BWAY Intermediate Company, Inc. Reports Sales and Earnings for the Fourth Quarter and Fiscal Year Ended September 30, 2011

ATLANTA, Dec. 19, 2011 /PRNewswire/ -- BWAY Intermediate Company, Inc., a leading North American supplier of general line rigid containers, today reported net sales for fiscal 2011 of $1.2 billion compared to $1.0 billion last year. The acquisitions of Plastican, Inc. in October 2010 and Phoenix Container, Inc. in December 2010 (the "Recent Acquisitions") accounted for approximately $109.0 million of the increase with the remaining increase of $21.6 million resulting from higher raw material driven selling prices, partially offset by lower overall volume for fiscal 2011. Excluding the effect of the Recent Acquisitions, overall volume for the year decreased 2.7% as compared fiscal 2010. Fourth quarter net sales were $290.0 million compared to $275.2 million for the same quarter of fiscal 2010. The quarter-over-quarter increase was attributable to the Recent Acquisitions and higher raw material driven selling prices, partially offset by lower demand for the Company's products.  Overall sales volume for the quarter, excluding the effect of the Recent Acquisitions, decreased approximately 11.9% compared with the fourth quarter of fiscal 2010 as the result of continued weak general economic conditions and inventory reductions by the Company's customers.

The Company also reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and certain other items noted in the accompanying GAAP reconciliation) for fiscal 2011 of $141.8 million compared to $140.9 million for fiscal 2010, and $37.2 million for the fourth quarter compared to $39.1 million for the same period last year. 

Fiscal 2011 gross margin (excluding depreciation and amortization) was $159.9 million compared to $156.4 million for fiscal 2010 which included $5.3 million of manufacturers profit in beginning inventory and one-time costs associated with the June 2010 sale of the Company to affiliates of Madison Dearborn Partners, LLC (the "MDP Transaction").  Excluding these items, gross margin decreased $1.8 million primarily as a result of lower margins in the Company's plastic packaging segment (discussed below) more than offsetting gains in the Company's metal packaging segment. Fourth quarter gross margin was $39.6 million, compared to $42.0 million for the same quarter last year.  

Depreciation and amortization expense for fiscal 2011 was $91.9 million compared to $59.1 million for fiscal 2010, and $25.5 million for the fourth quarter of fiscal 2011 compared to $18.9 million for the same quarter last year. The increases for the fourth quarter and fiscal year are primarily attributable to the Recent Acquisitions, higher depreciation and amortization resulting from a write-up of assets to fair value associated with the MDP Transaction, and depreciation on recent capital expenditures.

Selling and administrative expense was $19.5 million for fiscal 2011 compared to $23.7 million last year, and $3.4 million for the fourth quarter compared to $5.7 million for the same quarter last year. Lower overall spending and lower bonus expense for the quarter and fiscal year more than offset additional selling and administrative expense associated with the Recent Acquisitions. 

The Company recorded restructuring charges of $4.3 million and $2.9 million for fiscal 2011 and the fourth quarter, respectively. The charges were primarily associated with plant closures and reductions in salary headcount during the fourth quarter in response to lower market demand for the Company's products.

Interest expense was $52.9 million for fiscal 2011 compared to $41.0 million last year. The increase is attributable to a higher level of debt with associated higher average interest rates and amortization of debt issuance costs resulting from the financing of the MDP Transaction. Interest expense for the fourth quarter was $12.7 million compared to $13.6 million for the same quarter last year. The reduction was primarily due to lower borrowing rates under the Company's credit agreement resulting from an amendment to the agreement in February 2011.

During the fourth quarter of fiscal 2011 the Company recorded a $124.6 million non-cash goodwill impairment charge in the Company's plastic packaging segment. This charge resulted from an assessment of our goodwill value which considered three valuation methodologies; a comparison of EBITDA trading multiples for publicly traded packaging companies, a comparison of recent merger and acquisition transactions in the packaging industry, and a discounted cash flow analysis based on expected future results for the Company's plastic packaging segment.

Fiscal 2011 loss before income taxes was $135.0 million including the goodwill impairment of $124.6 million discussed above. Fiscal 2010 loss before income taxes was $64.7 million including approximately $98.3 million of costs associated with the MDP transaction.

Fiscal 2011 benefit from income taxes was $2.4 million compared $16.5 million for fiscal 2010. Net loss for fiscal 2011 was $132.6 million compared to a net loss of $48.2 million for fiscal 2010.  Adjusted net income (see accompanying reconciliations to GAAP financial measures) was $14.3 million for fiscal 2011 compared to $27.3 million last year.

Business Segments

Metal Packaging

Fiscal 2011 sales for the Company's metal packaging segment were $693.6 million compared to $656.1 million last year. Fourth quarter sales of $173.7 million were slightly lower than the fourth quarter of fiscal 2010 sales of $178.6 million. The decreases for the quarter and fiscal year were largely attributable to lower market demand, partially offset by the Phoenix Container acquisition and higher raw material driven selling prices for the Company's products.  Excluding the effects of the Phoenix Container acquisition, overall volumes decreased from fiscal 2010 by approximately 3.8% for the full year and 15.2% for the fourth quarter.

Fiscal 2011 metal packaging segment earnings (excluding depreciation and amortization) were $130.7 million compared to $115.7 million for fiscal 2010, and $32.1 million for the fourth quarter compared to $31.1 million for the same quarter last year. Despite lower volume, earnings increased as a result of the Phoenix Container acquisition, continued cost reduction and productivity improvement initiatives, and effective management of raw material cost change pass-through.  

Plastic Packaging

Fiscal 2011 sales for the Company's plastic packaging segment were $467.9 million compared to $374.8 million last year. Fourth quarter sales were $116.3 million compared to $96.6 million for the same period last year. The increase resulted largely from the Plastican acquisition and resin cost driven selling price increases, partially offset by lower volume. Excluding the effect of the Plastican acquisition, overall volume decreased from fiscal 2010 by approximately 0.9% for the full year and 5.9% for the fourth quarter.

Plastic packaging segment earnings (excluding depreciation and amortization) were $20.0 million for fiscal 2011 compared to $34.9 million last year, and $5.9 million for the fourth quarter compared to $8.9 million for the fourth quarter of fiscal 2010. The decrease in plastic packaging segment earnings resulted primarily from lower volume, competitive pricing actions, and  the timing and magnitude of changes in the cost of resin and the lag associated with selling price pass through of cost changes to customers.  

Corporate

Undistributed corporate expenses were $10.3 million for fiscal 2011 compared to $17.9 million last year, and were $1.8 million for the fourth quarter compared to $3.7 million for the fourth quarter of fiscal 2010. The lower level of expense relates to cost reduction initiatives and lower bonus expense. 

Capital expenditures for fiscal 2011 were $36.8 million compared to $24.5 million in fiscal 2010. The increase is primarily due to expenditures related to plant rationalizations associated with the Recent Acquisitions, and to expenditures related to the implementation of a new ERP system at certain of the Company's manufacturing plants.

Adjusted free cash flow (see accompanying reconciliations to GAAP financial measures) for fiscal 2011 was $49.8 million compared to $56.1 million for fiscal 2010. Higher capital expenditures was the primary contributor to lower adjusted free cash flow. Cash and cash equivalents was $82.5 million at the end of fiscal 2011.

About BWAY Holding Company

BWAY Holding Company is a leading North American supplier of general line rigid containers. The Company operates 23 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. BWAY'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.

BWAY'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.