ICOC Ico (MM)

HOUSTON, Aug. 6 /PRNewswire-FirstCall/ -- ICO, Inc. (NASDAQ:ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the quarter ended June 30, 2008. (Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO) Third Quarter Highlights ------------------------ -- Revenues of $115.7 million, an increase of $2.3 million or 2% from the prior year -- Volumes declined 9% compared to the third quarter of fiscal 2007 -- Operating income of $6.5 million, down 28% year-over-year -- Net income per share of $.17 fully diluted -- Total debt outstanding decreased $10.0 million or 15% as a result of positive cash flow Third Quarter 2008 vs. Third Quarter 2007 ----------------------------------------- Revenues for the three months ended June 30, 2008 were $115.7 million, an increase of $2.3 million or 2% compared to the same quarter of the previous year. The translation effect of stronger foreign currencies caused $8.9 million of the increase, while higher average selling prices and changes in product mix caused $1.8 million of the increase. A 9% decrease in volumes sold reduced revenues by $8.3 million. Gross margins declined from 18.1% to 16.0% primarily as a result of lower volumes sold, pricing pressures and higher operating costs, especially in our Bayshore Industrial segment and Australian locations. The decline in gross margins led to a decline in operating income of $2.5 million or 28% compared to the prior year quarter. During the third quarter the Company reversed its valuation allowance on previous tax losses incurred in Brazil, which resulted in a reduction to income tax expense of $0.7 million. Compared to the prior year quarter, income from continuing operations decreased $1.0 million or 18%, to $.17 per share for the three months ended June 30, 2008 as a result of the above items. Third Quarter 2008 vs. Second Quarter 2008 ------------------------------------------ Comparing the sequential quarterly results, revenues increased $3.6 million or 3% caused by the translation effect of stronger foreign currencies and changes in product sales mix and prices. A 4% decline in volumes sold, combined with a decrease in feedstock margins, led to a reduction in gross margin from 17.2% to 16.0%. The decline in gross margins, as well as lower net insurance recoveries of $1.2 million related to the July 2007 fire in the Company's New Jersey location, led to a decline in operating income of $2.2 million or 25%. Similar to the year-over-year quarterly comparison, profitability in our Bayshore Industrial segment and Australian locations also declined during the quarter, contributing to the sequential quarter reduction in operating income. The reversal of the valuation allowance in Brazil and the Company's lower pre-tax income led to lower quarterly tax expense of $1.5 million. Income from continuing operations declined $0.4 million or 7% as a result of the above. "Although our third quarter results were disappointing to us, we can see the benefits of being diversified," stated A. John Knapp, Jr., the Company's President and CEO. "Our European region produced tremendous results for the quarter which helped offset some of the weakness we saw in our Bayshore Industrial segment and Australian locations. During the quarter, we generated good cash flow as we reduced our debt levels by $10.0 million. We remain confident in the success of our business over the long-term due to our product and geographic diversity." Balance Sheet and Liquidity --------------------------- Total debt outstanding as of June 30, 2008 was $58.5 million, a decline of $10.0 million from March 31, 2008. This reduction was accomplished by positive cash flow from operations of $13.5 million less net capital expenditures of $3.3 million. Approximately $1.7 million of the capital expenditures related to our facility relocation from New Jersey to Pennsylvania. For the first nine months of fiscal year 2008, shareholders' equity increased $22.4 million or 25%, primarily as a result of year-to-date net earnings and the effect of stronger foreign currencies compared to the U.S. Dollar. Our available borrowing capacity at June 30, 2008 was $68.0 million, an increase from March 31, 2008 by $11.0 million. Conference Call on the Web -------------------------- A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal 2008 third quarter results can be accessed at 10:00 a.m. Central Time on Thursday, August 7, 2008 at http://www.videonewswire.com/event.asp?id=50067, 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- 3733, passcode 22186048. A replay of the conference call will be available by dialing 630-652-3044, passcode 22186048. About ICO, Inc. --------------- With 20 locations in 10 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 subsidiary 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 Nine Months Ended June 30, March 31, June 30, ---------------------- ---------- --------------------- 2008 2007 2008 2008 2007 ---------- ---------- ---------- ---------- ---------- Product Sales $105,494 $102,963 $102,120 $308,802 $265,443 Toll Services 10,224 10,415 10,006 29,907 28,915 ---------- ---------- ---------- ---------- ---------- Total Revenues 115,718 113,378 112,126 338,709 294,358 Cost of sales and services (exclusive of depreciation shown separately below) 97,234 92,836 92,838 281,845 241,976 ---------- ---------- ---------- ---------- ---------- Gross Profit (1) 18,484 20,542 19,288 56,864 52,382 Selling, general and administrative expense 10,441 9,727 10,387 31,431 27,440 Depreciation and amortization 1,932 1,855 1,853 5,580 5,466 Impairment, restructuring and other costs (income) (356) - (1,598) (1,756) (654) ---------- ---------- ---------- ---------- ---------- Operating income 6,467 8,960 8,646 21,609 20,130 Other income (expense): Interest expense, net (1,039) (799) (1,096) (3,158) (2,301) Other income (expense) 165 (129) (68) (36) (296) ---------- ---------- ---------- ---------- ---------- Income from continuing operations before income taxes 5,593 8,032 7,482 18,415 17,533 Provision for income taxes 960 2,400 2,489 5,263 3,819 ---------- ---------- ---------- ---------- ---------- Income from continuing operations 4,633 5,632 4,993 13,152 13,714 Income (loss) from discontinued operations, net of income taxes - (18) - (16) 1,421 ---------- ---------- ---------- ---------- ---------- Net income $4,633 $5,614 $4,993 $13,136 $15,135 Preferred Stock dividends - (82) - (1) (472) Net gain on redemption of Preferred Stock - - - - 6,023 ---------- ---------- ---------- ---------- ---------- Net income applicable to Common Stock $4,633 $5,532 $4,993 $13,135 $20,686 ========== ========== ========== ========== ========== Basic income from continuing operations per common share $0.17 $0.21 $0.18 $0.48 $0.74 ========== ========== ========== ========== ========== Basic net income per common share $0.17 $0.21 $0.18 $0.48 $0.80 ========== ========== ========== ========== ========== Diluted income from continuing operations per common share $0.17 $0.20 $0.18 $0.47 $0.49 ========== ========== ========== ========== ========== Diluted net income per common share $0.17 $0.20 $0.18 $0.47 $0.54 ========== ========== ========== ========== ========== Basic weighted average shares outstanding 27,433,000 26,056,000 27,263,000 27,202,000 25,934,000 ========== ========== ========== ========== ========== Diluted weighted average shares outstanding 27,975,000 27,598,000 27,949,000 27,975,000 27,892,000 ========== ========== ========== ========== ========== Gross Margin (2) 16.0% 18.1% 17.2% 16.8% 17.8% (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) June 30, September 30, 2008 2007 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $3,909 $8,561 Trade receivables 89,438 95,142 Inventories 72,302 60,420 Deferred income taxes 2,140 1,778 Prepaid and other current assets 8,868 9,924 ------------- ------------- Total current assets 176,657 175,825 ------------- ------------- Property, plant and equipment, net 65,039 57,396 Goodwill 9,258 9,228 Other assets 4,250 3,768 ------------- ------------- Total assets $255,204 $246,217 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings under credit facilities $13,468 $16,133 Current portion of long-term debt 17,089 11,611 Accounts payable 54,601 66,906 Accrued salaries and wages 7,010 7,313 Other current liabilities 13,517 16,004 ------------- ------------- Total current liabilities 105,685 117,967 ------------- ------------- Long-term debt, net of current portion 27,906 29,605 Deferred income taxes 4,894 4,820 Other long-term liabilities 3,255 2,783 ------------- ------------- Total liabilities 141,740 155,175 ------------- ------------- Commitments and contingencies - - Stockholders' equity: Convertible exchangeable preferred stock - 2 Undesignated preferred stock - - Common stock 54,302 47,659 Additional paid-in capital 72,158 74,920 Accumulated other comprehensive income 10,823 5,416 Accumulated deficit (23,819) (36,955) ------------- ------------- Total stockholders' equity 113,464 91,042 ------------- ------------- Total liabilities and stockholders' equity $255,204 $246,217 ============= ============= OTHER BALANCE SHEET DATA Working capital $70,972 $57,858 Current ratio 1.7 1.5 Total debt $58,463 $57,349 Debt-to-capitalization 34.0% 38.6% ICO, Inc. Supplemental Segment Information (Unaudited and in thousands, except percentages) Revenues Three Months Ended June 30: % of % of 2008 Total 2007 Total Change % -------- ------ -------- ------ -------- ----- ICO Europe $58,226 50% $47,797 42% $10,429 22% Bayshore Industrial 19,044 16% 25,684 23% (6,640) (26%) ICO Asia Pacific 21,417 19% 25,528 22% (4,111) (16%) ICO Polymers North America 12,081 10% 11,083 10% 998 9% ICO Brazil 4,950 5% 3,286 3% 1,664 51% -------- ------ -------- ------ -------- Consolidated $115,718 100% $113,378 100% $2,340 2% ======== ====== ======== ====== ======== Nine Months Ended June 30: % of % of 2008 Total 2007 Total Change % -------- ------ -------- ------ -------- ----- ICO Europe $158,720 47% $124,178 42% $34,542 28% Bayshore Industrial 71,563 21% 69,465 24% 2,098 3% ICO Asia Pacific 58,989 18% 59,624 20% (635) (1%) ICO Polymers North America 34,971 10% 31,486 11% 3,485 11% ICO Brazil 14,466 4% 9,605 3% 4,861 51% -------- ------ -------- ------ -------- Consolidated $338,709 100% $294,358 100% $44,351 15% ======== ====== ======== ====== ======== Operating income (loss) Three Months Ended June 30: 2008 2007 Change % ------ ------- ------- ----- ICO Europe $3,901 $3,376 $525 16% Bayshore Industrial 2,045 3,329 (1,284) (39%) ICO Asia Pacific (11) 2,315 (2,326) (100%) ICO Polymers North America 1,811 1,553 258 17% ICO Brazil 224 63 161 256% ------ ------- ------- Total Operations 7,970 10,636 (2,666) (25%) Unallocated General Corporate Expense (1,503) (1,676) 173 (10%) ------ ------- ------- Consolidated $6,467 $8,960 $(2,493) (28%) ====== ======= ======= Nine Months Ended June 30: 2008 2007 Change % ------- ------- ------- ----- ICO Europe $10,419 $6,559 $3,860 59% Bayshore Industrial 8,755 9,642 (887) (9%) ICO Asia Pacific 1,612 4,161 (2,549) (61%) ICO Polymers North America 5,194 4,313 881 20% ICO Brazil 553 267 286 107% ------- ------- ------- Total Operations 26,533 24,942 1,591 6% Unallocated General Corporate Expense (4,924) (4,812) (112) 2% ------- ------- ------- Consolidated $21,609 $20,130 $1,479 7% ======= ======= ======= Operating income (loss) as a percentage of revenues Three Months Ended Nine Months Ended June 30, June 30, ------------------------- ------------------- 2008 2007 Change 2008 2007 Change ------- ------- ------- ----- ----- ------ ICO Europe 7% 7% 0% 7% 5% 2% Bayshore Industrial 11% 13% (2%) 12% 14% (2%) ICO Asia Pacific 0% 9% (9%) 3% 7% (4%) ICO Polymers North America 15% 14% 1% 15% 14% 1% ICO Brazil 5% 2% 3% 4% 3% 1% Consolidated 6% 8% (2%) 6% 7% (1%) ICO, Inc. Supplemental Segment Information (cont'd.) (Unaudited and in thousands, except percentages) Revenues Three Months Ended ------------------------------------------------- June 30, March 31, ------------------ ---------------- % of % of 2008 Total 2008 Total Change % -------- ------ -------- ------ ------- ---- ICO Europe $58,226 50% $54,181 48% $4,045 7% Bayshore Industrial 19,044 16% 20,742 18% (1,698) (8%) ICO Asia Pacific 21,417 19% 19,627 18% 1,790 9% ICO Polymers North America 12,081 10% 12,559 11% (478) (4%) ICO Brazil 4,950 5% 5,017 5% (67) (1%) -------- ------ -------- ------ ------- Consolidated $115,718 100% $112,126 100% $3,592 3% ======== ====== ======== ====== ======= Operating income (loss) Three Months Ended ---------------------------------- June 30, March 31, 2008 2008 Change % --------- -------- -------- ----- ICO Europe $3,901 $3,520 $381 11% Bayshore Industrial 2,045 2,782 (737) (26%) ICO Asia Pacific (11) 761 (772) (101%) ICO Polymers North America 1,811 2,937 (1,126) (38%) ICO Brazil 224 192 32 17% --------- -------- -------- Total Operations 7,970 10,192 (2,222) (22%) Unallocated General Corporate Expense (1,503) (1,546) 43 (3%) --------- -------- -------- Consolidated $6,467 $8,646 $(2,179) (25%) ========= ======== ======== Operating income (loss) as a percentage of revenues Three Months Ended ---------------------------- June 30, March 31, 2008 2008 Change -------- --------- ------- ICO Europe 7% 6% 1% Bayshore Industrial 11% 13% (2%) ICO Asia Pacific 0% 4% (4%) ICO Polymers North America 15% 23% (8%) ICO Brazil 5% 4% 1% Consolidated 6% 8% (2%) 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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