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Berry Plastics Group, Inc. Reports Fourth Quarter And Fiscal Year 2013 Results

Stocks in this article: BERY

Looking forward, we anticipate our fiscal 2014 adjusted free cash flow, after deducting the $32 million tax receivable payment, to be approximately $270 million. This estimate assumes flat pricing on plastic resin costs and benefits and costs from our restructuring program initiatives. Our investments in property, plant and equipment are forecasted to be approximately $230 million for fiscal 2014. Assuming no change in short-term interest rates and no refinancing activity, we estimate fiscal 2014 cash interest will be approximately $215 million.

Investor Conference CallThe Company will host a conference call on Friday, November 22, 2013, at 10 a.m. Eastern Time to discuss its fourth quarter and fiscal 2013 results. The telephone number to access the conference call is (866) 835-8845 (domestic), or (703) 639-1408 (international), conference ID 1627146. The call will last approximately one hour. Interested parties are invited to listen to a live webcast by visiting the Company’s Investor Relations page at www.berryplastics.com. A replay of the conference call can also be accessed on the Investor Relations page of the website beginning November 22, 2013, at 2 p.m. Eastern Time, to November 30, 2013, by calling (888) 266-2081 (domestic), or (703) 925-2533 (international), access code 1627146.

About Berry PlasticsBerry Plastics Group, Inc. is a leading provider of value-added plastic consumer packaging and engineered materials delivering high-quality customized solutions to our customers with annual net sales of over $4.6 billion in fiscal 2013. With world headquarters in Evansville, Indiana, the Company’s common stock is listed on the New York Stock Exchange under the ticker symbol BERY. For additional information, visit the Company’s website at www.berryplastics.com.

Non-GAAP Financial MeasuresThis press release includes non-GAAP financial measures such as Operating EBITDA, Adjusted EBITDA, Adjusted net income per share and Adjusted free cash flow. A reconciliation of these non-GAAP financial measures to comparable measures determined in accordance with accounting principles generally accepted in the United States of America (GAAP) is set forth at the end of this press release.

Forward Looking Statements Statements in this release that are not historical, including statements relating to the expected future performance of the Company, are considered “forward looking” and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “anticipates” “outlook,” or “looking forward,” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as cautionary statements, are disclosed under “Risk Factors” and elsewhere in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission, including, without limitation, in conjunction with the forward-looking statements included in this release. All forward-looking information and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include: (1) risks associated with our substantial indebtedness and debt service; (2) changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices on a timely basis; (3) performance of our business and future operating results; (4) risks related to our acquisition strategy and integration of acquired businesses; (5) reliance on unpatented know-how and trade secrets; (6) increases in the cost of compliance with laws and regulations, including environmental, safety, and production and product laws and regulations; (7) risks related to disruptions in the overall economy and the financial markets may adversely impact our business; (8) catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions; (9) risks of competition, including foreign competition, in our existing and future markets;(10) general business and economic conditions, particularly an economic downturn; (11) the ability of our insurance to cover fully our potential exposures; (12) risks that our restructuring programs may entail greater implementation costs or result in lower costs savings than anticipated, and (13) the other factors discussed in the under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 
 

Berry Plastics Group, Inc.

Consolidated Statements of Operations

(Unaudited)

(in millions, except per share data)

           
Quarterly Period Ended Fiscal Year Ended

September 28, 2013

 

September 29,2012

September 28, 2013

 

September 29,2012

Net sales $ 1,204 $ 1,204 $ 4,647 $ 4,766
Costs and expenses:
Cost of goods sold 1,006 987 3,835 3,993
Selling, general and administrative 77 81 307 308
Amortization of intangibles 24 28 105 109
Restructuring and impairment charges   7     1     14     31  
Operating income 90 107 386 325
Debt extinguishment 64
Other income, net (1 ) (6 ) (7 ) (7 )
Interest expense, net   56     81     244     328  
Income before income taxes 35 32 85 4
Income tax expense   9     9     28     2  
Net income $ 26   $ 23   $ 57   $ 2  
 

Net income per share:

Basic $ 0.23 $ 0.28 $ 0.50 $ 0.02
Diluted 0.22 0.26 0.48 0.02
Weighted-average number of shares outstanding:

(in thousands)

Basic 115,427 83,202 113,486 83,435
Diluted 120,747 89,131 119,454 86,644
 

 

Comprehensive income $ 52   $ 19   $ 86   $ 3  
 
 
 

Berry Plastics Group, Inc.

Condensed Consolidated Balance Sheets

(in millions)

           

September 28, 2013

September 29,2012

(Unaudited)
Assets:
Cash and cash equivalents $ 142 $ 87
Accounts receivable, net 449 455
Inventories 575 535
Other current assets 171 156
Property, plant and equipment, net 1,266 1,216
Goodwill, intangibles assets and other long-term assets   2,532     2,657  
Total assets $ 5,135   $ 5,106  
 
Liabilities and stockholders' deficit
Current liabilities, excluding debt 613 606
Current and long-term debt 3,946 4,471
Other long-term liabilities 772 481
Redeemable shares 23
Stockholders’ deficit   (196 )   (475 )
Total liabilities and stockholders' deficit $ 5,135   $ 5,106  
 
 
 

Berry Plastics Group, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

       
Fiscal Year Ended

September 28, 2013

   

September 29,2012

(Unaudited)
 
Net cash from operating activities $ 464 $ 479
 
Cash flows from investing activities:
Additions to property, plant and equipment (239 ) (230 )
Proceeds from sale of assets 18 30
Acquisitions of business, net of cash acquired   (24 )   (55 )
Net cash from investing activities (245 ) (255 )
 
Cash flows from financing activities:
Proceeds from long-term borrowings 1,391 2
Repayment of long-term borrowings (1,978 ) (175 )
Proceeds from issuance of common stock 27
Purchases of common stock (6 )
Payment of tax receivable agreement (5 )
Debt financing costs (39 )
Repayment of notes receivable 2
Equity contributions   438      
Net cash from financing activities   (164 )   (179 )
Effect of exchange rate changes on cash
Net change in cash and cash equivalents 55 45
Cash and cash equivalents at beginning of period   87     42  
Cash and cash equivalents at end of period $ 142   $ 87  
 
 
 

Berry Plastics Group, Inc.

Condensed Consolidated Financial Statements

Segment Information

(Unaudited)

(in millions)

           
Quarterly Period Ended Fiscal Year Ended

September 28, 2013

 

September 29,2012

September 28, 2013

 

September 29,2012

Net sales:
Rigid Open Top $ 299 $ 318 $ 1,127 $ 1,229
Rigid Closed Top   351   352   1,387   1,438
Rigid Packaging $ 650 $ 670 $ 2,514 $ 2,667
Engineered Materials 367 352 1,397 1,362
Flexible Packaging   187   182   736   737
Total $ 1,204 $ 1,204 $ 4,647 $ 4,766
Operating income:
Rigid Open Top $ 28 $ 46 $ 123 $ 159
Rigid Closed Top   33   32   130   95
Rigid Packaging $ 61 $ 78 $ 253 $ 254
Engineered Materials 28 28 116 70
Flexible Packaging   1   1   17   1
Total $ 90 $ 107 $ 386 $ 325
Depreciation and amortization:
Rigid Open Top $ 22 $ 23 $ 90 $ 90
Rigid Closed Top   31   34   129   135
Rigid Packaging $ 53 $ 57 $ 219 $ 225
Engineered Materials 18 20 71 71
Flexible Packaging   12   16   51   59
Total $ 83 $ 93 $ 341 $ 355
Restructuring and impairment charges:
Rigid Open Top $ $ $ 1 $
Rigid Closed Top     1   3   9
Rigid Packaging $ $ 1 $ 4 $ 9
Engineered Materials 7 9 22
Flexible Packaging       1  
Total $ 7 $ 1 $ 14 $ 31
Other operating expenses:
Rigid Open Top $ 4 $ 1 $ 9 $ 6
Rigid Closed Top   4   4   11   29
Rigid Packaging $ 8 $ 5 $ 20 $ 35
Engineered Materials 2 4 7 12
Flexible Packaging   4   2   7   13
Total $ 14 $ 11 $ 34 $ 60
Operating EBITDA:
Rigid Open Top $ 54 $ 70 $ 223 $ 255
Rigid Closed Top   68   71   273   268
Rigid Packaging $ 122 $ 141 $ 496 $ 523
Engineered Materials 55 52 203 175
Flexible Packaging   17   19   76   73
Total $ 194 $ 212 $ 775 $ 771
 
 
 

Berry Plastics Group, Inc.

Reconciliation Schedules

(Unaudited)

(in millions, except per share data)

           
Quarterly Period Ended Fiscal Year Ended

September 28, 2013

September 29,2012

September 28, 2013

 

September 29,2012

 
Net income $ 26 $ 23 $ 57 $ 2
 
Add: interest expense 56 81 244 328
Add: income tax expense   9     9     28     2  
EBIT (1) $ 91 113 $ 329 $ 332
 
Add: depreciation and amortization 83 93 341 355
Add: restructuring and impairment 7 1 14 31
Add: extinguishment of debt 64
Add: other expense   13     5     27     53  
Operating EBITDA (1) $ 194   $ 212   $ 775   $ 771  
 
 
Add: pro forma acquisitions 2
Add: unrealized cost savings   1     13  
Adjusted EBITDA (1) $ 195   $ 790  
 
 
Cash flow from operating activities $ 167 $ 201 $ 464 $ 479
Additions to property, plant, and equipment, net   (47 )   (42 )   (221 )   (200 )
Adjusted free cash flow (1) $ 120   $ 159   $ 243   $ 279  
 
 
Net income per share-diluted $ 0.22 $ 0.26
Restructuring and impairment charges (net of tax) 0.04 0.01
Other expense (net of tax)   0.07     0.07  
Adjusted net income per share (1) $ 0.33 $ 0.34
 
 

Estimated Fiscal 2014

Cash flow from operating activities $ 532
Additions to property, plant, and equipment, net (230 )
Tax receivable agreement payment   (32 )
Adjusted free cash flow (1) $ 270  
 

(1) Supplemental financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). These non-GAAP financial measures should not be considered as alternatives to operating or net income or cash flows from operating activities, in each case determined in accordance with GAAP. These non-GAAP financial measures are among the indicators used by management to measure the performance of the Company’s operations, and also among the criteria upon which performance-based compensation may be based. Adjusted EBITDA also is used by our lenders for debt covenant compliance purposes. We use Adjusted Free Cash Flow as a measure of liquidity because it assists us in assessing our company’s ability to fund its growth through its generation of cash.

Similar non-GAAP financial measures may be calculated differently by other companies, including other companies in our industry, limiting their usefulness as comparative measures. Because of these limitations, you should consider the non-GAAP financial measures alongside other performance measures and liquidity measures, including operating income, various cash flow metrics, net income and our other GAAP results.

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