AEP Industries Inc. Reports Fiscal 2013 First Quarter Results

Tue Mar 12, 2013 7:45am EDT

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SOUTH HACKENSACK, N.J.,  March 12, 2013  /PRNewswire/ -- AEP Industries Inc.
(Nasdaq: AEPI, the "Company" or "AEP") today reported financial results for its
first quarter ended  January 31, 2013.

Net sales for the first quarter of fiscal 2013 decreased  $0.5 million, or 0.2%,
to  $267.1 million  from  $267.6 million  for the first quarter of fiscal 2012.
The decrease was the result of a decrease in sales volume of 0.8% partially
offset by a 0.4% increase in average selling prices and improved sales mix.

Gross profit for the first quarter of fiscal 2013 was  $42.4 million, an
increase of  $7.8 million, or 22%, compared to the comparable period in the
prior fiscal year.  Excluding the impact of the LIFO reserve change of  $6.4
million  during the periods, gross profit increased  $1.4 million  primarily due
to improvements in material margins, plant utilization and sales mix.   

Operating expenses for the first quarter of fiscal 2013 were  $28.8 million, a
decrease of  $0.5 million, or 2%, compared to the comparable period in the prior
fiscal year. Included in the prior year period was  $0.4 million  of
acquisition-related fees associated with our Webster acquisition. Without these
items, operating expenses decreased  $0.1 million  primarily due to synergies
recognized related to Webster, partially offset by an increase in share-based
compensation costs associated with the Company's stock options and performance
units.  

"We are pleased with AEP's strong start to fiscal 2013, supported by an
improving sales mix," said  Brendan Barba, Chairman, President and Chief
Executive Officer of the Company.  "We continue making strategic investments
across our business lines to deliver sustainable growth as we remain focused on
driving efficiencies throughout our organization to optimize our performance. We
remain confident that our core businesses and broadened portfolio will continue
to improve our competitive position, deliver long-term growth and enhance value
to our shareholders."

Interest expense for the three months ended  January 31, 2013  decreased  $0.3
million  as compared to the prior year period resulting primarily from lower
average borrowings under our credit facility partially offset by higher interest
rates on our credit facility borrowings.  

Net income for the three months ended  January 31, 2013  was  $6.9 million, or 
$1.23  per diluted share, as compared to net income of  $0.4 million, or  $0.06 
per diluted share, for the three months ended  January 31, 2012. The three
months ended  January 31, 2013  included a gain on bargain purchase of the
Transco business of  $1.0 million.

Adjusted EBITDA (defined below) was  $17.9 million  in the current quarter as
compared to  $15.3 million  for the three months ended  January 31, 2012.

Reconciliation of Non-GAAP Measures to GAAP



The Company defines Adjusted EBITDA as net income (loss) before discontinued
operations, interest expense, income taxes, depreciation and amortization,
changes in LIFO reserve, other non-operating income (expense) and non-cash
share-based compensation expense. The Company believes Adjusted EBITDA is an
important measure of operating performance because it allows management,
investors and others to evaluate and compare its core operating results,
including its return on capital and operating efficiencies, from period to
period by removing the impact of its capital structure (interest expense from
its outstanding debt), asset base (depreciation and amortization), tax
consequences, changes in LIFO reserve (a non-cash charge/benefit to its
consolidated statements of operations), other non-operating items and non-cash
share-based compensation. Furthermore, management uses Adjusted EBITDA for
business planning purposes and to evaluate and price potential acquisitions. In
addition to its use by management, the Company also believes Adjusted EBITDA is
a measure widely used by securities analysts, investors and others to evaluate
the financial performance of the Company and other companies in the plastic
films industry.  Other companies may calculate Adjusted EBITDA differently, and
therefore the Company's Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.  

Adjusted EBITDA is not a measure of financial performance under U.S. generally
accepted accounting principles (GAAP), and should not be considered in isolation
or as an alternative to net income (loss), cash flows from operating activities
and other measures determined in accordance with GAAP.  Items excluded from
Adjusted EBITDA are significant and necessary components to the operations of
the Company's business, and, therefore, Adjusted EBITDA should only be used as a
supplemental measure of the Company's operating performance.  

The following is a reconciliation of the Company's net income, the most directly
comparable GAAP financial measure, to Adjusted EBITDA:

                                           First Quarter                 First Quarter               
                                           Fiscal 2013                   Fiscal 2012                 
                                           (in thousands)                (in thousands)              
                                                                                                     
 Net income                                $                    6,910    $                      354  
 Provision for taxes                       3,275                         281                         
 Interest expense                          4,566                         4,837                       
 Depreciation and amortization expense     6,001                         5,691                       
 (Decrease) increase in LIFO reserve       (3,066)                       3,293                       
 Gain on bargain purchase of a business    (1,001)                       -                           
 Other non-operating income                (69)                          (85)                        
 Non-cash share-based compensation         1,269                         879                         
 Adjusted EBITDA                           $                  17,885     $                  15,250   


The Company invites all interested parties to listen to its first quarter
conference call live over the Internet at  www.aepinc.com  on  March 13, 2013,
at  10:00 a.m. ET  or by dialing 888-802-8577 for domestic participants or
404-665-9935 for international participants and referencing passcode 17551359. 
An archived version of the call will be made available on the Company's website
after the call is concluded and will remain available for one year.

AEP Industries Inc. manufactures, markets, and distributes an extensive range of
plastic packaging products for the consumer, industrial and agricultural
markets.  The Company has manufacturing operations in  the United States  and 
Canada.

Except for historical information contained herein, statements in this release
are forward-looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. 
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results. Those risks include, but are not limited to,
risks associated with resin and product pricing, volume, resin availability, the
integration of Webster Industries and Transco Plastics Industries, our liquidity
and market conditions generally, including the continuing impacts of the U.S.
recession and the global credit and financial crisis. Those and other risks are
described in the Company's annual report on Form 10-K for the year ended 
October 31, 2012  and subsequent reports filed with the Securities and Exchange
Commission (SEC), copies of which are available from the SEC or may be obtained
from the Company. Except as required by law, the Company assumes no obligation
to update the forward-looking statements, which are made as of the date hereof,
even if new information becomes available in the future.

 AEP INDUSTRIES INC.                                                     
 
CONSOLIDATED STATEMENTS OF OPERATIONS                                  
 
(UNAUDITED)                                                            
 
(in thousands, except per share data)                                  
                                                                         
                                           For the Three                
                                           Months Ended                 
                                           January 31,                  
                                           2013             2012      
 NET SALES                                 $267,142         $267,664  
 COST OF SALES                             224,708          233,010   
 Gross profit                              42,434           34,654    
 OPERATING EXPENSES:                                                  
 Delivery                                  12,366           12,487    
 Selling                                   9,498            9,794     
 General and administrative                6,889            6,986     
 Total operating expenses                  28,753           29,267    
 Operating income                          13,681           5,387     
 OTHER INCOME (EXPENSE):                                              
 Interest expense                          (4,566)          (4,837)   
 Gain on bargain purchase of a business    1,001            -         
 Other, net                                69               85        
 Income before provision for income taxes  10,185           635       
 PROVISION FOR INCOME TAXES                (3,275)          (281)     
 Net income                                $6,910           $354      
                                                                      
 BASIC EARNINGS PER COMMON SHARE:                                     
 Net income per common share               $1.25            $0.06     
 DILUTED EARNINGS PER COMMON SHARE:                                   
 Net income per common share               $1.23            $0.06     


Contact:  Paul M. Feeney
Executive Vice President, Finance
  and Chief Financial Officer
AEP Industries Inc.
(201) 807-2330
feeneyp@aepinc.com 

 

SOURCE  AEP Industries Inc.

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