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Archive for September, 2007

AEP INDUSTRIES INC. REPORTS 2007 THIRD QUARTER RESULTS

Monday, September 10th, 2007

Contact: Paul Feeney
Executive Vice President
and Chief Financial Officer
AEP Industries
(201) 807-2330
feeneyp@aepinc.com

South Hackensack, NJ, September 10, 2007 – AEP Industries Inc. (Nasdaq: AEPI, the “Company”) today reported financial results for its fiscal third quarter ended July 31, 2007.

Net sales decreased $3.9 million, or 2%, in the third quarter of fiscal 2007 to $205.0 million compared with $208.9 million in the third quarter of fiscal 2006, despite a 2% increase in sales volume. The decrease is primarily the result of a 5% decrease in average selling prices, driven by lower resin costs in the current period in comparison to the same period of the prior year.  The effect of foreign exchange on net sales in the 2007 period was a positive $2.6 million, primarily reflecting the impact of the strengthened European currency.

For the first nine months of fiscal 2007, net sales decreased $22.8 million, or 4%, to $572.1 million compared with $594.9 million in the same period last year. The decrease in net sales was the result of a 10% decrease in average selling prices resulting primarily from resin price decreases, partially offset by a sales volume increase of 6% combined with the positive impact of foreign exchange of $7.7 million.

Gross profit for the third quarter of fiscal 2007 decreased $4.9 million to $35.6 million as compared to $40.5 million in the same quarter of the prior year. The decrease in gross profit for the third quarter of fiscal 2007 was largely due to a $6.0 million increase in the LIFO reserve in the current quarter as compared to a $4.2 million increase in the LIFO reserve in the same quarter of the prior year, combined with selling price increases lagging behind recently rising resin prices.  The effect of foreign exchange on gross profit in the 2007 period was a positive $0.3 million.

For the first nine months of fiscal 2007, gross profit decreased $5.7 million, or 5%, to $115.8 million from $121.5 million recorded in the same period of fiscal 2006. The decrease in gross profit is primarily due to a cumulative increase in LIFO reserves of $10.4 million between the periods combined with reduced material margins partially offset by the positive effect of a 6% sales volume increase.  The effect of foreign exchange on gross profit for the first nine months of 2007 was a positive $0.9 million.

Operating expenses for the three and nine months ended July 31, 2007 increased $1.1 million to $25.1 million and $3.2 million to $70.6 million, respectively.  These increases are primarily due to increased selling and delivery costs resulting from higher volumes sold in the 2007 periods, the negative effect of foreign exchange, and increased compensation costs recorded in accordance with SFAS 123R for stock options and performance units.

Other operating income consists of gains or losses resulting from the routine disposition of assets.  In the first quarter of the prior year, a gain of $1.4 million resulted from the sale of our FIAP land and building.

Interest expense for the three months ended July 31, 2007 increased $0.1 million to $4.2 million primarily as a result of increased borrowings under our Credit Facility during the fiscal 2007 period.  Interest expense decreased $0.1 million to $12.1 million for the nine months ended July 31, 2007 as a result of a reduction in average borrowings, which was partially offset by an increase in interest rates during the nine month period.

Other, net expenses in the fiscal 2006 nine-month period includes the non cash write-off of accumulated foreign currency translation losses applicable to FIAP of $8.0 million.

“The single most important metric we use in evaluating our Company’s performance is Adjusted EBITDA, which we are pleased to report for the first nine months of this year is ahead of our internal forecast and guidance, beating our prior year by $3.8 million,” stated Brendan Barba, Chairman and Chief Executive Officer of the Company.

“Throughout 2007 increased sales volumes have largely offset the negative declines in material margins,” Mr. Barba continued.  “In the coming periods we expect we will continue to have some difficulty catching up with resin cost increases. However, we expect volume increases will continue and, as a result, expect our cash flow goals will continue to be met and possibly exceeded.”

Net income for the three and nine months ended July 31, 2007 was $4.8 million or $0.63 per diluted share and $21.6 million or $2.75 per diluted share, respectively.  Net income for the three and nine months ended July 31, 2006 was $20.1 million or $2.28 per diluted share and $38.5 million or $4.41 per diluted share, respectively.  Net income for the three and nine months ended July 31, 2006 includes income tax benefits totaling $12.5 million and $18.5 million, respectively, related to our FIAP operation and worthless stock deductions of certain discontinued operations.

Adjusted EBITDA was $21.8 million in the current quarter as compared to $26.3 million for the three months ended July 31, 2006.   Adjusted EBITDA for the nine months ended July 31, 2007 was $67.8 million, an increase of $3.8 million over the first nine months of fiscal 2006.

Reconciliation of Non-GAAP Measures to GAAPThe 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:

press77-table1The Company invites all interested parties to listen to its second quarter conference call live over the Internet at www.aepinc.com on September 11, 2007 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.

AEP INDUSTRIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

For the Three Months
Ended July 31,
For the Nine Months
Ended July 31,
2007 2006 2007 2006
NET SALES $204,965 $208,925 $572,091 $594,936
COST OF SALES 169,358 168,452 456,293 473,464
Gross profit 35,607 40,473 115,798 121,472
OPERATING EXPENSES:
Delivery 10,409 9,972 27,591 26,124
Selling 8,921 8,459 25,730 23,704
General and administrative 5,814 5,628 17,234 17,514
Total operating expenses 25,144 24,059 70,555 67,342
OTHER OPERATING INCOME:
Gain (loss) on sales of property, plant and equipment, net 15 (129) 19 1,342
Operating income 10,478 16,285 45,262 55,472
OTHER INCOME (EXPENSE):
Interest expense (4,149) (4,056) (12,066) (12,208)
Other, net 914 (12) 1,142 (6,904)
Income from continuing operations before provision for income taxes 7,243 12,217 34,338 36,360
PROVISION (BENEFIT) FOR INCOME TAXES 2,466 (559) 12,747 10,354
Income from continuing operations 4,777 12,776 21,591 26,006
DISCONTINUED OPERATIONS:
Pre-tax income (loss) from discontinued operations - (310) 31 (1,068)
Gain from disposition - 124 - 81
Income tax benefit - 7,506 - 13,506
Income from discontinued operations - 7,320 31 12,519
Net income $4,777 $20,096 $21,622 $38,525
BASIC EARNINGS PER COMMON SHARE:
Income from continuing operations $0.65 $1.47 $2.79 $3.02
Income from discontinued operations $0.00 $0.84 $0.00 $1.45
Net income per common share $0.65 $2.32 $2.80 $4.47
DILUTED EARNINGS PER COMMON SHARE:
Income from continuing operations $0.63 $1.45 $2.74 $2.98
Income from discontinued operations $0.00 $0.83 $0.00 $1.43
Net income per common share $0.63 $2.28 $2.75 $4.41

AEP INDUSTRIES INC. SCHEDULES CONFERENCE CALL To DISCUSS THIRD QUARTER 2007 FINANCIAL RESULTS

Tuesday, September 4th, 2007

Contact: Paul Feeney
Executive Vice President
and Chief Financial Officer
AEP Industries
(201) 807-2330
feeneyp@aepinc.com

South Hackensack, NJ, September 4, 2007 – AEP Industries Inc. (NASDAQ: AEPI), a manufacturer, marketer and distributor of an extensive range of plastic packaging products for the food/beverage, industrial and agricultural markets, invites shareholders and investors to listen to a broadcast review of the Company’s third quarter 2007 results.

The call will be held on Tuesday, September 11, 2007, at 10:00 AM ET.  Domestic participants can access the conference call by dialing 888-694-4702. International participants should dial 973-582-2741. Callers should ask to be connected to AEP’s third quarter earnings teleconference. The call will also be broadcast live over the Internet and can be accessed by visiting the Company’s investor information page at www.aepinc.com. Brendan Barba, Chairman, President and Chief Executive Officer, and Paul Feeney, Executive Vice President, Finance and Chief Financial Officer, will host the call.

For those unable to participate during the call, a replay will be available until 11:59 PM ET on September 25, 2007. Domestic participants can access the replay by dialing 877-519-4471. International participants should dial 973-341-3080. The replay will also be available over the Internet and can be accessed by visiting the Company’s investor information page at www.aepinc.com.

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 throughout North America and Europe.

2007 THIRD QUARTER RESULTS CONFERENCE CALL

Saturday, September 1st, 2007

Contact: Paul Feeney
Executive Vice President
and Chief Financial Officer
AEP Industries
(201) 807-2330
feeneyp@aepinc.com

South Hackensack, NJ – AEP Industries Inc. (NASDAQ: AEPI), a manufacturer, marketer and distributor of an extensive range of plastic packaging products for the food/beverage, industrial and agricultural markets, will announce third quarter 2007 results before the market opens on Monday, September 10, 2007 and will host a conference call the following morning to discuss the results.

Date / Time: Tuesday, September 11, 2007 10:00 a.m. ET
Hosted by: J. Brendan Barba
Chairman, President and
Chief Executive Officer Paul M. Feeney
Executive Vice President, Finance and
Chief Financial Officer
Call Number: Domestic Dial In: 888-694-4702
International Dial In: 973-582-2741
Web Access: www.aepinc.com
Replay: Domestic: 877-519-4471
International: 973-341-3080
Conference ID: 9178138
Available until 11:59 p.m. ET
September 25, 2007

If you have and questions regarding the call or would like
further information about AEP Industries, please contact:

Sharon Stern / Eric Bonach
Joele Frank, Wilkinson Brimmer Katcher
Phone: (212) 355-4449
Email: sstern@joelefrank.com / ebonach@joelefrank.com