Penford Corporation (Nasdaq: PENX), a leader in ingredient
systems for industrial and food applications, today reported first
quarter 2013 results.
For the first quarter ended November 30, 2012 consolidated sales
increased 4.5% to $94.9 million from $90.7 million a year ago. The
Company reported first quarter net income of $1.7 million, or $0.14
per diluted share, compared with net income of $0.6 million or
$0.05 per diluted share last year.
A table summarizing quarterly and annual financial results is
shown below:
Penford Corporation –
Financial Highlights (In thousands)
Q1 FY 13
Q4 FY 12 Q3 FY 12 Q2 FY 12
Q1 FY 12 Food Ingredients: Sales $
27,654 $ 25,543 $ 26,173 $ 24,904 $ 25,924 Gross margin 8,104 8,098
8,225 7,626 8,221 Operating income 5,355 5,028 5,362 5,247 5,959
Depreciation and amortization 485 473 512 498 505
Industrial Ingredients: Sales $ 67,205 $ 65,962 $ 66,751 $
61,284 $ 64,822 Gross margin 5,154 3,149 3,229 1,775 3,586
Operating income (loss) 1,387 (767 ) 75 (985 ) 743 Depreciation and
amortization 2,813 2,781 2,772 2,697 2,629
Consolidated: Sales $ 94,859 $ 91,505 $ 92,924 $ 86,188 $
90,746 Gross margin 13,258 11,247 11,454 9,401 11,808 Operating
income 4,020 476 3,573 1,650 4,359 Depreciation and amortization
3,383 3,409 3,632 3,574 3,512
Highlights for the first quarter are as follows:
Food Ingredients Division
- Food Ingredients reported record
quarterly sales of $27.7 million.
- Revenue gains of 6.7% were primarily
led by strong sales in protein and sauces end markets. The revenue
increase was partially offset by a 3% decline in sales of coatings
applications, which reflected a pipeline build from a new product
introduction in the year ago quarter.
- Operating income declined 10% due to
higher investment spending in R&D and commercial
resources.
Industrial Ingredients Division
- Revenue for the first quarter increased
4% to $67.2 million on growth in industrial starch volumes, as well
as contributions from the Carolina Starches business acquired in
January 2012.
- The revenue gain was partially offset
by lower ethanol sales, down 28% from weaker pricing and lower
volume. The Industrial Division shifted more of its production to
higher margin starches. Ethanol revenue represented 35% of
Industrial sales in the first quarter, down from 50% last
year.
- Gross margin improved 44% to $5.2
million, and operating income rose 87% over the prior year on
higher starch sales, lower unit costs and better manufacturing
yields, but slightly offset by increased investment in R&D and
commercial support for the Company’s bioproducts platform.
- During the quarter the Company received
approval from the City of Cedar Rapids, IA for an agreement which
will permit the Company to acquire an 11 acre park adjacent to the
Company’s Cedar Rapids plant for future expansion of the Company’s
bioproducts and other operations.
Consolidated Results
- Interest expense declined by 55% to
$1.1 million in the first quarter of fiscal 2013, reflecting the
complete redemption of the Series A 15% Preferred Stock in fiscal
2012.
- The Company’s effective tax rate in the
first quarter of 2013 was 38.5% compared to 70% for the same period
last year. The decrease in the effective rate was primarily due to
the redemption of the Company’s preferred stock. Dividends and
discount accretion on the preferred stock, which were reported as
interest expense, were not deductible for tax purposes.
Conference Call
Penford will host a conference call to discuss fiscal 2013 first
quarter results today, January 9, 2013 at 7:30 a.m. Mountain Time
(9:30 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, 2013, please phone 1-877-407-9205 at 7:20 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 seven 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; changes in general
economic conditions or developments with respect to specific
industries or customers affecting demand for the Company’s
products, including changes in government rules or incentives
affecting ethanol consumption, 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 with the Securities
and Exchange Commission.
Penford Corporation
Financial Highlights
Three Months EndedNovember 30
(In thousands, except per share data)
2012
2011
(unaudited)
Consolidated Results Sales $
94,859 $ 90,746 Income from operations $ 4,020 $ 4,359
Net income $ 1,707 $ 592 Earnings per share, diluted
$ 0.14 $ 0.05
Cash Flows Cash flow provided by
(used in): Operating activities $ 6,247 $ 12,182 Investing
activities (3,425 ) (2,447 ) Financing activities
(2,855 ) (9,752
) Decrease in cash $ (33 ) $ (17 )
Balance Sheets November 30, August 31, 2012
2012 (unaudited) Current assets $ 90,210 $ 91,965 Property,
plant and equipment, net 112,390 113,191 Other assets 29,853
31,023 Total assets 232,453
236,179 Current liabilities 32,250 36,138
Long-term debt 82,954 84,004 Other liabilities 47,870 47,187
Shareholders’ equity 69,379 68,850
Total liabilities and equity $ 232,453 $ 236,179
Penford CorporationConsolidated
Statements of Operations
Three Months EndedNovember 30,
(unaudited)
(In thousands,
except per share data)
2012 2011 Sales $ 94,859 $ 90,746 Cost of
sales 81,601 78,938 Gross margin 13,258 11,808
Operating expenses 7,773 6,109 Research and development
expenses 1,465 1,340 Income from
operations 4,020 4,359 Interest expense 1,081 2,397 Other
non-operating income (expense), net (163 ) 20 Income
before income taxes 2,776 1,982 Income tax expense
1,069 1,390 Net income $ 1,707 $ 592
Weighted average common shares and equivalents outstanding, diluted
12,372 12,330 Earnings per common share, diluted $ 0.14 $
0.05
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