EVANSVILLE, Ind.--(BUSINESS WIRE)--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 millions) March 30, 2013   March 31, 2012  

$ Change

  % Change
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 millions) March 30, 2013   March 31, 2012  

$ Change

  % Change
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,
2013

 

September 29,
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,
2013

  March 31,
2012

March 30,
2013

  March 31,
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 administrative 75 84 152 156
Amortization of intangibles 27 26 54 54
Restructuring and impairment charges   1     3   6     26  
Operating income 111 91 179 120
Debt extinguishment 48 — 64 —
Other expense (income), net (1 ) 2 (4 ) (2 )
Interest expense   61     83   131     166  
Income (loss) before income taxes 3 6 (12 ) (44 )
Income tax expense (benefit)   2     4   (3 )   (15 )
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 (loss) $ (4 ) $ 10 $ (11 ) $ (20 )
 

Berry Plastics Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)

   

March 30,
2013

September 29,
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 assets   2,591     2,657  
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,
2013

 

March 31,
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,
2013

 

March 31,
2012

March 30,
2013

 

March 31,
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,
2013

 

March 31,
2012

March 30,

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 amortization 85 88 350
Add: restructuring and impairment 1 3 11
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 activities $ 78 $ 66 $ 490
Additions to property, plant, and equipment, net   (62 )   (61 )   (207 )
Adjusted free cash flow $ 16   $ 5   $ 283  
 
 
Net income per share-diluted $ 0.01 $ 0.02
Restructuring and impairment charges (net of tax) 0.01 0.02
Loss on extinguishment of debt (net of tax) 0.25 —
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.

Source: Berry Plastics Group, Inc.

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