News

Archive for September, 2011

AEP INDUSTRIES INC. TO ACQUIRE WEBSTER INDUSTRIES

Thursday, September 29th, 2011

Transaction Will Diversify and Strengthen AEP Product Portfolio and

Enhance AEP’s Position in the Plastics Industry

South Hackensack, NJ – September 27, 2011 – AEP Industries Inc. (Nasdaq: AEPI, the “Company”) today announced that it has reached a definitive agreement to acquire substantially all of the assets and specified liabilities of Webster Industries (“Webster”), a privately-held national manufacturer and distributor of retail and institutional private label food and trash bags, in a cash transaction valued at approximately $28.4 million, subject to a post-closing working capital adjustment.  Webster has operations in Montgomery, Alabama and is an operating division of Chelsea Industries, Inc.

Founded in 1957, Webster sold 93 million pounds of product with recorded net sales of $145 million in 2010.  Webster’s product lines include high value-added food contact products, which consist of food storage and freezer bags with a resealable zipper, bags with a slider close, fold top and twist tie food storage and sandwich bags, and conventional trash bag products.

“This is an exciting opportunity for AEP, as it allows us to enter into a new market with significant cross-selling potential,” said Brendan Barba, Chairman, President and Chief Executive Officer of the Company.  “The private-label market continues to thrive, and with a stronger, more diversified portfolio of products, we will be able to build on our success in the plastics industry and create additional long-term value for our shareholders.  We expect to achieve significant cost savings, realized principally from improved resin purchasing and other synergies throughout the combined organization.”

Jack Shields, president of Webster Industries, said “With virtually no overlap in our markets, this combination will provide a stronger platform from which we can enhance our product and service offering to customers.  Webster and AEP share a successful history, and this transaction will strengthen both organizations. We look forward to our future as a part of AEP.”

Commenting on the transaction, Ronald Casty, Chairman of Chelsea Industries, observed “This combination will make both companies stronger and better position them to prosper in the marketplace.  I am pleased that our Webster employees will be working with such a fine organization.”

The transaction is expected to close in two to three weeks and is subject to specified closing conditions.  The Company plans to finance the transaction through a combination of cash on hand and availability under its revolving credit facility.

About AEP Industries Inc.

AEP Industries Inc. manufactures, markets, and distributes an extensive range of plastic packaging products for the consumer, industrial and agricultural markets.  The Company has manufacturing operations in the United States and Canada.

About Webster Industries

Webster Industries is a full-line supplier of private label and branded trash bags, containers and food bags, including reclosable zipper bags to retailers and distributors throughout the country. Headquartered in Peabody, MA, Webster has been manufacturing and marketing high quality products since 1957, with manufacturing operations in Montgomery, Alabama.

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 the operations of Webster Industries, closing the acquisition of Webster Industries and realizing the anticipated synergies, resin and product pricing, volume, resin availability, the Company’s liquidity and market conditions generally, including the continuing impacts of the U.S. recession and the global credit and financial crisis, and other risks as described in the Company’s annual report on Form 10-K for the year ended October 31, 2010 and other subsequent reports, filed 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, which are made as of the date hereof, even if new information becomes available in the future.

AEP Industries Inc. Reports Fiscal 2011 Third Quarter and Year-To-Date Results

Friday, September 9th, 2011

South Hackensack, NJ, September 9, 2011 – AEP Industries Inc. (Nasdaq: AEPI, the “Company” or “AEP”) today reported financial results for its third quarter ended July 31, 2011.

Net sales for the third quarter of fiscal 2011 increased $41.5 million, or 20.3%, to $246.4 million from $204.9 million for the third quarter of fiscal 2010. Net sales for the nine months ended July 31, 2011 increased $135.0 million, or 23.4%, to $712.7 million from $577.7 million in the same period of the prior fiscal year. The increases were the result of an increase in sales volume coupled with an increase in average selling prices primarily attributable to the pass-through of higher resin costs to customers during the comparable periods.

“Through the first nine months of fiscal 2011, we have seen a significant increase in sales volume and solid year-over-year sales growth, demonstrating our continued ability to gain market share during this economic downturn,” said Brendan Barba, Chairman, President and Chief Executive Officer of the Company. “In addition to sales growth, our results are further supported by more efficient operations and improved plant utilization. We implemented
numerous cost controlling measures throughout the recession, and continue to achieve material savings from these significant actions. We anticipated AEP and our shareholders would benefit from these initiatives for many years, and we are pleased to successfully deliver on our expectations. Going forward, our financial strength and ample liquidity position will enable us to continue our successes.”

Gross profit for the third quarter of fiscal 2011 increased $1.7 million, or 5.0%, to $35.3 million from $33.6 million in the same quarter of the prior fiscal year. Excluding the impact of the LIFO reserve change of $5.7 million during the periods, gross profit increased $7.4 million primarily due to increased sales volumes and improved plant utilization, partially offset by continuing challenges in passing resin price increases through to customers in a timely fashion.

Gross profit for the first nine months of 2011 increased $17.2 million, or 22.2%, to $94.7 million from $77.5 million in the same period of the prior fiscal year. Excluding the impact of the LIFO reserve change of $1.8 million during the periods, gross profit increased $19.0 million primarily due to increased sales volumes and improved plant utilization.

Operating expenses for the third quarter of fiscal 2011 increased $2.7 million, or 11.5%, to $26.4 million and for the first nine months of fiscal 2011, operating expenses increased $5.8 million, or 8.2%, to $76.4 million, as compared to the same periods of the prior fiscal year. The increase in operating expense for both periods is primarily related to increased volumes sold, as well as an increase in accruals related to employee cash performance incentives. Furthermore, the positive impact on operating expenses of cost cutting initiatives implemented in the prior fiscal year was partially reduced by rising fuel costs.

Interest expense for the three and nine months ended July 31, 2011 increased $1.2 million and $3.1 million, respectively, as compared to the prior year comparable periods. The increase in interest rates (7.875% to 8.25%) and aggregate principal amount (from $160.2 million to $200.0 million) related to the Company’s refinancing of its senior notes resulted in an increase in interest expense of $1.1 million and $1.4 million, respectively, for the three and
nine months ended July 31, 2011 as compared to the same periods in the prior fiscal year. Also included in interest expense for the three and nine months ended July 31, 2011 is the write-off of unamortized issuance costs of $0.2 million and $1.2 million, respectively, related to the 2013 senior notes. Also included in interest expense for the nine months ended July 31, 2011 are the early tender fee paid to the holders of 2013 senior notes of $0.3 million and $0.2 million of fees related to the repurchase of the 2013 senior notes.

Adjusted EBITDA (defined below) was $9.1 million in the current quarter as compared to $4.6 million for the three months ended July 31, 2010. Adjusted EBITDA for the nine months ended July 31, 2011 was $44.1 million, as compared to $30.6 million for the nine months ended July 31, 2010.

Reconciliation of Non-GAAP Measures to GAAP

The Company defines Adjusted EBITDA as net income (loss) before discontinued operations, interest expense, income taxes, depreciation and amortization, changes in LIFO reserve, other non-operating income (expense) and non-cash share-based compensation expense (income). 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), other non-operating items and non-cash share-based compensation. Furthermore, management uses Adjusted EBITDA for business planning purposes and to evaluate and price potential acquisitions. 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.

Adjusted EBITDA is not a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and should not be considered in isolation or as an alternative to net income (loss), 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 net income (loss), the most directly comparable GAAP financial measure, to Adjusted EBITDA:

The Company invites all interested parties to listen to its third quarter conference call live over the Internet at www.aepinc.com on September 12, 2011, at 10:00 a.m. ET or by dialing 888-802-8577 for domestic participants or 404-665-9928 for international participants and referencing passcode 92082779. An archived version of the call will be made available on the Company’s website after the call is concluded and will remain available for one year.

AEP Industries Inc. manufactures, markets, and distributes an extensive range of plastic packaging products for the consumer, industrial and agricultural markets. The Company has manufacturing operations in the United States and Canada.

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 resin and product pricing, volume, resin availability, our new operating system, our liquidity and market conditions generally, including the continuing impacts of the U.S. recession and the global credit and financial crisis. Those and other risks are described in the Company’s annual report on Form 10-K for the year ended October 31, 2010 and other subsequent reports, filed 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, which are made as of the date hereof, even if new information becomes available in the future.

AEP Industries Fiscal 2011 Third Quarter Earnings Conference Call

Thursday, September 1st, 2011

The AEP Industries fiscal 2011 third quarter earnings Conference Call is scheduled for Monday, September 12th at 10:00 am.

Click here to access the call.