- Reported EPS improved to $0.16 from
$0.04 a year ago. Excluding $0.10 per share of nonrecurring
merger-related costs, EPS would have been $0.26.
- Reported operating income rose to
$4.4 million from $1.6 million a year ago. Excluding merger-related
costs, operating income would have been $6.4 million.
Penford Corporation (Nasdaq:PENX), a leader in ingredient
systems for food and industrial markets, today reported first
quarter fiscal 2015 results.
First quarter 2015 net income was $2.1 million, up by $1.6
million over first quarter 2014. Diluted EPS for the first quarter
ended November 30, 2014, as reported, increased to $0.16 from $0.04
a year ago. Adjusted diluted earnings per share, excluding
nonrecurring items related to the merger (as described below),
equaled $0.26.
Reported operating income rose to $4.4 million in the first
quarter, an increase of $2.8 million from last year’s comparable
quarter. Reported operating income includes merger-related costs,
as well as increased overhead expenses for the internal controls
program that were partially offset by the accrual freeze of a
Company pension plan. Adjusted operating income, excluding
merger-related costs, increased to $6.4 million.
First quarter 2015 consolidated sales declined to $103.6 million
compared with $109.3 million in last year’s first quarter,
reflecting lower corn prices that were passed through to customers,
which reduced industrial starch and by-product revenues.
Penford Corporation entered into a definitive merger agreement
with Ingredion Incorporated on October 14, 2014. A special
shareholders meeting to approve the proposed merger has been
scheduled for January 29, 2015. Under the merger agreement,
Ingredion will acquire all of the outstanding shares of Penford for
$19.00 in cash per share. The merger is subject to Penford
shareholder and regulatory approvals, as well as other customary
closing conditions.
Penford Corporation - Financial
Highlights:
(In thousands)
Q1 FY 15 Q4 FY
14 Q3 FY 14 Q2 FY 14
Q1 FY 14 Consolidated: Sales $ 103,636 $
109,086 $ 119,429 $ 106,107 $ 109,251 Gross Margin 18,146 16,561
14,868 12,169 10,709 Adjusted Operating Income (excluding
merger-related costs)* 6,406 5,814 4,925 2,911 1,641 Merger-related
Costs (1,996 ) - -
- - Operating Income 4,410 5,814 4,925 2,911 1,641
Net Income 2,134 2,954 3,071 1,240 488
Food Ingredients:
Sales $ 34,162 $ 32,343 $ 35,317
$ 30,279 $ 28,651 Gross Margin 10,956 9,982 9,572 8,813 9,274
Operating Income 6,893 5,996 6,025 5,794 6,530
Industrial
Ingredients: Sales $ 69,474 $ 76,744 $ 84,112 $ 75,828 $ 80,600
Gross Margin 7,190 6,579 5,296 3,356 1,435 Operating Income (Loss)
2,983 2,659 1,957 14 (2,043 )
* Adjusted EPS and adjusted operating income are
non-GAAP financial measures. See “Reconciliation of Non-GAAP
Measures” later in this release.
Division highlights for the quarter are as follows:
Food Ingredients Division
- Food Ingredients revenue increased 19%
to $34.2 million for the quarter on strong growth in several
product segments and the acquisition of Gum Technology.
- Gross margin improved by 18% to $11.0
million with the addition of gum sales and increases in specialty
starch segments.
Industrial Ingredients Division
- Industrial Ingredients reported
sequential improvement for the last five quarters in gross margin
and operating income. Gross margin expanded to $7.2 million, up by
$5.8 million from last year’s first quarter on favorable ethanol
market dynamics, the lower cost of physical corn, the growth in
specialty bio-products and the reduction in depreciation expense
with the increase in estimated useful lives that occurred as of May
1, 2014. Operating income increased to $3.0 million from a loss in
the prior year’s first quarter.
- Quarterly revenue fell to $69.5
million, reflecting the decline in the market price of corn, which
reduced pass-through revenues.
As a result of the announcement of the definitive merger
agreement with Ingredion Incorporated, Penford Corporation will not
host a conference call to discuss the results of fiscal first
quarter 2015.
About Penford Corporation
Penford Corporation develops, manufactures and markets specialty
ingredient systems for a variety of food and industrial products.
Penford operates six manufacturing facilities and three research
and development centers 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: factors relating to the proposed
merger with Ingredion Incorporated; 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; impairment of
the Company’s long-lived assets that could result in a noncash
charge to reported earnings; 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
November 30,
(In thousands, except per share data)
2014
2013
Consolidated Results
(unaudited)
Sales $ 103,636 $ 109,251 Income from operations $
4,410 $ 1,641 Net income $ 2,134 $ 488 Earnings per
share, diluted $ 0.16 $ 0.04
Cash Flows
(unaudited)
Cash flow provided by (used in): Operating activities $
8,088 $ 8,674 Investing activities (3,216 ) (2,319 ) Financing
activities
(4,751 )
(6,379 ) Increase (decrease) in cash
$ 121 $
(24 ) Balance Sheets
(unaudited)
November 30, August 31, 2014 2014
Current assets $ 98,781 $ 98,444 Property, plant and
equipment, net 115,984 114,804 Other assets 26,674
25,942 Total assets $ 241,439 $ 239,190 Current liabilities
$ 36,753 $ 39,015 Long-term debt 74,623 76,665 Other liabilities
32,857 31,377 Shareholders’ equity 97,206 92,133
Total liabilities and equity $ 241,439 $ 239,190
Penford Corporation
Consolidated Statements of Income (Loss)
(unaudited)
Three Months Ended
November 30,
(In thousands,
except per share data)
2014 2013 Sales $ 103,636 $ 109,251 Cost of
sales 85,490 98,542 Gross margin 18,146 10,709 Operating
expenses 12,108 7,801 Research and development expenses 1,628 1,267
Income from operations 4,410 1,641 Interest expense
(904) (813) Other non-operating (expense) income, net (72) 8 Income
before income taxes 3,434 836 Income tax expense 1,300 348
Net income $ 2,134 $ 488 Weighted-average common shares and
equivalents outstanding, diluted 13,040 12,841 Earnings per
common share, diluted $ 0.16 $ 0.04
Penford CorporationReconciliation of
Non-GAAP Measures
To supplement the segment and consolidated financial results
prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”), the Company utilizes
certain non-GAAP financial measures. The Company’s results include
pre-tax merger-related costs of $2.0 million ($1.2 million
after-tax, or $0.10 per share). The Company believes that these
non-GAAP measures are valuable to investors and management in
measuring the Company’s operating performance. These non-GAAP
measures are not a substitute for, or an alternative to, the
corresponding measures calculated in accordance with GAAP.
Three months Ended November 30,
2014 Reported Merger-related Adjusted 2014
Costs 2014 Operating income (loss) $ 4,410 $ (1,996 ) $ 6,406
Interest expense (904 ) - (904 ) Other non-operating expense
(72 ) - (72 ) Income (loss)
before income taxes 3,434 (1,996 ) 5,430 Income taxes expense
(benefit) 1,300 (756 ) 2,056
Net income (loss) $ 2,134 $ (1,240 ) $
3,374 Earnings (loss) per share, diluted $ 0.16
$ (0.10 ) $ 0.26
Penford CorporationDirector, Investor Relations and
CommunicationsEllen G. Grinde, 630-590-0707egrinde@penx.com
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