BWAY Intermediate Company, Inc. Reports Financial Results For The Three Months Ended June 30, 2014

ATLANTA, Aug. 13, 2014 /PRNewswire/ – BWAY Intermediate Company, Inc. (the "Company"), a leading North American supplier of general line rigid containers, today reported net sales of $415.9 million and net income of $7.3 million for the three months ended June 30, 2014.  In the second quarter of 2014, the Company:

• Increased net sales by $23.4 million to $415.9 million from $392.5 million.
• Improved net income to $7.3 million, an increase of $6.8 million, from $0.5 million.
• Adjusted EBITDA increased to $68.8 million compared to $68.3 million.

Second quarter 2014 net sales were favorably impacted by higher volumes and higher selling prices as the result of effective pass through of higher raw material costs.  Net income improved due to the reductions in the level of spending related to identifying and implementing cost savings initiatives as well as lower overall restructuring expenses in 2014.  The 2013 quarter included $5.5 million of restructuring costs primarily related to the closure of certain plastic plants, compared to $1.5 million in the 2014 quarter.

On August 13, 2014, BWAY Holding Company completed a private placement offering of $650.0 million aggregate principal amount of 9.125% Senior Notes due 2021 and expects to complete a new $1.22 billion term loan credit facility on August 14, 2014, collectively referred to as the "2014 Refinancing".  The proceeds from the 2014 Refinancing, together with approximately $8.0 million of borrowings under the Company's asset-based revolving credit facility, will be used to: (i) pay a dividend to our parent company to redeem all of the outstanding 9.00%/9.75% Senior PIK Toggle Notes due 2017 issued by BOE Intermediate Holding Corporation and all of the outstanding 9.50%/10.25% Senior PIK Toggle Notes due 2017 issued by BWAY Parent Company, Inc., (ii) redeem all of our 10% Senior Notes due 2018, (iii) repay all outstanding borrowings under our existing term loan credit facility, (iv) pay a special dividend to BOE Holding Corporation stockholders and compensate certain members of management that participate in the 2013 BWAY Parent Participation Plan and (v) pay related transaction fees and expenses.  

We expect to incur financing costs associated with the 2014 Refinancing of approximately $23.7 million, which includes an underwriting fee of approximately $15.0 million.  These financing costs will be capitalized and amortized to interest expense over the term of new debt instruments. Additionally, in connection with the 2014 Refinancing, in the third quarter of 2014, we expect to record a loss on extinguishment of debt of approximately $13.9 million.

Business Segments

Metal Packaging
Second quarter sales were $196.6 million compared to $189.4 million in 2013 primarily driven by higher volumes, partially offset by an unfavorable sales mix.

Metal packaging segment earnings (excluding depreciation and amortization) for the 2014 second quarter were $41.6 million compared to $42.3 million for the same period in 2013.  The decrease was primarily attributable to higher manufacturing costs, which include plant realignment costs in the current year, and was partially offset by higher volumes. Also included in the 2013 period was $2.6 million for a one-time impact related to a temporary customer dislocation.

Plastic Packaging

Sales for the plastic packaging segment for second quarter were $219.3 million compared to $203.1 million last year. The increase is primarily due to higher volumes as well as the effective pass-through of higher raw material costs. 

Plastic packaging segment earnings (excluding depreciation and amortization) for the 2014 second quarter were $27.4 million compared to $24.9 million in the same period last year.  The increase in segment earnings includes the synergies associated with 2013 closing of four plastic facilities and other operational synergies which include supply chain initiatives and elimination of certain general and administrative costs.  Improvements also resulted from actions taken by the Company to improve margins in this segment, including changes in policies and practices with regard to passing through increases in resin price and productivity improvement initiatives. These improvements were partially offset by higher freight costs to service customers.

Corporate

Undistributed corporate expenses for the 2014 second quarter were $4.0 million compared to $7.7 million for the same period last year.  The decrease is primarily the result of reduced professional fees related to identifying and executing business performance improvement initiatives.

Debt

The Company's total net debt at June 30, 2014 was $938.9 million.  Interest expense decreased $0.4 million during 2014 compared to same period in 2013. The ratio of net debt to adjusted EBITDA (leverage), at June 30, 2014 was 3.9x. The Company had total liquidity, cash plus undrawn revolver capacity, of approximately $190.5 million as of June 30, 2014.

About BWAY Intermediate Company

The Company is a leading North American supplier of general line rigid containers. The Company currently operates 24 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 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) and "adjusted net income (loss)," 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. The Company'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.

The Company'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.

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SOURCE BWAY Intermediate Company, Inc.