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.

Business Wire

CENTENNIAL, Colo. -- April 5, 2013

Penford Corporation (Nasdaq: 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
                                          Incr.                              Incr.
(In             February    February    (Decr)   February   February     (Decr)
thousands)      28, 2013     29, 2012              28, 2013    29, 2012
                                                                            
                                                                             
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         5,535        5,247      5   %      10,891      11,206      (3  )%
income
Depreciation
and               547          498                   1,032       1,003
amortization
                                                                             
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         (452   )     (985   )   54  %      936         (242    )   487 %
income (loss)
Depreciation
and               2,791        2,697                 5,604       5,326
amortization
                                                                             
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         2,530        1,650      53  %      6,550       6,009       9   %
income
Net income        1,191        (340   )              2,897       252
Depreciation
and               3,421        3,574                 6,803       7,086
amortization
                                                                             

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 reports filed with the Securities and Exchange Commission.

                                                 
Penford Corporation                                
Financial Highlights
                        Three months ended          Six months ended

(In thousands except    February    February       February     February 29,
per share data)         28, 2013     29, 2012       28, 2013      2012
                        (unaudited)
                                                    
Consolidated Results
                                                                  
Sales                   $ 89,037     $  86,188      $ 183,896     $  176,934
                                                                  
Income from             $ 2,530      $  1,650       $ 6,550       $  6,009
operations
                                                                  
Net income (loss)       $ 1,191      $  (340    )   $ 2,897       $  252
                                                                  
Earnings (loss) per     $ 0.10       $  (0.03   )   $ 0.23        $  0.02
share, diluted
                                                                  
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)     $ 29         $  331         $ (4      )   $  314
in cash
                                                                  
                                                                  
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     2013          2012          2013          2012
data)
                     (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            1,300        1,317        2,765        2,657   
expenses
                                                                  
Income from             2,530          1,650          6,550          6,009
operations
                                                                  
Interest expense        (983    )      (2,430  )      (2,064  )      (4,827  )
Other
non-operating          84           216          (79     )     236     
income (expense),
net
Income (loss)
before income           1,631          (564    )      4,407          1,418
taxes
                                                                  
Income tax expense     440          (224    )     1,510        1,166   
(benefit)
Net income (loss)    $  1,191      $  (340    )   $  2,897      $  252     
                                                                  
Weighted average
common shares and
equivalents             12,503         12,300         12,439         12,327
outstanding,
diluted
                                                                  
Earnings (loss)
per common share,    $  0.10        $  (0.03   )   $  0.23        $  0.02
diluted
                                                                             

Contact:

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