Consolidated revenues for the second quarter up 16% from the prior
year.
Gross margin expands 37% from last year to $9.4 million.
Acquisition of Carolina Starches for $8.5 million closed in January
2012.
Company intends to redeem preferred stock valued at approximately
$20 million (including accrued dividends).
Penford Corporation (Nasdaq: PENX), a leader in renewable ingredient
systems for industrial and food applications, today reported that
consolidated sales for the quarter ended February 29, 2012 increased 16%
to $86.2 million from $74.3 million a year ago. Gross margin expanded
37% to $9.4 million. The Company reported a second quarter net loss of
$0.3 million or $0.03 per diluted share compared with a net loss of $1.6
million or $0.13 per diluted share last year.
A table summarizing quarterly financial results is shown below:
Penford Corporation - Financial Highlights
(In thousands)
Q2 FY 12
Q1 FY 12
Q4 FY 11
Q3 FY11
Q2 FY11
Food Ingredients:
Sales
$
24,904
$
25,924
$
22,554
$
23,637
$
17,713
Gross margin
7,626
8,221
6,766
7,808
5,385
Operating income
5,247
5,959
4,135
5,517
3,576
Depreciation and amortization
498
505
486
510
553
Industrial Ingredients:
Sales
$
61,284
$
64,822
$
61,085
$
61,596
$
56,591
Gross margin
1,775
3,586
552
2,609
1,458
Operating income (loss)
(985)
743
(3,023)
(734)
(1,103)
Depreciation and amortization
2,697
2,629
2,691
2,712
2,696
Consolidated:
Sales
$
86,188
$
90,746
$
83,638
$
85,233
$
74,304
Gross margin
9,401
11,808
7,317
10,418
6,843
Operating income (loss)
1,650
4,359
(1,518)
2,506
488
Depreciation and amortization
3,574
3,512
3,556
3,598
3,618
Food Ingredients
Food Ingredients reported record second quarter sales, gross margin
and operating income.
Revenue grew more than 40% to $24.9 million. Sales of coating
applications expanded over 30% reflecting volume growth and improved
pricing. Revenue from applications for protein, bakery, companion pet
treats, and gluten free segments expanded at double-digit rates.
Gross margin increased over 40% to $7.6 million on higher pricing and
volume gains from existing customers and new business.
Operating income rose 47% to $5.2 million.
Industrial Ingredients
Revenue increased 8% to $61.3 million. The increase includes revenue
from the Carolina Starches business, growth in specialty starches, and
higher processing fees. Improved revenue was partially offset by a 6%
decline in ethanol sales partly due to production downtime to
undertake equipment maintenance.
Ethanol sales were $24.2 million. Comparable industry crush margins
fell by about $0.08 per gallon or 15% from a year ago. Second quarter
industry crush margins were about $0.45 per gallon or 50% below the
first quarter of fiscal 2012.
Sales of specialty bio-products grew over 25% on new business, higher
volumes at existing accounts and unit pricing.
Gross margin expanded $0.3 million from a year ago, as higher average
unit selling prices for industrial starch outpaced rising corn and
chemical costs. Lower natural gas costs also contributed to a higher
margin.
Consolidated Results
Corporate expense rose $0.6 million on higher professional fees,
employee costs and acquisition-related charges.
Bank debt rose to $30.7 million reflecting the $8.5 million
acquisition of Carolina Starches in January 2012.
The effective tax rate for the first half was 82%, which reflects
non-deductible preferred stock dividends.
Redemption of Preferred Stock
The Company intends to provide notice to the holder of its Series A
15% Cumulative Non-Voting Non-Convertible Preferred Stock that
approximately $20 million of principal and accrued dividends will be
redeemed next month. The stock will be called without premium at issue
price.
The redemption will be funded by utilizing the Company's existing
revolving debt facility.
Acquisition of Carolina Starches
The Company closed on the acquisition of the Carolina Starches
business and the integration is proceeding as planned.
Revenues, cost of goods sold and a portion of the selling, general and
administrative expenses reported by Carolina Starches since the
acquisition have been included in the results of operations of the
Industrial Ingredients segment.
Conference Call
Penford will host a conference call to discuss second quarter results
today, April 9, 2012 at 1:00 p.m. Mountain Time (3:00 p.m. Eastern
Time). Access information for the call and webcast can be found at www.penx.com.
To participate in the call on April 9, 2012, please phone 1-877-407-9205
at 12:50 p.m. Mountain Time. A replay will be available at www.penx.com.
About Penford Corporation
Penford Corporation develops, manufactures and markets specialty,
natural-based ingredient systems for a variety of industrial and food
applications. Penford has seven manufacturing and/or research locations
in the United States.
The statements contained in this release that are not historical
facts are forward-looking statements that represent management's beliefs
and assumptions based on currently available information.Forward-looking
statements can be identified by the use of words such as "believes,"
"may," "will," "looks," "should," "could," "anticipates," "expects," or
comparable terminology or by discussions of strategies or trends.Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it cannot give any assurances
that these expectations will prove to be correct.Such statements
by their nature involve substantial risks and uncertainties that could
significantly affect expected results.Actual future results
could differ materially from those described in such forward-looking
statements, and the Company does not intend to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.Among the factors that could cause
actual results to differ materially are the risks and uncertainties
discussed in this release and those described from time to time in other
filings with the Securities and Exchange Commission which include, but
are not limited to: competition; the possibility of interruption of
business activities due to equipment problems, accidents, strikes,
weather or other factors; product development risk; changes in corn and
other raw material prices and availability; the Company's inability to
comply with the terms of instruments governing the Company's debt and
preferred stock instruments; changes in general economic conditions or
developments with respect to specific industries or customers affecting
demand for the Company's products,including unfavorable shifts
in product mix; unanticipated costs, expenses or third party claims;
interest rate, chemical and energy cost volatility; changes in returns
on pension plan assets and/or assumptions used for determining employee
benefit expense and obligations;unforeseen developments in the
industries in which Penford operates; and other factors described in the
"Risk Factors" section in reportsfiled with the Securities and
Exchange Commission.
Penford Corporation
Financial Highlights
Three months ended
Six months ended
(In thousands except per share data)
February 29, 2012
February 28, 2011
February 29, 2012
February 28, 2011
(unaudited)
(unaudited)
Consolidated Results
Sales
$
86,188
$
74,304
$
176,934
$
146,570
Income from operations
$
1,650
$
488
$
6,009
$
3,456
Net income (loss)
$
(340)
$
(1,575)
$
252
$
(1,239)
Income (loss) per share, diluted
$
(0.03)
$
(0.13)
$
0.02
$
(0.10)
Cash Flows
Cash flow provided by (used in) operations:
Operating activities
$
(3,146)
$
(6,626)
$
9,036
$
(1,959)
Investing activities
(11,928)
(1,718)
(14,375)
(3,403)
Financing activities
15,405
8,320
5,653
5,339
Total cash provided by (used in ) operations
$
331
$
(24)
$
314
$
(23)
Balance Sheets
February 29,
August 31,
2012
2011
(unaudited)
Current assets
$
81,054
$
74,077
Property, plant and equipment, net
111,134
107,372
Other assets
30,110
30,965
Total assets
222,298
212,414
Current liabilities
28,883
30,155
Long-term debt
32,210
23,802
Redeemable preferred stock
41,564
38,982
Other liabilities
34,582
34,010
Shareholders' equity
85,059
85,465
Total liabilities and equity
$
222,298
$
212,414
Penford Corporation
Consolidated Statements of Operations
Three months ended
Six months ended
(In thousands except per share data)
February 29, 2012
February 28,2011
February 29, 2012
February 28,2011
(unaudited)
(unaudited)
Sales
$
86,188
$
74,304
$
176,934
$
146,570
Cost of sales
76,787
67,461
155,725
130,470
Gross margin
9,401
6,843
21,209
16,100
Operating expenses
6,434
5,235
12,543
10,430
Research and development expenses
1,317
1,120
2,657
2,214
Income from operations
1,650
488
6,009
3,456
Interest expense
2,430
2,303
4,827
4,572
Non-operating income (expense), net
216
(1
)
236
88
Income (loss) before income taxes
(564
)
(1,816
)
1,418
(1,028
)
Income tax expense (benefit)
(224
)
(241
)
1,166
211
Net income (loss)
$
(340
)
$
(1,575
)
$
252
$
(1,239
)
Weighted average common shares and equivalents
outstanding, diluted
12,300
12,257
12,327
12,239
Income (loss) per share, diluted
$
(0.03
)
$
(0.13
)
$
0.02
$
(0.10
)
Penford Corporation Steven O. Cordier, 303-649-1900 Senior
Vice President and CFO steve.cordier@penx.com
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