurricane Sandy.

                    Quarterly Period Ended (Unaudited)
Net sales (in           December 29,   December 31,   $Change   % Change
millions)               2012             2011
Rigid Open Top          $    259       $    287       $ (28 )   (10  %)
Rigid Closed                313           347        (34 )   (10  %)
Top
Rigid Packaging              572              634           (62 )     (10  %)
Engineered                   325              328           (3  )     (1   %)
Materials
Flexible                    175           175        —      —    
Packaging
Total Net Sales         $    1,072     $    1,137     $ (65 )   (6   %)
                                                                           

Capital Structure and Adjusted Free Cash Flow
During the December 2012 quarter 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 $3,943 million to the Adjusted EBITDA for the four
quarters ended December 29, 2012 of $812 million was 4.9x. The ratio at the
end of September 29, 2012 quarter was 5.5x. Adjusted free cash flow was $44
million for the December 2012 quarter. In January the Company announced its
intention to obtain commitments for $1 billion of First Lien Senior Secured
Term Loans, to be structured as an incremental facility under Berry’s existing
term loan credit agreement. Berry intends to use the net proceeds from the
borrowing to redeem its Second Priority Senior Secured Floating Rate Notes due
2014, First Priority Senior Secured Floating Rate Notes due 2015 and 10¼%
Senior Subordinated Notes due 2016.

                                            December 29,   September 29,
                                                2012             2012
(in millions) (Unaudited)
Term loan                                       $  1,134         $   1,134
Revolving line of credit                           44                73
First Priority Senior Secured Floating             681               681
Rate Notes
8¼% First Priority Notes                           370               370
Second Priority Senior Secured Floating            210               210
Rate Notes
9½% Second Priority Notes                          500               500
Senior Unsecured Term Loan                         18                39
9¾% Second Priority Notes                          800               800
10¼% Senior Subordinated Notes                     127               127
11% Senior Subordinated Notes                      —                 455
Debt discount, net                                 (8     )          (9     )
Capital leases and other                           99                91
Cash and cash equivalents                         (32    )         (87    )
Net Debt                                        $  3,943        $   4,384  
                                                                 

Outlook
“For our March 2013 quarter, we anticipate a modest improvement in Operating
EBITDA versus the prior year assuming that volumes improve in line with GDP
forecasts. We remain on track to achieve our financial performance goals for
2013. As we move forward, Berry will remain focused on innovation,
productivity, free cash flow generation, and further reduction of our debt,”
said Rich.

Investor Conference Call
The Company will host a conference call on Friday, February 1, 2013, at 9:00
a.m. CST to discuss its First Quarter 2013 results. The telephone number to
access the conference call is (866) 847-7864 (domestic), or (703) 639-1430
(international), and use conference ID 1602821. 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. You can identify forward-looking
statements because they contain words such as “believes,” “expects,” “may,”
“will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,”
“plans,” “estimates,” or “anticipates” or similar expressions that relate to
our strategy, plans or intentions. All statements we make relating to our
estimated and projected earnings, margins, costs, expenditures, cash flows,
growth rates and financial results or to our expectations regarding future
industry trends are forward-looking statements. In addition, we, through our
senior management, from time to time make forward-looking public statements
concerning our expected future operations and performance and other
developments. These forward-looking statements are subject to risks and
uncertainties that may change at any time, and, therefore, our actual results
may differ materially from those that we expected. We derive many of our
forward-looking statements from our operating budgets and forecasts, which are
based upon many detailed assumptions. While we believe that our assumptions
are reasonable, we caution that it is very difficult to predict the impact of
known factors, and it is impossible for us to anticipate all factors that
could affect our actual results. All forward-looking statements are based upon
information available to us on the date of this release.

Important factors that could cause actual results to differ materially from
our expectations, which we refer to as cautionary statements, are disclosed
under “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission, including, without limitation, in
conjunction with the forward-looking statements included in this release. All
forward-looking information and subsequent written and oral forward-looking
statements attributable to us, or to persons acting on our behalf, are
expressly qualified in their entirety by the cautionary statements. Some of
the factors that we believe could affect our results include: (1) risks
associated with our substantial indebtedness and debt service; (2) changes in
prices and availability of resin and other raw materials and our ability to
pass on changes in raw material prices on a timely basis; (3) performance of
our business and future operating results; (4) risks related to our
acquisition strategy and integration of acquired businesses; (5) reliance on
unpatented know-how and trade secrets; (6) increases in the cost of compliance
with laws and regulations, including environmental, safety, and production and
product laws and regulations; (7) risks related to disruptions in the overall
economy and the financial markets may adversely impact our business; (8)
catastrophic loss of one of our key manufacturing facilities, natural
disasters, and other unplanned business interruptions; (9) risks of
competition, including foreign competition, in our existing and future
markets;(10) general business and economic conditions, particularly an
economic downturn; (11) the ability of our insurance to cover fully our
potential exposures; and (12) the other factors discussed in the under the
heading “Risk Factors” in our Annual Report on Form 10-K.

We caution you that the foregoing list of important factors may not contain
all of the material factors that are important to you. In addition, in light
of these risks and uncertainties, the matters referred to in the
forward-looking statements contained in this release may not in fact occur.
Accordingly, readers should not place undue reliance on those statements. We
undertake no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or otherwise, except
as otherwise required by law.

                                            
                                                 
Berry Plastics Group, Inc.

Consolidated Statements of Operations

(Unaudited)

(in millions, except per share data)

                                                 Quarterly Period Ended
                                                 December 29,   December 31,
                                                 2012             2011
Net sales                                        $  1,072         $  1,137
Costs and expenses:
Cost of goods sold                                  895              985
Selling, general and administrative                 77               72
Amortization of intangibles                         27               28
Restructuring and impairment charges               5              23      
Operating income                                    68               29
                                                                  
Debt extinguishment                                 16               —
Other income                                        (3      )        (4      )
Interest expense                                   70             83      
Loss before income taxes                            (15     )        (50     )
Income tax benefit                                 (5      )       (19     )
Net loss                                         $  (10     )     $  (31     )
                                                                  
                                                                  
Net loss per share:
Basic                                            $  (0.09   )     $  (0.37   )
Diluted                                             (0.09   )        (0.37   )
                                                                  
Weighted-average number of shares
outstanding:
(in thousands)
Basic                                               111,352          83,851
Diluted                                             111,352          83,851
                                                                             



Berry Plastics Group, Inc.

Condensed Consolidated Balance Sheets

(in millions)
                                                          
                                                December 29,     September 29,
                                                2012             2012
                                                (unaudited)
Assets:
Cash and cash equivalents                       $  32            $   87
Accounts receivable, net                           396               455
Inventories                                        551               535
Other current assets                               216               156
Property, plant and equipment, net                 1,223             1,216
Goodwill, intangibles assets and other            2,632           2,657  
deferred costs
Total assets                                    $  5,050        $   5,106  
                                                                 
Liabilities and stockholders' deficit
Current liabilities, excluding debt                670               606
Current and long-term debt                         3,975             4,471
Other liabilities                                  718               481
Redeemable shares                                  —                 23
Stockholders’ deficit                             (313   )         (475   )
Total liabilities and stockholders'             $  5,050        $   5,106  
deficit
                                                                 

                                            
                                                 
Berry Plastics Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in millions)
                                                 
                                                 Quarterly Period Ended
                                                 December 29,   December 31,
                                                 2012             2011
                                                                  
Net cash from operating activities               $   87           $   89
                                                                  
Cash flows from investing activities:
Additions to property, plant and                     (45   )          (45   )
equipment
Proceeds from sale of assets                         2                8
Acquisitions of business, net of cash               (20   )         —     
acquired
Net cash from investing activities                   (63   )          (37   )
                                                                  
Cash flows from financing activities:
Proceeds from long-term borrowings                   1                —
Repayment of long-term borrowings                    (509  )          (65   )
Debt repurchase premium                              (13   )          —
Proceeds from issuance of common stock               4                —
Proceeds from initial public stock                  438            —     
offering
Net cash from financing activities                  (79   )         (65   )
Effect of exchange rate changes on cash              —                —
Net change in cash and cash equivalents              (55   )          (13   )
Cash and cash equivalents at beginning              87             42    
of period
Cash and cash equivalents at end of              $   32          $   29    
period
                                                                            



Berry Plastics Group, Inc.

Condensed Consolidated Financial Statements

Segment Information

(Unaudited)

(in millions)
                                         
                                              Quarterly Period Ended
                                              December 29,   December 31,
                                              2012             2011
Net sales:
Rigid Open Top                                $  259           $  287
Rigid Closed Top                                313            347    
Rigid Packaging                               $  572           $  634
Engineered Materials                             325              328
Flexible Packaging                              175            175    
Total                                         $  1,072        $  1,137  
                                                               
Operating income (loss):
Rigid Open Top                                $  27            $  31
Rigid Closed Top                                18             3      
Rigid Packaging                               $  45            $  34
Engineered Materials                             24               2
Flexible Packaging                              (1     )        (7     )
Total                                         $  68           $  29     
                                                               
Depreciation and amortization:
Rigid Open Top                                $  23            $  22
Rigid Closed Top                                32             35     
Rigid Packaging                               $  55            $  57
Engineered Materials                             18               17
Flexible Packaging                              14             15     
Total                                         $  87           $  89     
                                                               
Restructuring and impairment charges:
Rigid Open Top                                $  1             $  —
Rigid Closed Top                                2              5      
Rigid Packaging                               $  3             $  5
Engineered Materials                             1                18
Flexible Packaging                              1              —      
Total                                         $  5            $  23     
                                                               
Other operating expenses:
Rigid Open Top                                $  2             $  2
Rigid Closed Top                                5              14     
Rigid Packaging                               $  7             $  16
Engineered Materials                             3                (1     )
Flexible Packaging                              3              8      
Total                                         $  13           $  23     
                                                               
Operating EBITDA:
Rigid Open Top                                $  53            $  55
Rigid Closed Top                                57             57     
Rigid Packaging                               $  110           $  112
Engineered Materials                             46               36
Flexible Packaging                              17             16     
Total                                         $  173          $  164    
                                                                         



Berry Plastics Group, Inc.

Reconciliation Schedules

(Unaudited)

(in millions, except per share data)
                                                          
                               Quarterly Period Ended            Four Quarters
                                                                 Ended
                               December 29,   December 31,     December 29,
                               2012             2011             2012
                                                                 
                                                                 
Net income (loss)              $  (10    )      $  (31    )      $     23
                                                                 
Add: interest expense             70               83                  315
Add: income tax                  (5     )        (19    )           16
expense (benefit)
EBIT                           $  55               33            $     354
                                                                 
Add: depreciation and             87               89                  353
amortization
Add: restructuring and            5                23                  13
impairment
Add: extinguishment of            16               —                   16
debt
Add: non-cash stock               4                1                   5
compensation expense
Add: other expense               6              18                39
Operating EBITDA ^(1)          $  173            164          $     780
                                                                 
Add: pro forma                    —                                    6
acquisitions
Add: unrealized cost             3                                  26
savings
Adjusted EBITDA ^(1)           $  176                           $     812
                                                                 
                                                                 
Cash flow from                 $  87            $  89
operating activities
Additions to property,
plant, and equipment,            (43    )        (37    )
net
Adjusted free cash             $  44           $  52     
flow
                                                             
                                                             
Net income (loss) per          $  (0.09  )      $  (0.37  )
share-diluted
Restructuring and
impairment charges                0.03             0.17
(net of tax)
Loss on extinguishment            0.09             —
of debt (net of tax)
Non-cash stock
compensation expense              0.02             0.01
(net of tax)
Other expense (net of            0.03           0.14   
tax)
Adjusted net income            $  0.08         $  (0.05  )
(loss) per share
                                                             

^(1)  Adjusted EBITDA, Adjusted free cash flow, and Adjusted net income 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, Adjusted free cash flow, and Adjusted net income
and the related definitions differently than we do, limiting the usefulness of
our calculation of Adjusted EBITDA, Adjusted free cash flow, and Adjusted net
income as comparative measures. EBIT, Operating EBITDA, Adjusted EBITDA,
Adjusted free cash flow, and Adjusted net income 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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