Continuing operations show worth for Pregis

Pregis Corporation, a leading international manufacturer, marketer and supplier of protective packaging products and specialty packaging solutions, has reported a 7.8 percent net sales increase in its third quarter results as it moves to focus on protective packaging.
 
The company generated net sales of US$241.1 million, an increase of 7.8 percent versus net sales of US$223.7 million in the third quarter of 2010.
 
For the third quarter of 2011, Pregis generated net sales from continuing operations of US$212 million, an increase of 7.2 percent versus net sales from continuing operations of US$197.7 million in the third quarter of 2010. It said the increase was driven primarily by the impact of selling price increases and favorable foreign currency translation.
 
Gross margin as a percent of net sales decreased year-over-year to 19.9 percent for the third quarter of 2011, compared to 20.5 percent for the same period of 2010. The year-on-year decline in gross margin as a percentage of net sales was due to cost increases of over US$5 million in key raw materials offset by the impact of selling price increases implemented during the past twelve months.
 
During the third quarter, Pregis announced the sale of multiple businesses, the proceeds of which will be used to repay a portion of the company's ABL credit facility and will be otherwise retained for debt repayment, general corporate purposes and future reinvestment. This included entering into a definitive agreement with an affiliate of Sun European Partners LLP, the European advisor to Sun Capital Partners, Inc, to sell the Kobusch-Sengewald business for €160 million (approximately US$220 million). Kobusch Sengewald included Pregis’s flexibles and rigid packaging businesses, which has historically been included in its specialty packaging segment and manufactures flexible and foodservice packaging such as films, bags, pouches and labels.
 
Glenn Fischer, president and chief executive officer, said: ‘I am very pleased with our strong third quarter performance. Our adjusted EBITDA from continuing and discontinued operations of US$22.9 million was the highest quarterly EBITDA performance since the third quarter of 2009. We were able to drive year-over-year EBITDA improvement by continuing to reduce our cost structure, as well as offsetting significant resin cost increases with the impact of our selling price initiatives over the past twelve months.
 
‘In October, we announced the divestiture of our Hexacomb and Kobusch-Sengewald business units. The sale of these businesses is part of Pregis' objective to optimize our overall business unit portfolio. The divestment of these businesses will allow us to focus our energy on driving the operating performance of our core global protective packaging business.’