EXHIBIT 99.1
Pactiv Posts 23 Percent Increase In EPS
LAKE FOREST, Ill.--(BUSINESS WIRE)--April 23, 2007--For the
quarter ended March 31, 2007, Pactiv Corporation (NYSE: PTV) today
announced that net income was $57 million, or $0.43 per share,
compared with $51 million, or $0.35 per share, in 2006. Sales of $677
million decreased slightly from $680 million.
"We posted strong EPS growth, helped by improved spread (the
difference between selling prices and raw material costs). Over the
past year we have demonstrated our ability to perform well in an
environment of lower volatility in resin pricing. Overall, our markets
remain sluggish, but we are performing well in spite of the soft
conditions. We recently announced an agreement to acquire Prairie
Packaging, a leading manufacturer of disposable tableware products,
which will add significantly to growth and is expected to be $0.02 to
$0.04 accretive to EPS in the second half," said Richard L. Wambold,
Pactiv's chairman and chief executive officer.
Free cash flow in the first quarter was $18 million compared with
$28 million last year. The decrease was driven by higher incentive
compensation payments related to prior year performance, and higher
capital expenditures. During the quarter the Company repurchased 3.1
million shares of its common stock for $100 million.
First quarter gross margin was 30.4 percent compared with 29.1
percent in the first quarter of 2006, and operating margin was 15.2
percent compared with 14.3 percent.
First quarter 2007 earnings per share benefited $0.01 from a lower
effective tax rate due to the favorable resolution of a state tax
audit.
Business Segment Results
Hefty(R) Consumer Products
First quarter sales of $247 million rose 2 percent from $242
million, reflecting a 2-percent volume decrease. Growth in cups,
branded foam tableware, and food bags was more than offset by a
decline in waste bag shipments primarily due to a lower number of
promotions, as well as the timing of inventory replenishment orders.
The new products launched in the quarter, Hefty(R) One Zip(R) Travel
Bags and Hefty(R) One Zip(R) Big Bags, have been well received by the
trade.
Operating income was $54 million compared with $42 million in
2006, primarily reflecting favorable spread, including lower trade
promotional expense, as well as lower logistics costs. Operating
margin was 21.9 percent compared with 17.4 percent in the first
quarter last year.
Foodservice/Food Packaging
First quarter sales were $430 million, down 2 percent compared
with $438 million in 2006. Volume was slightly negative, driven by a
significant decline in foam insulation product sales affected by the
soft home construction market. Volume in the remainder of the segment
increased 1 percent.
Operating income was $50 million versus $57 million in 2006. The
decline was driven by unfavorable spread as the segment posted a very
strong quarter in 2006, benefiting from both higher pricing and lower
raw material costs. Operating margin was 11.6 percent compared with
13.0 percent in the first quarter of 2006, and 11.5 percent in the
fourth quarter of 2006.
Outlook
The following outlook does not include any impact of the
acquisition of Prairie Packaging announced earlier in April.
The Company expects low single digit sales growth in 2007 and has
initiated a second quarter earnings per share outlook in a range of
$0.45 to $0.49, against a record quarter last year and reflecting
potentially increasing raw material costs. The full year 2007 earnings
per share outlook remains in a range of $1.75 to $1.87.
For the full year, SG&A expense is estimated to be approximately
$300 million, and the full year tax rate is expected to be
approximately 36 percent. Free cash flow for 2007 is anticipated to
remain in a range of $200 million to $225 million. Depreciation and
amortization expense will be approximately $150 million and capital
expenditures will be approximately $120 million.
Other
This press release includes certain non-GAAP financial measures. A
reconciliation of the non-GAAP financial measures to GAAP is shown in
the attached "Regulation G GAAP Reconciliations."
Cautionary Statements
This press release includes certain "forward-looking statements"
such as those in the Outlook section and ..."will add significantly to
growth and is expected to be $0.02 to $0.04 accretive to EPS...". A
variety of factors may cause actual results to differ materially from
these expectations including a slowdown in economic growth, changes in
the competitive market, increased cost of raw materials, and changes
in the regulatory environment. More detailed information about these
and other factors is contained in the Company's Annual Report on Form
10-K at page 54 filed with the Securities and Exchange Commission as
revised and updated by Forms 10-Q and 8-K as filed with the
Commission.
Company Information
Pactiv Corporation (NYSE: PTV) is a leader in the consumer and
foodservice/food packaging markets it serves. With 2006 sales of $2.9
billion, Pactiv derives more than 80 percent of its sales from market
sectors in which it holds the No. 1 or No. 2 market-share position.
Pactiv's Hefty(R) brand products include waste bags, slider storage
bags, disposable tableware, and disposable cookware. Pactiv's
foodservice/food packaging offering is one of the broadest in the
industry, including both custom and stock products in a variety of
materials. For more information, visit www.pactiv.com.
Pactiv Corporation
Consolidated Statement of Income
(In millions, except per-share data)
Three months ended March 31
---------------------------
2007 2006
------------- -------------
Sales $677 $680
Costs and expenses
Cost of sales (excluding depreciation and
amortization) 471 482
Depreciation and amortization 36 35
Selling, general, and administrative 66 66
Other expense 1 -
------------- -------------
Operating income 103 97
Other income/(expense)
Interest income 2 2
Interest expense, net of capitalized
interest (18) (18)
------------- -------------
Income before income taxes 87 81
Income tax expense 30 30
------------- -------------
Net income $57 $51
============= =============
Average common shares outstanding
(diluted) 133.5 143.7
Earnings per share $0.43 $0.35
Gross margin (before deprec. & amort.) 30.4% 29.1%
Operating margin 15.2% 14.3%
Pactiv Corporation
Consolidated Statement of Financial Position
(In millions)
March 31, 2007 December 31, 2006
---------------- -----------------
Assets
Current assets
Cash and temporary cash
investments $125 $181
Accounts and notes receivable 290 323
Inventories 342 296
Other 32 38
---------------- -----------------
Total current assets 789 838
---------------- -----------------
Property, plant, and equipment, net 1,084 1,093
Other assets
Goodwill 525 525
Intangible assets, net 235 238
Other 59 64
---------------- -----------------
Total other assets 819 827
---------------- -----------------
Total assets $2,692 $2,758
================ =================
Liabilities and shareholders'
equity
Current liabilities
Short-term debt, including
current maturities of long-term
debt $99 $98
Accounts payable 142 152
Other 268 284
Liabilities from discontinued
operations 27 15
---------------- -----------------
Total current liabilities 536 549
---------------- -----------------
Long-term debt 771 771
Pension and postretirement benefits 389 403
Other liabilities 158 173
Minority interest 13 9
Shareholders' equity 825 853
---------------- -----------------
Total liabilities and
shareholders' equity $2,692 $2,758
================ =================
Pactiv Corporation
Consolidated Statement of Cash Flows
(In millions)
Three months ended March 31, 2007 2006
---------- ----------
Operating activities
Net income $57 $51
Adjustments to reconcile income from continuing
operations
to cash provided by continuing operations
Depreciation and amortization 36 35
Deferred income taxes 9 4
Noncash pension income (13) (11)
Noncash compensation expense 2 3
Working capital (58) (41)
Other 9 4
---------- ----------
Cash provided by operating activities -
continuing operations 42 45
Cash used by operating activities - discontinued
operations - (3)
---------- ----------
Cash provided by operating activities $42 $42
---------- ----------
Investing activities
Expenditures for property, plant, and equipment (24) (17)
Net proceeds from sales of assets 1 1
Other continuing operations investing activities - 3
---------- ----------
Cash used by investing activities $(23) $(13)
---------- ----------
Financing activities
Issuance of common stock 12 12
Purchase of common stock (100) (46)
Other 13 (3)
---------- ----------
Cash used by financing activities $(75) $(37)
---------- ----------
Effect of foreign-currency exchange rate changes
on cash and temporary cash investments - 1
---------- ----------
Decrease in cash and temporary cash investments (56) (7)
Cash and temporary cash investments, January 1 181 172
---------- ----------
Cash and temporary cash investments, March 31 $125 $165
---------- ----------
Pactiv Corporation
Operating Results by Segment
(In millions)
Foodservice /
Consumer Food Packaging Other Total
---------- ---------------- ------- -------
Three months ended
March 31, 2007
- --------------------------
Sales $247 $430 $- $677
Operating income (loss) $54 $50 $(1) $103
Operating margin 21.9% 11.6% 15.2%
Three months ended
March 31, 2006
- --------------------------
Sales $242 $438 $- $680
Operating income (loss) $42 $57 $(2) $97
Operating margin 17.4% 13.0% 14.3%
Pactiv Corporation
Regulation G GAAP Reconciliations
Free Cash Flow
Outlook for
Three months ended Twelve months ended
March 31, December 31, 2007
----------------------- -----------------------
(In millions) Low High
2007 2006 estimate estimate
----------- ----------- ----------- -----------
Cash flow provided by
operating activities
from continuing
operations - GAAP
basis $42 $45 $320 $345
Less: Capital
expenditures -
continuing
operations (24) (17) (120) (120)
----------- ----------- ----------- -----------
Free cash flow (a) $18 $28 $200 $225
=========== =========== =========== ===========
(a) Free cash flow is defined as cash flow from operating activities
excluding the change in our asset-securitization-program balance,
less capital expenditures, all of which are calculated in accordance
with GAAP. We believe that free cash flow provides a useful measure
of our liquidity. We use free cash flow as a measure of cash
available to fund early or required debt retirement and incremental
investments such as, but not limited to, acquisitions and share
repurchases. However, free cash flow has limitations, in that it does
not represent residual cash flow available for discretionary
expenditures. Some of our expenditures are mandatory. The amount of
mandatory versus discretionary expenditures can vary significantly
between periods.
CONTACT: Pactiv Corporation
Investor Relations Contact:
Christine Hanneman, 847-482-2429
channeman@pactiv.com
or
Media Relations Contact:
Lisa Foss, 847-482-2704
lfoss@pactiv.com