Imperial Sugar Company Reports First Quarter Fiscal 2011 Results
Gross margin as a percent of sales was a negative 1.6% in the current quarter compared to 7.1% last year, including 10.9 % attributable to the mark-to-market derivative gain.
2/8/2011 --- Imperial Sugar Company reported a net loss for the fiscal first quarter ended December 31, 2010 of $8.9 million, or $0.75 per diluted share. Results for the same period of fiscal 2009, which included $278.5 million of pre-tax gains associated with settlement of insurance claims related to the February 2008 Port Wentworth accident, was net income of $178.1 million, or $14.84 per share. Additionally, the prior year’s results included $18.9 million of mark-to-market gains on raw sugar derivatives intended to hedge raw sugar purchases in subsequent periods. Absent the insurance and derivative gains the prior year’s results would have been a net loss of $12.2 million, or $1.03 per share.
Net sales for the quarter ended December 31, 2010 increased to $227.4 million compared to $173.8 million for the same period in the prior year. The increased revenues were due to 11% higher sales volumes and 18% higher refined prices. Gross margin as a percent of sales was a negative 1.6% in the current quarter compared to 7.1% last year, including 10.9 % attributable to the mark-to-market derivative gain. Current quarter results include a $2.9 million severance charge related primarily to the transition of refining operations in Louisiana.
“A number of important milestones were reached during the past few months as we continue to implement our strategic vision and position the company for the future,” stated John Sheptor, president and CEO. “We completed the necessary improvements to the Gramercy refinery, and turned over operational control of the facility to Louisiana Sugar Refining, LLC, our one-third owned joint venture, on the first of January. LSR re-initiated refining operations in the existing refinery in early February. Construction of the new LSR refinery remains on track for a summer 2011 start-up. “
Sheptor continued, “We are encouraged by the early results of the retail consumer trial initiated in November of Steviacane, the first stevia-sucrose product developed by our 50% owned Natural Sweet Ventures. Consumer feedback has been positive and we are planning a wider retail distribution beginning later this year.”
Domestic raw sugar prices increased rapidly during the past 18 months, in part in response to significantly higher world raw sugar prices. Domestic raw sugar costs were 12.6% higher for the first fiscal quarter compared to the same period last year. Selling, general and administrative costs were 27% lower in the current quarter due to lower compensation and legal costs.
“The process modifications implemented in the Port Wentworth refinery at the beginning of October produced immediate improvements in refinery results,” added Sheptor. “The refined silo repairs were completed by the contractor in mid-January and we anticipate placing the silos back in service in early February. We are anxious to continue the ramp-up in production in Port Wentworth once the silos are on line.”
The Company reported that at December 31, 2010, it had cash balances of $6.7 million and available, undrawn revolving credit capacity of $46 million, after deducting $48 million of borrowings and $6 million of letters of credit outstanding under that facility.
Capital expenditures during the first quarter of fiscal 2011 were $10.1 million, including spending to complete the improvements to the Gramercy, Louisiana refinery prior to contribution to LSR.
