Penford Reports Improvement in Q2

Improved results from ethanol operations as well as volume gains in specialty Liquid Natural Additives and selected food applications nearly offset the impact from lower selling prices across most product categories.

12 Apr 2010 --- Penford Corporation, a leader in renewable, natural-based ingredient systems for industrial and food applications, reported that consolidated sales for the quarter ended February 28, 2010 were $62.3 million compared with $63.9 million a year ago. Diluted income per share, including discontinued operations, was $0.99. Net loss from continuing operations was $1.8 million, or $0.17 per diluted share, compared to a net loss of $4.2 million, or $0.38 per diluted share last year.

Consolidated sales were $62.3 million. Improved results from ethanol operations as well as volume gains in specialty Liquid Natural Additives and selected food applications nearly offset the impact from lower selling prices across most product categories.

Lower costs and higher productivity improved results. Absolute costs decreased more than $10 million from last year. Unit manufacturing costs declined by 20% on lower input prices, higher throughput rates and improved production yields. Unit operating expenses fell by 9% from a year ago primarily due to lower compensation costs.

Quarterly operating losses were $1.1 million compared with a loss of $6.1 million last year.

Cash flow from continuing operations and collections from Australia during the first six months of fiscal 2010 were applied to reduce outstanding bank debt by $31.0 million in the second quarter.

Net assets of discontinued operations in Australia, excluding $2.0 million of sale proceeds held in escrow, were $1.2 million at the end of February. As a result of the substantial liquidation of the net assets of the Australian operation, the Company reclassified $13.8 million of currency translation adjustments in accumulated other comprehensive income to earnings in the second quarter. This reclassification is a non-cash item.

Food ingredients sales decreased $0.4 million from a year ago due to the divestiture of the non-core dextrose business in the second quarter of fiscal 2009. The dextrose business contributed $1.0 million in sales during the second quarter last year.

Revenue from coating applications decreased as same-store-sales at quick-service restaurant customers declined.

Sales of formulations for bakery and pet categories improved at double-digit rates from the prior year.