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Penford Reports Fiscal Year 2012 And Fourth Quarter Financial Results

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

(In thousands)

2012

 

2011

 

Incr.

2012

 

2011

 

Incr.

 
Food Ingredients Division:
Sales $ 25,543 $ 22,554 13 % $ 102,544 $ 82,240 25 %
Gross margin 8,098 6,766 20 % 32,165 26,311 22 %
Operating income 5,028 4,135 22 % 21,591 18,037 20 %
Depreciation and amortization 473 486 1,988 2,110
 
Industrial Ingredients Division:
Sales $ 65,963 $ 61,085 8 % $ 258,819 $ 233,201 11 %
Gross margin 3,149 552 470 % 11,745 7,523 56 %
Operating loss (767 ) (3,023 ) 75 % (928 ) (4,718 ) 80 %
Depreciation and amortization 2,781 2,691 10,879 10,812
 
Consolidated:
Sales $ 91,506 $ 83,638 9 % $ 361,363 $ 315,441 15 %
Gross margin 11,247 7,317 54 % 43,910 33,835 30 %
Operating income (loss) 476 (1,518 ) 131 % 10,059 4,445 126 %
Depreciation and amortization 3,409 3,556 14,126 14,415
 

Highlights for the quarter and year are as follows:

Food Ingredients Division

  • 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.

Industrial Ingredients Division

  • 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.

Refinancing of Preferred Stock and Credit Facility

  • 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.

Consolidated Results

  • 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.

Conference Call

Penford will host a conference call to discuss fiscal 2012 fourth quarter and annual results today, November 8, 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 November 8, 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 seven manufacturing and/or research locations in the United States.

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