Penford Corporation (Nasdaq: PENX), a leader in renewable
ingredient systems for industrial and food applications, today
reported that consolidated sales for the quarter ended November 30,
2011 increased 25.6% to $90.7 million from $72.3 million a year
ago. Gross margin expanded $2.6 million from last year.
Consolidated net income rose 76% to $0.6 million, or $0.05 per
diluted share, from $0.3 million, or $0.03 per diluted share last
year.
A table summarizing quarterly financial results is shown
below:
Penford Corporation – Financial Highlights
(In thousands)
Q1
FY 12 Q4 FY 11 Q3 FY11
Q2 FY11 Q1
FY11 Food Ingredients: Sales $ 25,924 $ 22,554
$ 23,637 $ 17,713 $ 18,336 Gross margin 8,221 6,766 7,808 5,385
6,353 Operating income 5,959 4,135 5,517 3,576 4,808 Depreciation
and amortization 505 486 510 553 561
Industrial
Ingredients: Sales $ 64,822 $ 61,085 $ 61,596 $ 56,591 $ 53,930
Gross margin 3,586 552 2,609 1,458 2,904 Operating income (loss)
743 (3,023) (734) (1,103) 142 Depreciation and amortization 2,629
2,691 2,712 2,696 2,713
Consolidated: Sales $ 90,746
$ 83,638 $ 85,233 $ 74,304 $ 72,266 Gross margin 11,808 7,317
10,418 6,843 9,257 Operating income (loss) 4,359 (1,518) 2,506 488
2,969 Depreciation and amortization 3,512 3,556 3,598 3,618 3,643
Food Ingredients
- Food Ingredients reported record
quarterly sales, gross margin and operating income.
- Revenue grew more than 40%; all end
market segments expanded at double-digit rates.
- Gross margin increased 29% from volume
growth and higher pricing. Product mix changes reflect new business
gains in specialty modified products, as well as expansion of value
added corn-based applications.
- Operating income rose 24% to $6.0
million on volume and margin increases.
Industrial Ingredients
- Revenue increased 20% to $64.8 million
reflecting higher corn prices that were passed through to
customers, increased pricing from processing and manufacturing
fees, higher ethanol volumes, and growth of specialty
bio-products.
Industrial Ingredients (continued)
- Ethanol sales expanded 32% to $32.4
million. Market prices for ethanol rose about 25% from a year ago
while comparable industry crush margins improved by approximately
$0.10 per gallon, or about 15% from last year.
- Specialty bio-products sales grew over
40% on new business gains, higher volumes at existing accounts and
unit pricing.
- Gross margin expanded $0.7 million from
a year ago, as higher average unit selling prices for industrial
starch and ethanol outpaced rapidly rising corn and chemical costs.
Industry net corn costs increased more than 50% from last
year.
- Operating results improved $0.6 million
from last year’s first quarter and increased sequentially over the
fourth quarter of fiscal 2011 by $3.8 million on higher throughput
rates, lower unit costs and improved ethanol crush margins.
Consolidated Results
- Corporate expenses increased by $0.4
million on higher professional fees, employee costs and acquisition
related charges.
- Outstanding bank debt on the Company’s
$60 million bank facility fell by $6 million from August 31, 2011
to $16.1 million.
- Cash flow from operations improved to
$12.2 million from $4.7 million last year.
- The effective tax rate for the first
quarter was 70%, which reflects the increased tax expense for the
non-deductible preferred stock dividends. The preferred stock
dividends are recorded as interest expense in the statements of
operations.
Carolina Starches Acquisition
- The Company reported last quarter that
it had executed a definitive agreement to purchase the stock and
certain assets of the business currently operated by Carolina
Starches. The Company expects to close the transaction in
January.
Conference Call
Penford will host a conference call to discuss first quarter
fiscal 2012 financial and operational results today, January 9,
2012 at 9:00 a.m. Mountain time (11:00 a.m. Eastern time). Access
information for the call and webcast can be found at www.penx.com. To participate in the call on
January 9, 2012, 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 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; 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
November 30
(In thousands except per share data)
2011 2010 (unaudited)
Consolidated Results
Sales $ 90,746 $ 72,266 Income from operations $
4,359 $ 2,969 Net income $ 592 $ 336 Earnings per
share, diluted $ 0.05 $ 0.03
Cash Flows
Cash flow provided by (used in): Operating activities $ 12,182 $
4,667 Investing activities (2,447) (1,685) Financing activities
(9,752) (2,981) Total cash provided (used in)
$ (17) $ 1
Balance Sheets
November 30, August 31, 2011 2011
(unaudited) Current assets $ 69,811 $ 74,077 Property, plant and
equipment, net 106,705 107,372 Other assets 29,201
30,965 Total assets 205,717 212,414 Current
liabilities 28,549 30,155 Long-term debt 17,691 23,802 Redeemable
preferred stock 40,260 38,982 Other liabilities 34,175 34,010
Shareholders’ equity 85,042 85,465 Total liabilities
and equity $ 205,717 $ 212,414
Penford Corporation
Consolidated Statements of
Operations
Three months ended
November 30
(In thousands except per share data) 2011 2010
(unaudited) Sales $ 90,746 $ 72,266 Cost of sales
78,938 63,009 Gross margin 11,808 9,257
Operating expenses 6,109 5,194 Research and development
expenses 1,340 1,094 Income from
operations 4,359 2,969 Interest expense (2,397 ) (2,270 )
Other non-operating income, net 20 89
Income before income taxes 1,982 788 Income tax
expense 1,390 452 Net income $
592 $ 336 Weighted average common shares and
equivalents outstanding, diluted 12,330 12,339 Earnings per
share, diluted $ 0.05 $ 0.03
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