Imperial Sugar Company Reports Fourth Quarter And Fiscal Year 2011 Results

Imperial Sugar Company (NASDAQ:IPSU) today reported a net loss for the fiscal fourth quarter ended September 30, 2011 of $32.5 million, or $2.73 per share, compared to a net loss of $2.3 million, or $0.19 per share, for the same period in fiscal 2010. For the year, the Company reported a net loss of $53.4 million, or $4.49 per share, compared to net income of $136.9 million, or $11.33 per share, for fiscal 2010. Fiscal 2010 results include pretax gains resulting from the settlement of insurance claims totaling $278.5 million ($178.9 million or $14.81 per share after tax), while fiscal 2011 results include a tax charge of $18.9 million to establish a valuation allowance for tax loss carry forwards, as well as pre-tax impairment charges related to joint venture investments totaling $7.1 million.

“Imperial’s results continue to be challenged by high raw sugar prices and competitive pricing dynamics,” stated John Sheptor, president and CEO of Imperial Sugar. “Additionally, our progress on increasing production rates and reducing costs at the Port Wentworth refinery has been slower than we expected, adding to the unsatisfactory financial results. Studies completed by an outside refining consultant, as well as by our internal operating and engineering teams, identified potential improvements in processing and equipment reliability issues in the refinery. We are evaluating those findings and as part of our 2012 capital plan, have initiated projects to replace equipment in several key areas of the refinery. We continue to evaluate additional capital projects which may be required to be undertaken later in fiscal 2012 or in fiscal 2013.

Sheptor continued, “our operating results and the impact of high sugar prices on working capital have strained our financial resources and we are exploring opportunities to improve liquidity, including potential further asset sales. We continue to maintain compliance with the terms of our revolving credit agreement and have an open dialog with our lenders. We completed an amendment of our credit agreement in late December, which is designed to provide additional flexibility under the agreement over the next several months.”

Net sales for the fourth quarter of fiscal 2011 decreased to $231.4 million compared to $264.4 million for the same period in fiscal 2010 as a result of 27% lower sales volumes, offset in part by 19% higher refined prices. The lower sales volumes were the result of the contribution of the Gramercy refinery to Louisiana Sugar Refining LLC (“LSR”) in January 2011 in exchange for a one-third membership interest, which was reported on the equity method of accounting. As previously reported, in December 2011 the Company sold its membership interest in LSR. Gross margin as a percent of sales was a negative 3.5% in the current quarter compared to a positive 2.7% last year as higher reported raw sugar costs more than offset the higher sales prices.

Other income declined from a positive $1.0 million in the fourth quarter of fiscal 2010 to a negative $6.0 million as the Company’s share of operating losses in LSR, as well as impairment charges, more than offset increased earnings from other investments. Impairment charges totaling $7.1 million were recorded during the fourth quarter of fiscal 2011, principally to reduce the carrying value of the LSR investment to the sales value realized subsequent to year end.

Fiscal Year Ended September 30, 2011

Net sales for fiscal 2011 were $848.0 million compared to $908.0 million in fiscal 2010, as lower sales volumes in the industrial and distributor channels more than offset higher sales prices. Gross margin as a percent of sales for fiscal 2011 improved slightly to a negative 1.6% from a negative 2.1% largely from higher sales prices.

The Company reported that it had available, undrawn revolving credit availability of $44 million, at September 30, 2011, after deducting $82 million of borrowings and $7 million of letters of credit outstanding under its revolving credit agreement. Undrawn availability was $36 million as of December 31, 2011.

Capital expenditures during fiscal 2011 were $24.8 million, principally for safety and normal equipment replacement projects.

Conference Call Details

Company officials will conduct a conference call starting at 11:00 a.m. Eastern, Monday, January 9, 2012. Imperial Sugar President and CEO, John Sheptor and Senior Vice President and CFO, Hal Mechler, will discuss the Company’s operating results for its fiscal fourth quarter and year ended September 30, 2011, its current financial position and its business strategies.

Participants wishing to listen and participate in a brief question-and-answer session after the presentation can dial 1-866-356-4279 and enter the Participant Passcode: 16857689. The conference call can also be accessed via live audio webcast by visiting Imperial Sugar’s web site at http://www.imperialsugarcompany.com/investor-relations and clicking on the “Q4 2011 Imperial Sugar Earnings Conference Call” icon under “Investor Relations.”

For those who are unable to listen to the call during its live broadcast, a replay of the entire presentation will be available on the company’s web site beginning one hour following the conclusion of the call. In addition to the webcast replay, a telephone replay will also be available beginning one hour following the conclusion of the call that can be accessed by dialing 1-888-286-8010 and entering the Passcode: 14750120. Both replays will be available through February 9, 2012.

Please note: Participants planning to listen to the call via the Internet may need to download Windows Media Player(R) to hear the call if this feature has not been previously installed on their computers.

About Imperial

Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and foodservice distributors. The Company markets products nationally under the Imperial®, Dixie Crystals® and Holly® brands. For more information about Imperial Sugar, visit www.imperialsugarcompany.com and www.iscnewsroom.com.

Statements regarding future market prices and margins, our liquidity and ability to finance our operations and capital investment programs, future expenses and liabilities arising from the Port Wentworth refinery incident, future costs and liabilities arising from the Louisiana Sugar Refining LLC venture, future import and export levels, future government and legislative action, future environmental regulatory and compliance costs, future operating results, future availability and cost of raw sugars, operating efficiencies, results of future investments and initiatives, future asset sales, future cost savings, future product innovations, future energy costs, future pension plan contributions and other statements that are not historical facts contained in this release are forward-looking statements that involve certain risks, uncertainties and assumptions. These risks, uncertainties and assumptions include, but are not limited to, market factors, farm and trade policy, unforeseen engineering and equipment delays, our ability to obtain financing and the terms of any such financing, our ability to realize planned cost savings and other improvements, the available supply of sugar, energy costs, the effect of weather and economic conditions, results of actuarial assumptions, actual or threatened acts of terrorism or armed hostilities, legislative, administrative and judicial actions and other factors detailed in the Company’s filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated.

Tables to follow
 
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
 
 
  Three Months Ended September 30,     Year Ended September 30,

2011
 

2010

2011
 

2010
 
Net Sales $ 231,436 $ 264,413 $ 847,976 $ 908,033
Business Interruption Insurance Recovery - - - 84,677
Cost of Sales (239,502 ) (257,145 ) (861,507 ) (927,302 )
Selling, General and Administrative Expense (9,255 ) (10,843 ) (38,013 ) (41,434 )
Refinery Explosion Related Charges (1,090 ) (795 ) (2,222 ) (8,600 )
Insurance Recoveries Recognized - - - 193,796
Gain on Contribution of Assets to Joint Venture       3,598    
Operating Income (Loss) (18,411 ) (4,370 ) (50,168 ) 209,170
 
Interest Expense (776 ) (414 ) (2,307 ) (1,721 )
Interest Income - 4 404 52
Other Income (Loss), Net   (6,004 )   983     (6,818 )   5,542  
 
Income (Loss) From Continuing Operations
Before Income Taxes (25,191 ) (3,797 ) (58,889 ) 213,043
(Provision) Credit for Income Taxes   (7,358 )   1,492     5,496     (76,183 )
 
Income (Loss) from Continuing Operations (32,549 ) (2,305 ) (53,393 ) 136,860
Income (Loss) from Discontinued Operations   -     -     0     0  
 
Net Income (Loss) $ (32,549 ) $ (2,305 ) $ (53,393 ) $ 136,860  
 
Basic Earnings
Per Share of Common Stock:
Income (Loss) from Continuing Operations $ (2.73 ) $ (0.19 ) $ (4.49 ) $ 11.59
Loss from Discontinued Operations   -     -     -     -  
Net Income (Loss) $ (2.73 ) $ (0.19 ) $ (4.49 ) $ 11.59  
 
Diluted Earnings
Per Share of Common Stock:
Income (Loss) from Continuing Operations $ (2.73 ) $ (0.19 ) $ (4.49 ) $ 11.33
Loss from Discontinued Operations   -     -     -     -  
Net Income (Loss) $ (2.73 ) $ (0.19 ) $ (4.49 ) $ 11.33  
 
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(Unaudited)
 

September 30, 2011
   

September 30, 2010
 
Cash and Temporary Investments $ 134 $ 22,750
Marketable Securities 206 198
Accounts Receivable, Net 55,622 55,093
Inventory 70,589 113,375
Other Current Assets   59,155   40,949
Current Assets 185,706 232,365
Property, Plant & Equipment, Net 251,009 280,211
Deferred Income Taxes, Net 11,034 10,624
Other Assets   42,672   18,366
Total $ 490,421 $ 541,566
 
Accounts Payable, Raw Sugar $ 23,461 $ 81,673
Accounts Payable, Trade 13,367 28,326
Borrowing under Revolving Credit Line 81,843 22,000
Deferred Income Taxes, Net 8,313 11,427
Other Current Liabilities   74,200   54,189
Current Liabilities 201,184 197,615
Long-Term Debt - -
Other Liabilities 127,783 125,219
Shareholders' Equity   161,454   218,732
Total $ 490,421 $ 541,566
 
Shares of Common Stock Outstanding 12,223,978 12,145,098

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