Pregis Corporation News
Pregis Announces First Quarter 2008 Financial Results
For the first quarter of 2008, the Company generated net sales of
Gross profit margin, as a percent of net sales, was 21.9% in the first quarter of 2008, compared to 25.5% in the first quarter of 2007. The decline in gross margin resulted primarily from significantly increased costs of resin and other raw materials in the 2008 period, which approximated
Commenting on the Company's results,
For the first quarter of 2008, operating income was
Segment Performance
Comments on segment net sales performance for the first quarter of 2008 are as follows:
— Net sales of the protective packaging segment increased by $12.8 million, or 8.2%. The 2008 first quarter sales growth was driven by favorable foreign currency translation, as well as the incremental sales generated by the Petroflax and Besin entities acquired in the second half of 2007. The segment experienced declining volumes in both its U.S. and European businesses due primarily to the weakened U.S. and European economies. Excluding the impact of favorable foreign currency effects and acquisitions, net sales for the segment decreased 3.8%. — Net sales of the flexible packaging segment increased $5.6 million, or 13.1%. Improvements in pricing and product mix were offset by volume shortfalls in the segment's Egyptian operations. Excluding the impact of favorable foreign currency, 2008 net sales for the segment were comparable to the 2007 period. — Net sales of the hospital supplies segment increased $2.3 million, or 11.9%. Excluding the impact of favorable foreign currency effects, net sales for the segment decreased 2.1% in the quarter, primarily due to price erosion resulting from the competitive market environment. — Net sales of the rigid packaging segment were relatively flat compared to net sales in the first quarter of 2007. However, excluding the impact of favorable foreign currency effects, net sales for the segment decreased 1.4% in the quarter, due mainly to product mix during the quarter.
A summary of a significant measure required by the Company's indentures is presented in the supplemental information at the end of this release.
Conference Call:
The Company will conduct an investor conference call to review its 2008 first quarter results on
About Pregis:
Pregis Corporation is a leading global provider of innovative protective, flexible, and foodservice packaging and hospital supply products. The specialty-packaging leader currently operates 47 facilities in 18 countries around the world. Pregis Corporation is a wholly owned subsidiary of Pregis Holding II Corporation. For more information about Pregis, visit the Company's web site at http://www.pregis.com.
Safe Harbor Statement:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. You can generally identify forward-looking statements by the Company's use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," "should," or "will," or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. For a discussion of key risk factors, please see the risk factors disclosed in the Company's annual report, which is available on its website, http://www.pregis.com. These risks may cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risk and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. The Company undertakes no duty to update its forward-looking statements.
Pregis Holding II Corporation Consolidated Balance Sheets Unaudited (dollars in thousands) March 31, December 31, Assets 2008 2007 Current assets Cash and cash equivalents $42,511 $34,989 Accounts receivable Trade, net of allowances of $5,621 and $5,313, respectively 159,392 148,045 Other 11,202 18,532 Inventories, net 121,952 108,914 Deferred income taxes 3,028 2,991 Due from Pactiv 3,474 7,072 Prepayments and other current assets 9,903 9,187 Total current assets 351,462 329,730 Property, plant and equipment, net 287,651 277,398 Other assets Goodwill 153,803 150,000 Intangible assets, net 48,380 47,910 Deferred financing costs, net 9,515 10,080 Due from Pactiv, long- term 11,553 12,229 Pension and related assets 26,741 25,659 Other 1,649 2,313 Total other assets 251,641 248,191 Total assets $890,754 $855,319 Liabilities and stockholder's equity Current liabilities Current portion of long-term debt $3,982 $2,120 Accounts payable 116,443 100,326 Accrued income taxes 8,519 13,900 Accrued payroll and benefits 17,662 19,814 Accrued interest 11,684 6,775 Other 22,201 22,436 Total current liabilities 180,491 165,371 Long-term debt 495,013 475,604 Deferred income taxes 37,294 34,589 Long-term income tax liabilities 9,781 9,585 Pension and related liabilities 10,037 9,389 Other 7,277 7,124 Stockholder's equity: Common stock - $0.01 par value; 1,000 shares authorized, 149.0035 shares issued and outstanding at March 31, 2008 and December 31, 2007 - - Additional paid-in capital 149,843 149,659 Accumulated deficit (19,860) (16,588) Accumulated other comprehensive income 20,878 20,586 Total stockholder's equity 150,861 153,657 Total liabilities and stockholder's equity $890,754 $855,319 Pregis Holding II Corporation Consolidated Statements of Operations Unaudited (dollars in thousands) Three Months Ended March 31, 2008 2007 Net sales $259,322 $239,017 Operating costs and expenses: Cost of sales, excluding depreciation and amortization 202,494 178,002 Selling, general and administrative 34,739 31,982 Depreciation and amortization 13,540 12,676 Other operating expense (income) 271 (183) Total operating costs and expenses 251,044 222,477 Operating income 8,278 16,540 Interest expense 12,081 11,261 Interest income (228) (47) Foreign exchange gain, net (3,013) (573) Income (loss) before income taxes (562) 5,899 Income tax expense 2,710 3,652 Net income (loss) $(3,272) $2,247 Pregis Holding II Corporation Consolidated Statements of Cash Flows Unaudited (dollars in thousands) Three Months Ended March 31, 2008 2007 Operating activities Net income (loss) $(3,272) $2,247 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 13,540 12,676 Deferred income taxes 1,810 974 Unrealized foreign exchange gain (2,972) (604) Amortization of deferred financing costs 594 535 Stock compensation expense 184 79 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts and other receivables, net 3,671 (3,345) Due from Pactiv 5,165 - Inventories, net (8,276) (3,721) Prepayments and other current assets (554) 317 Accounts payable 10,782 18,592 Accrued taxes (5,400) 2,807 Accrued interest 4,538 4,698 Other current liabilities (4,006) (4,794) Pension and related assets and liabilities, net (1,035) (64) Other, net 302 (207) Cash provided by operating activities 15,071 30,190 Investing activities Capital expenditures (10,863) (5,099) Other, net 63 184 Cash used in investing activities (10,800) (4,915) Financing activities Repayment of long-term debt (488) (443) Other, net 1,731 296 Cash provided by (used in) financing activities 1,243 (147) Effect of exchange rate changes on cash and cash equivalents 2,008 641 Increase in cash and cash equivalents 7,522 25,769 Cash and cash equivalents, beginning of period 34,989 45,667 Cash and cash equivalents, end of period $42,511 $71,436 Pregis Holding II Corporation Supplemental Information (Unaudited) Calculation of Adjusted EBITDA (\"Consolidated Cash Flow\") Twelve Months Ended March 31, (dollars in thousands) 2008 2007 Net loss of Pregis Holding II Corporation $(10,298) $(4,235) Interest expense, net of interest income 46,044 43,592 Income tax expense 6,766 8,220 Depreciation and amortization 56,663 53,219 EBITDA 99,175 100,796 Other non-cash charges (income): Unrealized foreign currency transaction gains, net (5,061) (6,274) Non-cash stock based compensation expense 663 127 Non-cash asset impairment charge 403 - Impact attributable to application of purchase accounting - 258 Net unusual or nonrecurring gains or losses: Nonrecurring charges related to acquisitions and dispositions 5,214 6,238 Other, principally executive management severance and recruiting expenses 4,830 6,299 Other adjustments: Amounts paid pursuant to management agreement with Sponsor 1,981 1,698 Pro forma earnings and costs savings 2,084 - Adjusted EBITDA (\"Consolidated Cash Flow\") $109,289 $109,142 Note to above: EBITDA is defined as net income before interest expense, interest income, income tax expense, depreciation and amortization. Adjusted EBITDA, referred to as Consolidated Cash Flow within the context of the Company's indentures, is presented herein because it is a material element of the fixed charge coverage ratio and secured indebtedness leverage ratio included in the Company's indentures. Pregis Holding II Corporation First Quarter 2008 Supplemental Information (Unaudited) (Amounts and percentage changes are approximations due to rounding.) Gross Margin Calculations Three Months Ended March 31, (dollars in millions) 2008 2007 Change Net sales $259.3 $239.0 $20.3 Cost of sales, excluding depreciation and amortization (202.5) (178.0) (24.5) Gross margin $56.8 $61.0 $(4.2) Gross margin, as a percent of net sales 21.9% 25.5% (3.6)% Net Sales Analysis by Segment Change Attributable to the Three Months Ended Following Factors (dollars March 31, Price/ Currency in millions) 2008 2007 $ % Mix Volume Acqui- Trans- Change Change sitions lation Segment: Protective Packaging $169.6 $156.8 $12.8 8.2 % 0.3 % (4.1)% 5.4 % 6.6 % Flexible Packaging 48.3 42.7 5.6 13.1 % 0.9 % (0.8)% - 13.0 % Hospital Supplies 21.1 18.8 2.3 11.9 % (2.2)% 0.1 % - 14.0 % Rigid Packaging 21.9 22.0 (0.1) (0.3)% (1.2)% (0.2)% - 1.1 % Intersegment elim- inations (1.6) (1.3) (0.3) 24.2 % Total $259.3 $239.0 $20.3 8.5 % 0.0 % (3.0)% 3.5 % 8.0 %
SOURCE Pregis Corporation
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