DEERFIELD, Ill., May 9 Pregis Corporation, a leadinginternational manufacturer, marketer, and supplier of protective packagingproducts and specialty packaging solutions, today announced its 2008 firstquarter financial results.
For the first quarter of 2008, the Company generated net sales of $259.3million, an increase of 8.5% over net sales of $239.0 million in the firstquarter of 2007. Excluding the impact of favorable foreign currencytranslation and sales from two acquisitions made in the second half of 2007,the quarter's net sales were down 3% compared to the prior year quarter.
Gross profit margin, as a percent of net sales, was 21.9% in the firstquarter of 2008, compared to 25.5% in the first quarter of 2007. The declinein gross margin resulted primarily from significantly increased costs of resinand other raw materials in the 2008 period, which approximated $7 million ofyear-over-year unfavorability. In order to mitigate these increases in rawmaterial costs, the Company implemented selling price increases throughout itsbusinesses in the first quarter of 2008. However, the Company has experienceda lag in realizing the benefits from these recent price increases relative tothe impact of the increased raw material costs, which resulted in thereduction in its gross margin percentage in the first quarter of 2008.
Commenting on the Company's results, Mike McDonnell, President and ChiefExecutive Officer, stated, "Our first quarter results were negatively impactedby raw material cost inflation, as well as the weakened economic environmentin the U.S. as well as in Europe. Although resin costs stabilized somewhatduring the first three months of 2008, we expect continued volatility andremain committed to our disciplined focus on achieving pricing for value andfull cost recovery as rapidly as possibly. In addition, we continue to driveefficiency initiatives throughout the organization, both to mitigate theweakened economic environment and to solidify our foundation for futuregrowth."
For the first quarter of 2008, operating income was $8.3 million comparedto $16.5 million in the first quarter of 2007, with the reduction drivenprimarily by increased raw material costs, as noted above.
Comments on segment net sales performance for the first quarter of 2008are as follows:
A summary of a significant measure required by the Company's indentures ispresented in the supplemental information at the end of this release.
The Company will conduct an investor conference call to review its 2008first quarter results on Monday, May 12, 2008 at 10:00 a.m. ET (9:00 a.m. CT).The call can be accessed through the following dial-in numbers: Domestic:866-510-0708; International: 617-597-5377; Participant Passcode: 95937816. Areplay of the conference call will be available through May 23, 2008. Thereplay may be accessed using the following dial-in information: Domestic:888-286-8010; International: 617-801-6888; Passcode: 73894836.
Pregis Corporation is a leading global provider of innovative protective,flexible, and foodservice packaging and hospital supply products. Thespecialty-packaging leader currently operates 47 facilities in 18 countriesaround the world. Pregis Corporation is a wholly owned subsidiary of PregisHolding II Corporation. For more information about Pregis, visit the Company'sweb site at http://www.pregis.com.
Safe Harbor Statement:
This press release contains forward-looking statements within the meaningof Section 27A of the Securities Act and Section 21E of the SecuritiesExchange Act of 1934, as amended. You can generally identify forward-lookingstatements by the Company's use of forward-looking terminology such as"anticipate," "believe," "continue," "could," "estimate," "expect," "intend,""may," "might," "plan