Constar International Inc. Announces First Quarter Results.Business Editors PHILADELPHIA--(BUSINESS WIRE)--April 28, 2004 Constar International Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CNST CNST Clinical Negligence Scheme for Trusts (UK) CNST Certified Network Systems Technician ) today announced its financial results for the first quarter ended March 31, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the first quarter rose to $191.7 million, a 14 percent increase over the $168.8 million for the 2003 first quarter. The growth reflects increased shipments of conventional products, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency translation and the pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. of slightly increased resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing prices. These increases were partially offset by price reductions implemented to extend key contracts and meet competitive pricing. First quarter gross profit was $9.4 million compared to $12.1 million in the 2003 first quarter. The reduced gross profit reflects price reductions implemented to extend key contracts and meet competitive pricing. In addition, as a result of a reduced seasonal build of inventory compared to last year's first quarter, the Company generated unfavorable inventory absorption which negatively impacted gross profit. However, gross profit benefited from the increase in sales units and reduced spending on warehousing and material handling expenses as well as cost savings from the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). project undertaken in the second half of last year. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become in the first quarter was $14.3 million. This compares to $20.4 million in the first quarter of last year. The reduction in gross profit and an increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were the primary contributors to the reduction in adjusted EBITDA. EBITDA is defined by the Company as net income (loss) before interest expense, provision for income taxes, depreciation and amortization and the cumulative effect of a change in accounting for goodwill. The Company's Senior Secured Credit Agreement adjusts EBITDA for certain non-cash accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and uses the adjusted EBITDA figure to determine the Company's compliance with certain financial covenants in the Senior Secured Credit Agreement. In the first quarter of 2004, these increases totaled $0.4 million. This definition of adjusted EBITDA may not be comparable to adjusted EBITDA as defined by other companies. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Hoffman, Constar's President and Chief Executive Officer, commented, "We are pleased that first quarter results were consistent with our full year guidance. The Company achieved these results through ongoing efforts to reduce costs, increase volume and closely manage working capital. We remain in a difficult pricing environment for conventional and off-the-shelf custom PET bottles and are addressing price strategies to improve margins. However, we see positive factors with the custom bottle contracts scheduled to ramp-up later in the year, increased interest in Oxbar(R), our proprietary oxygen barrier technology, and the continuing trend of conversions from glass containers to PET." First quarter operating expenses (defined as selling and administrative expenses, research and technology expense, foreign exchange adjustments and other expense, net) were $8.5 million compared to $6.3 million for the same period last year. The increase reflects higher administrative expenses and legal expenses related to a patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. action to protect the Company's Oxbar(R) oxygen barrier technology. In addition, the Company incurred a charge for an insurance deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). related to a fire at a warehouse in the United Kingdom. Interest expense in the first quarter was $10.0 million compared to $8.3 million in the prior year period. The increase reflects higher debt levels when compared to the same period in 2003 as well as the increase in the Company's effective interest rate due to the December December: see month. 2003 refinancing Refinancing An extension and/or increase in amount of existing debt. . Loss before taxes and minority interest was $9.0 million in the first quarter compared to a loss of $2.5 million in the first quarter of 2003. The primary contributors to this decline were the previously noted reduced gross profit, increased operating expenses and higher interest expense. The Company reported a first quarter net loss of $8.9 million, or $0.74 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $1.8 million, or $0.15 per diluted share, in the 2003 first quarter. Conference Call, Web Cast Information The Company will hold a conference call on April 28, 2004, at 9:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss this news release and the Company's business outlook. Forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and other material information will be discussed on this conference call. The dial-in numbers for the conference call are (800) 818-5264 (domestic callers) or (913) 981-4910 (international callers). The passcode is "Constar." The conference call will also be broadcast live over the internet and can be accessed via the Company's website: www.constar.net. Please log on approximately 15 minutes prior to the call to register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any necessary audio software. A replay of the broadcast will be available from 1:00 p.m. EDT on April 28, 2004, through midnight on May 5, 2004 and can be accessed via telephone by dialing (888) 203-1112 (domestic callers) or (719) 457-0820 (international callers) and entering passcode 794750, or via the web at www.constar.net where it will be archived. Cautionary Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for historical information, all information in this press release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors, which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. These risks, uncertainties and other factors include, among other things, the continued conversion from metal, glass and other materials for packaging to plastic packaging; increasing demand for packaging requiring the Company's proprietary technologies and know-how; the Company's ability to protect its existing technologies and to develop new technologies; the Company's ability to control costs; the Company's relationship with its key customers; the Company's ability to achieve improved utilization on its equipment; the terms upon which the Company acquires resin and its ability to reflect those terms in its sales; the Company's debt levels and its ability to service existing debt; the Company's ability to comply with restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. contained in the instruments governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. its indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. or obtain waivers if not in compliance; the Company's ability to realize the expected benefits of the previously announced restructuring and to complete the restructuring at its expected costs; the success of the Company's customers in selling their products in their markets; the Company's customers purchasing volumes that do not fall short of projections delivered to the Company; risks associated with the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; legal and regulatory proceedings and developments; general economic and political conditions; seasonal fluctuations in demand and the impact of weather on sales; the Company's ability to identify trends in the markets and to offer new solutions that address the changing needs of these markets; the Company's ability to successfully execute its business model and enhance its product mix; the Company's ability to compete successfully against competitors; and the other risks identified from time to time in the Company's SEC filings. The Company does not intend to review or revise any particular forward-looking statement in light of future events. About Constar Philadelphia-based Constar is a leading global producer of PET (polyethylene polyethylene (pŏl'ēĕth`əlēn), widely used plastic. It is a polymer of ethylene, CH2=CH2, having the formula (-CH2-CH2-)n terephthalate Ter`eph´tha`late n. 1. (Chem.) A salt of terephthalic acid. ) plastic containers for food, soft drinks and water. The Company provides full-service packaging solutions, from product design and engineering, to ongoing customer support. Its customers include many of the world's leading branded consumer products companies. Tables to Follow
CONSTAR INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS COMPARISON
(in thousands, except per share data)
Three Months Ended
March 31,
-------------------------
2004 2003
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Net customer sales $190,745 $168,433
Net sales to affiliates 993 358
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Net sales 191,738 168,791
Cost of products sold, excluding depreciation 169,440 142,732
Depreciation 12,898 14,002
------------ ------------
Gross profit 9,400 12,057
Selling and administrative expenses 6,277 4,759
Research and technology expenses 1,374 1,419
Interest expense 9,982 8,283
Foreign exchange adjustments 46 47
Other expense, net 754 63
------------ ------------
Loss before taxes and minority interests (9,033) (2,514)
Benefit for income taxes 116 610
Minority interests 5 73
------------ ------------
Net loss $(8,912) $(1,831)
============ ============
Per common share data:
Basic and Diluted
Net loss $(0.74) $(0.15)
Weighted average shares outstanding:
Basic and diluted shares 12,000 12,000
Reconciliation of net loss to adjusted EBITDA
Net loss $(8,912) $(1,831)
Add back:
Interest expense 9,982 8,283
Taxes (116) (610)
Depreciation 12,898 14,002
------------ ------------
EBITDA 13,852 19,844
Other adjustments under Senior Secured
Credit Agreements 403 540
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Adjusted EBITDA $14,255 $20,384
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SELECTED BALANCE SHEET DATA
---------------------------------------------
03/31/2004 12/31/2003
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Cash and cash equivalents $20,949 $16,478
Debt:
Senior Revolving Credit 40,000 25,000
Term B Loan 122,876 123,188
Second Lien Term Loan 75,000 75,000
Senior Subordinated Debt 172,748 172,683
Other 1,565 1,547
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