Exhibit 99.1
Pactiv Posts Record Second Quarter EPS
LAKE FOREST, Ill.--(BUSINESS WIRE)--July 23, 2007--For the quarter
ended June 30, 2007, Pactiv Corporation (NYSE: PTV) today announced
that income from continuing operations was $69 million, or $0.52 per
share, compared with $69 million, or $0.49 per share, in 2006. Sales
rose 10 percent to $828 million from $750 million. Results included
$43 million in sales from the acquisition of Prairie Packaging that
closed in June.
"Our performance in the quarter was strong, particularly against
record EPS in last year's second quarter and in an environment that
has seen steadily increasing raw material costs since early 2007. Our
price increase in the Foodservice/Food Packaging segment was effective
late in the quarter, and we saw improving volume trends in both
business segments. We closed on the Prairie acquisition in June and
are pleased with the integration progress, as well as the
opportunities to grow the Prairie business going forward," said
Richard L. Wambold, Pactiv's chairman and chief executive officer.
Gross margin was 29.0 percent compared with 31.9 percent last
year. The decline primarily reflected unfavorable spread (the
difference between selling prices and raw material costs) due to
higher polystyrene and aluminum costs. Operating margin was 15.5
percent compared with 16.5 percent last year.
Free cash flow in the quarter was $29 million compared with $65
million last year. The decline was the result of higher accounts
receivable due to greater sales late in the quarter, as well as higher
capital expenditures.
For the six-month period, income from continuing operations was
$126 million, or $0.94 per share, compared with $120 million, or $0.84
per share, last year. Sales of $1.51 billion rose 5 percent from $1.43
billion. Gross margin was 29.6 percent compared with 30.6 percent, and
operating margin was 15.3 percent compared with 15.5 percent.
Year-to-date free cash flow was $47 million compared with $93 million
last year.
Business Segment Results
Hefty(R) Consumer Products
Sales of $308 million rose 11 percent from $277 million, and
included $19 million from the Prairie Packaging acquisition. Volume
rose 4 percent in the base business, reflecting strength in food bags,
waste bags, and tableware.
Operating income was $58 million versus $57 million last year as
higher volume and lower advertising and promotion expense offset
unfavorable spread. Operating margin was 18.8 percent compared with
20.6 percent last year.
For the six-month period, sales of $555 million rose 7 percent
from $519 million. Operating income was $112 million compared with $99
million last year. Operating margin was 20.2 percent compared with
19.1 percent.
Foodservice/Food Packaging
Sales of $520 million rose 10 percent from $473 million last year.
The Prairie Packaging acquisition added $24 million to sales in this
segment. Volume in the base business rose 1 percent. Excluding a
continuing decline in foam insulation product sales related to the
soft home construction market, volume in the base business rose 2
percent.
Operating income was $68 million compared with $70 million last
year as higher raw material costs offset favorable pricing. Operating
margin was 13.1 percent compared with 14.8 percent last year.
For the six-month period, sales of $950 million rose 4 percent
compared with $911 million last year. Operating income was $118
million compared with $127 million in 2006. Operating margin was 12.4
percent compared with 13.9 percent.
Outlook
The following outlook includes the Prairie Packaging acquisition.
The Company expects 2007 sales to grow 11 percent to 13 percent. The
third quarter earnings per share outlook is a range of $0.41 to $0.45.
The full year earnings per share outlook is a range of $1.82 to $1.92.
The earnings per share accretion from Prairie Packaging included in
the full year outlook is $0.02 to $0.04, in line with the Company's
original expectation.
For the full year, SG&A expense is estimated to be approximately
$300 million. The 2007 tax rate is expected to be approximately 36
percent. Free cash flow from continuing operations for 2007 is
anticipated to be in a range of $200 million to $225 million. Capital
expenditures are expected to be approximately $140 million.
Depreciation and amortization expense will be approximately $165
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" or in the attached
"Operating Results by Segment". The "Operating Results by Segment"
also details the impact on sales of acquisitions.
Cautionary Statements
This press release includes certain "forward-looking statements"
such as those in the Outlook section. 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 Six months ended
June 30 June 30
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Sales $828 $750 $1,505 $1,430
Costs and expenses
Cost of sales (excluding
depreciation
and amortization) 588 511 1,059 993
Depreciation and amortization 39 37 75 72
Selling, general, and
administrative 73 77 139 143
Other expense - 1 1 1
--------- --------- --------- ---------
Operating income 128 124 231 221
Other income/(expense)
Interest income 1 1 3 3
Interest expense, net of
capitalized interest (20) (18) (38) (36)
Share of income from joint
ventures - 1 - 1
--------- --------- --------- ---------
Income before income taxes 109 108 196 189
and minority interest
Income-tax expense 39 39 69 69
Minority interest 1 - 1 -
--------- --------- --------- ---------
Income from continuing
operations 69 69 126 120
Discontinued operations, net
of tax 1 - 1 -
--------- --------- --------- ---------
Net income $70 $69 $127 $120
========= ========= ========= =========
Average common shares
outstanding (diluted) 132.3 141.4 133.0 142.5
Income from continuing
operations 0.52 0.49 0.94 0.84
Discontinued operations, net of
tax 0.01 - 0.01 -
--------- --------- --------- ---------
Net income $0.53 $0.49 $0.95 $0.84
========= ========= ========= =========
Gross margin (before deprec. &
amort.) 29.0% 31.9% 29.6% 30.6%
Operating margin 15.5% 16.5% 15.3% 15.5%
Pactiv Corporation
Consolidated Statement of Financial Position
(In millions)
June 30, 2007 December 31, 2006
----------------- -----------------
Assets
Current assets
Cash and temporary cash
investments $76 $181
Accounts and notes receivable 319 323
Inventories 386 296
Other 34 38
----------------- -----------------
Total current assets 815 838
----------------- -----------------
Property, plant, and equipment, net 1,275 1,093
Other assets
Goodwill 1,096 525
Intangible assets, net 430 238
Other 62 64
----------------- -----------------
Total other assets 1,588 827
----------------- -----------------
Total assets $3,678 $2,758
================= =================
Liabilities and shareholders'
equity
Current liabilities
Short-term debt, including
current maturities of long-term
debt $- $98
Accounts payable 195 152
Other 294 284
Liabilities from discontinued
operations 20 15
----------------- -----------------
Total current liabilities 509 549
----------------- -----------------
Long-term debt 1,699 771
Pension and postretirement benefits 353 403
Other liabilities 167 173
Minority interest 12 9
Shareholders' equity 938 853
----------------- -----------------
Total liabilities and
shareholders' equity $3,678 $2,758
================= =================
Pactiv Corporation
Consolidated Statement of Cash Flows
(In millions)
Six months ended June 30, 2007 2006
---------- ----------
Operating activities
Net income $127 $120
Less results from discontinued operations 1 -
---------- ----------
Income from continuing operations 126 120
Adjustments to reconcile income from continuing
operations to cash provided by continuing
operations
Depreciation and amortization 75 72
Deferred income taxes 10 16
Noncash pension income (25) (21)
Noncash compensation expense 4 4
Working capital 3 (73)
Other 6 5
---------- ----------
Cash provided by operating activities -
continuing operations 199 123
Cash used by operating activities - discontinued
operations (6) (5)
---------- ----------
Cash provided by operating activities $193 $118
---------- ----------
Investing activities
Expenditures for property, plant, and equipment (52) (30)
Net proceeds from sales of assets 1 1
Acquisitions of businesses and assets (1,021) -
Other continuing operations investing activities - 3
---------- ----------
Cash used by investing activities $(1,072) $(26)
---------- ----------
Financing activities
Issuance of common stock 18 21
Purchase of common stock (100) (137)
Issuance of long-term debt 932 -
Retirement of long-term debt (99) -
Other 22 -
---------- ----------
Cash provided (used) by financing activities $773 $(116)
---------- ----------
Effect of foreign-currency exchange rate changes
on cash and temporary cash investments 1 3
---------- ----------
Decrease in cash and temporary cash investments (105) (21)
Cash and temporary cash investments, January 1 181 172
---------- ----------
Cash and temporary cash investments, June 30 $76 $151
---------- ----------
Pactiv Corporation
Operating Results by Segment
(In millions)
Foodservice /
Consumer Food Packaging Other Total
------------- --------------- --------- ---------
Three months ended
June 30, 2007
- --------------------
Sales $308 $520 $- $828
Adjustments to sales
for acquisitions (19) (24) - (43)
------------- --------------- --------- ---------
Sales adjusted for
acquisitions $289 $496 $- $785
------------- --------------- --------- ---------
Operating income
(loss) $58 $68 $2 $128
Operating margin 18.8% 13.1% 15.5%
Three months ended
June 30, 2006
- --------------------
Sales $277 $473 $- $750
Operating income
(loss) $57 $70 $(3) $124
Operating margin 20.6% 14.8% 16.5%
Six months ended
June 30, 2007
- --------------------
Sales $555 $950 $- $1,505
Adjustments to sales
for acquisitions (19) (24) - (43)
------------- --------------- --------- ---------
Sales adjusted for
acquisitions $536 $926 $- $1,462
------------- --------------- --------- ---------
Operating income
(loss) $112 118 $1 $231
Operating margin 20.2% 12.4% 15.3%
Six months ended
June 30, 2006
- --------------------
Sales $519 $911 $- $1,430
Operating income
(loss) $99 $127 $(5) $221
Operating margin 19.1% 13.9% 15.5%
Pactiv Corporation
Regulation G GAAP Reconciliations
Free Cash Flow
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
(In millions) 2007 2006 2007 2006
--------- --------- --------- ---------
Cash flow provided by
operating activities from
continuing operations - GAAP
basis $157 $78 $199 $123
Less:
Capital expenditures -
continuing operations (28) (13) (52) (30)
(Increase) decrease in
asset securitization
program (100) - (100) -
--------- --------- --------- ---------
Free cash flow (a) $29 $65 $47 $93
========= ========= ========= =========
Outlook for
Twelve months ended
December 31, 2007
-------------------
(In millions) Low High
estimate estimate
--------- ---------
Cash flow provided by
operating activities from
continuing operations - US
GAAP basis $340 $365
Less: Capital expenditures -
continuing operations (140) (140)
--------- ---------
Free cash flow (a) $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