BWAY Holding Company Announces First Quarter Results and Affirms Annual Guidance

ATLANTA, Feb. 12 /PRNewswire-FirstCall/ -- BWAY Holding Company
(NYSE: BWY), a leading North American supplier of general line rigid
containers, today reported a net loss for the first quarter of fiscal 2008 of
$(3.9) million, or ($0.18) per diluted share, compared to $(0.6) million or
$(0.03) per diluted share for the first quarter of fiscal 2007. Revenues were
$217.4 million, an increase of 7.4% when compared to the prior year. The year-
over-year improvement in sales was driven primarily by higher volume in
plastic containers and aerosol cans, higher raw material-driven selling prices
and the January 2007 acquisition of Vulcan Containers in Canada.
Gross margin (excluding depreciation and amortization) for the quarter was
$20.5 million compared to $24.0 million for the first quarter of fiscal 2007.
The decrease resulted from lower margins in the Company's metal packaging
segment, which was partially offset by higher margins in the Company's plastic
packaging segment. EBITDA (earnings before interest, taxes, depreciation and
amortization) for the quarter was $14.5 million vs. $19.7 million in the year
ago period. First quarter fiscal 2008 EBITDA includes $1.8 million of non-
cash stock based compensation expense ($0.5 included in cost of products sold
and $1.3 included in SG&A) associated with modifications made to pre-IPO stock
options at the completion of the Company's IPO in June of 2007.
Kenneth Roessler, President and Chief Executive Officer, stated, "The
reported EPS and EBITDA results were in-line with our prior guidance despite
operating in a challenging environment. We are pleased with our progress
during the first quarter and with the positive momentum we continue to see in
our plastic packaging segment. Volumes in every plastic product category
increased 5.0% or more, which led to market share gains and higher segment
earnings."
"In our metal packaging segment, aerosol can volumes continued to increase
as a result of new business gained during fiscal 2007," Roessler added. "As
expected, earnings in the metal packaging segment were lower year over year
primarily due to an imbalance between steel costs and selling prices. The
imbalance resulted from lower cost foreign steel and spot buying opportunities
becoming largely unavailable. However, new steel supply agreements are now in
place for 2008, and selling price increases have been implemented to reflect
higher overall steel costs. We believe these actions will restore our metal
packaging segment margins to their historical levels beginning in the second
quarter of fiscal 2008."
First Quarter Segment Results
Metal Packaging
Sales for the Company's metal packaging segment were $124.4 million for
the first quarter of fiscal 2008, up 4.6% compared to $118.9 million for the
same quarter last year. The increase resulted from the January 2007
acquisition of Vulcan Containers, higher aerosol can volume, and higher raw
material-driven selling prices. General line metal container volume on average
across the Company's product mix was flat quarter-over-quarter. Demand for
architectural paint and coatings, the largest end use market segment for the
Company's metal packaging containers, remained weak during the quarter due to
continued slowness in the housing market and manufacturers' concerns over the
general economy.
Metal segment earnings (excluding depreciation and amortization) were
$10.5 million for the first quarter of fiscal 2008 compared to $14.4 million
for the first quarter of fiscal 2007. As forecasted in the Company's fourth
quarter fiscal 2007 earnings release, the three factors that adversely
impacted the Company's metal packaging segment continued through the first
quarter of fiscal 2008. These factors were:

- The Company's mix of steel supply, anticipated at the beginning of
calendar year 2007 when price increases were passed through to
customers, became unfavorable in the second half of the fiscal year
when lower-cost foreign sources and opportunistic spot buys largely
disappeared.
- Competitive pricing pressures, particularly for aerosol cans.
- Lower volume and an unfavorable customer mix driven by the housing
market downturn.

During December, the Company made adjustments to its steel supplier
portfolio and negotiated new steel supply agreements for 2008. In January,
the Company implemented product selling price increases to reflect the higher
cost of steel and this is expected to restore metal segment margins to their
historical levels. Selling price increases are also expected to begin
improving margins in the aerosol business.
In reaction to lower volumes driven by the weak housing market, the
Company is adjusting production schedules and staffing, and reducing inventory
levels. In addition, last quarter we announced our intention to close one of
our metal packaging manufacturing plants. We are now finalizing a definitive
plan and expect to make a specific announcement by the end of March.
Plastic Packaging
Sales for the Company's plastic packaging segment were $93.0 million for
the first quarter of fiscal 2008, an increase of 11.4% compared to $83.5
million for the same quarter last year. The increase is attributable to higher
volumes in all product categories relative to the first quarter of fiscal 2007
and higher selling prices resulting from increases in resin cost passed
through to customers. Product mix within the segment was favorable, with a
higher level of blow molded container sales.
Plastic segment earnings (excluding depreciation and amortization) were
$8.1 million for the first quarter of fiscal 2008 compared to $7.3 million for
the first quarter of fiscal 2007. The increase is largely attributable to
higher volumes, favorable product mix, and improved plant productivity.
Corporate
Undistributed corporate expenses (excluding depreciation and amortization)
were $3.9 million for the first quarter of fiscal 2008 compared to $1.9
million for the first quarter of fiscal 2007. The increase is largely
attributable to higher selling and administrative expenses that included non-
cash stock-based compensation of $1.3 million associated with modifications
made to pre-IPO stock options. The first quarter of fiscal 2007 included a
favorable adjustment to the allowance for doubtful accounts of $0.4 million.
The benefit from income taxes for the first quarter of fiscal 2008 was
$2.2 million, representing a 36% effective tax rate, compared to $0.5 million
for the first quarter of fiscal 2007 representing a 44% effective tax rate.
Total debt of $426.1 million remained essentially unchanged during the
quarter. Cash and cash equivalents decreased from $53.4 million at the
beginning of the quarter to $23.8 million at the end of the first quarter,
primarily as a result of seasonal increases in working capital including
increasing steel inventories ahead of price increases, a $10.0 million semi-
annual interest payment on the Company's $200.0 million senior subordinated
notes, and capital expenditures focused on the completion of several key
projects. First quarter capital expenditures totaling $12.3 million were
focused on aerosol components and new plastic product development in addition
to routine quality, productivity, and equipment refurbishment projects. Full
year fiscal 2008 capital expenditures are forecasted to be $31.0-$33.0 million
as the Company completes projects for aerosol components and plastic packaging
product development. Capital expenditures are expected to return to the
Company's base-line level of $20.0 - $22.0 million in fiscal 2009.
Outlook for Fiscal 2008
"We are in a difficult environment. However, the actions we took in
January to rebalance our raw material cost and selling price equation combined
with continued positive momentum in our plastic packaging segment provide a
good basis for improved financial expectations," stated Mr. Roessler. "Our
priorities focus on volume gains, continued gains in productivity and free
cash flow generation." With regard to specific guidance the Company
provides the following:

- Second fiscal quarter 2008 (ending March 30, 2008) diluted EPS of
$0.10 - $0.15, and adjusted EBITDA of $24.0 - $26.0 million.
Expectations include $1.8 million of non-cash stock- based compensation
expense.
- Full year fiscal 2008 expectations as previously forecasted. Diluted
EPS of $0.68 - $0.78, and adjusted EBITDA of $109.0-$113.0 million.
Full year expectations include $7.0 million of non-cash stock-based
compensation expense, but exclude potential restructuring charges
associated with the Company's planned closure of a manufacturing
facility.
- Full year fiscal 2008 free cash flow (net cash provided by operating
activities less capital expenditures) anticipated at $32.0-$34.0
million as previously forecasted.

Conference Call
The Company will hold a conference call tomorrow, February 13, 2008 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 800-510-0146, or for international 617-
614-3449 and the access passcode is 39594843. A replay of the conference call
will be available until midnight on February 20. The dial-in numbers for the
replay are 888-286-8010, or for international 617-801-6888 and the access
passcode is 90699867.
About BWAY Holding Company
BWAY Holding Company is a leading North American manufacturer of general
line rigid metal and plastic containers. The Company operates 22 plants
throughout the United States and Canada serving industry leading customers on
a national basis.
Cautionary Note Regarding Forward-Looking Statement
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 our liquidity and our possible or assumed future results of
operations, including descriptions of our 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 we have made in light
of our experience in the industry as well as our perceptions of historical
trends, current conditions, expected future developments and other factors we
believe 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 our 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 our
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 our end markets,
consolidation of key suppliers, deceleration of growth in our 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 our quarterly operating results, an increase in
interest rates, inability to repay or refinance the senior subordinated notes,
restrictions in our debt agreements, fluctuations of the Canadian dollar, and
the other factors discussed in our 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 us or persons acting on our behalf are
expressly qualified in their entirety by the foregoing cautionary statements.
All such statements speak only as of the date made, and we undertake 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 Measure
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 measures such as "EBITDA", and "adjusted
EBITDA", provide investors with an alternative method for assessing our
operating results in a manner that enables them to more thoroughly evaluate
our performance. These non-GAAP measures provide a baseline for assessing the
Company's future earnings expectations. BWAY management uses these non-GAAP
measures for the same purpose. The non-GAAP measures included in this release
are provided to give investors access to the types of measures that we use in
analyzing our results.
BWAY's calculation of non-GAAP financial measures is not necessarily
comparable to similarly titled measures reported by other companies. These
non-GAAP 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 non-GAAP financial
measures used in this press release to GAAP financial measures are included
with this news release.

BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Amounts in thousands, except per share data)

Three Months Ended
Dec. 30, 2007 Dec. 31, 2006
Statements of Operations:
Net sales $217,387 $202,376
Cost of products sold (excluding
depreciation and amortization) 196,872 178,350
Gross margin (excluding depreciation
and amortization) 20,515 24,026
Other costs and expenses
Depreciation and amortization 11,127 11,398
Selling and administrative
expenses 5,880 4,215
Restructuring charge 24 39
Interest expense, net 9,455 9,403
Other expense, net 134 57
Total other costs and
expenses 26,620 25,112

Net (loss) before benefit from income
taxes (6,105) (1,086)
(Benefit) from income taxes (2,202) (479)

Net (loss) $(3,903) $(607)

Net (loss) per share
Basic and Diluted $(0.18) $(0.03)

Shares - Basic and Diluted 21,661 20,525

Reconciliation of EBITDA and EBIT to Net Loss
Net (loss) $(3,903) $(607)
Interest expense, net 9,455 9,403
(Benefit) from income taxes (2,202) (479)
Depreciation and amortization 11,127 11,398

EBITDA $14,477 $19,715

Less: Depreciation and amortization 11,127 11,398
EBIT $3,350 $8,317

BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data
(Unaudited)
(Amounts in thousands)
Three Months Ended
Dec. 30, 2007 Dec. 31, 2006
Business Segment Information:

Net sales
Metal segment $124,400 $118,874
Plastic segment 92,987 83,502
Consolidated net sales 217,387 202,376

(Loss) before income taxes
Segment earnings (excluding
depr. and amort.)
Metal segment 10,508 14,385
Plastic segment 8,061 7,323
Total segment earnings
(excluding depr. and amort.) 18,569 21,708

Depreciation and amortization
Metal segment 5,667 5,535
Plastic segment 5,275 5,397
Total segment depreciation
and amortization 10,942 10,932
Corporate depreciation 185 466
Total depreciation and
amortization 11,127 11,398

Corporate and other expenses
Corporate undistributed
expense 3,934 1,897
Restructuring charge 24 39
Interest expense, net 9,455 9,403
Other expense, net 134 57

(Loss) before income taxes $(6,105) $(1,086)

Condensed Balance Sheets:
As of
Dec. 30, 2007 Sept. 30, 2007
Assets
Cash and cash equivalents $23,772 $53,423
Accounts receivable, net of
allow. for doubtful accts. 96,052 107,151
Inventories, net 130,544 111,792
Other current assets 22,837 19,879
Total current assets 273,205 292,245

Property, plant and equipment,
net 144,920 141,750
Goodwill and other intangible
assets, net 410,439 412,832
Other assets 10,971 11,106
Total Assets $839,535 $857,933

Liabilities and Stockholders' Equity
Accounts payable $121,970 $132,890
Accrued expenses 28,611 33,309
Current portion of long-term
debt 2,699 2,284
Other current liabilities 14,332 17,269
Total current liabilities 167,612 185,752

Long-term debt (excluding
current portion) 423,377 423,314
Total other long-term
liabilities 93,341 91,611
Stockholders' equity 155,205 157,256
Total Liabilities and
Stockholders' Equity $839,535 $857,933

BWAY Holding Company and Subsidiaries
Summary Consolidated Financial Data (Unaudited)
(Amounts in thousands)

Fiscal Year Ended
Statements of Cash Flows: Dec. 30, 2007 Dec. 31, 2006
Cash Flows From Operating Activities
Net (loss) $(3,903) $(607)
Adjustments to reconcile net loss to
net cash used in operating
activities
Depreciation 7,123 7,517
Amortization of other intangible
assets 4,004 3,881
Amortization of deferred
financing costs 533 525
Provision for (benefit from)
doubtful accounts 143 (391)
Loss (gain) on disposition of property,
plant and equipment 28 (5)
Deferred income taxes (137) (1,601)
Stock-based compensation expense 1,768 223
Changes in assets and liabilities
Accounts receivable 11,113 18,170
Inventories (18,656) (6,261)
Other assets 533 (1,538)
Accounts payable (9,364) (27,332)
Accrued and other liabilities (6,954) (7,724)
Income taxes (3,219) 1,079
Net Cash Used In Operating Activities (16,988) (14,064)

Cash Flows From Investing Activities
Capital expenditures (12,306) (5,273)
Other 2 1
Net Cash Used In Investing Activities (12,304) (5,272)

Cash Flows From Financing Activities
Repayments of term loans (144) (20,122)
Principal repayments under
capital leases (41) (55)
Net Cash Used In Financing Activities (185) (20,177)
Effect Of Exchange Rate Changes On
Cash and Cash Equivalents (174) (263)
Net (Decrease) in Cash And Cash
Equivalents (29,651) (39,776)
Cash And Cash Equivalents, Beginning
Of Period 53,423 50,979
Cash And Cash Equivalents, End Of
Period $23,772 $11,203

SOURCE BWAY Holding Company

Jeffrey M. O'Connell of BWAY Holding Company, +1-770-645-4800