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.
The statements contained in this release that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements can be identified by the use of words such as “believes,” “may,” “will,” “looks,” “should,” “could,” “anticipates,” “expects,” or comparable terminology or by discussions of strategies or trends. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly affect expected results. Actual future results could differ materially from those described in such forward-looking statements, and the Company does not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this release and those described from time to time in other filings with the Securities and Exchange Commission which include, but are not limited to: competition; the possibility of interruption of business activities due to equipment problems, accidents, strikes, weather or other factors; product development risk; changes in corn and other raw material prices and availability; the Company’s inability to comply with the terms of instruments governing the Company’s debt and preferred stock instruments; changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company’s products, including unfavorable shifts in product mix; unanticipated costs, expenses or third party claims; interest rate, chemical and energy cost volatility; changes in returns on pension plan assets and/or assumptions used for determining employee benefit expense and obligations; unforeseen developments in the industries in which Penford operates; and other factors described in the “Risk Factors” section in reports filed with the Securities and Exchange Commission.
|Penford Corporation Financial Highlights||Three months ended||Six months ended|
|(In thousands except per share data)||February29, 2012||February28, 2011||February29, 2012||February28, 2011|
|Income from operations||$||1,650||$||488||$||6,009||$||3,456|
|Net income (loss)||$||(340)||$||(1,575)||$||252||$||(1,239)|
|Income (loss) per share, diluted||$||(0.03)||$||(0.13)||$||0.02||$||(0.10)|
|Cash flow provided by (used in) operations:|
|Total cash provided by (used in ) operations||$||331||$||(24)||$||314||$||(23)|
|February 29,||August 31,|
|Property, plant and equipment, net||111,134||107,372|
|Redeemable preferred stock||41,564||38,982|
|Total liabilities and equity||$||222,298||$||212,414|
|Penford Corporation Consolidated Statements of Operations||Three months ended||Six months ended|
|(In thousands except per share data)||February29, 2012||February28,2011||February29, 2012||February28,2011|
|Cost of sales||76,787||67,461||155,725||130,470|
|Research and development expenses||1,317||1,120||2,657||2,214|
|Income from operations||1,650||488||6,009||3,456|
|Non-operating income (expense), net||216||(1||)||236||88|
|Income (loss) before income taxes||(564||)||(1,816||)||1,418||(1,028||)|
|Income tax expense (benefit)||(224||)||(241||)||1,166||211|
|Net income (loss)||$||(340||)||$||(1,575||)||$||252||$||(1,239||)|
|Weighted average common shares and equivalents|
|Income (loss) per share, diluted||$||(0.03||)||$||(0.13||)||$||0.02||$||(0.10||)|