Berry Plastics Group today reported results for its fiscal fourth quarter 2013 and fiscal year 2013.
"The September quarter continued to be pressured by weak consumer demand, similar to trends seen throughout 2013 and the back half of 2012," said Jon Rich, Chairman and CEO of Berry Plastics. "To offset the impact of continuing tough economic challenges, Berry has taken many necessary, proactive steps to remain competitive and a leader in the plastics packaging industry."
September Quarter and Fiscal Year 2013 Results
For the quarter ended September 2013, the Company’s net sales were flat versus the September 2012 quarter at $1,204 million. The quarter consisted of increased selling prices due to higher material costs offset by lower volumes due to softer customer demand.
For fiscal year 2013, the Company’s net sales declined by 2 percent to $4,647 million from $4,766 million as compared to the same period for 2012. This decline was primarily attributed to lower selling prices of 1 percent and sales volume declines of 2 percent related to softer customer demand, year-over-year adverse change in weather and reduction in raw material content partially offset by acquisition volumes and volume gains in certain of our product lines.
The ratio of net debt of $3,804 million to Adjusted EBITDA for the fiscal year ended September 28, 2013 of $790 million was 4.8x. The ratio at the end of September 29, 2012 quarter was 5.5x. The Company’s Adjusted free cash flow for fiscal 2013 was $243 million. Adjusted free cash flow for the September 2013 quarter was $120 million.
"Our enhanced focus on driving organic growth and international growth coupled with our progress on operational efficiencies and cost reduction actions, pave the way for success for Berry in the future. As we move forward, Berry will remain focused on our key strategic initiatives to continue to drive shareholder value," said Rich.
In November, the Company initiated a cost reduction plan designed to deliver meaningful cost savings and optimal equipment utilization. This plan will result in several plant rationalizations. The costs associated with this plan will primarily consist of one-time costs associated with facility consolidation, including severance and termination benefits for employees of approximately $6 million, other costs associated with exiting facilities of approximately $30 million and non-cash asset impairment charges of approximately $11 million.
In addition, as part of this cost reduction plan the company estimates it will incur capital expenditures of approximately $13 million. Overall these facility restructuring programs are projected to generate approximately $27 million of annual operating savings when fully implemented. These amounts are preliminary estimates based on the information currently available to management. The plan is expected to be fully implemented by the end of fiscal 2014.
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.