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Penford Reports Fourth Quarter And Fiscal 2010 Financial Results

Penford Corporation (Nasdaq: PENX), a leader in renewable ingredient systems for industrial and food applications, today reported that consolidated sales for the quarter ended August 31, 2010 were $63.0 million compared with $70.8 million a year ago. Consolidated sales for fiscal 2010 were $254.3 million compared to $255.6 million last year. Net loss from continuing operations was $3.1 million, or $0.26 per diluted share, for the quarter ended August 31, 2010 compared to net income from continuing operations of $1.3 million, or $0.12 per diluted share last year.

A table summarizing fourth quarter fiscal 2010 results from continuing operations is shown below:

Penford Corporation – Financial Highlights

               
(In thousands except per share data) 4Q FY10 4Q FY09 FY10 FY09
 
Industrial Ingredients:
Sales $ 45,633 $ 52,698 $ 184,016 $ 186,526
Gross margin (1,907 ) 3,512 461 (9,327 )
Operating income (loss) (5,098 ) 745 (11,512 ) (11,154 ) (1 )
 
Food Ingredients:
Sales $ 17,369 $ 18,059 $ 70,258 $ 69,030
Gross margin 5,406 5,940 22,993 21,618
Operating income 3,698 3,936 15,145 13,512
 
Consolidated:
Sales $ 63,002 $ 70,757 $ 254,274 $ 255,556
Gross margin 3,499 9,452 23,454 12,291
Operating income (loss) (2,796 ) 3,183 (4,860 ) (6,449 )
Net income (loss) from continuing operations (3,126 ) 1,339 (9,629 ) (6,645 ) (1 )
Diluted income (loss) per share – continuing operations $ (0.26 ) $ 0.12 $ (0.84 ) $ (0.59 )
Diluted income (loss) per share – discontinued operations   -     (3.24 )   1.41     (5.21 )
Diluted income (loss) per share $ (0.26 ) $ (3.12 ) $ 0.57   $ (5.80 )
 
Cash provided by (used in) continuing operations $ 10,068 $ (11,180 )
Shareholder Equity / Shares Outstanding $ 7.35 $ 7.04
(1) Operating loss in fiscal 2009 included $9.1 million of net insurance recoveries
 

Food Ingredients Results

  • Food Ingredients 4 th quarter sales fell 4% from prior year. French fry processors slowed orders to balance strong 3 rd quarter shipments. Second half fiscal 2010 sales were 8% above prior year.
  • Food revenue other than coatings expanded 5% this quarter, led by double-digit growth in bakery, dairy and sauces applications.
  • The pet category continues to gain momentum with annual sales increasing by 20% from the prior year.
  • Unit manufacturing costs declined by 2% in the quarter. Full year unit costs were 8% lower.
  • Full year volumes rose by 8%, led by 20% growth in non-coating formulations. These products now represent about 50% of the total food business mix.

Industrial Ingredients Results

  • Industrial Ingredient 4 th quarter sales declined $7.1 million and operating profit decreased $5.8 million on lower prices for core industrial starches serving the paper industry. Contract renewal discussions for calendar 2011 are underway.
  • Sales of Liquid Natural Additive applications grew by over 30% in the quarter.
  • Average ethanol pricing was comparable to the prior year during the fourth quarter.
  • Total industrial segment annual volumes grew 11%.
  • Unit manufacturing costs fell by 2% in the quarter. Full year unit costs were 15% lower.

Cash and Debt

  • Total debt and redeemable preferred stock were $55.6 million at year end.
  • Interest expense was $7.6 million compared with $5.6 million last year.
  • Cash provided by operations in fiscal 2010 was $10.1 million compared to cash used in operations of $11.2 million last year. Improvements in working capital contributed $4.7 million to cash in fiscal 2010.

Outlook

  • Conditions for industrial starch markets are improving, as paper industry demand strengthens modestly and supplier capacity utilization rates remain high.
  • Ethanol economics have improved significantly since the 4 th quarter, and provide an attractive return in the current market dynamics.
  • Cost containment programs will continue to improve the Company’s competitive position.
  • Product development work and customer trial activity in both food ingredients and industrial specialty products remains strong into the new fiscal year.

Conference Call

Penford will host a conference call to discuss fiscal 2010 financial and operational results today, November 12, 2010 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 November 12, 2010, 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.

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