BWAY Holding Company Announces First Quarter Fiscal 2010 Earnings Results and Plant Rationalization, Reaffirms Annual Guidance
February 08 2010 - 4:07PM
PR Newswire (US)
ATLANTA, Feb. 8 /PRNewswire-FirstCall/ -- BWAY Holding Company
(NYSE: BWY), a leading North American supplier of general line
rigid containers, today reported net income for the first quarter
of fiscal 2010 of $0.8 million, or $0.03 per diluted share,
compared to a net loss of $(2.7) million or $(0.13) per diluted
share for the first quarter of fiscal 2009. The Company's first
fiscal quarter has historically been the weakest of the year due to
seasonal fluctuations in demand. Adjusted net income (see
accompanying reconciliations to GAAP financial measures) for the
first quarter of fiscal 2010 was $3.2 million, or $0.13 per diluted
share compared to an adjusted net loss for the year-earlier period
of $(2.2) million, or $(0.11) per diluted share. The Company also
reported adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization, and certain other items noted in the
accompanying GAAP reconciliation) of $26.0 million for the first
quarter of fiscal 2010 compared to $15.6 million for the same
period last year. Revenues were $219.0 million for the first
quarter of fiscal 2010, increasing 3.1% when compared with revenue
of $212.5 million for the same quarter of fiscal 2009. The
year-over-year increase in sales was primarily attributable to the
August 2009 acquisition of Central Can Company and the October 2009
acquisition of Ball Corporation's plastic pail business, and to
higher selling prices resulting from raw material cost increases
passed through to customers. Overall sales volume for the quarter,
excluding the effect of acquisitions, declined approximately 4%
compared with the first quarter of fiscal 2009, which had the
benefit of increased customer orders in advance of the significant
tin plate steel increase announced for January 1, 2009. Ken
Roessler, President and Chief Executive Officer stated that, "Our
first quarter earnings reflect the accruing benefits of our efforts
over the past 18 months to reduce cost and improve operating
efficiencies. Although market demand declined, the year-over-year
variance was substantially lower than we have experienced in recent
quarters." Mr. Roessler went on to say, "We made progress during
the quarter in pursuing rationalization synergies from our Central
Can acquisition. Our Brampton, Ontario steel pail plant is now
closed and production has been transferred to the Central Can
facility (BWAY's new 'Chicago plant'). The majority of the
equipment and business of our Chicago-Kilbourn plant has been moved
to the Chicago plant, and we expect Kilbourn to be fully shutdown
during the second fiscal quarter. "We have completed our evaluation
of plant rationalization opportunities associated with the October
2009 acquisition of Ball Corporation's plastic pail business
located in Georgia (BWAY's new 'Atlanta Plant'). A key element of
our evaluation is the decision to close our Toccoa, Georgia plastic
packaging plant and relocate the equipment and operations to the
Atlanta plant. The rationalization, which is expected to be
completed during the third fiscal quarter, is expected to generate
annual synergies estimated at $3.0 million, which will be phased-in
during the second half of fiscal 2010. We expect to record
restructuring charges of approximately $1.4 million during the
remainder of fiscal 2010 associated with plant closures, including
this initiative." Gross margin (excluding depreciation and
amortization) for the quarter was $32.1 million, or 14.7% of sales,
compared to $20.4 million, or 9.6% of sales in the year-earlier
period. Continued benefits from Company-wide cost reductions,
improved aerosol results, and deflation on certain input costs more
than offset the impact of lower volumes during the quarter.
Depreciation and amortization for the quarter was $13.7 million
compared to $11.1 million for the same quarter last year. The
increase was primarily due to the recent acquisitions, and to $1.1
million of accelerated depreciation associated with plant
rationalizations. The Company recorded a restructuring charge
during the first quarter of $2.0 million primarily associated with
the closure of the Company's Brampton, Ontario facility and
Kilbourn plant in Chicago, Illinois. Volumes and certain equipment
from the closed facilities have been transferred to the Chicago
plant. Interest expense increased from $8.2 million for the first
quarter of 2009 to $8.9 million for the first quarter this year.
The increase resulted from higher interest on the Company's senior
subordinated notes refinanced during fiscal 2009, partially offset
by lower LIBOR based interest rates on the Company's bank debt.
Metal Packaging Sales for the Company's metal packaging segment
were $143.1 million for the first quarter of fiscal 2010, including
the effects of recent acquisitions, compared to $130.9 million in
the year-earlier period. The increase was largely due to the
Central Can Company acquisition, and to higher selling prices
resulting from raw material cost increases passed through to
customers. Excluding the effects of acquisitions, overall volumes
declined by approximately 6% compared to the first quarter last
year. Metal packaging segment earnings (excluding depreciation and
amortization) were $20.4 million, or 14.3% of segment sales for the
first quarter of fiscal 2010 compared to $11.5 million, or 8.8% of
segment sales for the same quarter of fiscal 2009. The Company's
metal segment continues to benefit from cost reduction and
productivity initiatives. Plastic Packaging Sales for the Company's
plastic packaging segment were $75.9 million for the first quarter
of fiscal 2010, including the effects of recent acquisitions,
compared to $81.6 million for the year-earlier period. The decrease
resulted largely from an overall decline in volume, excluding the
effect of acquisitions, of approximately 2%, and to lower selling
prices resulting from raw material cost decreases passed through to
customers. Plastic packaging segment earnings (excluding
depreciation and amortization) were $9.8 million, or 12.9% of
segment sales for the quarter, compared to $6.8 million, or 8.3% of
segment sales for the first quarter of fiscal 2009. The increase is
primarily attributable to the company's cost reduction and
productivity improvement initiatives. Corporate Cash and cash
equivalents decreased from $88.7 million at the beginning of the
quarter to $16.8 million at the end of the first fiscal quarter.
The decrease resulted from cash used to fund the acquisition of
Ball Corporation's plastic pail business, seasonal increases in
working capital typical of the first fiscal quarter, and other
operating requirements. First quarter capital expenditures were
$5.5 million, including $2.8 million associated with plant
rationalizations, compared to $3.4 million for the same period of
fiscal 2009. Outlook for Fiscal 2010 "We continue to base our
guidance for fiscal 2010 on the assumption that market demand will
be flat with fiscal 2009," stated Mr. Roessler. "We anticipate
increases in adjusted earnings and cash flow driven by the full
year benefit of actions taken during fiscal 2009 to reduce cost and
increase productivity, as well as by new initiatives. We expect to
realize an increase in adjusted EBITDA for the second fiscal
quarter of 2010, as compared to 2009, which included a significant
benefit from consuming lower cost inventory following a substantial
increase in steel cost on January 1, 2009." With regard to specific
guidance, the Company provides the following: -- Second fiscal
quarter 2010 (ending March 31, 2010) adjusted net income of $0.29 -
$0.34 per diluted share compared with an adjusted net income per
diluted share of $0.40 for the second quarter of fiscal 2009.
Second quarter fiscal 2010 includes higher interest expense related
to the fiscal 2009 refinance of the Company's senior subordinated
debt, and higher depreciation and amortization attributable to
recent acquisitions, together equal to $0.10 per diluted share for
the second quarter. The Company expects adjusted EBITDA of $33.0 -
$35.0 million compared with $32.8 for the second quarter last year.
-- Previously released guidance reaffirmed for full-year fiscal
2010 (ending September 30, 2010) of adjusted net income per diluted
share of $1.42 - $1.60 compared with $1.32 for fiscal 2009, and
adjusted EBITDA of $138.0 - $142.0 million compared with $125.0
million last year. -- Previously released guidance reaffirming for
full year fiscal 2010 free cash flow (net cash provided by
operating activities less capital expenditures) guidance of $55.0 -
$60.0 million compared with $52.8 million for fiscal 2009.
Previously stated capital expenditure guidance of $23 - $25 million
is increased to $26 - $28 million to reflect the rationalization of
the Company's Toccoa, Georgia plant. Conference Call The Company
will hold a conference call tomorrow morning, February 9, 2010, at
10:00 a.m. (EST) to discuss this news release. Forward-looking and
other material information may be discussed on the conference call.
The dial-in numbers for the conference call are 800-706-7748, or
for international 617-614-3473 and the access passcode is 85218743.
A replay of the conference call will be available until midnight on
February 16, 2010. The dial-in numbers for the replay are
888-286-8010, or for international 617-801-6888 and the access
passcode is 18577781. About BWAY Holding Company BWAY Holding
Company is a leading North American supplier of general line rigid
containers. The Company operates 20 plants throughout the United
States and Canada serving industry leading customers on a national
basis. Cautionary Note Regarding Forward-Looking Statements This
document contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, and are
subject to substantial risks, uncertainties and assumptions. You
should not place reliance on these statements. Forward-looking
statements include information concerning our liquidity and our
possible or assumed future results of operations, including
descriptions of our business strategies. These statements often
include words such as "believe," "expect," "anticipate," "intend,"
"plan," "estimate," "seek," "will," "may" or similar expressions.
These statements are based on certain assumptions that we have made
in light of our experience in the industry as well as our
perceptions of historical trends, current conditions, expected
future developments and other factors we believe are appropriate in
these circumstances. As you read and consider this document, you
should understand that these statements are not guarantees of
performance or results. Many factors could affect our actual
performance and results and could cause actual results to differ
materially from those expressed in the forward-looking statements.
Please refer to our Form 10-K filing for the fiscal year ended
September 27, 2009, and our other filings with the United States
Securities and Exchange Commission, for a discussion of other
factors that may affect future performance or results. In light of
these risks, uncertainties and assumptions, the forward-looking
statements contained in this document might not prove to be
accurate and you should not place undue reliance upon them. All
forward- looking statements attributable to us or persons acting on
our behalf are expressly qualified in their entirety by the
foregoing cautionary statements. All such statements speak only as
of the date made, and we undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise. Use of Non-GAAP
Financial Measures The Company provides financial measures and
terms not calculated in accordance with accounting principles
generally accepted in the United States (GAAP). Presentation of
non-GAAP financial measures such as, but not limited to "EBITDA,"
"adjusted EBITDA," "EBIT," "adjusted EBIT," gross margin (excluding
depreciation and amortization) "adjusted net income (loss)," and
"adjusted net income (loss) per diluted share" provide investors
with an alternative method for assessing the Company's operating
results in a manner that enables them to more thoroughly evaluate
the Company's performance. These non-GAAP financial measures
provide a baseline for assessing the Company's future earnings
expectations. BWAY's management uses these non-GAAP financial
measures for the same purpose. The non-GAAP financial measures
included in this news release are provided to give investors access
to the types of measures that the Company uses in analyzing its
results. BWAY's calculation of non-GAAP financial measures is not
necessarily comparable to similarly titled measures reported by
other companies. These non-GAAP financial measures may be
considered in addition to results prepared in accordance with GAAP,
but should not be considered a substitute for or superior to GAAP
results. Schedules that reconcile these non-GAAP financial measures
to GAAP financial measures are included with this news release.
Financial Information to Follow BWAY Holding Company and
Subsidiaries Summary Consolidated Financial Data (Unaudited)
(Dollars in millions, except per share data) Three Months Ended
------------------ Dec. 31, 2009 Dec. 28, 2008 -------------
------------- Statements of Operations: -------------------------
Net sales $219.0 $212.5 Cost of products sold (excluding depr. and
amort.) 186.9 192.1 ----- ----- Gross margin (excluding depr. and
amort.) 32.1 20.4 ---- ---- Other costs and expenses Depreciation
and amortization 13.7 11.1 Selling and administrative 5.7 5.6
Restructuring 2.0 0.7 Interest, net 8.9 8.2 Business acquisition
costs 0.5 - Other 0.4 (0.8) --- ---- Total other costs and expenses
31.2 24.8 ---- ---- Income (loss) before income taxes 0.9 (4.4)
Provision for (benefit from) income taxes 0.1 (1.7) --- ---- Net
income (loss) $0.8 $(2.7) ==== ===== Net income (loss) per share
Basic $0.04 $(0.13) ===== ====== Diluted $0.03 $(0.13) ===== ======
Shares - Basic (000s) 22,219 21,865 Shares - Diluted (000s) 24,239
21,865 Reconciliation of Adjusted EBITDA to Net Income (Loss)
----------------------------------------------- Net income (loss)
$0.8 $(2.7) Interest expense, net 8.9 8.2 Provision for (benefit
from) income taxes 0.1 (1.7) Depreciation and amortization 13.7
11.1 ---- ---- EBITDA 23.5 14.9 Adjustments: Restructuring expense
2.0 0.7 Business acquisition costs 0.5 - --- --- Adjusted EBITDA
26.0 15.6 Less: Depreciation and amortization 13.7 11.1 ---- ----
Adjusted EBIT $12.3 $4.5 ===== ==== Reconciliation of Net Income
(Loss) to Adjusted Net Income (Loss)
----------------------------------------------- Net income (loss)
$0.8 $(2.7) Adjustments: Restructuring expense 2.0 0.7 Accelerated
depreciation 1.1 - Business acquisition costs 0.5 - Benefit from
income taxes related to the above adjustments (1.2) (0.2) ---- ----
Adjusted net income (loss) $3.2 $(2.2) ==== ===== Adjusted net
income (loss) per diluted share $0.13 $(0.11) ===== ====== Shares -
Diluted (000s) 24,239 21,865 BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited) (Dollars in
millions) Three Months Ended ------------------ Dec. 31, 2009 Dec.
28, 2008 ------------- ------------- Business Segment Information:
----------------------------- Net sales Metal packaging $143.1
$130.9 Plastic packaging 75.9 81.6 ---- ---- Consolidated net sales
219.0 212.5 Income (loss) before income taxes Segment earnings
(excluding depr. and amort.) Metal packaging 20.4 11.5 Plastic
packaging 9.8 6.8 --- --- Total segment earnings (excluding depr.
and amort.) 30.2 18.3 Depreciation and amortization Metal packaging
6.7 5.4 Plastic packaging 6.6 5.4 --- --- Total segment
depreciation and amortization 13.3 10.8 Corporate depreciation and
amortization 0.4 0.3 --- --- Consolidated depreciation and
amortization 13.7 11.1 Corporate and other expenses Corporate
undistributed expenses 3.8 3.5 Restructuring 2.0 0.7 Interest, net
8.9 8.2 Business acquisition costs 0.5 - Other 0.4 (0.8) ----
------ Consolidated income (loss) before income taxes $0.9 $(4.4)
==== ====== Dec. 31, 2009 Sept. 27, 2009 -------------
-------------- Condensed Balance Sheets: -------------------------
Assets Cash and cash equivalents $16.8 $88.7 Accounts receivable,
net of allow. for doubtful accts. 101.3 103.8 Inventories, net
103.1 87.0 Other current assets 18.5 15.6 ---- ---- Total current
assets 239.7 295.1 Property, plant and equipment, net 167.6 160.9
Goodwill and other intangible assets, net 404.0 388.4 Other assets
10.6 11.1 ---- ---- Total Assets $821.9 $855.5 ====== ======
Liabilities and Stockholders' Equity Accounts payable $86.0 $98.0
Other current liabilities 43.1 63.3 Current portion of long-term
debt 0.5 6.5 --- --- Total current liabilities 129.6 167.8
Long-term debt (excluding current portion) 397.9 395.8 Other
long-term liabilities 93.5 93.6 Stockholders' equity 200.9 198.3
----- ----- Total Liabilities and Stockholders' Equity $821.9
$855.5 ====== ====== DATASOURCE: BWAY Holding Company CONTACT:
Jeffrey M. O'Connell, +1-770-645-4800
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