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Penford Reports Second Quarter Fiscal 2011 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 February 28, 2011 increased 19% to $74.3 million from $62.3 million a year ago. Loss from continuing operations was $1.6 million, or $(0.13) per diluted share, for the quarter ended February 28, 2011 compared with a loss from continuing operations of $1.8 million, or $(0.17) per diluted share last year.

A table summarizing quarterly financial results is shown below:

Penford Corporation – Financial Highlights                  
(In thousands except per share data) Q2 FY11 Q1 FY11 4Q FY10 3Q FY10 Q2 FY10
 
Industrial Ingredients:
Sales $ 56,591 $ 53,930 $ 45,633 $ 42,010 $ 46,065
Gross margin 1,458 2,904 (1,907 ) (3,847 ) 1,229
Operating income (loss) (1,103 ) 142 (5,098 ) (6,847 ) (1,721 )
Depreciation and amortization 2,696 2,713 2,716 2,709 2,707
 
Food Ingredients:
Sales $ 17,713 $ 18,336 $ 17,369 $ 19,899 $ 16,228
Gross margin 5,385 6,353 5,406 7,112 4,833
Operating income 3,576 4,808 3,698 5,018 2,848
Depreciation and amortization 553 561 555 564 605
 
Consolidated:
Sales $ 74,304 $ 72,266 $ 63,002 $ 61,909 $ 62,293
Gross margin 6,843 9,257 3,499 3,265 6,062
Operating income (loss) 488 2,969 (2,796 ) (4,091 ) (1,116 )
Depreciation and amortization 3,618 3,643 3,642 3,631 3,717
 

Food Ingredients Results

  • Food Ingredients reported record second quarter sales, up 9% from the prior year on volume gains and product mix changes, reflecting strong demand for high performance applications as well as better prices on less modified products.
  • Sales of applications in several categories grew at double-digit rates, including dairy, pet and gluten-free bakery products. Non-coating revenues totaled 60% of the segment compared with 45% two years ago.
  • Product development, customer trials and commercialization activity remains strong.
  • Gross margin improved 11% from last year on higher revenues and stable total unit costs. Operating income increased 26% from a year ago on top-line gains and lower costs.

Industrial Ingredients Results

  • Quarterly revenue grew 23% to $56.6 million in fiscal 2011 from $46.1 million from a year ago on higher average selling prices for industrial starches as well as increases in fuel ethanol volumes and pricing.
  • Demand for products positioned as alternatives for petrochemical derivatives continues to expand at double-digit rates while customer trials of our new fluorochemical replacement product continue.
  • Sales of ethanol in the second quarter of fiscal 2011 increased 43% to $25.8 million from $18.1 million last year. Market prices for ethanol rose 24% from a year ago. Market crush margins declined by approximately $0.25 per gallon from the second quarter of last year due to corn prices which were 69% higher than last year.
  • Gross margin expanded 19% from the prior year despite higher net corn costs. Higher prices and stronger throughput rates as well as lower manufacturing costs helped offset increased input costs.
  • Segment operating income changed $0.6 million on stronger ethanol activity, better industrial starch prices, improved plant efficiencies and lower operating expenses.

Consolidated Financial Results

  • Consolidated operating expenses declined 14% from a year ago.
  • Interest expense, which includes dividends on preferred stock that are not deductible for income taxes, was $2.3 million compared with $1.6 million last year.
  • Consolidated gross margin increased 13% to $6.8 million and consolidated operating income rose $1.6 million to $0.5 million from an operating loss of $1.1 million in the same period last year. Both business segments contributed to improved financial results in the quarter.

Conference Call

Penford will host a conference call to discuss second quarter fiscal 2011 financial and operational results today, April 7, 2011 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 April 7, 2011, 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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