Berry Plastics Group, Inc. Reports September Quarter and Fiscal Year 2012 Results

Berry Plastics Group, Inc. Reports September Quarter and Fiscal Year 2012 Results

EVANSVILLE, Ind.--(BUSINESS WIRE)-- Berry Plastics Group, Inc. (NYS: 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

9½% 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