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,|
|Food Ingredients Division:|
|Depreciation and amortization||519||512||1,551||1,515|
|Industrial Ingredients Division:|
|Operating income (loss)||565||75||653||%||1,500||(161||)|
|Depreciation and amortization||2,723||2,772||8,326||8,098|
|Net income (loss)||2,058||(5,452||)||4,956||(5,200||)|
|Depreciation and amortization||3,324||3,632||10,128||10,718|
- 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.
- 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.
- 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.
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; changes in general economic conditions or developments with respect to specific industries or customers affecting demand for the Company’s products, including changes in government rules or incentives affecting ethanol consumption, 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.
|Financial Highlights||Three months ended May 31,||Nine months ended May 31,|
|(In thousands, except per share data)||2013||2012||2013||2012|
|Income from operations||$||4,275||$||3,573||$||10,825||$||9,582|
|Net income (loss)||$||2,058||$||(5,452||)||$||4,956||$||(5,200||)|
|Earnings (loss) per share, diluted||$||0.16||$||(0.44||)||$||0.39||$||(0.42||)|
|Cash flow provided by (used in):|
|Increase in cash||$||107||$||64||$||103||$||378|
|May 31,||August 31,|
|Property, plant and equipment, net||109,035||113,191|
|Total liabilities and equity||$||232,301||$||236,179|
|Consolidated Statements of Operations|
|Three months ended May 31,||Nine months ended May 31,|
|(In thousands, except per share data)||2013||2012 (1)||2013||2012 (1)|
|Cost of sales||108,528||99,829||312,373||290,265|
|Research and development expenses||1,590||1,541||4,356||4,198|
|Income from operations||4,275||3,573||10,825||9,582|
|Other non-operating income (expense), net||146||(2,815||)||68||(2,579||)|
|Income (loss) before income taxes||3,423||(1,577||)||7,831||(159||)|
|Income tax expense||1,365||3,875||2,875||5,041|
|Net income (loss)||$||2,058||$||(5,452||)||$||4,956||$||(5,200||)|
|Weighted average common shares and equivalents outstanding, diluted||12,670||12,300||12,548||12,292|
|Earnings (loss) per common share, diluted||$||0.16||$||(0.44||)||$||0.39||$||(0.42||)|
|(1) Previously reported amounts for sales and cost of sales have been restated to classify proceeds from the sale of co-products as sales rather than as a reduction of cost of sales.|