Exhibit 99.1
CONTACTS: Steven O. Cordier
Vice President and CFO
Penford Corporation
303-649-1900
steve.cordier@penx.com
PENFORD CORPORATION REPORTS THIRD QUARTER FISCAL 2004 RESULTS
DENVER, CO., JUNE 21, 2004 - Penford Corporation (Nasdaq: PENX), a global leader
in ingredient systems for food and industrial applications, today reported
financial results for the third quarter and first nine months of fiscal year
2004. Net income for the quarter ended May 31, 2004 was $2.3 million, or $0.26
per diluted share, compared to $1.8 million, or $0.21 per diluted share for the
same quarter last year. Third quarter 2004 results included $0.4 million in
pre-tax severance expense in Australia. "We are encouraged by this solid
quarterly performance," said Chief Executive Officer Thomas D. Malkoski. "Our
management team is committed to effective implementation of our strategy to
further improve results."
Net income for the nine months ended May 31, 2004 was $4.2 million, or $0.48 per
diluted share, compared to $6.6 million, or $0.82 per diluted share, last year.
Results for fiscal 2003 included a $1.9 million pre-tax non-operating gain on
the sale of the Hi-maize(R) business and fiscal 2004 results included $1.1
million in pre-tax restructuring costs in the Australian and Industrial
Ingredients businesses.
Consolidated sales of $72.5 million for the third quarter of fiscal 2004 rose
10% from $66.0 million a year ago on higher volumes in the Industrial
Ingredients business and a stronger Australian Dollar exchange rate. Third
quarter gross margin as a percent of sales rose 120 basis points over last year
primarily reflecting declining raw material grain costs in Australia and
improved capacity utilization in the Industrial Ingredients business. Operating
expenses as a percent of sales decreased from 8.8% last year to 8.5% and
interest expense for the quarter fell 16% to $1.1 million on lower average debt
balances.
SEGMENT RESULTS
Third quarter fiscal 2004 sales rose 11% over last year to $38.7 million at the
Industrial Ingredients business as volumes increased 7%. Segment gross margin as
a percent of sales rose to 15.0% from 14.5% on increased revenue and
improvements in manufacturing costs. Natural gas costs declined from the second
quarter but remain above levels a year ago. Total research, selling and
administrative expenses as a percent of sales fell to 7.4% from 8.2% last year,
reflecting cost containment measures and the previously announced workforce
reduction in the second quarter of fiscal 2004. Operating income rose 35% to
$3.0 million.
Food Ingredients - North America third quarter sales improved 4% over last year,
increasing $0.5 million to $11.4 million. Gross margin as a percent of sales
declined to 24.8% from 25.8% a year ago on higher input costs and sales
incentive programs intended to strengthen our market position in potato coating
categories. New binding, coating and marinade formulations for processed meat
applications grew by more than 50% this quarter. Operating income was comparable
with the prior year at $1.1 million.
Sales at our Australia/New Zealand business rose 11% to $22.6 million for the
third quarter of fiscal 2004 due to the continued strengthening of the
Australian dollar. Volumes decreased 2% as we encountered price competition from
imported products. Gross margin as a percent of sales rose to 15.0% from 11.4%
in fiscal 2003 reflecting lower grain costs and the impact of workforce
reductions announced during the first half of fiscal 2004. Operating income
increased to $1.7 million from $1.2 million a year ago. Third quarter results
for Penford Australia included a $0.4 million charge related to additional
headcount reductions announced during the third quarter at its Tamworth, New
South Wales plant.
"Process improvements and automation projects underway at every business unit
will help make our cost structure more competitive," Malkoski said. "We have
also asked bargaining unit employees at our Cedar Rapids facility to consider
difficult but necessary changes to the contract expiring on August 1st. These
adjustments are being carefully evaluated and discussions thus far have been
constructive. We continue to implement programs around the world that will
increase productivity, efficiency and returns throughout the business."
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CONFERENCE CALL
Penford will host a conference call to discuss third quarter financial and
operational results today, June 21, 2004 at 9:00 a.m. Mountain time (11:00 a.m.
Eastern time). Access information for the call and web-cast can be found at
WWW.PENX.COM. A replay will be available at WWW.PENX.COM.
ABOUT PENFORD CORPORATION
Penford Corporation develops, manufactures and markets specialty natural-based
ingredient systems for various applications, including papermaking, textiles and
food products. Penford has nine locations in the United States, Australia and
New Zealand.
For automated shareholder information, please call 1-888-317-2013.
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 disclaims any intention or obligation 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 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; changes in general economic
conditions or developments with respect to specific industries or customers
affecting demand for the Company's products including unfavorable shifts in
product mix; unanticipated costs, expenses or third party claims; the risk that
results may be affected by construction delays, cost overruns, technical
difficulties, nonperformance by contractors or changes in capital improvement
project requirements or specifications; interest rate and energy cost
volatility; foreign currency exchange rate fluctuations; or other unforeseen
developments in the industries in which Penford operates.
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CHARTS TO FOLLOW
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PENFORD CORPORATION Three months ended Nine months ended
FINANCIAL HIGHLIGHTS May 31, May 31,
---------------------- ----------------------
(In thousands except per share data) 2004 2003 2004 2003
- -------------------------------------------------- -------- -------- -------- --------
(unaudited)
CONSOLIDATED RESULTS
Sales $ 72,484 $ 66,035 $207,136 $193,769
Net income $ 2,319 $ 1,755 $ 4,199 $ 6,639
Earnings per share, diluted $ 0.26 $ 0.21$ $ 0.82
0.48
RESULTS BY SEGMENT
INDUSTRIAL INGREDIENTS:
Sales $ 38,679 $ 34,912 $107,006 $104,272
Gross margin 15.0% 14.5% 14.1% 15.6%
Operating income 2,964 2,190 6,079 7,390
FOOD INGREDIENTS - NORTH AMERICA:
Sales $ 11,417 $ 10,954 $ 34,283 $ 33,418
Gross margin 24.8% 25.8% 25.4% 28.3%
Operating income 1,096 1,113 3,714 4,499
AUSTRALIA/NEW ZEALAND:
Sales $ 22,580 $ 20,304 $ 66,306 $ 56,551
Gross margin 15.0% 11.4% 12.0% 12.2%
Operating income 1,692 1,217 3,500 3,682
BALANCE SHEET
May 31, August 31,
2004 2003
----------- ----------
(unaudited)
Current assets $ 88,281 $ 76,285
Property, plant and equipment, net 127,889 128,776
Other assets 49,018 45,832
-------- --------
Total assets 265,188 250,893
======== ========
Current liabilities 43,842 37,272
Long-term debt 74,174 76,696
Other liabilities 49,394 49,040
Shareholders' equity 97,778 87,885
-------- --------
Total liabilities and equity $265,188 $250,893
======== ========
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PENFORD CORPORATION Three months ended Nine months ended
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) May 31, May 31,
---------------------------- ----------------------------
(In thousands except share and per share data) 2004 2003 2004 2003
- ------------------------------------------------- ----------- ----------- ----------- -----------
Sales $ 72,484 $ 66,035 $ 207,136 $ 193,769
Cost of sales 60,461 55,839 175,393 161,141
----------- ----------- ----------- -----------
Gross margin 12,023 10,196 31,743 32,628
Operating expenses 6,156 5,786 17,330 17,969
Research and development expenses 1,595 1,290 4,551 4,036
Restructuring costs, net 384 -- 1,125 (117)
----------- ----------- ----------- -----------
Income from operations 3,888 3,120 8,737 10,740
Non-operating income, net 505 627 1,010 2,809
Interest expense (1,060) (1,265) (3,352) (4,249)
----------- ----------- ----------- -----------
Income before income taxes 3,333 2,482 6,395 9,300
Income taxes 1,014 727 2,196 2,661
----------- ----------- ----------- -----------
Net income $ 2,319 $ 1,755 $ 4,199 $ 6,639
=========== =========== =========== ===========
Weighted average common shares and equivalents
outstanding, diluted 8,933,302 8,489,320 8,835,097 8,098,943
Earnings per share, diluted $ 0.26 $ 0.21 $ 0.48 $ 0.82
Dividends declared per common share $ 0.06 $ 0.06 $ 0.18 $ 0.18
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