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Penford Reports Third 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 May 31, 2011 increased 38% to $85.2 million from $61.9 million a year ago. Loss from continuing operations was $0.7 million, or $0.06 per diluted share, for the quarter ended May 31, 2011 compared with a loss from continuing operations of $5.8 million, or $0.49 per diluted share last year. Third quarter fiscal 2011 results reflect an increase in accounts receivable reserve of $0.6 million in the Industrial Ingredients business.

A table summarizing quarterly financial results is shown below:
Penford Corporation – Financial Highlights
(In thousands) Q3 FY11     Q2 FY11     Q1 FY11     Q4 FY10     Q3 FY10
 
Industrial Ingredients:
Sales $ 61,596 $ 56,591 $ 53,930 $ 45,633 $ 42,010
Gross margin 2,609 1,458 2,904 (1,907 ) (3,847 )
Operating income (loss) (734 ) (1,103 ) 142 (5,098 ) (6,847 )
Depreciation and amortization 2,712 2,696 2,713 2,716 2,709
 
Food Ingredients:
Sales $ 23,637 $ 17,713 $ 18,336 $ 17,369 $ 19,899
Gross margin 7,808 5,385 6,353 5,406 7,112
Operating income 5,517 3,576 4,808 3,698 5,018
Depreciation and amortization 510 553 561 555 564
 
Consolidated:
Sales $ 85,233 $ 74,304 $ 72,266 $ 63,002 $ 61,909
Gross margin 10,418 6,843 9,257 3,499 3,265
Operating income (loss) 2,506 488 2,969 (2,796 ) (4,091 )
Depreciation and amortization 3,598 3,618 3,643 3,642 3,631
 

Food Ingredients Third Quarter Fiscal 2011 Results
  • Food Ingredients reported record quarterly sales of $23.6 million, up 19% from the prior year on growth in existing accounts and from new product introductions in the companion pet and gluten-free bakery segments.
  • Gross margin improved 10% on new product gains and lower unit processing costs.
  • Operating income reached an all-time quarterly record of $5.5 million compared with a previous record of $5.0 million one year ago.

Industrial Ingredients Third Quarter Fiscal 2011 Results
  • Revenue increased 47% to a record $61.6 million from $42.0 million a year ago reflecting higher corn prices that were passed through to customers, additional ethanol volumes and growth of specialty starch-based additives. Industrial starch net average selling prices for calendar 2011 rose at double-digit levels from a year ago.
  • Ethanol sales grew to $28.1 million from $14.6 million as spot prices for ethanol rose 65% from last year. Company results improved while industry crush margins were comparable to prior year as corn costs outpaced ethanol prices.
  • Sales of specialty industrial starches grew by 33% from a year ago. This category includes the Company’s Liquid Natural Additive products and the novel technology launched in November to replace fluorochemicals in food packaging applications. The Company announced the introduction of PEN-COTE ® natural binder products last month that replace synthetic latex in coated paper and paperboard applications, including a newly available dry version.
  • Segment gross margin expanded $6.5 million as increased prices, greater facility throughput rates and lower unit manufacturing costs offset higher raw material costs. Industry net corn costs more than doubled from a year ago.
  • The operating loss of $0.7 million includes a $0.6 million charge to increase the accounts receivable reserve related to a paper industry customer that announced closure of its mill operations.

Consolidated Financial Third Quarter Fiscal 2011 Results
  • Cash flow from operations was $1.7 million including a $4.4 million contribution to the Company’s pension plans.
  • Interest expense, which includes dividends on preferred stock, was $2.4 million compared with $1.9 million last year.
  • Income tax expense reflects the non-deductibility of dividends and discount accretion on preferred stock.
  • Outstanding bank debt on the Company’s $60 million revolving credit facility was $22.9 million.

Conference Call

Penford will host a conference call to discuss third quarter fiscal 2011 financial and operational results today, July 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 July 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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