News Column

Winpak Reports First Quarter Results

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WINNIPEG, MANITOBA -- (Marketwired) -- 04/24/13 -- Winpak Ltd. (TSX: WPK) today reports consolidated results in US dollars for the first quarter of 2013, which ended on March 31, 2013.

Quarter Ended (1) ------------------------------ March 31 April 1 2013 2012 ------------------------------ (restated (2))(thousands of US dollars, except per share amounts)Revenue 169,949 171,805 ------------------------------Net income 15,850 16,682 ------------------------------Income tax expense 6,862 8,185Net finance expense 105 269Depreciation and amortization 6,571 6,519 ------------------------------EBITDA (3) 29,388 31,655 ------------------------------Net income attributable to equity holders of the Company 15,989 16,551Net (loss) income attributable to non- controlling interests (139) 131 ------------------------------Net income 15,850 16,682 ------------------------------Basic and fully diluted earnings per share (cents) 25 25 ------------------------------



Winpak Ltd. manufactures and distributes high-quality packaging materials and related packaging machines. The Company's products are used primarily for the packaging of perishable foods, beverages and in health-care applications.

(1) The 2013 fiscal year comprises 52 weeks and the 2012 fiscal year comprised 53 weeks. Each quarter of 2013 and 2012 comprises 13 weeks with the exception of the first quarter of 2012, which comprised 14 weeks.

(2) Amounts have been restated to reflect the retrospective impact of amended IAS 19 "Employee Benefits", which included an increase in net finance expense due to the reduction in the expected return on defined benefit pension plan assets and an increase in general and administrative expenses following the reclassification of certain plan administration costs.

(3) EBITDA is not a recognized measure under International Financial Reporting Standards (IFRS). Management believes that in addition to net income, this measure provides useful supplemental information to investors including an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Investors should be cautioned, however, that this measure should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company's performance. The Company's method of calculating this measure may differ from other companies, and accordingly, the results may not be comparable.

(presented in US dollars)

Forward-looking statements: Certain statements made in the following report contain forward-looking statements including, but not limited to, statements concerning possible or assumed future results of operations of the Company. Forward-looking statements represent the Company's intentions, plans, expectations and beliefs, and are not guarantees of future performance. Such forward-looking statements represent Winpak's current views based on information as at the date of this report. They involve risks, uncertainties and assumptions and the Company's actual results could differ, which in some cases may be material, from those anticipated in these forward-looking statements. Unless otherwise required by applicable securities law, we disclaim any intention or obligation to publicly update or revise this information, whether as a result of new information, future events or otherwise. The Company cautions investors not to place undue reliance upon forward-looking statements.

Financial Performance

Net income attributable to common shareholders for the first quarter of 2013 was $16.0 million or 25 cents in earnings per share compared to $16.6 million or 25 cents per share in the corresponding quarter of 2012, a decrease of 3.4 percent. Operating expense savings and a lower income tax expense each contributed approximately 1.0 cent in earnings per share while a lesser amount attributable to non-controlling interests provided an additional 0.5 cents in earnings per share. This helped to offset the gross profit decline which reduced earnings per share by 2.5 cents.

As discussed in the 2012 first quarter Management's Discussion and Analysis, the 2012 fiscal year consisted of 53 weeks, with the first quarter of that year comprised of 14 weeks, one week more than the current period. The additional week included in the 2012 first quarter was essentially the last week of the 2011 calendar year which contained several statutory holidays. As a consequence, it is estimated that this additional week contributed in excess of 5 percent to first quarter 2012 volumes and net income results.

Revenue

Revenue for the first quarter of 2013 was $169.9 million, $1.9 million or 1.1 percent less than the first quarter of 2012. Volumes exceeded the prior year quarter by 0.3 percent, in spite of the additional week of revenues in the first quarter of 2012 as noted above and the divestiture of the drink cup product line in the second half of 2012 which unfavorably impacted revenues by 1.1 percent in the current period. Normalizing for these two factors results in a respectable overall volume growth in the quarter approaching 7 percent. Demand was, however, uneven across the Company's product groups. Rigid container volume growth was particularly brisk, exceeding 10 percent, and after adjusting for the additional week in 2012 and the divestiture of the drink cup product line, rigid volumes exceeded 20 percent led by specialty beverage and custom retort containers. Packaging machinery also had a strong quarter, advancing by more than 50 percent. Volumes in lidding and specialty film packaging fell just short of the prior year quarter, however, progressed in the low single-digit percentage range when the 2012 first quarter is normalized to 13 weeks. Modified atmosphere packaging was more challenged as volumes failed to reach the levels of the prior year corresponding quarter, exhibiting a small decline on normalized volumes. Weak demand for biaxially oriented nylon resulted in volumes receding in the low double-digit range as customer order levels in this product line continued their depressed levels from the latter half of 2012. Overall selling prices declined by 1.4 percent in comparison to the first quarter of 2012, while foreign exchange had a negligible impact on revenues in the period.

Gross profit margins

Gross profit margins fell by nearly one full percentage point to 28.8 percent of revenue from the 29.7 percent of revenue recorded in the same quarter of 2012. Raw material cost increases in the quarter, particularly for polypropylene products, resulted in margin contraction due to the lag in indexing of customer selling prices to raw material costs of approximately three months. In addition, manufacturing performance was not as favorable as the first quarter of 2012, which was particularly solid due to greater production volumes. The net result of these factors was a reduction in earnings per share of 2.5 cents compared to the prior year first quarter.

For reference, the following presents the weighted indexed purchased cost of Winpak's eight primary raw materials in the reported quarter and each of the preceding eight quarters, where base year 2001 = 100. The index was rebalanced as of December 31, 2012 to reflect the mix of the eight primary raw materials purchased in 2012.

----------------------------------------------------------------------------Quarter and Year 1/13 4/12 3/12 2/12 1/12 4/11 3/11 2/11 1/11----------------------------------------------------------------------------Purchase Price Index 176.5 170.6 167.3 174.5 174.7 172.3 182.9 184.5 168.0----------------------------------------------------------------------------



The purchase price index advanced by 3.5 percent compared to the fourth quarter of 2012. However, while most of the Company's major raw materials either experienced low single-digit increases or decreases, polypropylene resin prices jumped by nearly 30 percent in the quarter. Some pricing relief is expected for this resin in the second quarter while the remaining raw material input costs are expected to remain stable in the near term.

Expenses and Other

Operating expenses, adjusted for foreign exchange, declined by 2.2 percent in comparison to the first quarter of 2012 while sales volumes advanced by 0.3 percent. This decline occurred even though pre-production costs climbed by $0.5 million in the current period. The exit of the drink cup business, prudent spending, as well as one less week in the first quarter of 2013 in comparison to the prior year period, were the main drivers behind the savings achieved in operating expenses. This helped to supplement earnings per share by 1.0 cent while less income attributable to non-controlling interests provided an additional 0.5 cents in earnings per share in the quarter. A slightly lower effective income tax rate combined with a reduction in the income tax provision for prior periods contributed a further 1.0 cent in earnings per share. Foreign exchange also had a small negative impact on earnings per share of less than one cent in the first quarter of 2013, in relation to the corresponding 2012 period, due primarily to foreign exchange translation losses on Canadian net monetary assets as the Canadian dollar weakened against its US counterpart in the current three-month period.

Capital Resources, Cash Flow and Liquidity

The Company's cash and cash equivalents balance ended the first quarter at $129.2 million, a decline of $4.1 million from the start of the year. Winpak generated solid cash flows from operating activities before changes in working capital of $29.1 million, although down $3.6 million from the prior year first quarter. Working capital additions consumed $6.3 million, primarily in accounts receivable and inventories. Cash was also utilized for property, plant and equipment additions of $15.0 million, income tax payments of $7.7 million, dividends of $2.0 million, employee defined benefit plan payments of $1.9 million and other items of $0.3 million. The Company remains debt-free and has unutilized operating lines of $38 million, with the ability to increase borrowing capacity further should the need arise.

Summary of Quarterly Results

Thousands of US dollars, except per share amounts (US cents) --------------------------------------------------------------- Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 2013 2012(i) 2012(i) 2012(i) 2012(i) 2011(i) 2011(i) 2011(i) ---------------------------------------------------------------Revenue 169,949 173,226 165,399 159,648 171,805 171,516 170,670 161,340Net income attributable to equity holders of the Company 15,989 22,071 16,783 15,850 16,551 18,319 14,212 16,021EPS 25 34 26 25 25 28 22 25 ---------------------------------------------------------------



(i)Amounts have been restated to reflect the retrospective impact of amended IAS 19 "Employee Benefits", which included an increase in net finance expense due to the reduction in the expected return on defined benefit pension plan assets and an increase in general and administrative expenses following the reclassification of certain plan administration costs.

Looking Forward

The entire Winpak organization remains committed to the Company's billion dollar revenue goal by the end of 2015. Sales and marketing efforts have been intensified and capital projects geared toward growth are progressing well. The major extrusion/lamination lines at the Company's Vaudreuil lidding facility and Winnipeg modified atmosphere packaging (MAP) plant are both in the commissioning stage and should be manufacturing commercial product by the third quarter of this year. The 82,000 square foot addition to the Winnipeg MAP building should also be completed by the end of 2013. Demand across all product lines was rather uneven in the first quarter and there are mixed signals as to the future performance of the overall economy. Although demand for the Company's products, being primarily food and health-care related, is quite resilient regardless of the economic environment, the overall growth in GDP will nonetheless influence revenue growth to some degree at the Company's existing customer accounts. Raw material costs are projected to remain rather stable in the short-term with the exception of polypropylene which is expected to fall after a steep incline in the first quarter. This should result in some margin stability when the lag in selling price indexing agreements catches up to the recent raw material cost changes. It is expected that pre-production costs will temporarily rise in the second and third quarters as the new lines strive to achieve commercial status, the extent of which will depend on the technical challenges that may be encountered. In addition, as new capacity becomes available, costs may temporarily increase as product development expenses peak and capacity is under-utilized as revenues are added over an extended period. Margins, however, are not expected to deviate from historical levels by more than a few percentage points during this period. The Company also remains dedicated to seeking out acquisition opportunities to complement its core competencies of food and health-care packaging. With Winpak's extremely solid financial footing, it has the resources necessary to complete a significant acquisition while remaining strongly committed to the organic growth capital investment plan.

Winpak Ltd.

Interim Condensed Consolidated Financial Statements

First Quarter Ended: March 31, 2013

These interim condensed consolidated financial statements have not been audited or reviewed by the Company's independent external auditor. For a complete set of notes to the condensed consolidated financial statements, refer to www.sedar.com or the Company's website, www.winpak.com.

Winpak Ltd.Condensed Consolidated Balance Sheets(thousands of US dollars) (unaudited) March 31 December 30 2013 2012----------------------------------------------------------------------------AssetsCurrent assets: Cash and cash equivalents 129,248 133,303 Trade and other receivables 90,670 86,797 Income taxes receivable 1,766 389 Inventories 92,292 90,246 Prepaid expenses 4,602 3,864 Derivative financial instruments 72 288 --------------------------- 318,650 314,887Non-current assets: Property, plant and equipment 310,042 301,678 Intangible assets 14,698 14,551 Deferred tax assets 3,384 3,448 --------------------------- 328,124 319,677 ---------------------------Total assets 646,774 634,564 ---------------------------Equity and LiabilitiesCurrent liabilities: Trade payables and other liabilities 59,484 59,184 Provisions 427 427 Income taxes payable 4,989 5,417 Derivative financial instruments 375 - --------------------------- 65,275 65,028Non-current liabilities: Employee benefit plan liabilities 13,759 14,511 Deferred income 11,335 11,475 Provisions 7,245 7,399 Deferred tax liabilities 19,611 20,063 --------------------------- 51,950 53,448 ---------------------------Total liabilities 117,225 118,476 ---------------------------Equity: Share capital 29,195 29,195 Reserves (220) 250 Retained earnings 484,995 470,925 ---------------------------Total equity attributable to equity holders of the Company 513,970 500,370Non-controlling interests 15,579 15,718 ---------------------------Total equity 529,549 516,088 ---------------------------Total equity and liabilities 646,774 634,564 ---------------------------Winpak Ltd.Condensed Consolidated Statements of Income(thousands of US dollars, except per share amounts) (unaudited) Quarter Ended --------------------------- March 31 April 1 2013 2012---------------------------------------------------------------------------- (restated)Revenue 169,949 171,805Cost of sales (121,078) (120,768) ---------------------------Gross profit 48,871 51,037Sales, marketing and distribution expenses (14,095) (14,649)General and administrative expenses (7,823) (7,949)Research and technical expenses (3,384) (3,704)Pre-production expenses (526) (35)Other (expenses) income (226) 436 ---------------------------Income from operations 22,817 25,136Finance income 105 129Finance expense (210) (398) ---------------------------Income before income taxes 22,712 24,867Income tax expense (6,862) (8,185) ---------------------------Net income for the period 15,850 16,682 ---------------------------Attributable to: Equity holders of the Company 15,989 16,551 Non-controlling interests (139) 131 --------------------------- 15,850 16,682 ---------------------------Basic and fully diluted earnings per share - cents 25 25 ---------------------------Condensed Consolidated Statements of Comprehensive Income(thousands of US dollars) (unaudited) Quarter Ended --------------------------- March 31 April 1 2013 2012---------------------------------------------------------------------------- (restated)Net income for the period 15,850 16,682 ---------------------------Items that will not be reclassified to the statements of income:Cash flow hedge (losses) gains recognized (102) 408Cash flow hedge (gains) losses transferred to property, plant and equipment (33) 25Employee benefit plan remeasurements - 595Income tax on items that will not be classified to the statements of income - (185) --------------------------- (135) 843 ---------------------------Items that are or may be reclassified subsequently to the statements of income:Cash flow hedge (losses) gains recognized (436) 294Cash flow hedge (gains) losses transferred to the statements of income (21) 123Income tax on items that are or may be reclassified subsequently to the statements of income 122 (236) --------------------------- (335) 181 ---------------------------Other comprehensive (loss) income for the period - net of income tax (470) 1,024 ---------------------------Comprehensive income for the period 15,380 17,706 ---------------------------Attributable to: Equity holders of the Company 15,519 17,575 Non-controlling interests (139) 131 --------------------------- 15,380 17,706 ---------------------------Winpak Ltd.Condensed Consolidated Statements of Changes in Equity(thousands of US dollars) (unaudited) Attributable to equity holders of the Company -------------------------------------------------------- Non- Share Retained controlling Total capital Reserves earnings Total interests equity----------------------------------------------------------------------------Balance at December 26, 2011 29,195 (426) 409,008 437,777 15,846 453,623 -------------------------------------------------------- Comprehensive income for the period Cash flow hedge gains, net of tax - 506 - 506 - 506 Cash flow hedge losses transferred to the statements of income, net of tax - 83 - 83 - 83 Cash flow hedge losses transferred to property, plant and equipment - 25 - 25 - 25 Employee benefit plan remeasurements, net of tax (restated) - - 410 410 - 410 -------------------------------------------------------- Other comprehensive income (restated) - 614 410 1,024 - 1,024 Net income for the period (restated) - - 16,551 16,551 131 16,682 -------------------------------------------------------- Comprehensive income for the period - 614 16,961 17,575 131 17,706 -------------------------------------------------------- Dividends - - (1,955) (1,955) - (1,955) --------------------------------------------------------Balance at April 1, 2012 29,195 188 424,014 453,397 15,977 469,374------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Balance at December 31, 2012 29,195 250 470,925 500,370 15,718 516,088 -------------------------------------------------------- Comprehensive (loss) income for the period Cash flow hedge losses, net of tax - (422) - (422) - (422) Cash flow hedge gains transferred to the statements of income, net of tax - (15) - (15) - (15) Cash flow hedge gains transferred to property, plant and equipment - (33) - (33) - (33) -------------------------------------------------------- Other comprehensive (loss) - (470) (470) - (470) Net income (loss) for the period - - 15,989 15,989 (139) 15,850 -------------------------------------------------------- Comprehensive (loss) income for the period - (470) 15,989 15,519 (139) 15,380 -------------------------------------------------------- Dividends - - (1,919) (1,919) - (1,919) --------------------------------------------------------Balance at March 31, 2013 29,195 (220) 484,995 513,970 15,579 529,549 --------------------------------------------------------Winpak Ltd.Condensed Consolidated Statements of Cash Flows(thousands of US dollars) (unaudited) Quarter Ended --------------------------- March 31 April 1 2013 2012---------------------------------------------------------------------------- (restated)Cash provided by (used in):Operating activities: Net income for the period 15,850 16,682 Items not involving cash: Depreciation 6,759 6,412 Amortization - deferred income (294) (305) Amortization - intangible assets 106 412 Employee defined benefit plan expenses 1,037 1,139 Net finance expense 105 269 Income tax expense 6,862 8,185 Other (1,319) (98) --------------------------- Cash flow from operating activities before the following 29,106 32,696 Change in working capital: Trade and other receivables (3,873) 4,725 Inventories (2,046) (9,012) Prepaid expenses (738) (827) Trade payables and other liabilities 363 (2,107) Provisions (186) - Employee defined benefit plan payments (1,872) (1,725) Income tax paid (7,668) (5,481) Interest received 75 131 Interest paid (5) (2) --------------------------- Net cash from operating activities 13,156 18,398 ---------------------------Investing activities: Acquisition of property, plant and equipment - net (14,996) (19,664) Acquisition of intangible assets (258) (428) --------------------------- (15,254) (20,092) ---------------------------Financing activities: Dividends paid (1,957) (1,910) ---------------------------Change in cash and cash equivalents (4,055) (3,604)Cash and cash equivalents, beginning of period 133,303 126,879 ---------------------------Cash and cash equivalents, end of period 129,248 123,275 ---------------------------





Contacts:
Winpak Ltd.
K.P. Kuchma
Vice President and CFO
(204) 831-2254

Winpak Ltd.
B.J. Berry
President and CEO
(204) 831-2216
www.winpak.com



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