Coveris Reports Third Quarter 2014 Financial Results

  • Reports Pro Forma Net Sales of $693 million for Q3, up 1% from the prior year
  • Adjusted Pro Forma EBITDA of $77.5 million, a 9% increase from the prior year
  • Year-to-date Adjusted Pro Forma EBITDA of $249.6 million, a 20% increase from the prior year

CHICAGO--()--Coveris Holdings S.A. reported third quarter 2014 pro forma net sales of $693 million. Pro forma net sales for the third quarter of 2013 were $689 million. Adjusted pro forma EBITDA for the quarter was $77.5 million versus $71.2 million in the same period last year, up 9%. On a year-to-date basis, adjusted pro forma EBITDA is $249.6 million, up 20% from the prior year.

“We continue to experience margin expansion as we focus on implementation of the Coveris Business System, or CBS”

“We continue to experience margin expansion as we focus on implementation of the Coveris Business System, or CBS,” said Gary Masse, Chief Executive Officer. “I am pleased to see the results of our efforts, even in a slow sales growth environment. I see continued opportunity to drive synergies and cost reduction initiatives to the bottom line using the four cornerstones of CBS, which are Commercial Excellence, Operational Excellence, Talent & Leadership and Acquisition Integration.”

BUSINESS SEGMENT RESULTS

Coveris is divided into two reporting segments – Flexible and Rigid. The Flexible segment had pro forma net sales of $497.6 million for the quarter, which was up 2.8% on a like-for-like basis from $484.2 million from the same period last year. This increase was primarily the result of favorable currency impacts as well as favorable volumes in our North American salt and seasonal seed bag business.

The Rigid segment had pro forma net sales of $195.4 million for the quarter, which was down 4.4% on a like-for-like basis from $204.4 million from the same period last year. Economic challenges and intense competition continue in Europe for Rigid products, particularly in Southern Europe.

Please see our Adjusted Pro Forma EBITDA Reconciliation attached to this press release. Additional financial information may be found on www.coveris.com under the Investor Relations section.

EARNINGS CALL

A conference call hosted by management to discuss these financial results will be held on November 17, at 10:00 am, Eastern. The conference call number is 877-407-8031 (domestic) or 201-689-8031 (international). A replay of the call will be available after 1:30 pm, Eastern on November 17 until December 1, 2014, by dialing 877-660-6853 (domestic) or 201-612-7415 (international) with the conference ID of 13595809.

ABOUT COVERIS™

As a leading international manufacturing company, Coveris is dedicated to providing solutions that enhance the safety, quality and convenience of products we use every day. In partnership with the most respected brands in the world, Coveris develops vital products that protect everything from the food we eat, to medical supplies, to the touch screen device in our pockets, contributing to the lives of millions every day.

Coveris is an affiliated portfolio company of Sun Capital Partners, Inc.

FORWARD-LOOKING STATEMENTS:

Statements in this release that are not historical are "forward-looking statements." Forward-looking statements may be identified by the use of forward-looking terminology such as the words "should," "would," "could," "will," "may," "expect," "believe," "anticipate," "attempt," "project" and other terms with similar meaning indicating possible future events or potential impact on our business. You are cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management's current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect Coveris’ operations, markets, products, services, prices and other factors. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive, environmental, political, legal, regulatory and technological factors. In addition, any forward-looking statements are made only as of the date of this release, and Coveris does not intend and does not assume any obligation to update any statements set forth in this release.

COVERIS HOLDINGS S.A.
RECONCILIATION OF PRO FORMA NET INCOME (LOSS) TO ADJUSTED PRO FORMA EBITDA
(Expressed in millions of U.S. dollars)
 
           
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
30-Sep-14   30-Sep-13 30-Sep-14   30-Sep-13
 
U.S. GAAP Net income (loss) $ (39.8 ) $ (23.5 ) $ (59.9 ) $ (51.7 )
Interest expense, net $ 32.6 $ 28.0 $ 96.8 $ 60.9
Benefit (provision) for income taxes $ (1.4 ) $ (2.8 ) $ 1.8 $ (2.1 )
Depreciation and amortization $ 39.3 $ 31.6 $ 117.3 $ 83.8
PPA Adjustments and FX translation $ 20.4     $ 10.3   $ 17.0     $ 15.0  
Unadjusted EBITDA, net of PPA adjustments(a) $ 51.1 $ 43.6 $ 173.0 $ 105.9
 
Pro Forma adjustments to reflect full year results(b):
Unadjusted Exopack EBITDA prior to Fund V acquisition $ - $ - $ - $ 35.4
Unadjusted Closures EBITDA prior to Fund V acquisition $ - $ 2.2 $ - $ 6.5
Unadjusted Intelicoat EBITDA prior to Fund V acquisition $ - $ (0.5 ) $ - $ (0.7 )
Unadjusted St. Neots EBITDA prior to Fund V acquisition $ - $ 2.3 $ 3.0 $ 6.9
Unadjusted Learoyd EBITDA prior to Fund V acquisition $ 0.5     $ 0.8     $ 2.3     $ 2.2  
Unadjusted Pro Forma EBITDA, net of PPA adjustments $ 51.6 $ 48.4 $ 178.3 $ 156.2
 
 
Adjustments:
Restructuring and related relocation costs(c) $ 11.1 $ 10.6 $ 26.4 $ 27.7
Management fees and expenses $ 2.4 $ 2.9 $ 7.6 $ 11.6
Transaction related expenses(d) $ 4.1 $ 4.9 $ 7.7 $ 7.8
Business improvement consulting cost $ 6.4 $ 1.0 $ 12.7 $ 2.7
(Gain) loss on disposal of assets $ 0.5 $ 0.1 $ 1.5 $ (5.0 )
Pension revaluation $ 0.4 $ 0.5 $ 1.3 $ 0.5
Other expenses(e) $ 1.0 $ 2.8 $ 14.1 $ 6.0
Total addbacks $ 25.9     $ 22.8   $ 71.3     $ 51.3  
Adjusted Pro Forma EBITDA $ 77.5     $ 71.2   $ 249.6     $ 207.5  
 
 
(a) KubeTech was accounted for as a business combination under common control; therefore, KubeTech's historical results were included in the U.S. GAAP net income (loss) and reconciliation to Unadjusted EBITDA in both the current and prior year results.
 
(b) Pro Forma adjustments to retrospectively include results of certain entities prior to the Company's acquisitions.
 
(c ) Costs associated primarily with various restructuring activities, employee relocation expenses or employee severance costs.
 
(d) Costs associated with the Combination, Dividend recapitalization transaction and acquisition costs.
 
(e) Costs associated with information technology, consulting, rebranding and other infrequent or non-recurring expenses.

Contacts

Coveris
Investor Contact:
Duane A. Owens, 864-641-4710
Treasurer
or
Media Contact:
Chris Swalm, 864-504-6145
Marketing Communications Manager

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