Penford Reports Fiscal Year And Fourth Quarter 2013 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 2013 results.

Consolidated annual sales rose 8% to $467.3 million. Net income for the year grew to $4.0 million, or $0.32 per diluted share, compared with a net loss of $9.6 million, or $0.78 per diluted share, for the preceding year.

Fourth quarter consolidated sales increased 6.5% to $117.4 million from $110.2 million a year ago. The Company reported a fourth quarter net loss of $0.9 million, or $0.08 per diluted share, compared with a net loss of $4.4 million or $0.35 per diluted share last year.

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)

2013

2012

Incr.

2013
 

2012

Incr.
 
Food Ingredients Division:
Sales $ 28,441 $ 25,543 11.3 % $ 111,234 $ 102,544 8.5 %
Gross margin 9,111 8,098 12.5 % 34,399 32,165 6.9 %
EBITDA (see note below) 6,678 5,501 21.4 % 25,326 23,590 7.4 %
 
Industrial Ingredients Division:
Sales $ 88,986 $ 84,680 5.1 % $ 356,016 $ 330,607 7.7 %
Gross margin (1,515 ) 3,149 N/A 10,648 11,745 (9.3 )%
EBITDA (see note below) (2,114 ) 2,023 N/A 7,721 9,957 (22.5 )%
 
Consolidated:
Sales $ 117,427 $ 110,223 6.5 % $ 467,250 $ 433,151 7.9 %
Gross margin 7,597 11,247 (32.4 )% 45,047 43,910 2.6 %
EBITDA (see note below) 1,784 279 539.4 % 22,805 18,000 26.7 %
Net income (loss) (949 ) (4,366 ) N/A 4,007 (9,566 ) N/A
 

Note: EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization expense. The Company uses a non-GAAP (Generally Accepted Accounting Principles) financial measure, EBITDA, to evaluate performance and establish goals. The Company believes that this measure is valuable to investors in assessing the Company’s operating results when viewed in conjunction with GAAP results.

Highlights for the quarter and year are as follows:

Food Ingredients Division
  • Food Ingredients posted record annual sales of $111.2 million, up 8.5% over last year.
  • Fourth quarter revenue grew 11.3% to $28.4 million on higher volume and pricing.
  • Sales of coating and non-coating applications expanded more than 10% in the fourth quarter, with broad-based gains across several application segments.
  • Fourth quarter gross margin rose by 12.5% and operating income improved 22.7% on higher volumes and favorable pricing and product mix.

Industrial Ingredients Division
  • Full year revenue gained 8% to a record $356.0 million on improved pricing in all product categories.
  • Revenue for the fourth quarter increased 5% from a year ago to $89.0 million. Sales of ethanol rose 23% on higher volume and pricing. Sales of industrial specialty products in the quarter grew 10% on higher volumes.
  • In the fourth quarter, the division posted an operating loss of $4.7 million, driven by the unprecedented high cost of corn, which added over $3 million to cost of sales. In addition, higher manufacturing costs, including chemicals, energy and maintenance, increased cost of sales by approximately $1.5 million.
  • Regional corn prices are now 35% lower than the fourth quarter average and should impact cost of sales in fiscal 2014 by a smaller amount than the prior year. Chemical, energy and maintenance costs are declining in fiscal 2014 as a result of cost control programs and lower market prices.

Consolidated Results
  • Net income for fiscal 2013 increased $13.6 million to $4.0 million from a net loss in the prior year.
  • Annual sales were up 8%, driven by new customer wins and a more favorable product mix.
  • Interest expense was cut in half, by $4.6 million from the prior year, reflecting the redemption of the Company’s preferred stock in fiscal 2012.
  • Cash flow from operations improved $22.1 million in fiscal 2013 on higher earnings, lower corn inventories and reduced interest payments on the Company’s outstanding credit facility.
  • Total debt was reduced by $11.5 million from fiscal year 2012.

Conference Call

Penford will host a conference call to discuss fiscal 2013 fourth quarter and annual results today, November 14, 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 November 14, 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.

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; impairment of the Company’s long-lived assets that could result in a noncash charge to reported earnings; 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 CorporationFinancial Highlights

 
   

Three months endedAugust 31
 

 

Year ended August 31
(In thousands except per share data)

2013
 

2012
 

2013
 

2012
(unaudited)  
 
Consolidated Results
 
Sales $ 117,427 $ 110,223 $ 467,250 $ 433,151
 
Income (loss) from operations $ (1,421 ) $ 476 $ 9,404 $ 10,059
 
Net income (loss) $ (949 ) $ (4,366 ) $ 4,007 $ (9,566 )
 
Income (loss) per share, diluted $ (0.08 ) $ (0.35 ) $ 0.32 $ (0.78 )
 
Cash Flows
 
Cash flow provided by (used in) operations:
Operating activities $ 10,069 $ (4,074 ) $ 24,649 $ 2,560
Investing activities (5,861 ) (4,840 ) (12,062 ) (22,418 )
Financing activities   (4,244 )   8,409     (12,520 )   19,731  
Total cash provided by (used in ) operations $ (36 ) $ (505 ) $ 67 $ (127 )
 
 
 
 
Balance Sheets
August 31, August 31,
2013 2012
 
 
Current assets $ 90,114 $ 91,965
Property, plant and equipment, net 112,141 113,191
Other assets   22,363     31,023  
Total assets   224,618     236,179  
 
Current liabilities 35,640 36,138
Long-term debt 72,739 84,004
Other liabilities 33,346 47,187
Shareholders’ equity   82,893     68,850  
Total liabilities and equity $ 224,618   $ 236,179  
     

Penford CorporationConsolidated Statements of Operations
 
Three months ended August 31, Year ended August 31,

(Unaudited)
(In thousands, except per share data) 2013   2012 2013   2012
 
 
Sales $ 117,427 $ 110,223 $ 467,250 $ 433,151
Cost of sales   109,830     98,976     422,203   389,241  
Gross margin 7,597 11,247 45,047 43,910
 
Operating expenses 7,504 9,131 29,773 28,013
Research and development expenses   1,514     1,640     5,870   5,838  
 
Income (loss) from operations (1,421 ) 476 9,404 10,059
 
Interest expense 927 1,471 3,989 8,633
Other non-operating income (expense), net   7     (3,606 )   75   (6,186 )
Income (loss) before income taxes (2,341 ) (4,601 ) 5,490 (4,760 )
 
Income tax expense (benefit)   (1,392 )   (235 )   1,483   4,806  
Net income (loss) $ (949 ) $ (4,366 ) $ 4,007 $ (9,566 )
 
Weighted average common shares and equivalents outstanding, diluted 12,431 12,300 12,618 12,294
 
Income (loss) per common share, diluted $ (0.08 ) $ (0.35 ) $ 0.32 $ (0.78 )
 

Penford Corporation Reconciliation of Non-GAAP Measure

To supplement the segment and consolidated financial results prepared in accordance with generally accepted accounting principles (“GAAP”), the Company utilizes a non-GAAP financial measure, net income (loss), before interest, taxes, depreciation and amortization expense (“EBITDA”). The Company uses EBITDA to evaluate performance and establish goals. The Company believes that this measure is valuable to investors in assessing the Company’s operating results when viewed in conjunction with GAAP results. This non-GAAP measure is not a substitute for, or an alternative to, the corresponding measure calculated in accordance with GAAP.
     

Reconciliation of non-GAAP EBITDA to GAAP Operating Income (Loss)
                 

Three months ended August 31, 2013

Year ended August 31, 2013

FoodIngredients

IndustrialIngredients

Consolidated

FoodIngredients

IndustrialIngredients

Consolidated
 
Operating income (loss) $ 6,168 $ (4,738 ) $ (1,421 ) $ 23,265 $ (3,238 ) $ 9,404
 
Depreciation and amortization 510 2,607 3,198 2,061 10,933 13,326
Other non-operating income   -     17       7     -     26     $ 75  
 
EBITDA $ 6,678   $ (2,114 )   $ 1,784   $ 25,326   $ 7,721     $ 22,805  
 
 
 

Three months ended August 31, 2012

Year ended August 31, 2012

FoodIngredients

IndustrialIngredients

Consolidated

FoodIngredients

IndustrialIngredients

Consolidated
 
Operating income (loss) $ 5,028 $ (767 ) $ 476 $ 21,591 $ (928 ) $ 10,059
 
Loss on redemption of Preferred Stock - - (3,822 ) - - (6,599 )
Depreciation and amortization 473 2,781 3,409 1,989 10,879 14,127
Other non-operating income   -     9       216     10     6       413  
 
EBITDA $ 5,501   $ 2,023     $ 279   $ 23,590   $ 9,957     $ 18,000  
 

Copyright Business Wire 2010