ICOC Ico (MM)

HOUSTON, Feb. 4 /PRNewswire-FirstCall/ -- ICO, Inc. (NASDAQ:ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the quarter ended December 31, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO) First Quarter Highlights -- Revenues of $79.4 million, a decrease of $31.5 million or 28% from the prior year -- Volumes declined 21% compared to the prior year due to global economic downturn and unfavorable resin price environment -- Operating loss of $0.4 million, compared with operating income of $6.5 million in the prior year -- Net loss per share of $.04 -- Total debt outstanding decreased $7.1 million, or 14%, sequentially -- Cash flow from operating activities by continuing operations of $13.5 million, up from cash outflow of $11.4 million in the prior year -- Cash on hand of $11.0 million, up $5.4 million or 96% from September 30, 2008 First Quarter 2009 vs. First Quarter 2008 Revenues for the three months ended December 31, 2008 were $79.4 million, a decrease of $31.5 million or 28% compared to the same quarter of the previous year. The global economic downturn and the unfavorable resin price environment during the quarter were the primary causes of lower demand in all of our segments, which in turn caused a significant decrease in revenues. The unfavorable resin price environment was characterized by resin prices reaching historically high levels in the fourth quarter of fiscal year 2008, followed by a rapid and dramatic decline during the first quarter of fiscal year 2009. Downward resin price trends typically lead our customers to de-stock their inventory, which has the effect of reducing their demand for our products and services. Our total volumes sold decreased 21% during the first fiscal quarter, negatively impacting revenues by $18.3 million. The translation effect of the stronger U.S. Dollar was responsible for $9.2 million of the revenue decline, and the changes in prices and product mix negatively impacted revenues by an additional $4.0 million. As a result of the lower volumes sold and the unfavorable resin price environment, gross margins declined from 17.2% to 12.7% compared to the same quarter of the previous year, and gross profit declined from $19.1 million to $10.1 million over the same period. During the first quarter of fiscal year 2009, selling, general and administrative expenses ("SG&A") declined $1.5 million or 14% to $9.1 million as a result of the translation effect of the stronger U.S. Dollar, lower external professional fees and lower compensation costs. During the first quarter of fiscal year 2009, we recognized $0.6 million of bad debt expense. We also recognized a net benefit in impairment, restructuring and other costs (income) of $0.3 million primarily as a result of an insurance reimbursement related to financial losses resulting from the loss of power in September 2008 from Hurricane Ike at our Bayshore Industrial facility. Year-over-year operating income declined from income of $6.5 million to a loss of $0.4 million as a result of the lower volumes sold and the effect of the unfavorable resin price environment. Interest expense declined $0.4 million due to lower average borrowings. We also recognized a foreign currency loss of $0.3 million due to significant fluctuations in currencies during the quarter. Net loss for the quarter was $1.1 million, down from net income of $3.5 million in the prior year period. Net loss per share was $.04, compared with net income per share of $.13 in the prior year period. First Quarter 2009 vs. Fourth Quarter 2008 Comparing the sequential quarterly results, revenues decreased $28.6 million or 27%. A 12% reduction in volumes sold negatively impacted revenues by $14.4 million. The translation effect of the stronger U.S. Dollar contributed to $10.4 million of the reduction in revenues. Lower average selling prices as a result of lower resin prices had a $3.8 million negative impact on revenues. The sequential volume reduction was caused by a reduction in customer demand resulting from the global economic slowdown, the effect of the unfavorable resin price environment, as well as seasonal factors, as we usually experience reduced demand during our first fiscal quarter due to the holiday period in December. The decline in volumes and the unfavorable resin price environment led to a sequential reduction in gross profit of $6.2 million, or 38%. SG&A declined $0.7 million primarily due to the translation effect of the stronger U.S. Dollar. Income from continuing operations declined $3.3 million. "During the first quarter of fiscal year 2009, we altered our focus from offense to defense, protecting both our cash flow and the value of our Company," stated A. John Knapp, Jr., President and CEO. "The decline in resin prices during the quarter and the global economic slowdown impacted our results for the first quarter. However, we lowered our inventory position in the quarter, and with resin prices appearing to have stabilized, we believe we are positioned to meet the challenges ahead. During the first quarter we generated cash flow from operating activities by continuing operations of $13.5 million less capital expenditures of $1.4 million, which allowed us to decrease our net debt (total debt less cash) by $12.5 million from September 30, 2008." Balance Sheet and Liquidity Total debt outstanding as of December 31, 2008 was $42.8 million, a decline of $7.1 million from September 30, 2008. Our cash balance at quarter-end was $11.0 million, a sequential increase of $5.4 million, or 96%. These improvements were accomplished in part by positive cash flow from operating activities by continuing operations of $13.5 million during the quarter, less net capital expenditures of $1.4 million. Approximately $0.6 million of the capital expenditures related to our facility relocation from New Jersey to Pennsylvania, which is now substantially complete. Our available global borrowing capacity at December 31, 2008 was $55.3 million. Conference Call on the Web A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal 2009 first quarter results can be accessed at 10:00 a.m. Central Standard Time on Thursday, February 5, 2009 at http://www.videonewswire.com/event.asp?id=54967 where the webcast replay will be accessible for ninety days. The webcast replay will also be accessible on the Company's website at http://www.icopolymers.com/ for a period of twelve months. (Minimum requirements to listen to the broadcast are: The Windows Media Player software, downloadable free from http://www.microsoft.com/windows/windowsmedia/player/download/download.asp x and at least a 28.8Kbps connection to the Internet.) Investors are invited to participate in the conference by dialing 847-413-3238, passcode 23621551. A replay of the conference call will be available by dialing 630-652-3044, passcode 23621551. About ICO, Inc. With 20 locations in 9 countries, ICO produces custom polymer powders for rotational molding and other polymer related businesses, such as the textile, metal coating and masterbatch markets. ICO remains an industry leader in size reduction, compounding and other tolling services for plastic and non-plastic materials. ICO's Bayshore Industrial subsidiary produces specialty compounds, concentrates and additives primarily for the plastic film industry. Additional information about ICO, Inc. can be found on the Company's website at http://www.icopolymers.com/. Contact: CFO - Bradley T. Leuschner at 713-351-4100. Certain matters discussed in this press release are "forward-looking statements," involving certain risks, uncertainties, and assumptions, intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. The Company's statements regarding trends in the marketplace and potential future results are examples of such forward-looking statements. The forward-looking statements include, but are not limited to: restrictions imposed by the Company's outstanding indebtedness; changes in the cost and availability of resins (polymers) and other raw materials; general economic conditions; demand for the Company's services and products; business cycles and other industry conditions; international risks; operational risks; currency translation risks; the Company's lack of asset diversification; the Company's ability to manage inventories, develop technology and proprietary know-how, and attract and retain key personnel; as well as other factors detailed in the Company's form 10-K for the fiscal year ended September 30, 2008 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Any forward-looking statements are made only as of the date of this press release, and the Company undertakes no obligation to publically update any such forward-looking statements to reflect subsequent events or circumstances. ICO, Inc. Consolidated Statement of Operations (Unaudited and in thousands, except per share data and percentages) Three Months Ended December 31, September 30, ---------------------- ------------- 2008 2007 2008 ---------- ---------- ------------- Product Sales $71,857 $101,188 $99,274 Toll Services 7,501 9,677 8,718 ---------- ---------- ---------- Total Revenues 79,358 110,865 107,992 Cost of sales and services (exclusive of depreciation shown separately below) 69,248 91,773 91,712 ---------- ---------- ---------- Gross Profit (1) 10,110 19,092 16,280 Selling, general and administrative expense 9,138 10,603 9,823 Depreciation and amortization 1,713 1,795 1,951 Impairment, restructuring and other costs (income) (293) 198 408 ---------- ---------- ---------- Operating income (loss) (448) 6,496 4,098 Other income (expense): Interest expense, net (639) (1,023) (904) Other income (expense) (331) (133) (395) ---------- ---------- ---------- Income (loss) from continuing operations before income taxes (1,418) 5,340 2,799 Provision (benefit) for income taxes (342) 1,814 569 ---------- ---------- ---------- Income (loss) from continuing operations (1,076) 3,526 2,230 Income (loss) from discontinued operations, net of income taxes - (16) (52) ---------- ---------- ---------- Net income (loss) $(1,076) $3,510 $2,178 Preferred Stock dividends - (1) - ---------- ---------- ---------- Net income applicable to Common Stock $(1,076) $3,509 $2,178 ========== ========== ========== Basic and diluted income (loss) from continuing operations per common share $(0.04) $0.13 $0.08 ========== ========== ========== Basic and diluted income (loss) per common share $(0.04) $0.13 $0.08 ========== ========== ========== Basic weighted average shares outstanding 27,099,000 26,914,000 27,474,000 ========== ========== ========== Diluted weighted average shares outstanding 27,099,000 28,008,000 27,864,000 ========== ========== ========== Gross Margin (2) 12.7% 17.2% 15.1% (1) Calculated as Total Revenues minus Cost of Sales and Services, exclusive of Depreciation Expense. (2) Calculated as Gross Profit divided by Total Revenues. ICO, Inc. Consolidated Balance Sheet (Unaudited and in thousands, except share data and ratios) December 31, September 30, 2008 2008 ------------ ------------- ASSETS ------ Current assets: Cash and cash equivalents $10,975 $5,589 Trade receivables 59,884 75,756 Inventories 35,919 53,458 Deferred income taxes 2,314 2,056 Prepaid and other current assets 8,495 10,514 -------- -------- Total current assets 117,587 147,373 -------- -------- Property, plant and equipment, net 59,001 61,164 Goodwill 8,154 8,689 Other assets 3,799 3,870 -------- -------- Total assets $188,541 $221,096 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Short-term borrowings under credit facilities $6,009 $9,607 Current portion of long-term debt 13,629 15,201 Accounts payable 24,689 37,674 Accrued salaries and wages 4,568 5,978 Other current liabilities 10,194 11,912 -------- -------- Total current liabilities 59,089 80,372 -------- -------- Long-term debt, net of current portion 23,207 25,122 Deferred income taxes 4,727 5,039 Other long-term liabilities 2,295 2,728 -------- -------- Total liabilities 89,318 113,261 -------- -------- Commitments and contingencies - - Stockholders' equity: Undesignated preferred stock - - Common stock 55,247 54,756 Treasury stock (3,017) (543) Additional paid-in capital 72,428 72,241 Accumulated other comprehensive income (loss) (2,718) 3,022 Accumulated deficit (22,717) (21,641) -------- -------- Total stockholders' equity 99,223 107,835 -------- -------- Total liabilities and stockholders' equity $188,541 $221,096 ======== ======== OTHER BALANCE SHEET DATA ------------------------ Working capital $58,498 $67,001 Current ratio 2.0 1.8 Total debt $42,845 $49,930 Debt-to-capitalization 30.2% 31.6% ICO, Inc. Supplemental Segment Information (Unaudited and in thousands, except percentages) Revenues Three Months Ended % of % of December 31: 2008 Total 2007 Total Change % ------- ----- ------- ----- ------ --- ICO Europe $34,762 44% $46,313 42% $(11,551) (25%) Bayshore Industrial 18,330 23% 31,777 29% (13,447) (42%) ICO Asia Pacific 14,481 18% 17,945 16% (3,464) (19%) ICO Polymers North America 8,889 11% 10,331 9% (1,442) (14%) ICO Brazil 2,896 4% 4,499 4% (1,603) (36%) ------- --- -------- --- -------- Consolidated $79,358 100% $110,865 100% $(31,507) (28%) ======= === ======== === ======== Operating income (loss) Three Months Ended December 31: 2008 2007 Change % ------ ------ ------ --- ICO Europe $(149) $2,998 $(3,147) (105%) Bayshore Industrial 1,718 3,928 (2,210) (56%) ICO Asia Pacific (1,287) 862 (2,149) (249%) ICO Polymers North America 582 446 136 30% ICO Brazil (58) 137 (195) (142%) ------ ------ ------- Total Operations 806 8,371 (7,565) (90%) Unallocated General Corporate Expense (1,254) (1,875) 621 (33%) ------ ------ ------- Consolidated $(448) $6,496 $(6,944) (107%) ====== ====== ======= Operating income (loss) as a percentage of revenues Three Months Ended December 31, ------------------- 2008 2007 Change ---- ---- ------ ICO Europe 0% 6% (6%) Bayshore Industrial 9% 12% (3%) ICO Asia Pacific (9%) 5% (14%) ICO Polymers North America 7% 4% 3% ICO Brazil (2%) 3% (5%) Consolidated (1%) 6% (7%) ICO, Inc. Supplemental Segment Information (cont'd.) (Unaudited and in thousands, except percentages) Revenues Three Months Ended ----------------------------------------------- December 31, September 30, -------------- -------------- % of % of 2008 Total 2008 Total Change % ------- ----- -------- ----- -------- --- ICO Europe $34,762 44% $48,489 45% $(13,727) (28%) Bayshore Industrial 18,330 23% 19,173 18% (843) (4%) ICO Asia Pacific 14,481 18% 23,401 22% (8,920) (38%) ICO Polymers North America 8,889 11% 10,119 9% (1,230) (12%) ICO Brazil 2,896 4% 6,810 6% (3,914) (57%) ------- --- -------- --- -------- Consolidated $79,358 100% $107,992 100% $(28,634) (27%) ======= === ======== === ======== Operating income (loss) Three Months Ended ---------------------------------------- December 31, September 30, 2008 2008 Change % ----------- ------------ ------ --- ICO Europe $(149) $2,782 $(2,931) (105%) Bayshore Industrial 1,718 1,486 232 16% ICO Asia Pacific (1,287) 210 (1,497) (713%) ICO Polymers North America 582 424 158 37% ICO Brazil (58) 429 (487) (114%) ------ ------ ------- Total Operations 806 5,331 (4,525) (85%) Unallocated General Corporate Expense (1,254) (1,233) (21) 2% ------ ------ ------- Consolidated $(448) $4,098 $(4,546) (111%) ====== ====== ======= Operating income (loss) as a percentage of revenues Three Months Ended ---------------------------------- December 31, September 30, 2008 2008 Change ------------ ------------ ------ ICO Europe 0% 6% (6%) Bayshore Industrial 9% 8% 1% ICO Asia Pacific (9%) 1% (10%) ICO Polymers North America 7% 4% 3% ICO Brazil (2%) 6% (8%) Consolidated (1%) 4% (5%) http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO http://photoarchive.ap.org/ DATASOURCE: ICO, Inc. CONTACT: Bradley T. Leuschner, CFO of ICO, Inc., +1-713-351-4100 Web Site: http://www.icopolymers.com/

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