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Penford Reports First Quarter Fiscal 2012 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 November 30, 2011 increased 25.6% to $90.7 million from $72.3 million a year ago. Gross margin expanded $2.6 million from last year. Consolidated net income rose 76% to $0.6 million, or $0.05 per diluted share, from $0.3 million, or $0.03 per diluted share last year.

A table summarizing quarterly financial results is shown below:

Penford Corporation – Financial Highlights                
(In thousands) Q1 FY 12 Q4 FY 11 Q3 FY11       Q2 FY11       Q1 FY11
 
Food Ingredients:
Sales $ 25,924 $ 22,554 $ 23,637 $ 17,713 $ 18,336
Gross margin 8,221 6,766 7,808 5,385 6,353
Operating income 5,959 4,135 5,517 3,576 4,808
Depreciation and amortization 505 486 510 553 561
 
Industrial Ingredients:
Sales $ 64,822 $ 61,085 $ 61,596 $ 56,591 $ 53,930
Gross margin 3,586 552 2,609 1,458 2,904
Operating income (loss) 743 (3,023) (734) (1,103) 142
Depreciation and amortization 2,629 2,691 2,712 2,696 2,713
 
Consolidated:
Sales $ 90,746 $ 83,638 $ 85,233 $ 74,304 $ 72,266
Gross margin 11,808 7,317 10,418 6,843 9,257
Operating income (loss) 4,359 (1,518) 2,506 488 2,969
Depreciation and amortization 3,512 3,556 3,598 3,618 3,643
 

Food Ingredients

  • Food Ingredients reported record quarterly sales, gross margin and operating income.
  • Revenue grew more than 40%; all end market segments expanded at double-digit rates.
  • Gross margin increased 29% from volume growth and higher pricing. Product mix changes reflect new business gains in specialty modified products, as well as expansion of value added corn-based applications.
  • Operating income rose 24% to $6.0 million on volume and margin increases.

Industrial Ingredients

  • Revenue increased 20% to $64.8 million reflecting higher corn prices that were passed through to customers, increased pricing from processing and manufacturing fees, higher ethanol volumes, and growth of specialty bio-products.

Industrial Ingredients (continued)

  • Ethanol sales expanded 32% to $32.4 million. Market prices for ethanol rose about 25% from a year ago while comparable industry crush margins improved by approximately $0.10 per gallon, or about 15% from last year.
  • Specialty bio-products sales grew over 40% on new business gains, higher volumes at existing accounts and unit pricing.
  • Gross margin expanded $0.7 million from a year ago, as higher average unit selling prices for industrial starch and ethanol outpaced rapidly rising corn and chemical costs. Industry net corn costs increased more than 50% from last year.
  • Operating results improved $0.6 million from last year’s first quarter and increased sequentially over the fourth quarter of fiscal 2011 by $3.8 million on higher throughput rates, lower unit costs and improved ethanol crush margins.

Consolidated Results

  • Corporate expenses increased by $0.4 million on higher professional fees, employee costs and acquisition related charges.
  • Outstanding bank debt on the Company’s $60 million bank facility fell by $6 million from August 31, 2011 to $16.1 million.
  • Cash flow from operations improved to $12.2 million from $4.7 million last year.
  • The effective tax rate for the first quarter was 70%, which reflects the increased tax expense for the non-deductible preferred stock dividends. The preferred stock dividends are recorded as interest expense in the statements of operations.

Carolina Starches Acquisition

  • The Company reported last quarter that it had executed a definitive agreement to purchase the stock and certain assets of the business currently operated by Carolina Starches. The Company expects to close the transaction in January.

Conference Call

Penford will host a conference call to discuss first quarter fiscal 2012 financial and operational results today, January 9, 2012 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 January 9, 2012, 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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