Penford Corporation (Nasdaq: PENX), a leader in renewable
ingredient systems for industrial and food applications, today
reported that consolidated sales for the quarter ended May 31, 2011
increased 38% to $85.2 million from $61.9 million a year ago. Loss
from continuing operations was $0.7 million, or $0.06 per diluted
share, for the quarter ended May 31, 2011 compared with a loss from
continuing operations of $5.8 million, or $0.49 per diluted share
last year. Third quarter fiscal 2011 results reflect an increase in
accounts receivable reserve of $0.6 million in the Industrial
Ingredients business.
A table summarizing quarterly financial results is shown
below:
Penford Corporation – Financial Highlights (In thousands)
Q3 FY11 Q2 FY11
Q1 FY11 Q4 FY10
Q3 FY10 Industrial
Ingredients: Sales $ 61,596 $ 56,591 $ 53,930 $ 45,633 $ 42,010
Gross margin 2,609 1,458 2,904 (1,907 ) (3,847 ) Operating income
(loss) (734 ) (1,103 ) 142 (5,098 ) (6,847 ) Depreciation and
amortization 2,712 2,696 2,713 2,716 2,709
Food
Ingredients: Sales $ 23,637 $ 17,713 $ 18,336 $ 17,369 $ 19,899
Gross margin 7,808 5,385 6,353 5,406 7,112 Operating income 5,517
3,576 4,808 3,698 5,018 Depreciation and amortization 510 553 561
555 564
Consolidated: Sales $ 85,233 $ 74,304 $
72,266 $ 63,002 $ 61,909 Gross margin 10,418 6,843 9,257 3,499
3,265 Operating income (loss) 2,506 488 2,969 (2,796 ) (4,091 )
Depreciation and amortization 3,598 3,618 3,643 3,642 3,631
Food Ingredients Third Quarter Fiscal 2011 Results
- Food Ingredients reported record
quarterly sales of $23.6 million, up 19% from the prior year on
growth in existing accounts and from new product introductions in
the companion pet and gluten-free bakery segments.
- Gross margin improved 10% on new
product gains and lower unit processing costs.
- Operating income reached an all-time
quarterly record of $5.5 million compared with a previous record of
$5.0 million one year ago.
Industrial Ingredients Third Quarter Fiscal 2011
Results
- Revenue increased 47% to a record $61.6
million from $42.0 million a year ago reflecting higher corn prices
that were passed through to customers, additional ethanol volumes
and growth of specialty starch-based additives. Industrial starch
net average selling prices for calendar 2011 rose at double-digit
levels from a year ago.
- Ethanol sales grew to $28.1 million
from $14.6 million as spot prices for ethanol rose 65% from last
year. Company results improved while industry crush margins were
comparable to prior year as corn costs outpaced ethanol
prices.
- Sales of specialty industrial starches
grew by 33% from a year ago. This category includes the Company’s
Liquid Natural Additive products and the novel technology launched
in November to replace fluorochemicals in food packaging
applications. The Company announced the introduction of PEN-COTE®
natural binder products last month that replace synthetic latex in
coated paper and paperboard applications, including a newly
available dry version.
- Segment gross margin expanded $6.5
million as increased prices, greater facility throughput rates and
lower unit manufacturing costs offset higher raw material costs.
Industry net corn costs more than doubled from a year ago.
- The operating loss of $0.7 million
includes a $0.6 million charge to increase the accounts receivable
reserve related to a paper industry customer that announced closure
of its mill operations.
Consolidated Financial Third Quarter Fiscal 2011
Results
- Cash flow from operations was $1.7
million including a $4.4 million contribution to the Company’s
pension plans.
- Interest expense, which includes
dividends on preferred stock, was $2.4 million compared with $1.9
million last year.
- Income tax expense reflects the
non-deductibility of dividends and discount accretion on preferred
stock.
- Outstanding bank debt on the Company’s
$60 million revolving credit facility was $22.9 million.
Conference Call
Penford will host a conference call to discuss third quarter
fiscal 2011 financial and operational results today, July 7, 2011
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
July 7, 2011, 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 CorporationFinancial
Highlights
Three months endedMay 31
Nine months endedMay 31
(In thousands except per share data) 2011 2010 2011
2010 (unaudited) (unaudited)
Consolidated
Results of Operations Sales $ 85,233 $ 61,909
$ 231,802 $ 191,272 Loss from
continuing operations $ (709 ) $ (5,758 ) $ (1,948 ) $ (6,503 )
Income (loss) from discontinued operations, net of tax -
(218 ) - 16,312 Net
income (loss) $ (709 ) $ (5,976 ) $ (1,948 ) $ 9,809 Loss
per share, diluted – continuing operations $ (0.06 ) $ (0.49 ) $
(0.16 ) $ (0.58 ) Income (loss) per share, diluted – discontinued
operations - (0.02 ) -
1.43 Income (loss) per share, diluted $ (0.06 ) $ (0.51 ) $
(0.16 ) $ 0.85
Consolidated Cash Flows Cash
flow provided by (used in) continuing operations: Operating
activities $ 1,741 $ (2,054 ) $ (219 ) $ 9,560 Investing activities
(2,237 ) (463 ) (5,640 ) 16,437 Financing activities 432
2,517 5,771 (31,537 ) (64
) - (88 ) (5,540 ) Net cash flow provided by (used in) discontinued
operations - - -
(270 ) Total cash used $ (64 ) $ - $ (88 ) $ (5,810 )
Consolidated Balance Sheets May 31,
August 31, 2011 2010 (unaudited) Current
assets $ 72,501 $ 61,115 Property, plant and equipment, net 107,841
111,930 Other assets 33,711 35,363 Total assets
214,053 208,408 Current liabilities 29,237
26,000 Long-term debt 24,713 21,038 Redeemable preferred stock
37,725 34,104 Other liabilities 40,692 43,694 Shareholders’ equity
81,686 83,572 Total liabilities and equity $ 214,053
$ 208,408
Penford CorporationConsolidated
Statements of Operations
Three months endedMay 31
Nine months endedMay 31
(In thousands except per share data) 2011 2010 2011
2010 (unaudited) (unaudited) Sales $ 85,233 $
61,909 $ 231,802 $ 191,272 Cost of sales 74,815
58,644 205,285 171,317
Gross margin 10,418 3,265 26,517 19,955 Operating
expenses 6,664 6,312 17,093 18,854 Research and development
expenses 1,248 1,044 3,462
3,165 Income (loss) from operations
2,506 (4,091 ) 5,962 (2,064 ) Interest expense 2,380 1,904
6,953 5,324 Non-operating income (expense), net (12 )
(2,606 ) 77 (1,997 ) Income (loss)
before income taxes 114 (8,601 ) (914 ) (9,385 ) Income tax
expense (benefit) 823 (2,843 ) 1,034
(2,882 ) Loss from continuing operations (709
) (5,758 ) (1,948 ) (6,503 ) Income (loss) from discontinued
operations, net of tax - (218 ) -
16,312 Net income (loss) $ (709 ) $
(5,976 ) $ (1,948 ) $ 9,809
Weighted average common shares and
equivalents outstanding, diluted
12,262 11,796 12,247 11,396 Loss per share, diluted –
continuing operations $ (0.06 ) $ (0.49 ) $ (0.16 ) $ (0.58 )
Income (loss) per share, diluted – discontinued operations -
(0.02 ) - 1.43 Income
(loss) per share, diluted $ (0.06 ) $ (0.51 ) $ (0.16 ) $ 0.85
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