AEP
Industries Inc. Reports Fiscal 2007 Results
SOUTH HACKENSACK, N.J., Jan.
14 /PRNewswire-FirstCall/ -- AEP Industries Inc. (Nasdaq: AEPI, the "Company")
today reported financial results for its fiscal year ended October 31,
2007.
Net sales for the fiscal
year ended October 31, 2007 ("fiscal 2007") decreased $16.1 million, or 2.0%, to
$786.0 million as compared to $802.1 million for the fiscal year ended October
31, 2006 ("fiscal 2006"). The
decrease in net sales was the result of an 8% decrease in average selling prices
resulting primarily from a decrease in resin prices during fiscal 2007 as
compared to fiscal 2006, partially mitigated by a sales volume increase of 5%
combined with the positive impact of foreign exchange of $11.8 million,
primarily reflecting the impact of the strengthened Euro and Canadian
dollar.
Gross profit for fiscal 2007
decreased $10.3 million, or 6.4%, to $151.4 million as compared to $161.7
million in fiscal 2006. The
decrease in gross profit was largely due to a $7.9 million increase in the LIFO
reserve in the current fiscal year as compared to a $11.6 million decrease in
the LIFO reserve in the prior year, combined with lagging selling price
increases over recently rising resin prices, partially offset by the positive
effect of a 5% sales volume increase.
The effect of foreign exchange on gross profit for fiscal 2007 was a
positive $1.4 million.
Operating expenses for
fiscal 2007 increased $1.3 million, or 1.4%, to $94.5 million as compared to
$93.2 million in the prior fiscal year.
The effect of foreign exchange increased reported total operating
expenses by $1.0 million. The
remaining increase is primarily due to an increase in delivery and selling
expenses resulting from higher volumes sold, an increase in compensation costs
recorded in accordance with SFAS No. 123R for our stock options and performance
units, and advisory costs incurred as a result of our exploration of strategic
alternatives related to our subsidiary in the Netherlands.
These increases were partially mitigated
by a decrease in audit and consulting fees associated with compliance with the
Sarbanes-Oxley Act of 2002 and a decrease in bonuses earned in fiscal
2007.
Other operating income
(expense) consists of gains or losses resulting from the routine disposition of
assets. Fiscal 2006 includes a gain
of $1.4 million resulting from the sale of our FIAP land and
building.
Interest expense of $16.5
million for fiscal 2007 remained relatively flat in comparison to the prior
year. Interest expense on our Credit Facility increased $0.3 million during
fiscal 2007 as compared to the prior fiscal year resulting from higher average
borrowings, partially offset by lower average interest rates during fiscal
2007. Interest expense in our
foreign locations decreased $0.3 million primarily due to reduced borrowings,
partially offset by higher average interest rates during fiscal 2007 as compared
to the prior fiscal year.
Other, net expenses in
fiscal 2006 include the non cash write-off of accumulated foreign currency
translation losses applicable to FIAP of $8.0 million.
"During 2007 we increased
Adjusted EBITDA, a key metric used for measuring operating performance in our
industry, by 11% to $87.4 million; returned $49.0 million to shareholders in
repurchasing 1,129,100 shares of our common stock; increased sales volumes 5% in
a very competitive marketplace; and effectively continued to control our
operating expenses and resin cost spreads," stated Brendan Barba, Chairman and
Chief Executive Officer of the Company.
"We are well capitalized and
believe we can deal effectively with any adverse situation that may result from
the financial markets," continued Mr. Barba. "Our focus will continue to be directed
toward growth and improving the fundamentals of our business.
We remain fully committed to improving
shareholder value."
Net income for fiscal 2007
was $30.1 million, or $3.93 per diluted share. Net income for fiscal 2006 was $62.9
million, or $7.35 per diluted share.
Net income for fiscal 2006 includes income tax benefits totaling $35.2
million related to our FIAP operation and worthless stock deductions of certain
discontinued operations.
Adjusted EBITDA increased
$8.7 million to $87.4 million for fiscal 2007 as compared to $78.7 million in
fiscal 2006.
Reconciliation of Non-GAAP
Measures to GAAP
The Company defines Adjusted
EBITDA as net income before discontinued operations, interest expense, income
taxes, depreciation and amortization, changes in LIFO reserve, non-operating
income (expense), non-cash share-based compensation expense and non-cash
employee stock ownership plan ("ESOP") 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), non-operating items and non-cash
share-based compensation and non-cash ESOP charges. 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. Furthermore,
management uses Adjusted EBITDA for business planning purposes and to evaluate
and price potential acquisitions.
Adjusted EBITDA is not a
measure of financial performance under generally accepted accounting principles
(GAAP), and should not be considered in isolation or as an alternative to net
income, 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 Adjusted EBITDA to net income, the most directly
comparable GAAP financial measure:
Fiscal
2007
Fiscal 2006
(in thousands)
(in thousands)
Net income
$30,052
$62,929
Income from discontinued
operations
4,116 25,665
Income from continuing
operations
25,936
37,264
Provision for taxes
15,217
8,432
Interest expense
16,487
16,541
Depreciation and amortization
expense
19,266
17,236
Write off FIAP CTA
-
7,986
Gain
on sale of FIAP land and
building
-
(1,442)
Increase (decrease) in LIFO
reserve
7,906
(11,636)
Other non-operating income
(745)
(329)
Non-cash share-based compensation
3,337
2,740
Non-cash ESOP expense
-
1,874
Adjusted EBITDA
$87,404
$78,666
The Company invites all
interested parties to listen to its fiscal 2007 conference call live over the
Internet at www.aepinc.com
on January 15, 2008 at 10.00 a.m. EDT.
An archived version of the call will be made available after the call is
concluded.
AEP Industries Inc.
manufactures, markets, and distributes an extensive range of plastic packaging
products for the food/beverage, industrial and agricultural markets.
The Company has operations in three
countries in North America and Europe.
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
pricing, volume, cash flow guidance and market conditions.
Those and other risks are described in
the Company' annual report on Form 10-K for the year ended October 31, 2006 and
subsequent filings 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, even if new
information become available in the future.
Contact: Paul Feeney
Executive Vice President
and Chief Financial Officer
AEP Industries
Inc.
(201) 807-2330
feeneyp@aepinc.com
AEP
INDUSTRIES INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR
THE YEARS ENDED OCTOBER 31, 2007 and 2006
(in
thousands, except per share data)
2007
2006
NET SALES
$786,015
$802,109
COST OF SALES
634,602
640,397
Gross profit
151,413
161,712
OPERATING EXPENSES:
Delivery
37,498
35,950
Selling
34,503
32,291
General and
administrative
22,484
24,918
Total operating expenses
94,485
93,159
OTHER OPERATING INCOME
(EXPENSE):
Gain (loss) on
sales of property and equipment, net
(33)
1,341
Operating income from continuing operations
56,895
69,894
OTHER INCOME (EXPENSE):
Interest
expense
(16,487)
(16,541)
Other, net
745
(7,657)
Income from continuing operations before
provision for income taxes
41,153
45,696
PROVISION FOR INCOME
TAXES
15,217
8,432
Income from continuing operations
25,936
37,264
DISCONTINUED
OPERATIONS:
Pre-tax income
(loss) from discontinued operations 3,657
(3,204)
Gain from
disposition
459
653
Income tax
benefit
-
28,216
Income from discontinued operations
4,116
25,665
Net
income
$30,052
$62,929
BASIC EARNINGS PER COMMON
SHARE:
Income from continuing operations
$3.45
$4.42
Income from discontinued operations
$0.55
$3.04
Net
income per common share
$4.00
$7.46
DILUTED EARNINGS PER COMMON
SHARE:
Income from continuing operations
$3.39
$4.35
Income from discontinued operations
$0.54
$3.00
Net
income per common share
$3.93
$7.35
SOURCE
AEP Industries Inc.
-0-
01/14/2008
/CONTACT:
Paul
Feeney, Executive Vice President and Chief Financial Officer of AEP Industries
Inc., +1-201-807-2330 or feeneyp@aepinc.com/
/Web site:
http://www.aepinc.com
/
(AEPI)