Penford Corporation (Nasdaq: PENX), a leader in renewable
ingredient systems for industrial and food applications, today
reported that consolidated sales for the quarter ended February 29,
2012 increased 16% to $86.2 million from $74.3 million a year ago.
Gross margin expanded 37% to $9.4 million. The Company reported a
second quarter net loss of $0.3 million or $0.03 per diluted share
compared with a net loss of $1.6 million or $0.13 per diluted share
last year.
A table summarizing quarterly financial results is shown
below:
Penford Corporation – Financial Highlights
(In thousands)
Q2 FY 12 Q1 FY 12
Q4 FY 11 Q3
FY11 Q2 FY11
Food Ingredients: Sales $ 24,904 $ 25,924 $ 22,554 $ 23,637
$ 17,713 Gross margin 7,626 8,221 6,766 7,808 5,385 Operating
income 5,247 5,959 4,135 5,517 3,576 Depreciation and amortization
498 505 486 510 553
Industrial Ingredients: Sales $
61,284 $ 64,822 $ 61,085 $ 61,596 $ 56,591 Gross margin 1,775 3,586
552 2,609 1,458 Operating income (loss) (985) 743 (3,023) (734)
(1,103) Depreciation and amortization 2,697 2,629 2,691 2,712 2,696
Consolidated: Sales $ 86,188 $ 90,746 $ 83,638 $
85,233 $ 74,304 Gross margin 9,401 11,808 7,317 10,418 6,843
Operating income (loss) 1,650 4,359 (1,518) 2,506 488 Depreciation
and amortization 3,574 3,512 3,556 3,598 3,618
Food Ingredients
- Food Ingredients reported record second
quarter sales, gross margin and operating income.
- Revenue grew more than 40% to $24.9
million. Sales of coating applications expanded over 30% reflecting
volume growth and improved pricing. Revenue from applications for
protein, bakery, companion pet treats, and gluten free segments
expanded at double-digit rates.
- Gross margin increased over 40% to $7.6
million on higher pricing and volume gains from existing customers
and new business.
- Operating income rose 47% to $5.2
million.
Industrial Ingredients
- Revenue increased 8% to $61.3 million.
The increase includes revenue from the Carolina Starches business,
growth in specialty starches, and higher processing fees. Improved
revenue was partially offset by a 6% decline in ethanol sales
partly due to production downtime to undertake equipment
maintenance.
- Ethanol sales were $24.2 million.
Comparable industry crush margins fell by about $0.08 per gallon or
15% from a year ago. Second quarter industry crush margins were
about $0.45 per gallon or 50% below the first quarter of fiscal
2012.
- Sales of specialty bio-products grew
over 25% on new business, higher volumes at existing accounts and
unit pricing.
- Gross margin expanded $0.3 million from
a year ago, as higher average unit selling prices for industrial
starch outpaced rising corn and chemical costs. Lower natural gas
costs also contributed to a higher margin.
Consolidated Results
- Corporate expense rose $0.6 million on
higher professional fees, employee costs and acquisition-related
charges.
- Bank debt rose to $30.7 million
reflecting the $8.5 million acquisition of Carolina Starches in
January 2012.
- The effective tax rate for the first
half was 82%, which reflects non-deductible preferred stock
dividends.
Redemption of Preferred Stock
- The Company intends to provide notice
to the holder of its Series A 15% Cumulative Non-Voting
Non-Convertible Preferred Stock that approximately $20 million of
principal and accrued dividends will be redeemed next month. The
stock will be called without premium at issue price.
- The redemption will be funded by
utilizing the Company’s existing revolving debt facility.
Acquisition of Carolina Starches
- The Company closed on the acquisition
of the Carolina Starches business and the integration is proceeding
as planned.
- Revenues, cost of goods sold and a
portion of the selling, general and administrative expenses
reported by Carolina Starches since the acquisition have been
included in the results of operations of the Industrial Ingredients
segment.
Conference Call
Penford will host a conference call to discuss second quarter
results today, April 9, 2012 at 1:00 p.m. Mountain Time (3:00 p.m.
Eastern Time). Access information for the call and webcast can be
found at www.penx.com. To
participate in the call on April 9, 2012, please phone
1-877-407-9205 at 12:50 p.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 and preferred stock
instruments; 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 with the
Securities and Exchange Commission.
Penford Corporation
Financial Highlights
Three months ended
Six months ended
(In thousands except per share data)
February29, 2012
February28, 2011
February29, 2012
February28, 2011
(unaudited) (unaudited)
Consolidated Results
Sales $ 86,188 $ 74,304 $ 176,934 $ 146,570 Income from
operations $ 1,650 $ 488 $ 6,009 $ 3,456 Net income (loss) $
(340) $ (1,575) $ 252 $ (1,239) Income (loss) per share,
diluted $ (0.03) $ (0.13) $ 0.02 $ (0.10)
Cash Flows
Cash flow provided by (used in) operations: Operating
activities $ (3,146) $ (6,626) $ 9,036 $ (1,959) Investing
activities (11,928) (1,718) (14,375) (3,403) Financing activities
15,405 8,320
5,653 5,339 Total cash provided by
(used in ) operations $ 331 $ (24) $ 314 $ (23)
Balance
Sheets February 29,
August 31, 2012 2011 (unaudited)
Current assets $ 81,054 $ 74,077 Property, plant and equipment, net
111,134 107,372 Other assets 30,110 30,965 Total
assets 222,298 212,414 Current liabilities
28,883 30,155 Long-term debt 32,210 23,802 Redeemable preferred
stock 41,564 38,982 Other liabilities 34,582 34,010 Shareholders’
equity 85,059 85,465 Total liabilities and equity $
222,298 $ 212,414
Penford Corporation
Consolidated Statements of
Operations
Three months ended
Six months ended
(In thousands except per share data)
February29, 2012
February28,2011
February29, 2012
February28,2011
(unaudited) (unaudited) Sales $ 86,188 $ 74,304 $ 176,934 $
146,570 Cost of sales 76,787 67,461
155,725 130,470 Gross margin 9,401
6,843 21,209 16,100 Operating expenses 6,434 5,235 12,543
10,430 Research and development expenses 1,317
1,120 2,657 2,214 Income from
operations 1,650 488 6,009 3,456 Interest expense 2,430
2,303 4,827 4,572 Non-operating income (expense), net 216
(1 ) 236 88 Income (loss)
before income taxes (564 ) (1,816 ) 1,418 (1,028 ) Income
tax expense (benefit) (224 ) (241 ) 1,166
211 Net income (loss) $ (340 ) $ (1,575 ) $
252 $ (1,239 ) Weighted average common shares and
equivalents outstanding, diluted 12,300 12,257 12,327 12,239
Income (loss) per share, diluted $ (0.03 ) $ (0.13 ) $ 0.02 $ (0.10
)
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