Penford net income triples in Q1

Penford Corp. (Nasdaq: PENX), a leader in ingredient systems for industrial and food applications, reported first quarter 2013 results.

For the first quarter ended November 30, 2012 consolidated sales increased 4.5 percent to $94.9 million from $90.7 million a year ago. The Company reported first quarter net income of $1.7 million, or $0.14 per diluted share, compared with net income of $0.6 million or $0.05 per diluted share last year.

Highlights for the first quarter:

Food Ingredients Division

• Food Ingredients reported record quarterly sales of $27.7 million.

• Revenue gains of 6.7 percent were primarily led by strong sales in protein and sauces end markets. The revenue increase was partially offset by a 3 percent decline in sales of coatings applications, which reflected a pipeline build from a new product introduction in the year ago quarter.

• Operating income declined 10 percent due to higher investment spending in R&D and commercial resources.

Industrial Ingredients Division

• Revenue for the first quarter increased 4 percent to $67.2 million on growth in industrial starch volumes, as well as contributions from the Carolina Starches business acquired in January 2012.

• The revenue gain was partially offset by lower ethanol sales, down 28 percent from weaker pricing and lower volume. The Industrial Division shifted more of its production to higher margin starches. Ethanol revenue represented 35 percent of Industrial sales in the first quarter, down from 50 percent last year.

• Gross margin improved 44 percent to $5.2 million, and operating income rose 87 percent over the prior year on higher starch sales, lower unit costs and better manufacturing yields, but slightly offset by increased investment in R&D and commercial support for the Company’s bioproducts platform.

• During the quarter the Company received approval from the City of Cedar Rapids, IA for an agreement which will permit the Company to acquire an 11 acre park adjacent to the Company’s Cedar Rapids plant for future expansion of the Company’s bioproducts and other operations.

Consolidated Results

• Interest expense declined by 55 percent to $1.1 million in the first quarter of fiscal 2013, reflecting the complete redemption of the Series A 15 percent Preferred Stock in fiscal 2012.

• The Company’s effective tax rate in the first quarter of 2013 was 38.5 percent compared to 70 percent for the same period last year. The decrease in the effective rate was primarily due to the redemption of the Company’s preferred stock. Dividends and discount accretion on the preferred stock, which were reported as interest expense, were not deductible for tax purposes.