Penford Corporation (Nasdaq: PENX), a leader in renewable ingredient systems for industrial and food applications, today reported fourth quarter and annual fiscal year 2012 results.
2012 fiscal year consolidated sales rose to $361.4 million and operating income increased to $10.1 million. The Company reported a net loss for the year of $9.6 million, or $0.78 per diluted share, compared with a net loss of $5.1 million, or $0.42 per diluted share, for the preceding year. Included in the Company’s annual results were a pre-tax charge of $6.6 million related to the early redemption of the Company’s 15% Series A Preferred Stock and a non-cash tax valuation allowance of $1.8 million.
For the fourth quarter ended August 31, 2012 consolidated sales increased 9% to $91.5 million from $83.6 million a year ago. The Company reported a fourth quarter net loss of $4.4 million, or $0.35 per diluted share, compared with a net loss of $3.2 million or $0.26 per diluted share last year. Included in the fiscal 2012 fourth quarter loss was a pre-tax charge of $3.8 million related to the early redemption of the Company’s 15% Series A Preferred Stock.
A table summarizing quarterly and annual financial results is shown below:
|Penford Corporation – Financial Highlights|
3 Months Ended August 31
Year Ended August 31
|Food Ingredients Division:|
|Depreciation and amortization||473||486||1,988||2,110|
|Industrial Ingredients Division:|
|Depreciation and amortization||2,781||2,691||10,879||10,812|
|Operating income (loss)||476||(1,518||)||131||%||10,059||4,445||126||%|
|Depreciation and amortization||3,409||3,556||14,126||14,415|
- Record annual sales of $102.5 million up 25% over last year. Revenue growth was primarily from new products and customer gains.
- Fourth quarter revenue grew 13% to $25.5 million. Sales of coating applications rose 8% reflecting improved volume and product pricing. Sales of non-coating applications expanded more than 15%, led by double-digit gains in the protein, dairy and pet chews and treats market segments.
- Full year revenue gained 11% to a record $258.8 million on improved pricing, volume gains in paper and packaging starches and specialty bio-products, partially offset by lower ethanol pricing and volumes.
- Sales of advanced specialty bio-products expanded over 20% in the fiscal year.
- Fiscal 2012 gross margins improved by 56% to $11.7 million from gains in starch sales and lower unit costs.
- Revenue for the fourth quarter increased 8% to $66.0 million on double-digit growth in industrial starch volumes as well as contributions from the Carolina Starches business acquired in January 2012. Revenue gains were partially offset by lower ethanol sales, down 19% from weaker pricing and lower volume. The Industrial Division shifted more of its production to higher margin industrial and food starches.
- As previously reported, in July 2012, the Company completed the redemption of all of the Series A 15% Preferred Stock at the original issue price of $23.5 million plus $5.4 million of accrued dividends. In April 2012, the Company had redeemed 41,250 shares for $20.0 million, which included $3.5 million of accrued dividends. These redemptions were funded by borrowings on the Company’s credit facility.
- Also reported previously, in July 2012, the Company entered into an Amended and Restated Credit Agreement which increased the Company’s revolving credit facility to $130 million from $60 million. The new agreement has a five-year term with an optional “accordion” expansion feature which will allow the Company, under the conditions specified in the new agreement, to increase borrowing capacity by an additional $30 million.
- In connection with the redemptions of preferred stock, the Company accelerated the discount accretion related to the shares redeemed and wrote off the remaining issuance costs. The Company recorded charges of $6.6 million in non-operating expense related to these items.
- The Company recorded $4.8 million of tax expense on a loss before taxes of $4.8 million. The difference between the statutory tax rate of 35% and the effective tax rate is due to (i) approximately $13 million of preferred stock related expenses that are not deductible for tax purposes, and (ii) a $1.8 million tax valuation allowance related to the carryforward of a small ethanol producer tax credit. The valuation allowance may be reversed in future years if the tax credit is utilized.
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