Packaging

Graham Packaging Announces Results for 2011 First Quarter

Friday 29. April 2011 - Graham Packaging Company Inc. (NYSE: GRM) today announced results for the first quarter ended March 31, 2011.

Highlights
Net sales increased to $756.5 million as compared to $585.6 million in the first quarter of 2010.
Operating income increased to $73.8 million as compared to $32.3 million in the first quarter of 2010.
Adjusted EBITDA(1) increased to $135.2 million from $115.6 million in the first quarter of 2010.
Free Cash Flow (2) was $21.8 million for the first quarter of 2011.
The Company announced its commitment to acquire the assets of Techne – Technipack Engineering Italia S.r.l. (“Techne”), a manufacturer of blow molding machines, for total consideration of euro 8.8 million.
The Company reaffirms its Adjusted EBITDA guidance for 2011 of $583.0 million.
First Quarter 2011
Net sales improved to $756.5 million, an increase of $170.9 million over the first quarter of last year. The acquisition of Liquid Container contributed $98.6 million to the increase, and the remainder was driven by an increase in resin costs (which are passed through to customers), higher volumes, and slightly favorable exchange rates.
Adjusted EBITDA increased to $135.2 million compared to $115.6 million in the first quarter of last year. The increase was mainly due to the acquisition of Liquid Container and related synergies of approximately $3.0 million.
“Our first quarter results are a terrific start to 2011,” said CEO Mark Burgess. “We achieved solid adjusted EBITDA growth despite headwinds associated with an inflating cost environment. We were particularly successful in growing our Food and Beverage franchise in the quarter, and we remain pleased with our efforts and progress integrating Liquid Container. Finally, our intention to acquire the assets of Techne will enhance our proprietary machine technology platforms and enhance Graham’s efforts to effectively expand internationally and in other adjacent markets.”
By segment, sales in North America increased by $158.5 million, or 31.4%, due to the acquisition of Liquid Container, increases in resin costs mentioned above, higher volumes in the legacy business, and favorable exchange rates. Sales in Europe improved by $0.7 million, or 1.2%, due primarily to higher resin costs but were offset by lower volumes. Sales in South America increased by $6.2 million, or 27.7%, due to higher volumes, higher resin costs, and favorable exchange rates. Sales in Asia Pacific were $5.5 million, reflecting our operation in China that was acquired in July 2010.
SG&A expenses decreased to $39.5 million, as compared to $67.5 million in the first quarter last year. SG&A expenses last year included $39.0 million of expenses related to the Company’s IPO. This decrease was partially offset by acquisition integration expenses and the addition of Liquid Container’s SG&A.
Operating income increased to $73.8 million from $32.3 million for the first quarter of last year. The increase was driven by the acquisition of Liquid Container, increased operating income in the legacy business due to volumes and lower SG&A expenses.
Net interest expense was $52.7 million, an increase of $7.4 million from the first quarter of last year, primarily due to the interest expense on the debt related to the acquisition of Liquid Container and the higher effective interest rate on the portion of our term loans which were extended in September 2011.
Net debt was $2,657.2 million, down $22.7 million from the beginning of the year.
2011 Outlook
For fiscal 2011, the Company reaffirms its Adjusted EBITDA expectation at $583.0 million.