After close of markets yesterday, Reynolds Group released consolidated Q3/11 results which were generally in line with market expectations. Reported revenues were up 90%, driven by the Pactiv, Dopaco and Graham acquisitions (the latter was consolidated in the first week of September 2011). Cost pressure was evident as gross margin declined by 340 bps to 17% during the quarter. Adjusted EBITDA in Q3/11 was USD 563.1 mn, as lower earnings at SIG were offset by improved earnings at other divisions and positive contributions from the acquisitions.
On a PF basis and including all transactions (including Graham), LTM revenues were USD 13.7 bn. PF Adjusted EBITDA was USD 2.789 bn and included the various annualised synergies from the acquisitions. Net leverage remained high at 6.1x. Reynolds reported that it is on track to achieving the Pactiv synergies (USD 96 mn in YTD period and USD 168 mn run-rate synergies, vs. target of USD 225 mn). Cash restructuring costs have to a large extent been incurred to-date. The target for Graham is USD 75 mn in savings and operational synergies by the end of 2013. Reynolds reported reasonable headroom under its facility covenants (3.37x senior secured leverage vs. 4x test level and 2.05x interest cover vs. 1.65x test level).