Penford Reports Second Quarter Fiscal Year 2013 Financial Results

Penford Reports Second Quarter Fiscal Year 2013 Financial Results

  • Net earnings improved to $0.10 per diluted share from a loss of $0.03 last year.

  • Second quarter sales increased 3.3% to $89.0 million from last year.

  • Operating income expanded by more than 50% to $2.5 million.

CENTENNIAL, Colo.--(BUSINESS WIRE)-- Penford Corporation (NAS: PENX) , a leader in ingredient systems for industrial and food applications, today reported second quarter and year-to-date fiscal year 2013 results.

For the second quarter ended February 28, 2013 consolidated sales increased 3.3% to $89.0 million from $86.2 million a year ago.


The Company reported second quarter net income of $1.2 million, or $0.10 per diluted share, compared with a net loss of $0.3 million or $0.03 per diluted share last year.

Consolidated sales for the first half of fiscal 2013 rose to $183.9 million and operating income increased to $6.6 million. The Company reported net income for this period of $2.9 million, or $0.23 per diluted share, compared with net income of $0.3 million, or $0.02 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

Six Months Ended

(In thousands)

February
28, 2013

February
29, 2012

Incr.
(Decr)

February
28, 2013

February
29, 2012

Incr.
(Decr)

Food Ingredients Division:

Sales

$

26,604

$

24,904

7

%

$

54,258

$

50,828

7

%

Gross margin

8,128

7,626

7

%

16,232

15,848

2

%

Operating income

5,535

5,247

5

%

10,891

11,206

(3

)%

Depreciation and amortization

547

498

1,032

1,003

Industrial Ingredients Division:

Sales

$

62,433

$

61,284

2

%

$

129,639

$

126,106

3

%

Gross margin

2,873

1,775

62

%

8,027

5,361

50

%

Operating income (loss)

(452

)

(985

)

54

%

936

(242

)

487

%

Depreciation and amortization

2,791

2,697

5,604

5,326

Consolidated:

Sales

$

89,037

$

86,188

3

%

$

183,896

$

176,934

4

%

Gross margin

11,002

9,401

17

%

24,259

21,209

14

%

Operating income

2,530

1,650

53

%

6,550

6,009

9

%

Net income

1,191

(340

)

2,897

252

Depreciation and amortization

3,421

3,574

6,803

7,086

Highlights for the quarter are as follows:

Food Ingredients Division

  • Second quarter revenue grew 7% to $26.6 million on double-digit growth in sales of gluten-free, dairy and soups/sauces/gravies products.

  • Gross margin rose 7% in the quarter to $8.1 million and operating income increased 5% to $5.5 million, primarily from revenue and volume gains.

Industrial Ingredients Division

  • Revenue for the second quarter grew by a modest 2% to $62.4 million on double-digit growth in industrial corn starch sales as well as sales generated by the Carolina Starches business acquired in January 2012. Revenue gains were partially offset by lower ethanol sales, down 25% as the Industrial segment shifted production to more attractive starch products.

  • Gross margin improved 62% to $2.9 million on industrial corn starch volume gains, improved unit pricing and contributions from Carolina Starches.

  • Loss from operations narrowed in the second quarter of fiscal 2013 to $0.5 million from $1.0 million in the prior year. Margin expansion was partially offset by increased operating expenses from the Carolina Starches business and additions to the Industrial division's commercial resources.

Consolidated Results

  • Interest expense declined by 60% to $1.0 million in the second quarter of fiscal 2013, reflecting lower borrowing costs due to the redemption of the Company's Series A 15% Preferred Stock in the second half of fiscal 2012. Year-to-date interest expense decreased 57% to $2.1 million from $4.8 million in the prior year.

  • The Company's effective tax rate for the first half of fiscal 2013 was 34% compared to 82% in fiscal 2012. This decrease is attributable to the redemption of the Company's preferred stock. Dividends and discount accretion on the preferred stock which were reported as interest expense were not deductible for tax purposes.

Conference Call

Penford will host a conference call to discuss fiscal 2013 second quarter results today, April 5, 2013 at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time). Access information for the call and webcast can be found at www.penx.com. To participate in the call on April 5, 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; 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 reportsfiled with the Securities and Exchange Commission.

Penford Corporation
Financial Highlights

Three months ended

Six months ended

(In thousands except per share data)

February
28, 2013

February
29, 2012

February
28, 2013

February 29,
2012

(unaudited)

Consolidated Results

Sales

$

89,037

$

86,188

$

183,896

$

176,934

Income from operations

$

2,530

$

1,650

$

6,550

$

6,009

Net income (loss)

$

1,191

$

(340

)

$

2,897

$

252

Earnings (loss) per share, diluted

$

0.10

$

(0.03

)

$

0.23

$

0.02

Cash Flows

Cash flow provided by (used in):

Operating activities

$

(3,788

)

$

(3,146

)

$

2,459

$

9,036

Investing activities

(1,565

)

(11,928

)

(4,990

)

(14,375

)

Financing activities

5,382

15,405

2,527

5,653

Increase (decrease) in cash

$

29

$

331

$

(4

)

$

314

Balance Sheets

February 28,

August 31,

2013

2012

(unaudited)

Current assets

$ 97,370

$

91,965

Property, plant and equipment, net

110,948

113,191

Other assets

29,196

31,023

Total assets

237,514

236,179

Current liabilities

32,413

36,138

Long-term debt

85,293

84,004

Other liabilities

48,496

47,187

Shareholders' equity

71,312

68,850

Total liabilities and equity

$ 237,514

$

236,179

Penford Corporation
Consolidated Statements of Operations

Three months ended

Six months ended

February 28,

February 29,

February 28,

February 29,

(In thousands, except per share data)

2013

2012

2013

2012

(unaudited)

Sales

$

89,037

$

86,188

$

183,896

$

176,934

Cost of sales

78,036

76,787

159,637

155,725

Gross margin

11,001

9,401

24,259

21,209

Operating expenses

7,171

6,434

14,944

12,543

Research and development expenses

1,300

1,317

2,765

2,657

Income from operations

2,530

1,650

6,550

6,009

Interest expense

(983

)

(2,430

)

(2,064

)

(4,827

)

Other non-operating income (expense), net

84

216

(79

)

236

Income (loss) before income taxes

1,631

(564

)

4,407

1,418

Income tax expense (benefit)

440

(224

)

1,510

1,166

Net income (loss)

$

1,191

$

(340

)

$

2,897

$

252

Weighted average common shares and equivalents outstanding, diluted

12,503

12,300

12,439

12,327

Earnings (loss) per common share, diluted

$

0.10

$

(0.03

)

$

0.23

$

0.02



Penford Corporation
Michael J. Friesema, 303-649-1900
Vice President - Corporate Development
mfriesema@penx.com

KEYWORDS: United States North America Colorado

INDUSTRY KEYWORDS:

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