Graham Packaging Announces Results for 2011 First Quarter

YORK, Pa., April 28, 2011 /PRNewswire/ -- Graham Packaging Company Inc. (NYSE: GRM) today announced results for the first quarter ended March 31, 2011.

Highlights

• Net sales increased to $756.5 million as compared to $585.6 million in the first quarter of 2010.
• Operating income increased to $73.8 million as compared to $32.3 million in the first quarter of 2010.
• Adjusted EBITDA(1) increased to $135.2 million from $115.6 million in the first quarter of 2010.  
• Free Cash Flow (2) was $21.8 million for the first quarter of 2011.
• The Company announced its commitment to acquire the assets of Techne – Technipack Engineering Italia S.r.l. ("Techne"), a manufacturer of blow molding machines, for total consideration of euro 8.8 million.
• The Company reaffirms its Adjusted EBITDA guidance for 2011 of $583.0 million.

First Quarter 2011

Net sales improved to $756.5 million, an increase of $170.9 million over the first quarter of last year.  The acquisition of Liquid Container contributed $98.6 million to the increase, and the remainder was driven by an increase in resin costs (which are passed through to customers), higher volumes, and slightly favorable exchange rates.

Adjusted EBITDA increased to $135.2 million compared to $115.6 million in the first quarter of last year.  The increase was mainly due to the acquisition of Liquid Container and related synergies of approximately $3.0 million.  

"Our first quarter results are a terrific start to 2011," said CEO Mark Burgess.  "We achieved solid adjusted EBITDA growth despite headwinds associated with an inflating cost environment.  We were particularly successful in growing our Food and Beverage franchise in the quarter, and we remain pleased with our efforts and progress integrating Liquid Container. Finally, our intention to acquire the assets of Techne will enhance our proprietary machine technology platforms and enhance Graham's efforts to effectively expand internationally and in other adjacent markets."

By segment, sales in North America increased by $158.5 million, or 31.4%, due to the acquisition of Liquid Container, increases in resin costs mentioned above, higher volumes in the legacy business, and favorable exchange rates.  Sales in Europe improved by $0.7 million, or 1.2%, due primarily to higher resin costs but were offset by lower volumes.  Sales in South America increased by $6.2 million, or 27.7%, due to higher volumes, higher resin costs, and favorable exchange rates.  Sales in Asia Pacific were $5.5 million, reflecting our operation in China that was acquired in July 2010.

SG&A expenses decreased to $39.5 million, as compared to $67.5 million in the first quarter last year.  SG&A expenses last year included $39.0 million of expenses related to the Company's IPO.  This decrease was partially offset by acquisition integration expenses and the addition of Liquid Container's SG&A.

Operating income increased to $73.8 million from $32.3 million for the first quarter of last year. The increase was driven by the acquisition of Liquid Container, increased operating income in the legacy business due to volumes and lower SG&A expenses.

Net interest expense was $52.7 million, an increase of $7.4 million from the first quarter of last year, primarily due to the interest expense on the debt related to the acquisition of Liquid Container and the higher effective interest rate on the portion of our term loans which were extended in September 2011.

Net debt was $2,657.2 million, down $22.7 million from the beginning of the year.

2011 Outlook

For fiscal 2011, the Company reaffirms its Adjusted EBITDA expectation at $583.0 million.

Conference Call Information

The Company will hold a conference call to discuss first quarter 2011 results at 5:00 p.m. EDT this afternoon. The call will be web cast live over the Internet from the company's Web site at www.grahampackaging.com under "Investor Relations." Participants should follow the instructions provided on the Web site for downloading and installing the necessary audio applications. The conference call also is available by dialing 800-299-9086 (domestic) or 617-786-2903 (international) and entering passcode 21216957.

Following the live conference call, a replay will be available one hour after the call. The replay also will be available on the company's Web site or by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 12563101. The telephonic replay will be available until May 5, 2011.

About Graham Packaging

Graham Packaging, based in York, Pennsylvania, is a worldwide leader in the design, manufacture and sale of technology-based, customized blow molded plastic containers for the branded food and beverage, household, personal care/specialty and automotive lubricants product categories. The Company has an extensive blue-chip customer base that includes many of the world's largest branded consumer products companies. It produces more than 20 billion container units annually at 97 plants in North America, Europe, South America and Asia.

Graham Packaging is a leading U.S. supplier of plastic containers for hot-fill juice and juice drinks, sports drinks, drinkable yogurt and smoothies, nutritional supplements, wide-mouth food, dressings, condiments and beers; the leading global supplier of plastic containers for yogurt drinks; a leading supplier of plastic containers for liquid fabric care products, dish care products and hard-surface cleaners; and the leading supplier in the U.S., Canada and Brazil of one-quart/liter plastic motor oil containers.

To learn more about Graham Packaging, please visit the Company's Web site at http://www.grahampackaging.com/. Graham Packaging uses its Web site as a channel of distribution for material Company information. Financial and other material information regarding Graham Packaging is routinely posted on the Company's Web site and is readily accessible.

Forward-Looking Statements

Information provided and statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements only speak as of the date of this press release and Graham Packaging assumes no obligation to update the information included in this press release.  Such forward-looking statements include information concerning Graham Packaging's possible or assumed future results of operations.  These statements often include words such as "approximate," "believe," "expect," "anticipate," "outlook," "intend," "plan," "estimate," "guidance" or similar expressions.  These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Graham Packaging's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Graham Packaging's control.  Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, without limitation, specific factors discussed herein and in other releases and public filings made by the Company (including the Company's filings with the Securities and Exchange Commission, more specifically the Risk Factors sections of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q).  Although Graham Packaging believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements.  Forward-looking statements only speak as of the date of this press release or the date they were made and, unless otherwise required by law, Graham Packaging disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this press release.

Adjusted EBITDA and free cash flow are not intended to represent, and should not be considered more meaningful than, or as an alternative to, net income (loss) and net cash provided by operating activities, respectively, in both cases as calculated in accordance with generally accepted accounting principles.  The Company believes that the presentation of adjusted EBITDA and free cash flow provides investors with useful analytical indicators of its performance. Additionally, the Company uses adjusted EBITDA and free cash flow as key internal metrics and two components, among several, of management incentive compensation.  Because not all companies use identical calculations, these presentations of adjusted EBITDA may not be comparable to other similarly titled measures of other companies.  A reconciliation of net income (loss) to adjusted EBITDA is as follows:

(1) Reconciliation of net income (loss) to EBITDA:

Reconciliation of EBITDA to adjusted EBITDA:

(2) Reconciliation of cash flow from operations to free cash flow:

.

The Company is organized and managed on a geographical basis in four operating segments:  North America, Europe, South America and Asia. The Company began accounting for its new Asian operations as a new operating segment as of July 1, 2010, with the acquisition of China Roots. Segment information for the three months ended March 31, 2011 and 2010, and as of March 31, 2011, and December 31, 2010, representing the reportable segments currently utilized by the chief operating decision makers, was as follows:

Contact:
David Bullock
Chief Financial Officer
(717) 849-8500

Jeff Grossman
(717) 771-3220
[email protected]

SOURCE Graham Packaging Company Inc.