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 firstname.lastname@example.org
Penford Reports Fiscal Year and Fourth Quarter 2013 Financial Results
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