ICOC Ico (MM)

HOUSTON, Dec. 8 /PRNewswire-FirstCall/ -- ICO, Inc. (NASDAQ:ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the year ended September 30, 2008 and the fourth quarter ended September 30, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO) Fourth Quarter Highlights -- Revenues of $108.0 million, a decrease of $15.6 million or 13% from the prior year -- Volumes declined 21% compared to the fourth quarter of fiscal 2007 due to slowing economy and hurricanes in the Gulf Coast -- Operating income of $4.1 million, down 58% year-over-year -- Net income per share of $.08 fully diluted -- Total debt outstanding decreased $8.5 million or 15% sequentially as a result of positive cash flow and stronger U.S. Dollar Fourth Quarter 2008 vs. Fourth Quarter 2007 Revenues for the three months ended September 30, 2008 were $108.0 million, a decrease of $15.6 million or 13% compared to the same quarter of the previous year. A 21% decrease in volumes sold negatively impacted revenues by $20.3 million, and changes in product mix and prices negatively impacted revenues by $2.7 million. The volume reduction was most notable at the Company's Bayshore Industrial and Australian locations. The decline in revenues from the volume reduction was partially offset by the translation effect of stronger foreign currencies which benefited revenues by $7.4 million. Gross margin declined from 17.3% to 15.1%, primarily as a result of lower volumes sold. During the fourth quarter of fiscal 2008, the Company decided to close its plant in the United Arab Emirates and recognized an impairment charge of $0.4 million. In the fourth quarter of fiscal 2007, the Company recognized a net benefit of $0.3 million in impairment, restructuring and other income. The decline in gross margin and the higher impairment, restructuring and other costs of $0.7 million contributed to a decline in operating income of $5.6 million or 58% compared to the prior year quarter. Income tax expense decreased $2.3 million or 80% primarily due to the decrease in income before taxes. As a result of the above, income from continuing operations decreased $3.8 million or 63%, compared to the prior year quarter, to $.08 per share. Fourth Quarter 2008 vs. Third Quarter 2008 Comparing the sequential quarterly results, revenues decreased $7.7 million or 7%, caused primarily by a reduction in volumes sold due in part to the seasonal weakness in Europe on account of vacation periods, as well as by the effect from Hurricane Ike which hit the U.S. Gulf Coast in September 2008. The decline in volumes sold led to a reduction in gross margin from 16.0% to 15.1%. The decline in gross margin, as well as the impact from the impairment charges relating to the United Arab Emirates plant closure, led to a decline in operating income of $2.4 million or 37%. Income from continuing operations declined $2.4 million or 52% as a result of the above. "Our fiscal year fourth quarter was certainly a challenge for us," stated A. John Knapp, Jr., the Company's President and CEO. "We were thankful that we did not sustain major damage from Hurricane Ike, but we were impacted from the loss of power at two of our facilities in the Gulf Coast area. We also made the decision to close our plant in the United Arab Emirates and recognized an impairment charge of $0.4 million. We believe the Middle East is still an important market for the Company and we believe we can serve the region better at the current time from our other locations around the world. During the quarter, we generated satisfactory cash flow from operations of $7.4 million after capital expenditures." Balance Sheet and Liquidity Total debt outstanding as of September 30, 2008 was $49.9 million, a decline of $8.5 million from June 30, 2008. This reduction was accomplished in part by positive cash flow from operations of $10.0 million less net capital expenditures of $2.5 million. Approximately $1.3 million of the capital expenditures related to our facility relocation from New Jersey to Pennsylvania. Our available global borrowing capacity at September 30, 2008 was $62.8 million. During the quarter ended September 30, 2008, the Company repurchased 90,329 shares of its Common Stock for $0.5 million pursuant to the Share Repurchase Program approved by the Board of Directors in September 2008. In October 2008, the Company repurchased 487,752 shares of its Common Stock for total cash consideration of $2.5 million. The specific timing and amount of future repurchases will vary based on market conditions and other factors, and the Share Repurchase program may be modified, extended or terminated at any time. Conference Call on the Web A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal 2008 fourth quarter results can be accessed at 10:00 a.m. Central Time on Tuesday, December 9, 2008 at http://www.videonewswire.com/event.asp?id=53584 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.aspx and at least a 28.8Kbps connection to the Internet.) Investors are invited to participate in the conference by dialing 847-413-3238, passcode 23273960. A replay of the conference call will be available by dialing 630-652-3044, passcode 23273960. 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 segment 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/. This press release contains forward-looking statements, which are not statements of historical facts and involve certain risks, uncertainties and assumptions. These 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, 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 global inventory, 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, 2007 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. ICO, Inc. Consolidated Statement of Operations (Unaudited and in thousands, except per share data and percentages) Three Months Ended Twelve Months Ended September 30, June 30, September 30, ----------------------- ----------- ------------------------- 2008 2007 2008 2008 2007 ----------- ----------- ----------- ----------- ------------ Product Sales $99,274 $113,901 $105,494 $408,076 $379,344 Toll Services 8,718 9,658 10,224 38,625 38,573 ----------- ----------- ----------- ----------- ------------ Total Revenues 107,992 123,559 115,718 446,701 417,917 Cost of sales and services (exclusive of depreciation shown separately below) 91,712 102,195 97,234 373,557 344,171 ----------- ----------- ----------- ----------- ------------ Gross Profit (1) 16,280 21,364 18,484 73,144 73,746 Selling, general and administrative expense 9,823 10,236 10,441 41,254 37,676 Depreciation and amortization 1,951 1,785 1,932 7,531 7,251 Impairment, restructuring and other costs (income) 408 (343) (356) (1,348) (997) ----------- ----------- ----------- ----------- ------------ Operating income 4,098 9,686 6,467 25,707 29,816 Other income (expense): Interest expense, net (904) (926) (1,039) (4,062) (3,227) Other income (expense) (395) 181 165 (431) (115) ----------- ----------- ----------- ----------- ------------ Income from continuing operations before income taxes 2,799 8,941 5,593 21,214 26,474 Provision for income taxes 569 2,893 960 5,832 6,712 ----------- ----------- ----------- ----------- ------------ Income from continuing operations 2,230 6,048 4,633 15,382 19,762 Income (loss) from discontinued operations, net of income taxes (52) (65) - (68) 1,356 ----------- ----------- ----------- ----------- ------------ Net income $2,178 $5,983 $4,633 $15,314 $21,118 Preferred Stock dividends - (82) - (1) (554) Net gain on redemption of Preferred Stock - - - - 6,023 ----------- ----------- ----------- ----------- ------------ Net income applicable to Common Stock $2,178 $5,901 $4,633 $15,313 $26,587 =========== =========== =========== =========== ============ Basic income from continuing operations per common share $0.08 $0.23 $0.17 $0.56 $0.97 =========== =========== =========== =========== ============ Basic net income per common share $0.08 $0.22 $0.17 $0.56 $1.02 =========== =========== =========== =========== ============ Diluted income from continuing operations per common share $0.08 $0.22 $0.17 $0.55 $0.71 =========== =========== =========== =========== ============ Diluted net income per common share $0.08 $0.21 $0.17 $0.55 $0.76 =========== =========== =========== =========== ============ Basic weighted average shares outstanding 27,474,000 26,312,000 27,433,000 27,271,000 26,030,000 =========== =========== =========== =========== ============ Diluted weighted average shares outstanding 27,864,000 27,890,000 27,975,000 27,994,000 27,891,000 =========== =========== =========== =========== ============ Gross Margin (2) 15.1% 17.3% 16.0% 16.4% 17.6% (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) September 30, September 30, 2008 2007 -------------- ------------- ASSETS Current assets: Cash and cash equivalents $5,589 $8,561 Trade receivables 75,756 95,142 Inventories 53,458 60,420 Deferred income taxes 2,056 1,778 Prepaid and other current assets 10,514 9,924 -------------- ------------- Total current assets 147,373 175,825 -------------- ------------- Property, plant and equipment, net 61,164 57,396 Goodwill 8,689 9,228 Other assets 3,870 3,768 -------------- ------------- Total assets $221,096 $246,217 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings under credit facilities $9,607 $16,133 Current portion of long-term debt 15,201 11,611 Accounts payable 37,674 66,906 Accrued salaries and wages 5,978 7,313 Other current liabilities 11,912 16,004 -------------- ------------- Total current liabilities 80,372 117,967 -------------- ------------- Long-term debt, net of current portion 25,122 29,605 Deferred income taxes 5,039 4,820 Other long-term liabilities 2,728 2,783 -------------- ------------- Total liabilities 113,261 155,175 -------------- ------------- Commitments and contingencies - - Stockholders' equity: Convertible exchangeable preferred stock - 2 Undesignated preferred stock - - Common stock 54,756 47,659 Additional paid-in capital 72,241 74,920 Accumulated other comprehensive income 3,022 5,416 Accumulated deficit (21,641) (36,955) Treasury Stock (543) - -------------- ------------- Total stockholders' equity 107,835 91,042 -------------- ------------- Total liabilities and stockholders' equity $221,096 $246,217 ============== ============= OTHER BALANCE SHEET DATA Working capital $67,001 $57,858 Current ratio 1.8 1.5 Total debt $49,930 $57,349 Debt-to-capitalization 31.6% 38.6% ICO, Inc. Supplemental Segment Information (Unaudited and in thousands, except percentages) Revenues Three Months Ended % of % of September 30: 2008 Total 2007 Total Change % ---------- ------ ---------- ------ --------- ----- ICO Europe $48,489 45% $45,957 37% $2,532 6% Bayshore Industrial 19,173 18% 38,895 32% (19,722) (51%) ICO Asia Pacific 23,401 22% 25,166 20% (1,765) (7%) ICO Polymers North America 10,119 9% 9,891 8% 228 2% ICO Brazil 6,810 6% 3,650 3% 3,160 87% ---------- ------ ---------- ------ --------- Consolidated $107,992 100% $123,559 100% $(15,567) (13%) ========== ====== ========== ====== ========= Fiscal Year Ended % of % of September 30: 2008 Total 2007 Total Change % ---------- ------ ---------- ------ --------- ----- ICO Europe $207,209 46% $170,135 41% $37,074 22% Bayshore Industrial 90,736 20% 108,360 26% (17,624) (16%) ICO Asia Pacific 82,390 19% 84,790 20% (2,400) (3%) ICO Polymers North America 45,090 10% 41,377 10% 3,713 9% ICO Brazil 21,276 5% 13,255 3% 8,021 61% ---------- ------ ---------- ------ --------- Consolidated $446,701 100% $417,917 100% $28,784 7% ========== ====== ========== ====== ========= Operating income (loss) Three Months Ended September 30: 2008 2007 Change % -------- ------- --------- ------ ICO Europe $2,782 $2,449 $333 14% Bayshore Industrial 1,486 5,716 (4,230) (74%) ICO Asia Pacific 210 1,753 (1,543) (88%) ICO Polymers North America 424 1,709 (1,285) (75%) ICO Brazil 429 34 395 1162% -------- ------- --------- Total Operations 5,331 11,661 (6,330) (54%) Unallocated General Corporate Expense (1,233) (1,975) 742 (38%) -------- ------- --------- Consolidated $4,098 $9,686 $(5,588) (58%) ======== ======= ========= Fiscal Year Ended September 30: 2008 2007 Change % -------- ------- --------- ------ ICO Europe $13,201 $9,008 $4,193 47% Bayshore Industrial 10,241 15,358 (5,117) (33%) ICO Asia Pacific 1,822 5,914 (4,092) (69%) ICO Polymers North America 5,618 6,022 (404) (7%) ICO Brazil 982 301 681 226% -------- ------- --------- Total Operations 31,864 36,603 (4,739) (13%) Unallocated General Corporate Expense (6,157) (6,787) 630 (9%) -------- ------- --------- Consolidated $25,707 $29,816 $(4,109) (14%) ======== ======= ========= Operating income (loss) as a percentage of revenues Three Months Ended Fiscal Year Ended September 30, September 30, -------------------------- --------------------- 2008 2007 Change 2008 2007 Change ------ ------ ------- ---- ----- ------ ICO Europe 6% 5% 1% 6% 5% 1% Bayshore Industrial 8% 15% (7%) 11% 14% (3%) ICO Asia Pacific 1% 7% (6%) 2% 7% (5%) ICO Polymers North America 4% 17% (13%) 12% 15% (3%) ICO Brazil 6% 1% 5% 5% 2% 3% Consolidated 4% 8% (4%) 6% 7% (1%) ICO, Inc. Supplemental Segment Information (cont'd.) (Unaudited and in thousands, except percentages) Revenues Three Months Ended ------------------------------------------------- September 30, June 30, ------------------ -------------- % of % of 2008 Total 2008 Total Change % ---------- ------- --------- ---- -------- ------ ICO Europe $48,489 45% $58,226 50% $(9,737) (17%) Bayshore Industrial 19,173 18% 19,044 16% 129 1% ICO Asia Pacific 23,401 22% 21,417 19% 1,984 9% ICO Polymers North America 10,119 9% 12,081 10% (1,962) (16%) ICO Brazil 6,810 6% 4,950 5% 1,860 38% ---------- ------- --------- ---- -------- Consolidated $107,992 100% $115,718 100% $(7,726) (7%) ========== ======= ========= ==== ======== Operating income (loss) Three Months Ended -------------------------------------- September 30, June 30, 2008 2008 Change % --------- ------ -------- ----- ICO Europe $2,782 $3,901 $(1,119) (29%) Bayshore Industrial 1,486 2,045 (559) (27%) ICO Asia Pacific 210 (11) 221 N.M.* ICO Polymers North America 424 1,811 (1,387) (77%) ICO Brazil 429 224 205 92% --------- ------ -------- Total Operations 5,331 7,970 (2,639) (33%) Unallocated General Corporate Expense (1,233) (1,503) 270 (18%) --------- ------ -------- Consolidated $4,098 $6,467 $(2,369) (37%) ========= ====== ======== Operating income (loss) as a percentage of revenues Three Months Ended -------------------------------- September 30, June 30, 2008 2008 Change --------- ------ -------- ICO Europe 6% 7% (1%) Bayshore Industrial 8% 11% (3%) ICO Asia Pacific 1% 0% 1% ICO Polymers North America 4% 15% (11%) ICO Brazil 6% 5% 1% Consolidated 4% 6% (2%) *Not meaningful http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO http://photoarchive.ap.org/ DATASOURCE: ICO, Inc. CONTACT: Brad Leuschner, CFO of ICO, Inc., +1-713-351-4188 Web site: http://www.icopolymers.com/

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