Berry Plastics Group, Inc. Reports Second Quarter 2013 Results

  Berry Plastics Group, Inc. Reports Second Quarter 2013 Results

Business Wire

EVANSVILLE, Ind. -- May 2, 2013

Berry Plastics Group, Inc. (NYSE:BERY) today reported results for its fiscal
second quarter 2013 referred to in the following as the March 2013 quarter:

  *Achieved a record for any second fiscal quarter with a March 2013 quarter
    Adjusted EBITDA of $202 million and LTM Adjusted EBITDA of $810 million
    with the leverage ratio (net debt/Adjusted EBITDA) at 4.9x, a reduction of
    1.0x from the March 2012 quarter
  *Recorded Adjusted net income per share of $0.28 for the March 2013 quarter
    compared to $0.16 in the March 2012 quarter
  *Increased LTM Adjusted free cash flow to $283 million
  *Completed $1.4 billion issuance 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, 8½%
    First Priority Senior Secured Notes due 2015, and 10¼% Senior Subordinated
    Notes due 2016 which will result in a reduction of annual interest expense
    of approximately $48 million
  *Increased Operating EBITDA by 2 percent and increased Operating EBITDA
    margin to 17.4 percent from 16.6 percent in the March 2012 quarter

“I am very pleased to report that during the March 2013 quarter Berry achieved
an Operating EBITDA record for any March quarter, despite the continued
pressure from a sluggish economy and weak consumer demand. The year-over-year
Operating EBITDA margin improvements were achieved primarily through strategic
cost reduction actions,” said Jon Rich, Chairman and CEO of Berry Plastics.
“In addition, our recent financing will result in a significant reduction in
annualized interest expense and extend the Company’s maturity profile.”

March 2013 Quarter Results

For the quarter ended March 2013, the Company’s net sales declined by 3
percent to $1,150 million from $1,183 million, primarily attributed to a
volume decline of 3 percent. This decline is primarily related to a reduction
in the number of shipping days and the year-over-year adverse change in
weather, which was partially offset by volume gains in certain of our product
lines.

                        Quarterly Period Ended (Unaudited)
Net sales (in            March 30, 2013  March 31, 2012  $ Change  % Change
millions)
Rigid Open Top           $     257       $     296       $(39)     (13%)
Rigid Closed Top              353            364       (11)      (3%)
Rigid Packaging                610              660        (50)       (8%)
Engineered Materials           354              337        17         5%
Flexible Packaging            186            186       —         —
Total net sales          $     1,150     $     1,183     $(33)     (3%)
                                                                      

March 2013 YTD Results

For March 2013 YTD, the Company’s net sales declined by 4 percent to $2,222
million from $2,320 million as compared to the same period for 2012. This
decline was primarily attributed to lower selling prices resulting from lower
plastic resin costs and the year-over-year adverse change in weather; these
factors were partially offset by volume gains in certain of our product lines.

                        Two Quarterly Periods Ended (Unaudited)
Net sales (in            March 30, 2013  March 31, 2012  $ Change  % Change
millions)
Rigid Open Top           $     516       $     583       $(67)     (11%)
Rigid Closed Top              666            711       (45)      (6%)
Rigid Packaging                1,182            1,294      (112)      (9%)
Engineered Materials           679              665        14         2%
Flexible Packaging            361            361       —         —
Total net sales          $     2,222     $     2,320     $(98)     (4%)
                                                                      

Capital Structure and Adjusted Free Cash Flow

During the March 2013 quarter the Company completed a $1.4 billion issuance of
First Lien Senior Secured Term Loans. The Company used the loan to redeem its
Second Priority Senior Secured Floating Notes due 2014, First Priority Senior
Secured Floating Rate Notes due 2015, 8½ percent First Priority Senior Secured
Notes due 2015, and 10¼ percent Senior Subordinated Notes due 2016. This
action will result in a reduction of annualized interest expense of
approximately $48 million.

The ratio of net debt of $3,983 million to the Adjusted EBITDA for the four
quarters ended March 30, 2013 of $810 million was 4.9x. The ratio at the end
of September 29, 2012 quarter was 5.5x. The Company’s LTM Adjusted free cash
flow was $283 million. Adjusted free cash flow for the March 2013 quarter was
$16 million, despite early interest payments of $10 million in conjunction
with our recent financing.

                            March 30,  September 29,
                             2013        2012
(in millions) (Unaudited)
Term Loan                    $ 1,128     $   1,134
Incremental Term Loan          1,400         —
Revolving line of credit       51            73
9½% Second Priority Notes      500           500
Senior Unsecured Term Loan     18            39
9¾% Second Priority Notes      800           800
Retired debt                   —             1,845
Debt discount, net             (8    )       (11    )
Capital leases and other       110           91
Cash and cash equivalents     (16   )      (87    )
Net debt                     $ 3,983    $   4,384  

Outlook

“For our June 2013 quarter, we believe the demand driven by economic activity
will remain similar to the environment we have experienced in the past four
quarters. Seasonally, volumes improve in the June ending quarter and we are
observing typical sequential improvements in demand. Taking these factors into
account for our June 2013 quarter, and assuming that volumes improve in line
with normal seasonality and GDP forecasts, we anticipate a near double-digit
improvement in Operating EBITDA versus the prior year. We remain on track to
achieve our financial performance goals for fiscal 2013. As we move forward,
Berry will remain focused on our key strategic initiatives to continue to
drive shareholder value,” said Rich.

Investor Conference Call

The Company will host a conference call on Friday, May 3, 2013, at 9:00 a.m.
CDT to discuss its Second Quarter 2013 results. The telephone number to access
the conference call is (866) 847-7859 (domestic), or (703) 639-1426
(international), conference ID 1612631. 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. A 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    Two Quarterly Periods Ended
                         March 30,    March 31,   March 30,       March 31,
                         2013          2012        2013             2012
Net sales                $ 1,150       $  1,183    $  2,222         $ 2,320
Costs and expenses:
Cost of goods sold         936            979         1,831           1,964
Selling, general and       75             84          152             156
administrative
Amortization of            27             26          54              54
intangibles
Restructuring and         1            3          6             26     
impairment charges
Operating income           111            91          179             120
Debt extinguishment        48             —           64              —
Other expense              (1      )      2           (4       )      (2     )
(income), net
Interest expense          61           83         131           166    
Income (loss) before       3              6           (12      )      (44    )
income taxes
Income tax expense        2            4          (3       )     (15    )
(benefit)
Net income (loss)        $ 1          $  2        $  (9       )    $ (29    )
Net income (loss) per
share:
Basic                    $ 0.01        $  0.02     $  (0.08    )    $ (0.35  )
Diluted                    0.01           0.02        (0.08    )      (0.35  )
Weighted-average
number of shares
outstanding:

(in thousands)
Basic                      113,034        83,508      112,193         83,680
Diluted                    118,197        84,574      112,193         83,680
                                                                    

Comprehensive income     $ (4      )   $  10       $  (11      )    $ (20    )
(loss)
                                                                             

Berry Plastics Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
                                                              
                                                   March 30,     September 29,
                                                   2013          2012
                                                   (Unaudited)
Assets:
Cash and cash equivalents                          $  16         $   87
Accounts receivable, net                              458            455
Inventories                                           610            535
Other current assets                                  165            156
Property, plant and equipment, net                    1,242          1,216
Goodwill, intangibles assets and other long-term     2,591        2,657  
assets
Total assets                                       $  5,082     $   5,106  
                                                                 
Liabilities and stockholders' deficit
Current liabilities, excluding debt                   675            606
Current and long-term debt                            3,999          4,471
Other long-term liabilities                           723            481
Redeemable shares                                     —              23
Stockholders’ deficit                                (315   )      (475   )
Total liabilities and stockholders' deficit        $  5,082     $   5,106  
                                                                            

Berry Plastics Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
                                                 
                                                   Two Quarterly Periods Ended
                                                   March 30,        March 31,
                                                   2013              2012
                                                                     
Net cash from operating activities                 $   165           $  155
                                                                     
Cash flows from investing activities:
Additions to property, plant and equipment             (107    )        (106 )
Proceeds from sale of assets                           2                8
Acquisitions of business, net of cash acquired        (20     )       7    
Net cash from investing activities                     (125    )        (91  )
                                                                     
Cash flows from financing activities:
Proceeds from long-term borrowings                     1,392            —
Repayment of long-term borrowings                      (1,902  )        (68  )
Purchases of common stock                              —                (6   )
Repayment of note receivable                           1                —
Payment of tax receivable agreement                    (5      )        —
Debt financing costs                                   (39     )        —
Proceeds from issuance of common stock                 4                —
Proceeds from initial public stock offering           438            —    
Net cash from financing activities                    (111    )       (74  )
Effect of exchange rate changes on cash                —                —
Net change in cash and cash equivalents                (71     )        (10  )
Cash and cash equivalents at beginning of period      87             42   
Cash and cash equivalents at end of period         $   16           $  32   
                                                                             

Berry Plastics Group, Inc.
Condensed Consolidated Financial Statements
Segment Information
(Unaudited)
(in millions)
                                                
                          Quarterly Period Ended   Two Quarterly Periods Ended
                          March 30,   March 31,   March 30,     March 31,
                          2013         2012        2013           2012
Net sales:
Rigid Open Top            $   257      $  296      $   516        $  583
Rigid Closed Top             353        364         666          711    
Rigid Packaging           $   610      $  660      $   1,182      $  1,294
Engineered Materials          354         337          679           665
Flexible Packaging           186        186         361          361    
Total                     $   1,150    $  1,183    $   2,222      $  2,320  
Operating income
(loss):
Rigid Open Top            $   33       $  41       $   60         $  72
Rigid Closed Top             36         26          54           29     
Rigid Packaging           $   69       $  67       $   114        $  101
Engineered Materials          33          21           57            23
Flexible Packaging           9          3           8            (4     )
Total                     $   111      $  91       $   179        $  120    
Depreciation and
amortization:
Rigid Open Top            $   22       $  23       $   45         $  45
Rigid Closed Top             33         33          66           68     
Rigid Packaging           $   55       $  56       $   111        $  113
Engineered Materials          17          17           35            34
Flexible Packaging           13         14          26           29     
Total                     $   85       $  87       $   172        $  176    
Restructuring and
impairment charges:
Rigid Open Top            $   —        $  —        $   1          $  —
Rigid Closed Top             1          2           3            7      
Rigid Packaging           $   1        $  2        $   4          $  7
Engineered Materials          —           1            1             19
Flexible Packaging           —          —           1            —      
Total                     $   1        $  3        $   6          $  26     
Other operating
expenses:
Rigid Open Top            $   1        $  1        $   3          $  3
Rigid Closed Top             1          8           6            22     
Rigid Packaging           $   2        $  9        $   9          $  25
Engineered Materials          —           3            3             2
Flexible Packaging           —          3           3            11     
Total                     $   2        $  15       $   15         $  38     
Operating EBITDA:
Rigid Open Top            $   56       $  65       $   109        $  120
Rigid Closed Top             71         69          128          126    
Rigid Packaging           $   127      $  134      $   237        $  246
Engineered Materials          51          42           97            78
Flexible Packaging           22         20          39           36     
Total                     $   200      $  196      $   373        $  360    
                                                                            

Berry Plastics Group, Inc.
Reconciliation Schedules
(Unaudited)
(in millions, except per share data)
                                                        
                                  Quarterly Period Ended   Four Quarters Ended
                                  March 30,    March 31,   March 30,
                                  2013        2012
                                                           2013
                                             
                                                           
Net income                        $   1        $  2        $     22
                                                           
Add: interest expense                 61          83             293
Add: income tax expense              2         4            14       
EBIT                              $   64          89       $     329
                                                           
Add: depreciation and                 85          88             350
amortization
Add: restructuring and                1           3              11
impairment
Add: extinguishment of debt           48          —              64
Add: other expense                   2         16           30       
Operating EBITDA ^(1)             $   200       196     $     784      
                                                           
Add: pro forma acquisitions           —                          4
Add: unrealized cost savings         2                        22       
Adjusted EBITDA ^(1)              $   202                 $     810      
                                                           
                                                                          
Cash flow from operating          $   78       $  66       $     490
activities
Additions to property, plant,        (62  )     (61  )        (207     )
and equipment, net
Adjusted free cash flow           $   16      $  5       $     283      
                                                           
                                                         
Net income per share-diluted      $   0.01     $  0.02
Restructuring and impairment          0.01        0.02
charges (net of tax)
Loss on extinguishment of debt        0.25        —
(net of tax)
Other expense (net of tax)           0.01      0.12 
Adjusted net income per share     $   0.28    $  0.16 

^(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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