ATLANTA, Feb. 4 /PRNewswire-FirstCall/ -- BWAY Holding Company , a leading North American supplier of general line rigid containers, today reported a net loss for the first quarter of fiscal 2009 of $(2.7) million, or $(0.13) per diluted share, compared to a net loss of $(3.9) million or $(0.18) per diluted share for the first quarter of fiscal 2008. The Company's first fiscal quarter has historically been the weakest of the year due to seasonal fluctuations in demand. Adjusted net loss for the first quarter of fiscal 2009 was $(2.2) million, or $(0.11) per diluted share, which excludes a restructuring charge of $0.5 million associated with fiscal 2008 plant closures and first quarter fiscal 2009 cost reduction initiatives, net of income tax benefit. Adjusted net loss for the year-earlier period was $(3.9) million, or $(0.18) per diluted share.
Revenues were $212.5 million for the first quarter of fiscal 2009, declining 2.3% when compared to revenue of $217.4 million for the same quarter of fiscal 2008. The year-over-year decline in sales was due to an overall volume decrease of approximately 14%, which was partially offset by higher selling prices resulting from raw material price pass-throughs. Sales volume for the quarter was affected by the continued challenging macroeconomic environment, particularly as it relates to demand for architectural paint and coating and other residential and commercial property maintenance products. It is worth noting that the Company believes it did not experience a decline in market share during the period, an ongoing trend that leaves BWAY well positioned for the eventual economic rebound.
Gross margin (excluding depreciation and amortization) for the quarter was $20.4 million, essentially unchanged when compared to $20.5 million in the year-earlier period. Recent actions taken by the Company to adjust operating costs and product pricing served to offset the impact of lower volumes during the quarter. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $15.6 million, a 7.6% increase compared to $14.5 million in the year-ago period.
Ken Roessler, President and Chief Executive Officer, stated, "Despite significant raw material volatility and a challenging macroeconomic environment, we were pleased to report adjusted earnings per share that exceeded last year's results as well as the high end of our guidance. Product demand during our first fiscal quarter reflected a high level of downtime taken by our customers, particularly during the month of December. While the near-term outlook for the broader economy and for BWAY's end markets remains challenging, we are continuing to take the necessary steps to effectively manage through the recessionary environment. During fiscal 2008 we took a number of steps to reduce costs, including the closure of two manufacturing plants, and operational management became very effective at adjusting costs and operating schedules as volume declined. During the first quarter of fiscal 2009, we took another significant step by implementing a comprehensive cost reduction program that not only further and more broadly addresses our basic operating costs and production schedules, but also the way we manufacture products and do business. Together, we believe these actions will allow BWAY to improve earnings and free cash flow for fiscal 2009 despite a weak market environment. Furthermore, we are very well positioned to capitalize on the eventual market rebound, driving long-term growth and profitability."
The Company uses non-GAAP financial measures when presenting and discussing its operating results and those of its segments. Segment earnings (excluding depreciation and amortization) include sales and operating costs directly attributable to the segment, and include certain allocated corporate costs. Non-GAAP financial measures should not be considered in isolation or as a substitute for net income and cash flow data prepared in accordance with GAAP and may not be comparable to calculations of similarly titled measures by other companies. A reconciliation of earnings and segment earnings to the Company's consolidated financial statements is included with this news release.
Metal Packaging
Sales for the Company's metal packaging segment were $130.9 million for the first quarter of fiscal 2009 compared to $124.4 million in the year-earlier period. Despite the sales increase, volumes for all product categories were lower year-over-year by an approximate average of 12% due to continued weak economic conditions. The increase in sales was driven by the pass-through of higher raw material prices.
Metal packaging segment earnings (excluding depreciation and amortization) were $11.5 million, or 8.8% of segment sales for the first quarter of fiscal 2009 compared to $10.5 million, or 8.4% of segment sales for the first quarter of fiscal 2008. The first quarter of fiscal 2008 was negatively affected by a temporary imbalance between steel cost and selling prices which was corrected with selling price increases implemented January 1, 2008. Cost reduction initiatives implemented during the first quarter of fiscal 2009 acted to offset the negative effect of lower volume.
Plastic Packaging
Sales for the Company's plastic packaging segment were $81.6 million for the first quarter of fiscal 2009 compared to $93.0 million for the year-earlier period. The decrease resulted from an overall decline in volume of approximately 18%, partially offset by higher raw material driven selling prices.
Plastic packaging segment earnings (excluding depreciation and amortization) were $6.8 million, or 8.3% of segment sales for the quarter, compared to $8.1 million, or 8.7% of segment sales for the first quarter of fiscal 2008. The decrease is primarily attributable to the effect of lower sales volume partially offset by a favorable product mix and reductions in operating costs during the quarter.
Corporate
Undistributed corporate expense (excluding depreciation and amortization) was $3.5 million for the first quarter, compared to $4.0 million for the first quarter of fiscal 2008. The decline in expenses resulted primarily from lower non-cash stock based compensation expense.
Total debt decreased by $25.0 million during the quarter to $396.3 million compared to $421.3 million at the end of fiscal 2008. The decrease is largely the result of principal repayments made by the Company during the first fiscal quarter of 2009. Cash and cash equivalents decreased from $92.1 million at the beginning of the first quarter of fiscal 2009 to $25.5 million at the end of the quarter. The decrease in cash, a change the Company typically experiences during the fiscal quarter, resulted primarily from an $18.1 million term loan repayment, a $10.0 million semi-annual interest payment on the Company's senior subordinated debt, and seasonal increases in working capital.
First quarter capital expenditures were $3.4 million compared to $12.3 million for the same period of fiscal 2008. During the previous year the Company had made investments in equipment to produce recently developed plastic products.
Outlook for Fiscal 2009
"While we now anticipate 10%-12% lower overall volume for fiscal 2009 due to the prolonged economic downturn, we expect the cost reduction measures we implemented in fiscal 2008 and during our first fiscal quarter of 2009 to more than offset the effect of lower volume," stated Mr. Roessler. "We believe that the systematic nature of our cost reduction programs, now confirmed over successive quarters, combined with continued actions to appropriately adjust product prices in light of volatile raw material costs, reinforces our forecast and guidance assumptions. Our guidance indicates a comfortable margin above requirements to stay in compliance with our debt covenants. In addition, we believe that our current cash balance, our $50 million undrawn revolving credit line, and expected cash generated from operations will well exceed our operating requirements."
With regard to specific guidance, the Company provides the following:
-- Second fiscal quarter 2009 (ending March 29, 2009) adjusted net income of $0.20 - $0.24 per diluted shared compared to an adjusted net income per diluted share of $0.16 for the second quarter of fiscal 2008. Also, the Company expects adjusted EBITDA of $26.0 - $28.0 million compared to $25.6 for the second quarter last year. Expectations include $0.3 million of non-cash stock-based compensation expense for the second quarter of fiscal 2009 compared to $1.8 million for the same quarter last year.
-- Previously released guidance reaffirmed for full-year fiscal 2009 (ending September 27, 2009) of adjusted net income per diluted share of $0.85 - $0.90 compared to $0.71 for fiscal 2008, and adjusted EBITDA of $112.0 - $114.0 million compared to $104.6 million last year. Expectations include $1.7 million of non-cash stock-based compensation expense for fiscal 2009 compared to $6.3 million for fiscal 2008.
-- Reaffirming full year fiscal 2009 free cash flow (net cash provided by operating activities less capital expenditures) guidance of $42.0 - $44.0 million compared to $39.8 million for fiscal 2008. Capital expenditure guidance of $20 - $22 million for fiscal 2009 is also reaffirmed.
Conference Call
The Company will hold a conference call tomorrow morning, February 5, 2009, at 10:00 a.m. (EST) to discuss this news release. Forward-looking and other material information may be discussed on the conference call. The dial-in numbers for the conference call are 866-804-6923, or for international 857-350-1669 and the access passcode is 92505694. A replay of the conference call will be available until midnight on February 12, 2009. The dial-in numbers for the replay are 888-286-8010, or for international 617-801-6888 and the access passcode is 43180772.
About BWAY Holding Company
BWAY Holding Company is a leading North American supplier of general line rigid containers. The Company operates 20 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. You should not place reliance on these statements. Forward-looking statements include information concerning the Company's liquidity and its possible or assumed future results of operations, including descriptions of its 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 management has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors management believes 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. They involve risks, uncertainties and assumptions. Many factors could affect the Company's actual financial results and could cause actual results to differ materially from those expressed in the forward-looking statements. Some important factors include competitive risk from other container manufacturers or self- manufacture by customers, termination of customer contracts, loss or reduction of business from key customers, dependence on key personnel, changes in steel, resin, other raw material and energy costs or availability, product liability or product recall costs, lead pigment and lead paint litigation, increased consolidation in end markets, consolidation of key suppliers, deceleration of growth in end markets, increased use of alternative packaging, labor unrest, environmental, health and safety costs, management's inability to evaluate and selectively pursue acquisitions, fluctuation of quarterly operating results, an increase in interest rates, inability to repay or refinance the senior subordinated notes, restrictions in debt agreements, fluctuations of the Canadian dollar, and the other factors discussed in the Company's filings with the Securities and Exchange Commission. 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 the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes 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," "adjusted net income (loss)," and "adjusted net income (loss) per diluted share" 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.
Financial Information to Follow BWAY Holding Company and Subsidiaries Summary Consolidated Financial Data (Unaudited) (Dollars in millions, except per share data) Three Months Ended Dec. 28, 2008 Dec. 30, 2007 Statements of Operations: Net sales $212.5 $217.4 Cost of products sold (excluding depr. and amort.) 192.1 196.9 Gross margin (excluding depr. and amort.) 20.4 20.5 Other costs and expenses Depreciation and amortization 11.1 11.1 Selling and administrative expense 5.6 5.9 Restructuring charge 0.7 - Interest expense, net 8.2 9.5 Other (income) expense, net (0.8) 0.1 Total other costs and expenses 24.8 26.6 Loss before income taxes (4.4) (6.1) Benefit from income taxes (1.7) (2.2) Net loss $(2.7) $(3.9) Net loss per share Basic and Diluted $(0.13) $(0.18) Shares - Basic and Diluted (000s) 21,865 21,661 Reconciliation of Adjusted EBITDA to Net Loss Net loss $(2.7) $(3.9) Interest expense, net 8.2 9.5 Benefit from income taxes (1.7) (2.2) Depreciation and amortization 11.1 11.1 EBITDA 14.9 14.5 Adjustments: Restructuring charge 0.7 - Adjusted EBITDA 15.6 14.5 Less: Depreciation and amortization 11.1 11.1 Adjusted EBIT $4.5 $3.4 Reconciliation of Net Loss to Adjusted Net Loss Net loss $(2.7) $(3.9) Adjustments: Restructuring charge 0.7 - Benefit from income taxes related to the above adjustment (0.2) - Adjusted net loss $(2.2) $(3.9) Adjusted net loss per diluted share $(0.11) $(0.18) Shares - Diluted (000s) 21,865 21,661 BWAY Holding Company and Subsidiaries Summary Consolidated Financial Data (Unaudited) (Amounts in millions) Three Months Ended Dec. 28, 2008 Dec. 30, 2007 Business Segment Information: Net sales Metal packaging $130.9 $124.4 Plastic packaging 81.6 93.0 Consolidated net sales 212.5 217.4 Loss before income taxes Segment earnings (excluding depr. and amort.) Metal packaging 11.5 10.5 Plastic packaging 6.8 8.1 Total segment earnings (excluding depr. and amort.) 18.3 18.6 Depreciation and amortization Metal packaging 5.4 5.6 Plastic packaging 5.4 5.3 Total segment depreciation and amortization 10.8 10.9 Corporate depreciation and amortization 0.3 0.2 Consolidated depreciation and amortization 11.1 11.1 Corporate and other expenses Corporate undistributed expense 3.5 4.0 Restructuring charge 0.7 - Interest expense, net 8.2 9.5 Other expense, net (0.8) 0.1 Consolidated loss before income taxes $(4.4) $(6.1) As of Dec. 28, 2008 Sept. 28, 2008 Condensed Balance Sheets: Assets Cash and cash equivalents $25.5 $92.1 Accounts receivable, net of allow. for doubtful accts. 99.7 113.3 Inventories, net 102.1 112.2 Other current assets 19.5 20.7 Total current assets 246.8 338.3 Property, plant and equipment, net 136.3 141.9 Goodwill and other intangible assets, net 380.8 393.2 Other assets 7.9 9.0 Total Assets $771.8 $882.4 Liabilities and Stockholders' Equity Accounts payable $80.7 $149.8 Other current liabilities 41.9 52.4 Current portion of long-term debt 0.5 18.9 Total current liabilities 123.1 221.1 Long-term debt 395.8 402.4 Other long-term liabilities 84.8 85.2 Stockholders' equity 168.1 173.7 Total Liabilities and Stockholders' Equity $771.8 $882.4
