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Penford Reports Third Quarter Fiscal Year 2013 Financial Results

Penford Corporation (Nasdaq:PENX), a leader in ingredient systems for industrial and food applications, today reported third quarter and year-to-date fiscal year 2013 results. Consolidated sales for the quarter ended May 31, 2013 increased 9% to $121.7 million from $111.3 million a year ago.

The Company reported third quarter net income of $2.1 million, or $0.16 per diluted share, compared with a net loss of $5.5 million or $0.44 per diluted share a year ago.

Consolidated sales for the first nine months of fiscal 2013 rose to $349.8 million and operating income increased to $10.8 million. The Company reported net income for this period in fiscal 2013 of $5.0 million, or $0.39 per diluted share, compared with a net loss of $5.2 million, or $0.42 per diluted share, for the preceding year.

A table summarizing quarterly and year-to-date financial results is shown below:

Penford Corporation – Financial Highlights
      Three Months Ended May 31,       Nine Months Ended May 31,
(In thousands)            

Incr.

           

Incr.

2013

2012

(Decr)

2013

2012

(Decr)

Food Ingredients Division:
Sales $ 28,535 $ 26,173 9 % $ 82,793 $ 77,001 8 %
Gross margin 9,056 8,225 10 % 25,288 24,068 5 %
Operating income 6,206 5,362 16 % 17,097 16,563 3 %
Depreciation and amortization 519 512 1,551 1,515
 
Industrial Ingredients Division:
Sales $ 93,184 $ 85,110 9 % $ 267,030 $ 245,927 9 %
Gross margin 4,135 3,229 28 % 12,162 8,595 42 %
Operating income (loss) 565 75 653 % 1,500 (161 )
Depreciation and amortization 2,723 2,772 8,326 8,098
 
Consolidated:
Sales $ 121,719 $ 111,283 9 % $ 349,823 $ 322,928 8 %
Gross margin 13,191 11,454 15 % 37,450 32,663 15 %
Operating income 4,275 3,573 20 % 10,825 9,582 13 %
Net income (loss) 2,058 (5,452 ) 4,956 (5,200 )
Depreciation and amortization 3,324 3,632 10,128 10,718
 

Highlights for the quarter are as follows:

Food Ingredients Division

  • Food Ingredients reported record quarterly sales, gross margin and operating income.
  • Third quarter revenue grew 9% to $28.5 million, with volume gaining 6% and average unit pricing up 3%.
  • Sales into the gluten-free, dairy, pet and soups/sauces/gravies segments rose by double-digit rates.
  • Gross margin rose 10% in the quarter to $9.1 million and operating income increased 16% to $6.2 million, primarily from revenue and volume gains.

Industrial Ingredients Division

  • Revenue for the third quarter grew by 9% to $93.2 million on higher ethanol selling prices and industrial specialty starch volumes. Sales for the third quarter and year-to-date fiscal 2013 and 2012 include sales of co-products from the corn wet milling operations, primarily corn gluten meal, corn gluten feed and corn germ.
  • Gross margin expanded 28% to $4.1 million on higher unit pricing of industrial starch and ethanol and improved industrial starch mix.
  • Operating income rose in the third quarter of fiscal 2013 to $0.6 million from $0.1 million in the prior year. Margin expansion was partially offset by additions to the Industrial division’s sales and research and development resources.

Consolidated Results

  • Interest expense declined by 57% in the third quarter and year-to-date, reflecting lower borrowing costs due to the redemption of the Company’s Series A 15% Preferred Stock in the second half of fiscal 2012.
  • The Company’s year-to-date effective tax rate was 37%. Since the redemption of the Company’s preferred stock, the Company’s effective tax rate has stabilized at a rate approximating the statutory federal and state income tax rates.
  • Consolidated cash flow from operations improved by $13.9 million on higher earnings and lower working capital.
  • Bank loans were reduced $7.0 million in the third quarter.

Conference Call

Penford will host a conference call to discuss fiscal 2013 third quarter results today, July 9, 2013 at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time). Access information for the call and web-cast can be found at www.penx.com. To participate in the call on July 9, 2013, please phone 1-877-407-9205 at 7:50 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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