Alliance One International Reports Fiscal Year 2013 Third Quarter Results
MORRISVILLE, N.C., Feb. 5, 2013
MORRISVILLE, N.C., Feb. 5, 2013 /PRNewswire/ --Alliance One International,
Inc. (NYSE: AOI) today announced results for its third fiscal quarter ended
December 31, 2012.
For the third quarter ended December 31, 2012, the Company reported net income
of $21.3 million, or $0.24 per basic share, compared to net income of $11.8
million, or $0.13 per basic share, last year. Additionally, for the nine
months ended December 31, 2012, the Company reported net income of $8.9
million, or $0.10 per basic share, compared to net income of $9.4 million or
$0.11 per basic share for the same period of the prior fiscal year. Last
year's three and nine month results included $13.1 million of gain on sale of
certain Brazilian assets that did not occur this year.
Mark W. Kehaya, Chief Executive Officer, said, "In December of 2010 we were
faced with changing industry dynamics and a growing global oversupply.
Revenues declined from $2,308.3 million for fiscal year 2010 to $2,094.1
million for the next fiscal year. These challenges were a catalyst and spurred
strategy development to reposition our Company for future growth. As a
cornerstone of our strategy we instituted a number of operational enhancements
that are now complete and are delivering improved efficiencies with reduced
costs. We are sharing the financial impact of the efficiency improvements and
cost reductions with our customers, resulting in increased volume, revenue and
operating profit from core operations. Each incremental kilo of business that
we add is improving our cost per kilo as we leverage our efficiency
improvements and fixed costs further. Repositioning our Company was paramount
to future growth and should improve shareholder value."
J. Pieter Sikkel, President, said, "Fiscal year 2013 is on track to deliver
improved revenue and operating income from core operations versus the prior
year. As anticipated our inventories have decreased $155.2 million to $908.1
million when compared to last year and our uncommitted inventories are well
within our stated range and also significantly below the prior year. We
anticipate further committed and uncommitted inventory reductions as the year
progresses, with emphasis now on fourth quarter shipping to achieve our
Mr. Sikkel concluded, "We are focused on debt reduction, while allocating
capital to improve grower sustainability and enhance social responsibility.
Our factory investments are reducing operating expenses from where they would
have been, positioning our global operations to handle the increasing volumes
that we are experiencing, consistent with our strategy. Our order book is
developing for the upcoming year as contemplated and we have started
purchasing the crop in South America and Africa. Crop sizes are similar to
last year in South America with improved quality, and in Africa we believe
crop sizes have increased versus last year, but we have not purchased
sufficient quantities to establish quality comparisons. While shortages of
supply will remain in certain leaf qualities, the growth in volumes
particularly of African supply, are moving the global market closer to a state
of equilibrium in overall volumes from a current crop supply versus demand
perspective. Our continued focus on the components of our business that truly
matter, while constructively addressing the challenges, should translate to
enhanced long-term shareholder value."
Performance Summary for the Third Fiscal Quarter Ended December 31, 2012
Sales and other operating revenues increased 41.5% to $699.1 million mainly
due to smaller crops in South America and Africa versus record crop sizes last
year, which resulted in higher average sales prices for this year's crop. In
addition, sales of inventory from prior crops and earlier shipments this year
also increased revenues.
Gross profit increased 26.3% to $83.1 million compared to last year, while
gross profit as a percentage of sales decreased from 13.3% last year to 11.9%
this year. Smaller crop sizes resulted in increased processing charges and
other related costs on a per kilo basis, negatively impacting gross profit as
a percentage of sales. The U.S. dollar impact of these higher costs is
partially mitigated by the fluctuation of the Brazilian Real, Malawi Kwacha
and the Euro against the U.S. dollar.
Selling, general and administrative costs decreased 1.2% to $33.5 million.
Operating income increased 12.3% to $49.3 million. Prior year results included
$12.1 million of other income primarily due to asset gains related to a real
property exchange in Brazil that did not recur this year. Increased interest
costs related to higher average borrowings and higher average rates were
partially offset by increased interest income. Accordingly, pretax income
increased 24.5% to $23.0 million compared to last year.
Income tax expense decreased $3.5 million to $2.2 million this year mainly
related to the change in discrete event adjustments.
Performance Summary for the Nine Months Ended December 31, 2012
Sales and other operating revenues increased 19.2% to $1,633.3 million
compared to the prior year due to increased selling prices, sales of prior
crop inventory, and earlier shipments of tobacco this year. Average sales
prices have increased as a result of higher prices paid to tobacco suppliers
and higher operating costs on a per kilo basis from smaller crop sizes,
customer mix and product mix.
Gross profit increased 9.5% to $211.7 million compared to the prior year,
while gross profit as a percentage of sales decreased from 14.1% in 2011 to
13.0% in 2012 due to product mix, customer mix and the per kilo impact of
short crops in South America and Africa.
Selling, general and administrative costs increased 2.3% to $105.6 million due
to increased incentive compensation costs. Operating income remained
comparable to the prior year as increased gross profit was partially offset by
a $17.8 million decrease in other income (expense) primarily from asset gains
in the prior year related to a real property exchange in Brazil. After
interest costs, that increased $6.1 million related to higher average
borrowings and higher average rates, pretax income decreased $5.9 million to
$23.3 million, when compared to last year.
Income tax expense decreased $4.8 million to $15.3 million this year mainly
related to the change in discrete event adjustments and reduced pretax income.
Liquidity and Capital Resources
As of December 31, 2012, available credit lines and cash were $570.5 million,
comprised of $195.3 million in cash and $375.2 million of credit lines, of
which $70.0 million was available under the $250.0 million US revolving credit
facility for general corporate purposes, $294.3 million primarily of foreign
seasonal credit lines and $10.9 million exclusively for letters of credit.
Additionally, from time to time in the future, we may elect to redeem, repay,
make open market purchases, retire or cancel indebtedness prior to stated
maturity under our various global bank facilities and outstanding public
notes, as they may permit.
Effective December 31, 2012, the Company did not achieve a fixed charge ratio
under the 10% senior notes indenture to access the restricted payments basket
for the purchase of common stock, payment of dividends and other actions under
that basket. From time to time the Company may not meet or exceed the ratio to
utilize this basket.
Fiscal Year 2013 Third Quarter Financial Results Investor Call
The Company will hold a conference call to report financial results for its
third fiscal quarter ended December 31, 2012, on February 6, 2013 at 8:00 A.M.
ET. Those seeking to listen to the call may access a live broadcast on the
Alliance One website. Please visit www.aointl.com fifteen minutes in advance
For those who are unable to listen to the live event, a replay will be
available by telephone from 11:00 A.M. ET, February 6^th through 11:00 A.M. ET
February 11^th. To access the replay, dial (888) 203-1112 within the U.S., or
(719) 457-0820 outside the U.S., and enter access code 8114670. Any replay,
rebroadcast, transcript or other reproduction of this conference call, other
than the replay accessible by calling the number above, has not been
authorized by Alliance One and is strictly prohibited. Investors should be
aware that any unauthorized reproduction of this conference call may not be an
accurate reflection of its contents.
This press release contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. These statements are based
on current expectations of future events. Such statements include, but are not
limited to, statements about future financial and operating results, plans,
objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based on the current beliefs and
expectations of management and are subject to significant risks and
uncertainties. If underlying assumptions prove inaccurate or known or unknown
risks or uncertainties materialize, actual results may differ materially from
those currently anticipated expected or projected. The following factors,
among others, could cause actual results to differ from those expressed or
implied by the forward-looking statements: changes in the timing of
anticipated shipments, changes in anticipated geographic product sourcing,
political instability in sourcing locations, currency and interest rate
fluctuations, shifts in the global supply and demand position for tobacco
products, and the impact of regulation and litigation on customers. Additional
factors that could cause AOI's results to differ materially from those
expressed or implied by forward-looking statements can be found in AOI's most
recent Annual Report on Form 10-K and the other filings with the Securities
and Exchange Commission (the "SEC") which are available at the SEC's Internet
Alliance One International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended December 31, 2012 and 2011
Three Months Ended Nine Months Ended
December 31, December 31,
(in thousands, except per 2012 2011 2012 2011
Sales and other operating $ 699,111 $ 493,888 $1,633,292 $1,369,983
Cost of goods and services 615,982 428,092 1,421,637 1,176,689
Gross profit 83,129 65,796 211,655 193,294
Selling, general and 33,494 33,877 105,570 103,234
Other income (expense) (297) 12,052 (1,644) 16,173
Restructuring and asset 56 67 56 1,583
Operating income 49,282 43,904 104,385 104,650
Interest expense (includes
debt amortization of $2,640
for the three months and 29,384 27,408 86,275 80,211
$7,856 and $8,409 for the
nine months in
2012 and 2011, respectively)
Interest income 3,120 1,999 5,239 4,776
Income before income taxes 23,018 18,495 23,349 29,215
and other items
Income tax expense 2,152 5,714 15,292 20,108
Equity in net income (loss) 406 (975) 1,256 198
of investee companies
Net income (loss) 21,272 11,806 9,313 9,305
Less: Net income (loss)
attributable to (48) 52 368 (49)
Net income attributable to
Alliance One International, $ 21,320 $ 11,754 $ 8,945 $ 9,354
Earnings (loss) per share:
Basic $ .24 $ .13 $ .10 $ .11
Diluted $ .20 $ .12 $ .10 $ .11
Weighted average number of
Basic 87,465 87,146 87,342 86,976
Diluted 110,639 110,186 87,679 110,130
SOURCE Alliance One International, Inc.
Contact: Joel L. Thomas, +1-919-379-4300
Press spacebar to pause and continue. Press esc to stop.