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Berry Plastics Group, Inc. Reports Third Quarter Fiscal 2016 Results

EVANSVILLE, Ind. – August 9, 2016 – Berry Plastics Group, Inc. (NYSE:BERY) today reported results for its third fiscal 2016 quarter, referred to in the following as the June 2016 quarter.

	Reported record net sales of $1,645 million for the June 2016 quarter compared to $1,241 million in the June 2015 quarter

	Recorded operating income of $179 million in the June 2016 quarter, an increase of 48 percent compared to the prior year quarter

	Posted Operating EBITDA of $316 million (19.2 percent of net sales) in the June 2016 quarter compared to $219 million (17.6 percent of net sales) in the prior year quarter

	Generated $206 million of cash flow from operations in the June 2016 quarter compared to $180 million in the prior year quarter

	Increased adjusted free cash flow by 8 percent to $151 million in the June 2016 quarter resulting in a total of $475 million for the four quarters ended June 2016

	Recorded net income of $96 million or $0.76 per diluted share and increased adjusted net income per diluted share by 61 percent in the quarter to $0.82

	Increased our fiscal year 2016 Operating EBITDA guidance to $1,200 million and reaffirmed our adjusted free cash flow guidance of $475 million

"The third fiscal quarter was another strong performance period for Berry during which we achieved record net sales for any quarterly period while Operating EBITDA surpassed any June ending quarter in the Company's history.  I am pleased to report that Operating EBITDA margins also increased by 160 basis points to 19.2% in the current quarter.  Additionally we generated solid adjusted free cash flow in the quarter of $151 million bringing our adjusted free cash flow for the last four quarters to $475 million," said Jon Rich, Chairman and CEO of Berry Plastics.

June 2016 Quarter Results

For the June 2016 quarter, the Company recorded net sales of $1,645 million compared to $1,241 million in the same prior year period.  The year-over-year increase was primarily attributed to net sales from the acquisition of AVINTIV, Inc. ("Avintiv") partially offset by a $31 million decline in selling prices, a decrease in base volumes and a $4 million negative impact from foreign currency changes.  Net sales by reportable segment (reflecting our previously announced new operating segment structure) are presented in the following table.

For the June 2016 quarter, the Company had operating income of $179 million compared to $121 million in the same prior year quarter.  The 48 percent year-over-year increase was primarily attributed to the acquisition of Avintiv and a $32 million improvement in our product mix and price/cost spread including contributions from sourcing synergies and a $4 million reduction in business integration expenses.  These positive contributions were partially offset by a $3 million increase in depreciation and amortization expense, $5 million from base volume declines, and $5 million of increased costs in manufacturing.

June 2016 Fiscal Year-to-Date (FYTD) Results

For the June 2016 FYTD, the Company recorded net sales of $4,871 million compared to $3,685 million in the same prior fiscal year.  The year-over-year increase was primarily attributed to the acquisition of Avintiv partially offset by a $237 million decline in selling prices due to the pass-through of lower resin prices and $56 million negative impact from foreign currency changes.  Net sales by reportable segment (reflecting our previously announced new operating segment structure announced November 2015) are presented in the following table.

For the June 2016 FYTD, the Company had operating income of $430 million compared to $301 million in the same prior fiscal year.  The 43 percent year-over-year increase was primarily attributed to a $95 million improvement in our product mix and price/cost spread including contributions from sourcing synergies, the acquisition of Avintiv, and $9 million from net productivity improvements in manufacturing.  These positive contributions were partially offset by a $39 million increase in depreciation and amortization expense primarily related to purchase accounting adjustments associated with the Avintiv acquisition, a $9 million increase in selling, general, and administrative expenses, an $8 million increase in business integration and restructuring costs along with a $6 million negative impact from foreign currency changes.

Capital Structure and Adjusted Free Cash Flow

The ratio of net debt of $5,642 million to Adjusted EBITDA of $1,212 million for the four quarters ended July 2, 2016 was 4.7, representing a 0.4 improvement (reduction) since the close of the Avintiv acquisition nine months ago.  The Company's adjusted free cash flow for the June 2016 quarter was $151 million, an increase of 8 percent, compared to $140 million in the prior year period.

(1)	Increase primarily related to the purchase of Avintiv on October 1, 2015 for approximately $2.3 billion.  Net debt is a supplemental financial measure not required by or presented in accordance with accounting measures generally accepted in the United States.

Outlook

"Given our continued strong performance in the recent quarter, we are increasing our Operating EBITDA guidance for the full 2016 fiscal year an additional $10 million to $1,200 million.  We continue to target $475 million of adjusted free cash for fiscal 2016 with the forecasted improvement in Operating EBITDA being offset primarily by incremental cash taxes and timing of interest payments.  The $475 million of projected adjusted free cash flow assumes $817 million of cash flow from operations less $285 million of capital spending and the $57 million payment under our tax receivable agreement," stated Rich.

 

Investor Conference Call

The Company will host a conference call today, August 9, 2016, at 10 a.m. Eastern Time to discuss its third quarter fiscal 2016 results.  The telephone number to access the conference call is (866) 244-4530 (domestic), or (703) 639-1173 (international), conference ID 1674581.  We expect the call to last approximately one hour.  Interested parties are invited to listen to a live webcast and view the accompanying slides by visiting the Company's Investor page at www.berryplastics.com.  A replay of the conference call can also be accessed on the Investor page of the website beginning August 9, 2016, at 1 p.m. Eastern Time, to August 16, 2016, by calling (888) 266-2081 (domestic), or (703) 925-2533 (international), access code 1674581.

About Berry Plastics

Berry 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 pro forma net sales of $6.7 billion in fiscal 2015.  The Company's common stock is listed on the New York Stock Exchange under the ticker symbol BERY and its world headquarters is located in Evansville, Indiana.  For additional information, visit the Company's website at www.berryplastics.com.

Non-GAAP Financial Measures

This 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 team, 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.

Berry Plastics Group, Inc.

Consolidated Statements of Income

(Unaudited)

(in millions of dollars, except per share data)

 

 

Berry Plastics Group, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)
(in millions of dollars) 

Berry Plastics Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 (in millions of dollars)

Berry Plastics Group, Inc.

   Condensed Consolidated Statements of Cash Flows

(Unaudited)

 (in millions of dollars)

Berry Plastics Group, Inc.

Condensed Consolidated Financial Statements

Segment Information

(Unaudited)

(in millions of dollars)

(1)	Acquisition sales for the quarter ended June 2015 was $469 million.  Pro forma net sales within the HH&S segment, including acquisition sales for the quarter ended June 27, 2015, would be $591 million and total pro forma net sales for the quarter ended June 27, 2015 would be $1,710 million.

(2)	Includes integration expenses, non-cash charges, and other business optimization costs.

(3)	Increase from prior year period is primarily related to the Avintiv acquisition.

(4)

Acquisition Operating EBITDA for the quarter ended June 2015 was $75 million.  Operating EBITDA, including acquisitions for the HH&S segment for the quarter ended June 27, 2015, would be $90 million and total operating EBITDA for the quarter ended June 27, 2015 would be $294 million.  Acquisition operating EBITDA of $75 million includes $33 million of operating income, plus $30 million of depreciation and amortization, plus $12 million of other business optimization and restructuring costs.

Berry Plastics Group, Inc.

Reconciliation Schedules

(Unaudited)

(in millions of dollars, except per share data)

⁽¹⁾ Includes integration expenses and other business optimization costs.  Other non-cash charges included in adjusted net   income per diluted share

⁽²⁾ Amortization excludes non-cash amortization from the 2006 private sale of $8 million for both the July 2, 2016 and June 27, 2015 quarters and $32 million for the four quarters ended July 2, 2016.

⁽³⁾ Represents Adjusted EBITDA for Avintiv for the period of July 2015 to September 2015.  Unrealized cost savings primarily represents unrealized cost savings related to the Avintiv acquisition.

⁽⁴⁾ Income tax effects on adjusted net income were calculated using 30% and 32% for the June 2016 and 2015 quarters, respectively.  The rates used for each quarter represents the Company's expected effective tax rate for each full fiscal year.

⁽⁵⁾ 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. Adjusted EBITDA is used by our lenders for debt covenant compliance purposes. Our projected Adjusted Free Cash flow for fiscal 2016 assumes $817 million of cash flow from operations less $285 million of net additions to property, plant, and equipment and $57 million of payments under our tax receivable agreement.

We believe Adjusted Free Cash Flow is useful to an investor in evaluating our liquidity because Adjusted Free Cash Flow and similar measures are widely used by investors, securities analysts and other interested parties in our industry to measure a company's liquidity without regard to revenue and expense recognition, which can vary depending upon accounting methods.

These non-GAAP financial measures may be calculated differently by other companies, including other companies in our industry, limiting their usefulness as comparative measures

 

Investor Contact:

Dustin Stilwell

812.306.2964

Media Contact:

Eva Schmitz

812.306.2424

evaschmitz@berryplastics.com

 

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