Penford Corporation (Nasdaq:PENX), a leader in renewable,
natural-based ingredient systems for industrial and food
applications, today reported that consolidated sales for the
quarter ended May 31, 2010 were $61.9 million compared with $61.3
million a year ago. Diluted loss per share, including discontinued
operations, was $0.51. Net loss from continuing operations was $5.8
million, or $0.49 per diluted share, compared to a net loss of $4.3
million, or $0.39 per diluted share last year. A table summarizing
third quarter results from continuing operations is shown
below:
Penford Corporation – Financial Highlights
Quarter Ended (In thousands except per share data) 5/31/10
5/31/09
% Change
Industrial Ingredients: Sales
$ 42,010 $ 44,670 (6 )% Gross margin (3,847 ) (5,558 ) 31 %
Operating loss (6,847 ) (7,047 )
(1)
3 %
Food Ingredients: Sales $ 19,899 $ 16,606 20 %
Gross margin 7,112 5,573 28 % Operating income 5,018 3,365 49 %
Consolidated: Sales $ 61,909 $ 61,276 1 % Gross
margin 3,265 14 NA Operating loss (4,091 ) (6,036 ) (1) 32 % Net
Loss from continuing operations (5,758 ) (4,343 ) (33 )% Diluted
loss per share – continuing operations $ (0.49 ) $ (0.39 ) 26 %
Diluted loss per share – discontinued operations
$
(0.02 ) $ (0.27
) 93 % Diluted loss per share
$
(0.51 ) $ (0.66
) 23 % (1) Includes $1.1 million of net
insurance recoveries in the quarter ended 5/31/09
Third Fiscal Quarter Consolidated Financial Results
- Consolidated sales were
comparable to last year at $61.9 million. Higher volume offset
lower selling prices.
- Lower costs and higher
productivity improved results. Gross margin expanded $3.3 million
and unit costs declined by 11%.
- Quarterly operating losses were
$4.1 million compared with a loss of $7.1 million last year,
excluding net insurance recoveries of $1.1 million in fiscal
2009.
- Net loss from continuing
operations for the third quarter includes a $1.0 million pre-tax
non-cash charge related to unamortized transaction costs from the
Company’s prior credit facility, and a $1.6 million pre-tax
interest rate swap termination expense.
Food Ingredients Third Quarter Results
- The Food Ingredients business
reported record sales of $19.9 million for the quarter, increasing
20% over last year.
- Revenue grew by 20% in the
quarter from a combination of stronger sales of established
products and gains in new business in several areas.
- Gross margin and operating
income increased as unit costs fell 9%. Cost savings programs and
higher plant throughput contributed $1.3 million to higher quarter
profits.
Industrial Ingredients Third Quarter Results
- Sales of specialty products grew
15%.
- Industrial starch volumes
expanded by more than 10% as paper end-market fundamentals
improved. Higher volumes offset approximately half of the impact of
lower average unit selling prices.
- Ethanol volume represented just
under half of the Industrial product mix. Revenues and volume for
the third quarter of fiscal 2010 were comparable to a year
ago.
- Cost reduction program effects,
higher throughput rates, improved yields and lower raw material
costs impacted results by $7.2 million in the quarter.
Cash and Debt
- As previously announced, on
April 7, 2010, the Company issued $40 million of preferred stock,
which is mandatorily redeemable in seven years. The dividend rate
on the preferred stock is 15%, with 6% payable in cash quarterly.
The Company also entered into a five-year, $60 million, secured
revolving line of credit with a syndicate of banks that includes
the Bank of Montreal, Bank of America and Rabobank Nederland.
- The Company reduced debt levels
from $95.7 million at August 31, 2009 to $60.3 million, including
$40 million of preferred stock, at May 31, 2010.
- Year-to-date cash provided by
operations was $9.8 million compared to cash used in operations of
$12.3 million for the first nine months of fiscal 2009.
Improvements in working capital contributed $5.2 million to cash in
fiscal 2010.
Conference Call
Penford will host a conference call to discuss third quarter
financial and operational results today, July 8, 2010 at 9:00 a.m.
Mountain time (11:00 a.m. Eastern time). Access information for the
call and web-cast can be found at www.penx.com. To participate in
the call on July 8, 2010, please phone 1-877-407-9205 at 8:50 a.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 five 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 amount and timing of flood insurance recoveries;
the Company’s inability to comply with the terms of instruments
governing the Company’s debt; the effects of the current economic
recession as well as other 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; foreign
currency exchange rate fluctuations; 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 reports filed by the Company with
the Securities and Exchange Commission.
Penford Corporation
Financial Highlights Three months ended Nine months ended
May 31
May 31
(In thousands except per share data) 2010
2009 2010
2009 (unaudited)
Consolidated Results
Sales $ 61,909 $ 61,276 $ 191,272 $ 184,799 Loss from
continuing operations (5,758 ) (4,343 ) (6,503 ) (7,984 ) Income
(loss) from discontinued operations, net of tax (218 )
(3,072 ) 16,312 (21,978 ) Net income
(loss) $ (5,976 ) $ (7,415 ) $ 9,809 $ (29,962 ) Loss per
share, diluted – continuing operations $ (0.49 ) $ (0.39 ) $ (0.58
) $ (0.72 ) Income (loss) per share, diluted – discontinued
operations $ (0.02 ) $ (0.27 ) $ 1.43 $ (1.97 ) Income
(loss) per share, diluted $ (0.51 ) $ (0.66 ) $ 0.85 $ (2.69 )
Cash Flows Cash flow provided by (used in)
continuing operations: Operating activities $ (1,855 ) $ 1,725 $
9,759 $ (12,293 ) Investing activities (663 ) (5,254 ) 16,238
(7,981 ) Financing activities
2,518
5,106 (31,537
) 21,850 - 1,577 (5,540 )
1,576 Net cash flow provided (used in) by discontinued operations
(890 ) 876
(270 )
382 Total cash used $ (890 ) $ 2,453 $ (5,810 )
1,958
Balance Sheets May 31,
August 31, 2010 2009 (unaudited)
Current assets $ 61,636 $ 68,336 Current assets of discontinued
operations - 38,486 Property, plant and equipment, net 113,524
119,049 Other assets 33,618 28,147 Non-current assets of
discontinued operations - 4,227 Total assets
208,778 258,245 Current liabilities 27,035 44,958
Current liabilities of discontinued operations - 16,028 Long-term
debt 19,833 71,141 Redeemable preferred stock 32,940 Other
liabilities 42,628 43,908 Non-current liabilities of discontinued
operations - 2,851 Shareholders’ equity 86,342 79,359
Total liabilities and equity $ 208,778 $ 258,245
Penford Corporation
Consolidated Statements of Operations Three months ended
Nine months ended May 31 May 31 (In thousands except per share
data) 2010 2009
2010 2009 (unaudited)
Sales $ 61,909 $ 61,276 $ 191,272 $ 184,799 Cost of sales
58,644 61,262 171,317
181,960 Gross margin 3,265 14 19,955 2,839
Operating expenses 6,312 6,048 18,854 18,212 Research and
development expenses 1,044 1,077 3,165 3,368 Flood related costs,
net of insurance recoveries - (1,075 )
- (9,109 ) Loss from operations (4,091 )
(6,036 ) (2,064 ) (9,632 ) Non-operating income (expense),
net (2,606 ) 515 (1,997 ) 1,464 Interest expense 1,904
1,400 5,324 3,848
Loss before income taxes (8,601 ) (6,921 ) (9,385 ) (12,016
) Income tax benefit (2,843 ) (2,578 )
(2,882 ) (4,032 ) Loss from continuing operations
(5,758 ) (4,343 ) (6,503 ) (7,984 ) Income (loss) from
discontinued operations, net of tax (218 ) (3,072 ) 16,312 (21,978
) Net income (loss) $ (5,976 ) $
(7,415 ) $ 9,809 $ (29,962 )
Weighted average common shares and
equivalents outstanding, diluted
11,796 11,176 11,396 11,169 Loss per share, diluted –
continuing operations $ (0.49 ) $ (0.39 ) $ (0.58 ) $ (0.72 )
Income (loss) per share, diluted – discontinued operations $ (0.02
) $ (0.27 ) $ 1.43 $ (1.97 ) Income (loss) per share,
diluted $ (0.51 ) $ (0.66 ) $ 0.85 $ (2.69 ) Dividends
declared per common share $ - $ - $ - $ 0.12
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