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 29, 2012 increased 16% to $86.2 million from $74.3 million a year ago. Gross margin expanded 37% to $9.4 million. The Company reported a second quarter net loss of $0.3 million or $0.03 per diluted share compared with a net loss of $1.6 million or $0.13 per diluted share last year.
A table summarizing quarterly financial results is shown below:
|Penford Corporation – Financial Highlights|
|(In thousands)||Q2 FY 12||Q1 FY 12||Q4 FY 11||Q3 FY11||Q2 FY11|
|Depreciation and amortization||498||505||486||510||553|
|Operating income (loss)||(985)||743||(3,023)||(734)||(1,103)|
|Depreciation and amortization||2,697||2,629||2,691||2,712||2,696|
|Operating income (loss)||1,650||4,359||(1,518)||2,506||488|
|Depreciation and amortization||3,574||3,512||3,556||3,598||3,618|
- Food Ingredients reported record second quarter sales, gross margin and operating income.
- Revenue grew more than 40% to $24.9 million. Sales of coating applications expanded over 30% reflecting volume growth and improved pricing. Revenue from applications for protein, bakery, companion pet treats, and gluten free segments expanded at double-digit rates.
- Gross margin increased over 40% to $7.6 million on higher pricing and volume gains from existing customers and new business.
- Operating income rose 47% to $5.2 million.
- Revenue increased 8% to $61.3 million. The increase includes revenue from the Carolina Starches business, growth in specialty starches, and higher processing fees. Improved revenue was partially offset by a 6% decline in ethanol sales partly due to production downtime to undertake equipment maintenance.
- Ethanol sales were $24.2 million. Comparable industry crush margins fell by about $0.08 per gallon or 15% from a year ago. Second quarter industry crush margins were about $0.45 per gallon or 50% below the first quarter of fiscal 2012.
- Sales of specialty bio-products grew over 25% on new business, higher volumes at existing accounts and unit pricing.
- Gross margin expanded $0.3 million from a year ago, as higher average unit selling prices for industrial starch outpaced rising corn and chemical costs. Lower natural gas costs also contributed to a higher margin.
- Corporate expense rose $0.6 million on higher professional fees, employee costs and acquisition-related charges.
- Bank debt rose to $30.7 million reflecting the $8.5 million acquisition of Carolina Starches in January 2012.
- The effective tax rate for the first half was 82%, which reflects non-deductible preferred stock dividends.
- The Company intends to provide notice to the holder of its Series A 15% Cumulative Non-Voting Non-Convertible Preferred Stock that approximately $20 million of principal and accrued dividends will be redeemed next month. The stock will be called without premium at issue price.
- The redemption will be funded by utilizing the Company’s existing revolving debt facility.
- The Company closed on the acquisition of the Carolina Starches business and the integration is proceeding as planned.
- Revenues, cost of goods sold and a portion of the selling, general and administrative expenses reported by Carolina Starches since the acquisition have been included in the results of operations of the Industrial Ingredients segment.