Berry Plastics Group, Inc. Reports Fourth Quarter and Fiscal Year 2013 Results

  Berry Plastics Group, Inc. Reports Fourth Quarter and Fiscal Year 2013
  Results

Business Wire

EVANSVILLE, Ind. -- November 21, 2013

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

  *September 2013 quarter Operating EBITDA of $194 million and fiscal 2013
    Adjusted EBITDA of $790 million
  *September 2013 quarter net income of $26 million ($0.22 per diluted share)
    and fiscal 2013 net income of $57 million ($0.48 per diluted share)
  *Net debt reduction of $580 million and leverage ratio (net debt/Adjusted
    EBITDA) reduction to 4.8x, a total reduction of 0.7x during fiscal 2013
  *Fiscal 2013 Adjusted free cash flow of $243 million, representing a 10
    percent adjusted free cash flow yield
  *Fiscal 2013 cash flow from operating activities of $464 million
  *Adjusted net income per share of $0.33 for the September 2013 quarter
    compared to $0.34 in the September 2012 quarter

“The September quarter continued to be pressured by weak consumer demand,
similar to trends seen throughout 2013 and the back half of 2012,” said Jon
Rich, Chairman and CEO of Berry Plastics. “To offset the impact of continuing
tough economic challenges, Berry has taken many necessary, proactive steps to
remain competitive and a leader in the plastics packaging industry.”

September Quarter and Fiscal Year 2013 Results
For the quarter ended September 2013, the Company’s net sales were flat versus
the September 2012 quarter at $1,204 million. The quarter consisted of
increased selling prices due to higher material costs offset by lower volumes
due to softer customer demand.

                     Quarterly Period Ended (Unaudited)
Net sales (in            September 28,   September   $ Change   % Change
millions)                2013              29, 2012
Rigid Open Top           $    299        $  318      $  (19 )   (6   %)
Rigid Closed Top             351          352        (1  )   (-   %)
Rigid Packaging               650             670           (20 )     (3   %)
Engineered                    367             352           15        4    %
Materials
Flexible                     187          182        5      3    %
Packaging
Total net sales          $    1,204      $  1,204    $  —      —    
                                                                      

For fiscal year 2013, the Company’s net sales declined by 2 percent to $4,647
million from $4,766 million as compared to the same period for 2012. This
decline was primarily attributed to lower selling prices of 1 percent and
sales volume declines of 2 percent related to softer customer demand,
year-over-year adverse change in weather and reduction in raw material content
partially offset by acquisition volumes and volume gains in certain of our
product lines.

                     Fiscal Year Ended (Unaudited)
Net sales (in            September 28,   September   $ Change   % Change
millions)                2013              29, 2012
Rigid Open Top           $    1,127      $  1,229    $ (102 )   (8   %)
Rigid Closed Top             1,387        1,438     (51  )   (4   %)
Rigid Packaging               2,514           2,667        (153 )     (6   %)
Engineered                    1,397           1,362        35         3    %
Materials
Flexible                     736          737       (1   )   (-   %)
Packaging
Total net sales          $    4,647      $  4,766    $ (119 )   (2   %)
                                                                           

Capital Structure and Adjusted Free Cash Flow
The ratio of net debt of $3,804 million to Adjusted EBITDA for the fiscal year
ended September 28, 2013 of $790 million was 4.8x. The ratio at the end of
September 29, 2012 quarter was 5.5x. The Company’s Adjusted free cash flow for
fiscal 2013 was $243 million. Adjusted free cash flow for the September 2013
quarter was $120 million.

                                   September 28,   September 29,
                                           2013              2012
(in millions) (Unaudited)
Term Loan                                  $   1,125         $   1,134
Incremental Term Loan                          1,397             —
Revolving line of credit                       —                 73
9½% Second Priority Notes                      500               500
Senior Unsecured Term Loan                     18                39
9¾% Second Priority Notes                      800               800
Retired debt                                   —                 1,834
Debt discount, net                             (8     )          —
Capital leases and other                       114               91
Cash and cash equivalents                     (142   )         (87    )
Net debt                                   $   3,804        $   4,384  
                                                                        

Outlook
“Our enhanced focus on driving organic growth and international growth coupled
with our progress on operational efficiencies and cost reduction actions, pave
the way for success for Berry in the future. As we move forward, Berry will
remain focused on our key strategic initiatives to continue to drive
shareholder value,” said Rich.

In November, the Company initiated a cost reduction plan designed to deliver
meaningful cost savings and optimal equipment utilization. This plan will
result in several plant rationalizations. The costs associated with this plan
will primarily consist of one-time costs associated with facility
consolidation, including severance and termination benefits for employees of
approximately $6 million, other costs associated with exiting facilities of
approximately $30 million and non-cash asset impairment charges of
approximately $11 million. In addition, as part of this cost reduction plan
the Company estimates it will incur capital expenditures of approximately $13
million. Overall these facility restructuring programs are projected to
generate approximately $27 million of annual operating savings when fully
implemented. These amounts are preliminary estimates based on the information
currently available to management. The plan is expected to be fully
implemented by the end of fiscal 2014.

Looking forward, we anticipate our fiscal 2014 adjusted free cash flow, after
deducting the $32 million tax receivable payment, to be approximately $270
million. This estimate assumes flat pricing on plastic resin costs and
benefits and costs from our restructuring program initiatives. Our investments
in property, plant and equipment are forecasted to be approximately $230
million for fiscal 2014. Assuming no change in short-term interest rates and
no refinancing activity, we estimate fiscal 2014 cash interest will be
approximately $215 million.

Investor Conference Call
The Company will host a conference call on Friday, November 22, 2013, at 10
a.m. Eastern Time to discuss its fourth quarter and fiscal 2013 results. The
telephone number to access the conference call is (866) 835-8845 (domestic),
or (703) 639-1408 (international), conference ID 1627146. 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 beginning November 22, 2013, at 2
p.m. Eastern Time, to November 30, 2013, by calling (888) 266-2081 (domestic),
or (703) 925-2533 (international), access code 1627146.

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 over $4.6 billion in
fiscal 2013. 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.

Non-GAAP Financial Measures
This press release includes non-GAAP financial measures such as Operating
EBITDA, Adjusted EBITDA, Adjusted net income per share and Adjusted free cash
flow. A reconciliation of these non-GAAP financial measures to comparable
measures determined in accordance with accounting principles generally
accepted in the United States of America (GAAP) is set forth at the end of
this press release.

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 Private 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,” “anticipates” “outlook,” or
“looking forward,” 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.

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 and
subsequent filings 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; (12) risks that our restructuring programs may
entail greater implementation costs or result in lower costs savings than
anticipated, and (13) the other factors discussed in the under the heading
“Risk Factors” in our Annual Report on Form 10-K and subsequent filings with
the Securities and Exchange Commission.

We caution you that the foregoing list of important factors may not contain
all of the material factors that are important to you. Accordingly, readers
should not place undue reliance on those statements. All forward-looking
statements are based upon information available to us on the date of this
release. 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       Fiscal Year Ended
                         September     September      September     September
                         28,          29,            28,          29,
                         2013          2012           2013          2012
Net sales                $ 1,204       $ 1,204        $ 4,647       $ 4,766
Costs and
expenses:
Cost of goods              1,006         987            3,835         3,993
sold
Selling, general
and                        77            81             307           308
administrative
Amortization of            24            28             105           109
intangibles
Restructuring
and impairment            7           1            14          31     
charges
Operating income           90            107            386           325
Debt                       —             —              64            —
extinguishment
Other income,              (1      )     (6     )       (7      )     (7     )
net
Interest                  56          81           244         328    
expense, net
Income before              35            32             85            4
income taxes
Income tax                9           9            28          2      
expense
Net income               $ 26         $ 23          $ 57         $ 2      
                                                                    
Net income per
share:
Basic                    $ 0.23        $ 0.28         $ 0.50        $ 0.02
Diluted                    0.22          0.26           0.48          0.02
Weighted-average
number of shares
outstanding:

(in thousands)
Basic                      115,427       83,202         113,486       83,435
Diluted                    120,747       89,131         119,454       86,644
                                                                    

Comprehensive            $ 52         $ 19          $ 86         $ 3      
income
                                                                             



Berry Plastics Group, Inc.

Condensed Consolidated Balance Sheets

(in millions)
                                                          
                                               September 28,     September 29,
                                               2013              2012
                                               (Unaudited)
Assets:
Cash and cash equivalents                      $   142           $   87
Accounts receivable, net                           449               455
Inventories                                        575               535
Other current assets                               171               156
Property, plant and equipment, net                 1,266             1,216
Goodwill, intangibles assets and other            2,532           2,657  
long-term assets
Total assets                                   $   5,135        $   5,106  
                                                                 
Liabilities and stockholders' deficit
Current liabilities, excluding debt                613               606
Current and long-term debt                         3,946             4,471
Other long-term liabilities                        772               481
Redeemable shares                                  —                 23
Stockholders’ deficit                             (196   )         (475   )
Total liabilities and stockholders'            $   5,135        $   5,106  
deficit
                                                                            



Berry Plastics Group, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)
                                          
                                               Fiscal Year Ended
                                               September 28,   September 29,
                                               2013              2012
                                               (Unaudited)
                                                                 
Net cash from operating activities             $  464            $   479
                                                                 
Cash flows from investing activities:
Additions to property, plant and                  (239    )          (230   )
equipment
Proceeds from sale of assets                      18                 30
Acquisitions of business, net of cash            (24     )         (55    )
acquired
Net cash from investing activities                (245    )          (255   )
                                                                 
Cash flows from financing activities:
Proceeds from long-term borrowings                1,391              2
Repayment of long-term borrowings                 (1,978  )          (175   )
Proceeds from issuance of common stock            27                 —
Purchases of common stock                         —                  (6     )
Payment of tax receivable agreement               (5      )          —
Debt financing costs                              (39     )          —
Repayment of notes receivable                     2                  —
Equity contributions                             438              —      
Net cash from financing activities               (164    )         (179   )
Effect of exchange rate changes on                —                  —
cash
Net change in cash and cash                       55                 45
equivalents
Cash and cash equivalents at beginning           87               42     
of period
Cash and cash equivalents at end of            $  142           $   87     
period
                                                                            



Berry Plastics Group, Inc.

Condensed Consolidated Financial Statements

Segment Information

(Unaudited)

(in millions)
                                                  
                             Quarterly Period Ended      Fiscal Year Ended
                             September     September     September   September
                             28,          29,           28,        29,
                             2013          2012          2013        2012
Net sales:
Rigid Open Top               $   299       $  318        $  1,127    $  1,229
Rigid Closed Top                351         352          1,387      1,438
Rigid Packaging              $   650       $  670        $  2,514    $  2,667
Engineered Materials             367          352           1,397       1,362
Flexible Packaging              187         182          736        737
Total                        $   1,204     $  1,204      $  4,647    $  4,766
Operating income:
Rigid Open Top               $   28        $  46         $  123      $  159
Rigid Closed Top                33          32           130        95
Rigid Packaging              $   61        $  78         $  253      $  254
Engineered Materials             28           28            116         70
Flexible Packaging              1           1            17         1
Total                        $   90        $  107        $  386      $  325
Depreciation and
amortization:
Rigid Open Top               $   22        $  23         $  90       $  90
Rigid Closed Top                31          34           129        135
Rigid Packaging              $   53        $  57         $  219      $  225
Engineered Materials             18           20            71          71
Flexible Packaging              12          16           51         59
Total                        $   83        $  93         $  341      $  355
Restructuring and
impairment charges:
Rigid Open Top               $   —         $  —          $  1        $  —
Rigid Closed Top                —           1            3          9
Rigid Packaging              $   —         $  1          $  4        $  9
Engineered Materials             7            —             9           22
Flexible Packaging              —           —            1          —
Total                        $   7         $  1          $  14       $  31
Other operating
expenses:
Rigid Open Top               $   4         $  1          $  9        $  6
Rigid Closed Top                4           4            11         29
Rigid Packaging              $   8         $  5          $  20       $  35
Engineered Materials             2            4             7           12
Flexible Packaging              4           2            7          13
Total                        $   14        $  11         $  34       $  60
Operating EBITDA:
Rigid Open Top               $   54        $  70         $  223      $  255
Rigid Closed Top                68          71           273        268
Rigid Packaging              $   122       $  141        $  496      $  523
Engineered Materials             55           52            203         175
Flexible Packaging              17          19           76         73
Total                        $   194       $  212        $  775      $  771
                                                                        



Berry Plastics Group, Inc.

Reconciliation Schedules

(Unaudited)

(in millions, except per share data)
                                                
                           Quarterly Period Ended      Fiscal Year Ended
                           September     September     September     September
                           28,           29,           28,          29,
                           2013          2012          2013          2012
                                                                     
Net income                 $  26         $  23         $  57         $  2
                                                                     
Add: interest                 56            81            244           328
expense
Add: income tax              9           9           28          2    
expense
EBIT ^(1)                  $  91            113        $  329        $  332
                                                                     
Add: depreciation             83            93            341           355
and amortization
Add: restructuring            7             1             14            31
and impairment
Add:
extinguishment of             —             —             64            —
debt
Add: other expense           13          5           27          53   
Operating EBITDA           $  194       $  212       $  775       $  771  
^(1)
                                                                     
                                                                     
Add: pro forma                —                           2
acquisitions
Add: unrealized              1                         13    
cost savings
Adjusted EBITDA            $  195                     $  790   
^(1)
                                                                     
                                                                     
Cash flow from
operating                  $  167        $  201        $  464        $  479
activities
Additions to
property, plant,             (47   )      (42   )      (221  )      (200 )
and equipment, net
Adjusted free cash         $  120       $  159       $  243       $  279  
flow ^(1)
                                                                     
                                                                     
Net income per             $  0.22       $  0.26
share-diluted
Restructuring and
impairment charges            0.04          0.01
(net of tax)
Other expense (net           0.07        0.07  
of tax)
Adjusted net
income per share           $  0.33       $  0.34
^(1)
                                                     
                                                     
                           Estimated
                           Fiscal 2014
Cash flow from
operating                  $  532
activities
Additions to
property, plant,              (230  )
and equipment, net
Tax receivable               (32   )
agreement payment
Adjusted free cash         $  270   
flow ^(1)
                                         

^(1)  Supplemental financial measures that are not required by, or presented
in accordance with, accounting principles generally accepted in the United
States (“GAAP”). These non-GAAP financial measures should not be considered as
alternatives to operating or net income or cash flows from operating
activities, in each case determined in accordance with GAAP. These non-GAAP
financial measures are among the indicators used by management to measure the
performance of the Company’s operations, and also among the criteria upon
which performance-based compensation may be based. Adjusted EBITDA also is
used by our lenders for debt covenant compliance purposes. We use Adjusted
Free Cash Flow as a measure of liquidity because it assists us in assessing
our company’s ability to fund its growth through its generation of cash.

Similar non-GAAP financial measures may be calculated differently by other
companies, including other companies in our industry, limiting their
usefulness as comparative measures. Because of these limitations, you should
consider the non-GAAP financial measures alongside other performance measures
and liquidity measures, including operating income, various cash flow metrics,
net income and our other GAAP results.

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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