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)

28, 2013


29, 2012




28, 2013


29, 2012




Food Ingredients Division:
Gross margin8,1287,6267%16,23215,8482%
Operating income5,5355,2475%10,89111,206(3)%
Depreciation and amortization5474981,0321,003
Industrial Ingredients Division:
Gross margin2,8731,77562%8,0275,36150%
Operating income (loss)(452)(985)54%936(242)487%
Depreciation and amortization2,7912,6975,6045,326
Gross margin11,0029,40117%24,25921,20914%
Operating income2,5301,65053%6,5506,0099%
Net income1,191(340)2,897252
Depreciation and amortization3,4213,5746,8037,086

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 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

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)

28, 2013


29, 2012

28, 2013


February 29,

Consolidated Results
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)$314
Balance Sheets
February 28,August 31,
Current assets$ 97,370$91,965
Property, plant and equipment, net110,948113,191
Other assets29,196 31,023 
Total assets237,514 236,179 
Current liabilities32,41336,138
Long-term debt85,29384,004
Other liabilities48,49647,187
Shareholders' equity71,312 68,850 
Total liabilities and equity$ 237,514$236,179 

Penford Corporation
Consolidated Statements of Operations

Three months endedSix months ended
February 28, February 29,February 28, February 29,
(In thousands, except per share data)2013 2012 2013 2012
Cost of sales 78,036  76,787  159,637  155,725 
Gross margin11,0019,40124,25921,209
Operating expenses7,1716,43414,94412,543
Research and development expenses 1,300  1,317  2,765  2,657 
Income from operations2,5301,6506,5506,009
Interest expense(983)(2,430)(2,064)(4,827)
Other non-operating income (expense), net 84  216  (79) 236 
Income (loss) before income taxes1,631(564)4,4071,418
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





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

KEYWORDS:   United States  North America  Colorado


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