BWAY Intermediate Company, Inc. Reports Financial Results For The Three Months Ended June 30, 2014 - KXXV-TV News Channel 25 - Central Texas News and Weather for Waco, Temple, Killeen |

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

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SOURCE BWAY Intermediate Company, Inc.

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.

<Financial Information to Follow>

 

BWAY Intermediate Company, Inc. and Subsidiaries

Summary Consolidated Financial Data (Unaudited)

(Dollars in millions)




















Three Months Ended


Six  Months Ended

Statements of Operations


June 30, 2014


June 30, 2013


June 30, 2014


June 30, 2013

Net sales


$              415.9


$              392.5


$              787.2


$              746.5

Cost of products sold (excluding depr. and amort.)


344.0


320.6


654.9


618.1

Gross margin (excluding depr. and amort.)


71.9


71.9


132.3


128.4

Other costs and expenses









Depreciation and amortization


35.4


35.8


70.0


70.3

Selling and administrative


6.9


12.4


13.3


21.5

Restructuring


1.5


5.5


1.8


7.1

Interest


14.8


15.2


29.2


29.0

Business acquisition costs


0.4


0.4


0.6


5.1

Management fee


1.2


1.2


2.5


2.5

Other income


(0.2)


(0.9)


-


(1.1)

          Total other costs and expenses


60.0


69.6


117.4


134.4










Income (loss) before income taxes


11.9


2.3


14.9


(6.0)

Provision for (benefit from) income taxes


4.6


1.8


5.7


(1.7)

Net income (loss)


$                  7.3


$                  0.5


$                  9.2


$                (4.3)










Reconciliation of Net Income (Loss) to Adjusted EBITDA 









Net income (loss)


$                  7.3


$                  0.5


$                  9.2


$                (4.3)

Interest expense


14.8


15.2


29.2


29.0

Benefit from income taxes


4.6


1.8


5.7


(1.7)

Depreciation and amortization


35.4


35.8


70.0


70.3

    EBITDA


62.1


53.3


114.1


93.3










Adjustments:









Restructuring expense 


1.5


5.5


1.8


7.1

Business acquisition costs


0.4


0.4


0.6


5.1

Management fee


1.2


1.2


2.5


2.5

Operations improvement expenses


0.8


4.4


1.1


6.1

Plant realignment costs


2.9


0.6


2.9


1.0

Severe weather impact


-


-


2.7


-

Temporary customer dislocation


-


2.6


-


2.6

Amortization of manufacturers profit in inventory


-


-


-


0.8

Foreign exchange gain/other


(0.1)


0.3


0.3


0.9

Ropak pre-acquisition results


-


-


-


1.9

    Adjusted EBITDA


$                68.8


$                68.3


$              126.0


$              121.3










Business Segment Information









Net sales









     Metal packaging


$              196.6


$              189.4


$              373.2


$              372.5

     Plastic packaging


219.3


203.1


414.0


374.0

     Consolidated net sales


$              415.9


$              392.5


$              787.2


$              746.5










Income (loss) before income taxes









     Segment earnings (excluding depr. and amort.)









        Metal packaging


$                41.6


$                42.3


$                76.6


$                79.6

        Plastic packaging


27.4


24.9


49.8


39.7

        Total segment earnings (excluding depr. and amort.)


69.0


67.2


126.4


119.3










     Depreciation and amortization









        Metal packaging


21.2


22.8


42.5


45.6

        Plastic packaging


12.8


11.7


24.8


22.2

        Total segment depreciation and amortization


34.0


34.5


67.3


67.8

        Corporate


1.4


1.3


2.7


2.5

        Consolidated depreciation and amortization


35.4


35.8


70.0


70.3










     Corporate and other expenses









        Corporate undistributed expenses


4.0


7.7


7.4


12.4

        Restructuring


1.5


5.5


1.8


7.1

        Interest


14.8


15.2


29.2


29.0

        Business acquisition costs


0.4


0.4


0.6


5.1

        Management fee


1.2


1.2


2.5


2.5

        Other income


(0.2)


(0.9)


-


(1.1)

Consolidated income (loss) before income taxes


$                11.9


$                  2.3


$                14.9


$                (6.0)




























Condensed Balance Sheets






June 30, 2014


Dec. 31, 2013

Assets









     Cash and cash equivalents






$                  2.2


$                40.3

     Accounts receivable, net of allow. for doubtful accts.






204.4


141.5

     Inventories






154.9


167.8

     Other current assets






55.9


52.2

        Total current assets






417.4


401.8










     Property, plant and equipment, net






357.0


349.6

     Goodwill and other intangible assets, net






1,194.1


1,237.8

     Other assets






25.7


28.1

       Total Assets






$           1,994.2


$           2,017.3










Liabilities and Shareholder's Equity









     Accounts payable






$              129.0


$              131.7

     Other current liabilities






49.6


54.9

     Current portion of long-term debt






7.3


7.3

        Total current liabilities






185.9


193.9










     Long-term debt (excluding current portion)






933.8


938.2

     Other long-term liabilities






328.5


339.0

     Shareholder's equity






546.0


546.2

        Total Liabilities and Shareholder's Equity






$           1,994.2


$           2,017.3










 

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