[Missing Graphic Reference] NEWS RELEASE
Investor Contact: Media Contact:
Dustin Stilwell Eva Schmitz
812.306.2964 812.306.2424
dustinstilwell@berryplastics.com evaschmitz@berryplastics.com
FOR IMMEDIATE RELEASE
Berry Plastics Group, Inc. Reports September Quarter and Fiscal Year 2012 Results
EVANSVILLE, Ind. – November 26, 2012 – Berry Plastics Group, Inc. (NYSE:BERY) today reported results for the September quarter and fiscal year 2012:
| · | Net sales decrease of 2 percent versus September 2011 quarter |
| · | Adjusted free cash flow of $159 million for the September 2012 quarter |
| · | Fiscal year 2012 Adjusted EBITDA of $803 million with the leverage ratio (net debt/Adjusted EBITDA) at 4.9x (pro forma for the IPO), a reduction of 1.2x from fiscal year 2011 |
| · | Operating EBITDA increased 13 percent and Operating EBITDA margin increased to 17.6 percent from 15.3 percent in the September 2011 quarter |
| · | Adjusted net income (loss) per share of $0.34 for the quarter compared to ($0.04) in September 2011 |
“Berry’s improved product mix, aggressive cost reduction initiatives, and lower costs for raw materials, coupled with higher prices in certain of our product segments, allowed us to achieve record earnings and reduce our leverage,” said Jon Rich, Chairman and CEO of Berry Plastics. “While we are pleased with our overall performance, the weakening global economic environment will present challenges to our industry and to Berry.”
September Quarter and Fiscal Year 2012 Results
For the quarter ended September 2012, the Company’s net sales declined by 2 percent to $1,204 million from $1,229 million. The decrease in sales was related to the pass through of lower raw material costs and our decision to exit certain low margin business partially offset by sales from acquired businesses and a slight market share gain in certain segments.
| | | Quarterly Period Ended (Unaudited) | |
Net Sales (in millions) | | September 29, 2012 | | | October 1, 2011 | | | $ Change | | | % Change | |
| Rigid Open Top | | $ | 318 | | | $ | 356 | | | $ | (38 | ) | | | (11 | %) |
| Rigid Closed Top | | | 352 | | | | 307 | | | | 45 | | | | 15 | % |
| Engineered Materials | | | 352 | | | | 368 | | | | (16 | ) | | | (4 | %) |
| Flexible Packaging | | | 182 | | | | 198 | | | | (16 | ) | | | (8 | %) |
| Total Net Sales | | $ | 1,204 | | | $ | 1,229 | | | $ | (25 | ) | | | (2 | %) |
For fiscal year 2012, net sales increased by 4 percent to $4,766 million from $4,561 million in fiscal year 2011. The increase in sales was primarily related to acquisitions, partially offset by the Company’s decision to exit certain low margin business.
| | | Fiscal Year Ended (Unaudited) | |
Net Sales (in millions) | | September 29, 2012 | | | October 1, 2011 | | | $ Change | | | % Change | |
| Rigid Open Top | | $ | 1,229 | | | $ | 1,261 | | | $ | (32 | ) | | | ( 3 | %) |
| Rigid Closed Top | | | 1,438 | | | | 1,053 | | | | 385 | | | | 37 | % |
| Engineered Materials | | | 1,362 | | | | 1,451 | | | | (89 | ) | | | ( 6 | %) |
| Flexible Packaging | | | 737 | | | | 796 | | | | (59 | ) | | | ( 7 | %) |
| Total Net Sales | | $ | 4,766 | | | $ | 4,561 | | | $ | 205 | | | | 4 | % |
Capital Structure and Adjusted Free Cash Flow
In October 2012 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 $3,958 million to the Adjusted EBITDA for the four quarters ended September 29, 2012 of $803 million was 4.9x at the end of the September 2012 quarter when factoring in the impact from the IPO. The actual ratio at the end of September 29, 2012 quarter was 5.5x. Adjusted free cash flow was $159 million for the September 2012 quarter and $279 million for fiscal year 2012.
| | | September 29, 2012 | | | October 1, 2011 | |
| (in millions) (Unaudited) | | Actual | | | Pro Forma | | | | |
| Term loan | | $ | 1,134 | | | $ | 1,134 | | | $ | 1,146 | |
| Revolving line of credit | | | 73 | | | | 73 | | | | 195 | |
| First Priority Senior Secured Floating Rate Notes | | | 681 | | | | 681 | | | | 681 | |
| 8¼% First Priority Notes | | | 370 | | | | 370 | | | | 370 | |
| Second Priority Senior Secured Floating Rate Notes | | | 210 | | | | 210 | | | | 210 | |
91/2% Second Priority Notes | | | 500 | | | | 500 | | | | 500 | |
| Senior Unsecured Term Loan | | | 39 | | | | 39 | | | | 56 | |
| 9¾% Second Priority Notes | | | 800 | | | | 800 | | | | 800 | |
| 10¼% Senior Subordinated Notes | | | 127 | | | | 127 | | | | 127 | |
| 11% Senior Subordinated Notes | | | 455 | | | | — | | | | 455 | |
| Debt discount, net | | | (9 | ) | | | (9 | ) | | | (13 | ) |
| Capital leases and other | | | 91 | | | | 91 | | | | 100 | |
| Cash and cash equivalents | | | (87 | ) | | | (58 | ) | | | (42 | ) |
| Net Debt | | $ | 4,384 | | | $ | 3,958 | | | $ | 4,585 | |
Outlook
“Our strategic actions are allowing us to continue to strengthen the Company’s balance sheet, maintain significant liquidity, and generate substantial free cash flow,” said Rich. “Going forward, we will continue to execute on our strategies to further reduce our overall debt leverage, pursue innovative organic growth opportunities, identify value adding acquisitions that can be accretive to shareholder value, and take steps to grow our business internationally.”
Investor Conference Call
The Company will host a conference call on Tuesday, November 27, 2012, at 9:00 a.m. CST to discuss its September quarter and fiscal year 2012 results. The telephone number to access the conference call is (866) 847-7864 (domestic), or (703) 639-1430 (international), and use conference ID 1596079. 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. Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends, and other information that is not historical information. Actual results in future periods may differ materially from forward-looking statements made today because of a number of risks and uncertainties, including various economic and competitive factors, the Company’s ability to pass through raw material price increases to its customers, its ability to service debt, the availability and cost of plastic resin, the impact of changing environmental laws, changes in the level of the Company’s capital investment, the results and integration of acquired business, our reliance on unpatented know-how and trade secrets and the risks set forth in the “Risk Factors,” “Cautionary Statement Regarding Forward-Looking Statements” and other sections of our reports filed or furnished with the Securities Exchange Commission. You should not place undue reliance on our forward-looking statements. We undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes. Additional important information about the Company’s business is set forth in the Company’s various filings with the SEC and the information discussed today should be considered alongside the information contained in those filings.
Berry Plastics Group, Inc.
Consolidated Statements of Operations
(Unaudited)
(in millions, except per share data)
| | | Quarterly Period Ended | | | Fiscal Year Ended | |
| | | September 29, 2012 | | | October 1, 2011 | | | September 29, 2012 | | | October 1, 2011 | |
| Net sales | | $ | 1,204 | | | $ | 1,229 | | | $ | 4,766 | | | $ | 4,561 | |
| Costs and expenses: | | | | | | | | | | | | | | | | |
| Cost of goods sold | | | 977 | | | | 1,037 | | | | 3,949 | | | | 3,878 | |
| Selling, general and administrative | | | 81 | | | | 75 | | | | 308 | | | | 275 | |
| Amortization of intangibles | | | 28 | | | | 26 | | | | 109 | | | | 106 | |
| Restructuring and impairment charges | | | 1 | | | | 185 | | | | 31 | | | | 221 | |
| Other operating expenses | | | 10 | | | | 13 | | | | 44 | | | | 39 | |
| Operating income (loss) | | | 107 | | | | (107 | ) | | | 325 | | | | 42 | |
| | | | | | | | | | | | | | | | | |
| Other expense (income) | | | (6 | ) | | | (6 | ) | | | (7 | ) | | | 61 | |
| Interest expense, net | | | 81 | | | | 84 | | | | 328 | | | | 327 | |
| Net income (loss) before income taxes | | | 32 | | | | (185 | ) | | | 4 | | | | (346 | ) |
| Income tax expense (benefit) | | | 9 | | | | 7 | | | | 2 | | | | (47 | ) |
| Net income (loss) | | $ | 23 | | | $ | (192 | ) | | $ | 2 | | | $ | (299 | ) |
| Net income (loss) per share: | | | | | | | | | | | | |
| Basic | | $ | 0.28 | | | $ | (2.29 | ) | | $ | 0.02 | | | | (3.55 | ) |
| Diluted | | | 0.26 | | | | (2.29 | ) | | | 0.02 | | | | (3.55 | ) |
| | | | | | | | | | | | | | | | | |
Weighted-average number of shares outstanding: (in thousands) | | | | | | | | | | | | | | | | |
| Basic | | | 83,202 | | | | 83,876 | | | | 83,435 | | | | 84,121 | |
| Diluted | | | 89,131 | | | | 83,876 | | | | 86,644 | | | | 84,121 | |
Berry Plastics Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
| | | September 29, 2012 | | | October 1, 2011 | |
| Assets: | | | | | | |
| Cash and cash equivalents | | $ | 87 | | | $ | 42 | |
| Accounts receivable, net | | | 455 | | | | 543 | |
| Inventories | | | 535 | | | | 578 | |
| Other current assets | | | 90 | | | | 92 | |
| Property, plant and equipment, net | | | 1,216 | | | | 1,250 | |
| Goodwill, intangibles and other assets | | | 2,642 | | | | 2,712 | |
| Total assets | | $ | 5,025 | | | $ | 5,217 | |
| | | | | | | | | |
| Liabilities and stockholders' deficit | | | | | | | | |
| Current liabilities, excluding debt | | | 606 | | | | 638 | |
| Current and long-term debt | | | 4,471 | | | | 4,627 | |
| Other liabilities | | | 400 | | | | 403 | |
| Redeemable shares | | | 23 | | | | 16 | |
| Stockholders’ deficit | | | (475 | ) | | | (467 | ) |
| Total liabilities and stockholders' deficit | | $ | 5,025 | | | $ | 5,217 | |
Berry Plastics Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in millions)
| | | Fiscal Year Ended | |
| | | September 29, 2012 | | | October 1, 2011 | |
| | | | | | | |
| Net cash from operating activities | | $ | 479 | | | $ | 327 | |
| | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | |
| Additions to property, plant and equipment | | | (230 | ) | | | (160 | ) |
| Proceeds from sale of assets | | | 30 | | | | 5 | |
| Acquisitions of business, net of cash acquired | | | (55 | ) | | | (368 | ) |
| Net cash from investing activities | | | (255 | ) | | | (523 | ) |
| | | | | | | | | |
| Cash Flows from Financing Activities: | | | | | | | | |
| Proceeds from long-term borrowings | | | 2 | | | | 995 | |
| Purchase of common stock | | | (6 | ) | | | (2 | ) |
| Repayment of long-term borrowings | | | (175 | ) | | | (880 | ) |
| Debt financing costs | | | — | | | | (23 | ) |
| Net cash from financing activities | | | (179 | ) | | | 90 | |
| Effect of currency translation on cash | | | — | | | | — | |
| Net increase (decrease) in cash and cash equivalents | | | 45 | | | | (106 | ) |
| Cash and cash equivalents at beginning of period | | | 42 | | | | 148 | |
| Cash and cash equivalents at end of period | | $ | 87 | | | $ | 42 | |
Berry Plastics Group, Inc.
Condensed Consolidated Financial Statements
Segment Information
(Unaudited)
(in millions)
| | | Quarterly Period Ended | | | Fiscal Year Ended | |
| | | September 29, 2012 | | | October 1, 2011 | | | September 29, 2012 | | | October 1, 2011 | |
| Net Sales: | | | | | | | | | | | | |
| Rigid Open Top | | $ | 318 | | | $ | 356 | | | $ | 1,229 | | | $ | 1,261 | |
| Rigid Closed Top | | | 352 | | | | 307 | | | | 1,438 | | | | 1,053 | |
| Engineered Materials | | | 352 | | | | 368 | | | | 1,362 | | | | 1,451 | |
| Flexible Packaging | | | 182 | | | | 198 | | | | 737 | | | | 796 | |
| Total | | $ | 1,204 | | | $ | 1,229 | | | $ | 4,766 | | | $ | 4,561 | |
| | | | | | | | | | | | | | | | | |
| Operating Income (Loss): | | | | | | | | | | | | | | | | |
| Rigid Open Top | | $ | 46 | | | $ | 53 | | | $ | 159 | | | $ | 155 | |
| Rigid Closed Top | | | 32 | | | | 20 | | | | 95 | | | | 77 | |
| Engineered Materials | | | 28 | | | | (85 | ) | | | 70 | | | | (71 | ) |
| Flexible Packaging | | | 1 | | | | (95 | ) | | | 1 | | | | (119 | ) |
| Total | | $ | 107 | | | $ | (107 | ) | | $ | 325 | | | $ | 42 | |
| | | | | | | | | | | | | | | | | |
| Depreciation and Amortization: | | | | | | | | | | | | | | | | |
| Rigid Open Top | | $ | 23 | | | $ | 28 | | | $ | 90 | | | $ | 102 | |
| Rigid Closed Top | | | 34 | | | | 26 | | | | 135 | | | | 95 | |
| Engineered Materials | | | 20 | | | | 17 | | | | 71 | | | | 72 | |
| Flexible Packaging | | | 16 | | | | 20 | | | | 59 | | | | 75 | |
| Total | | $ | 93 | | | $ | 91 | | | $ | 355 | | | $ | 344 | |
| Restructuring and Impairment Charges: | | | | | | | | | | | | |
| Rigid Open Top | | $ | — | | | $ | 1 | | | $ | — | | | $ | 2 | |
| Rigid Closed Top | | | 1 | | | | 6 | | | | 10 | | | | 8 | |
| Engineered Materials | | | — | | | | 101 | | | | 21 | | | | 124 | |
| Flexible Packaging | | | — | | | | 77 | | | | — | | | | 87 | |
| Total | | $ | 1 | | | $ | 185 | | | $ | 31 | | | $ | 221 | |
| | | | | | | | | | | | | | | | | |
| Other Operating Expenses: | | | | | | | | | | | | | | | | |
| Rigid Open Top | | $ | 1 | | | $ | (10 | ) | | $ | 6 | | | $ | (13 | ) |
| Rigid Closed Top | | | 4 | | | | 2 | | | | 28 | | | | 18 | |
| Engineered Materials | | | 4 | | | | 10 | | | | 13 | | | | 23 | |
| Flexible Packaging | | | 2 | | | | 17 | | | | 13 | | | | 21 | |
| Total | | $ | 11 | | | $ | 19 | | | $ | 60 | | | $ | 49 | |
| | | | | | | | | | | | | | | | | |
| Operating EBITDA: | | | | | | | | | | | | | | | | |
| Rigid Open Top | | $ | 70 | | | $ | 72 | | | $ | 255 | | | $ | 246 | |
| Rigid Closed Top | | | 71 | | | | 54 | | | | 268 | | | | 198 | |
| Engineered Materials | | | 52 | | | | 43 | | | | 175 | | | | 148 | |
| Flexible Packaging | | | 19 | | | | 19 | | | | 73 | | | | 64 | |
| Total | | $ | 212 | | | $ | 188 | | | $ | 771 | | | $ | 656 | |
Berry Plastics Group, Inc.
Reconciliation Schedules
(Unaudited)
(in millions)
| | | Quarterly Period Ended | | | Fiscal Year Ended | |
| | | September 29, 2012 | | | October 1, 2011 | | | September 29, 2012 | | | October 1, 2011 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | 23 | | | $ | (192 | ) | | $ | 2 | | | $ | (299 | ) |
| | | | | | | | | | | | | | | | | |
| Add: interest expense | | | 81 | | | | 84 | | | | 328 | | | | 327 | |
| Add: income tax expense (benefit) | | | 9 | | | | 7 | | | | 2 | | | | (47 | ) |
| EBIT | | $ | 113 | | | | (101 | ) | | $ | 332 | | | | (19 | ) |
| | | | | | | | | | | | | | | | | |
| Add: depreciation and amortization | | | 93 | | | | 91 | | | | 355 | | | | 344 | |
| Add: restructuring and impairment | | | 1 | | | | 185 | | | | 31 | | | | 221 | |
| Add: other expense | | | 5 | | | | 13 | | | | 53 | | | | 110 | |
Operating EBITDA (1) | | $ | 212 | | | | 188 | | | $ | 771 | | | | 656 | |
| | | | | | | | | | | | | | | | | |
| Add: pro forma acquisitions | | | — | | | | | | | | 6 | | | | | |
| Add: unrealized cost savings | | | 3 | | | | | | | | 26 | | | | | |
Adjusted EBITDA (1) | | $ | 215 | | | | | | | $ | 803 | | | | | |
| | | | | | | | | | | | | | | | | |
| Cash flow from operating activities | | $ | 201 | | | $ | 122 | | | $ | 479 | | | $ | 327 | |
| Additions to property, plant, and equipment, net | | | (42 | ) | | | (31 | ) | | | (200 | ) | | | (155 | ) |
| Adjusted free cash flow | | $ | 159 | | | $ | 91 | | | $ | 279 | | | $ | 172 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share-diluted: | | $ | 0.26 | | | $ | (2.29 | ) |
Restructuring and impairment charges (net of tax) | | | 0.01 | | | | 2.11 | |
Other operating expenses (net of tax) | | | 0.07 | | | | 0.14 | |
| Adjusted net income (loss) per share | | $ | 0.34 | | | $ | (0.04 | ) |
| | | | | | | | | |
(1) Adjusted EBITDA 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 and the related definitions differently than we do, limiting the usefulness of our calculation of Adjusted EBITDA as a comparative measure. EBIT, Operating EBITDA and Adjusted EBITDA 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.
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