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Penford Reports Fiscal Year and Fourth Quarter 2013 Financial Results



  Penford Reports Fiscal Year and Fourth Quarter 2013 Financial Results

  * The Company posted annual net income of $4.0 million for fiscal year 2013.
  * Consolidated operating cash flow improved $22.1 million over last year.
  * Full year sales increased 8% over last year to $467 million.
  * Annual diluted EPS equaled 32 cents compared to prior year loss.
  * Fourth quarter revenue expanded 6.5% to $117 million from a year ago.
  * Fourth quarter sales increased in both divisions compared to last year’s
    fourth quarter.

Business Wire

CENTENNIAL, Colo. -- November 14, 2013

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             2013          2012         Incr.      2013        2012          Incr.
thousands)
                                                                                 
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       6,678         5,501      21.4  %      25,326      23,590      7.4   %
note below)
                                                                                 
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       (2,114  )     2,023      N/A          7,721       9,957       (22.5 )%
note below)
                                                                                 
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       1,784         279        539.4 %      22,805      18,000      26.7  %
note below)
Net income        (949    )     (4,366  )  N/A          4,007       (9,566  )   N/A
(loss)
                                                                                       

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 Corporation                                   
Financial Highlights     Three months ended         
                         August 31                   Year ended August 31
 
(In thousands except     2013          2012          2013          2012
per share data)
                         (unaudited)                              
                                                                    
Consolidated Results
                                                                    
Sales                    $ 117,427     $ 110,223     $ 467,250     $ 433,151
                                                                    
Income (loss) from       $ (1,421  )   $ 476         $ 9,404       $ 10,059
operations
                                                                    
Net income (loss)        $ (949    )   $ (4,366  )   $ 4,007       $ (9,566  )
                                                                    
Income (loss) per        $ (0.08   )   $ (0.35   )   $ 0.32        $ (0.78   )
share, diluted
                                                                    
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 )            $ (36     )   $ (505    )   $ 67          $ (127    )
operations
                                                                    
                                                                    
                                                                    
                                                                    
Balance Sheets
                                                     August 31,    August 31,
                                                     2013          2012
                                                                    
                                                                    
Current assets                                       $ 90,114      $ 91,965
Property, plant and                                    112,141       113,191
equipment, net
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                                    $ 224,618     $ 236,179  
and equity

                                                      
Penford
Corporation
Consolidated
Statements of
Operations
                                                        
                       Three months ended August 31,   Year ended August 31,
                       (Unaudited)
(In thousands,
except per share       2013              2012          2013        2012
data)
                                                                    
                                                                    
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               1,514            1,640         5,870       5,838    
expenses
                                                                    
Income (loss) from        (1,421   )       476           9,404       10,059
operations
                                                                    
Interest expense          927              1,471         3,989       8,633
Other
non-operating             7                (3,606  )     75          (6,186  )
income (expense),
net
Income (loss)
before income             (2,341   )       (4,601  )     5,490       (4,760  )
taxes
                                                                    
Income tax expense        (1,392   )       (235    )     1,483       4,806    
(benefit)
Net income (loss)      $  (949     )     $ (4,366  )   $ 4,007     $ (9,566  )
                                                                    
Weighted average
common shares and
equivalents               12,431           12,300        12,618      12,294
outstanding,
diluted
                                                                    
Income (loss) per
common share,          $  (0.08    )     $ (0.35   )   $ 0.32      $ (0.78   )
diluted
                                                                              

                             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
                      Food          Industrial    Consolidated         Food          Industrial    Consolidated
                      Ingredients   Ingredients                        Ingredients   Ingredients
                                                                                                    
      Operating       $   6,168     $  (4,738 )   $  (1,421  )         $   23,265    $  (3,238 )   $  9,404
      income (loss)
                                                                                                    
      Depreciation
      and                 510          2,607         3,198                 2,061        10,933        13,326
      amortization
      Other
      non-operating       -            17            7                     -            26         $  75       
      income
                                                                                                    
      EBITDA          $   6,678     $  (2,114 )   $  1,784             $   25,326    $  7,721      $  22,805   
                                                                                                    
                                                                                                    
                                                                                                    
                      Three months ended August 31, 2012               Year ended August 31, 2012
                      Food          Industrial    Consolidated         Food          Industrial    Consolidated
                      Ingredients   Ingredients                        Ingredients   Ingredients
                                                                                                    
      Operating       $   5,028     $  (767   )   $  476               $   21,591    $  (928   )   $  10,059
      income (loss)
                                                                                                    
      Loss on
      redemption of       -            -             (3,822  )             -            -             (6,599  )
      Preferred
      Stock
      Depreciation
      and                 473          2,781         3,409                 1,989        10,879        14,127
      amortization
      Other
      non-operating       -            9             216                   10           6             413      
      income
                                                                                                    
      EBITDA          $   5,501     $  2,023      $  279               $   23,590    $  9,957      $  18,000   
                                                                                                    

Contact:

Penford Corporation
Steven O. Cordier, 303-649-1900
Senior Vice President and CFO
scordier@penx.com
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