American Italian Pasta Company (NASDAQ: AIPC), the largest producer
of dry pasta in North America, today announced its second quarter
and year-to-date fiscal year 2010 results for the period ended
April 2, 2010.
The second quarters of fiscal year 2010 and 2009 contain 13
weeks of operation. The year-to-date fiscal year 2010 contains 26
weeks of operations compared to 27 weeks of operations for fiscal
year 2009. The Company reports on a 52/53-week basis with the extra
week occurring approximately every six years. Fiscal year 2010 will
be a 52-week fiscal year and ends on October 1, 2010. Fiscal year
2009 was a 53-week year that ended on October 2, 2009.
FINANCIAL HIGHLIGHTS
Net income for the second quarter increased $7.4 million, or
47%, to $23.2 million from an adjusted net income of $15.8 million
in the comparable quarter of the prior year. Earnings per share, on
a diluted basis, increased 44% to $1.05 per share from an adjusted
earnings per share of $0.73 per share in the comparable prior
quarter. Net income for fiscal 2010 year to date increased $11.0
million, or 33%, to $43.9 million from $32.9 million through the
second quarter of fiscal 2009. Earnings per share, on a diluted
basis, increased 30% to $2.00 per share year to date, from an
adjusted earnings per share of $1.54 per share in the same period
the year prior.
The non-GAAP adjustment to the 2009 numbers refers to tax
benefits recorded in fiscal 2009 related to the reversal of certain
tax reserves and the calculation of the prior year tax expense at
the current year rate. The Company believes investors gain
additional perspective of underlying business trends and results by
calculating a measure of net earnings and diluted net earnings per
share for fiscal 2009 that provides a consistent effective tax rate
in order to evaluate ongoing business operations. A reconciliation
of these non-GAAP financial measures to the most directly
comparable GAAP financial measures can be found after the financial
statements included below.
Net income for the second quarter decreased $3.0 million, or
11%, to $23.2 million from reported net income of $26.2 million in
the comparable prior quarter. Earnings per share, on a diluted
basis, decreased 13% to $1.05 per share from $1.21 per share in the
comparable prior quarter. Year to date net income for fiscal 2010
decreased $8.3 million, or 16% to $43.9 million from reported net
income of $52.2 million. Earnings per share, on a diluted basis,
decreased 18% to $2.00 per share year to date, from $2.44 per share
in the same period of the prior year.
AIPC reported strong key measurements for the second quarter of
2010. As a percent of revenue, the following gains were made over
the second quarter of fiscal 2009:
-- Gross profit increased to 36.5% from 27.2%
-- Operating profit grew to 25.3% from 17.6%
-- Income before taxes grew to 24.6% from 15.1%
"Our retail focus on private label or store brand business,
along with our strategic brands, contributed to strong results in
the second quarter of fiscal 2010. AIPC continued to outperform the
pasta category in both revenue and volume, and we are operating the
business more profitably, as second quarter operating profit
increased 30% from the year prior," said President and CEO Jack
Kelly.
"Strong performance in 2010 has allowed us to continue our
aggressive debt reduction, bringing total debt outstanding to $45
million from $110 million at the end of fiscal 2009. Since the
second quarter ended, we have further reduced our debt outstanding
by an additional $15 million," Kelly said.
Total revenue of $145.9 million for the quarter represents an
approximate 10% decrease compared with the same period the year
prior. Revenues decreased 5.4% due to lower average selling prices
and 4.7% due to decreased volume. Revenues of $294.9 million for
the 26-week year-to-date period represents a 12% decrease compared
with the 27-week period in fiscal 2009. The volume decreases were
within the institutional and non-strategic brand channels, which
offset volume gains in the strategic retail channel of 2.7% for the
quarter and 2.2% for the year to date period compared with the same
period the year prior. Cost of goods sold decreased approximately
22% to $92.6 million for the quarter, primarily as a result of the
combination of a decrease in our input costs and a decrease in
volume in the institutional and non-strategic brand channels. Cost
of goods sold as a percent of revenues was 63.5% in the second
quarter, compared with 72.8% for the second quarter of fiscal
2009.
Selling, marketing and general and administrative expenses were
stable for the 2010 second quarter compared with the 2009 second
quarter. Interest expense for the quarter and year-to-date period
was down $2.8 million and $6.9 million respectively, driven by
aggressive debt reduction combined with lower interest rates.
Income tax expense was $12.7 million for the quarter, compared
with $1.7 million tax benefit for the prior year's quarter. For the
year-to-date period AIPC has recorded $24.1 million of tax expense
compared with a $1.2 million benefit in the prior year-to-date
period. The $14.4 million increase in tax expense was the key
driver of the decrease in net income and the $0.16 decline in
diluted earnings per share quarter over quarter. For the
year-to-date period, the approximate $25.3 million of additional
tax expense was the key driver of the decrease in net income and
the $0.44 decline in diluted earnings per share.
ABOUT AIPC
Founded in 1988 and based in Kansas City, Mo., American Italian
Pasta Company is the largest producer of dry pasta in North
America. The Company has four plants that are located in Excelsior
Springs, Mo.; Columbia, S.C.; Tolleson, Ariz., and Verolanuova,
Italy. The Company has approximately 650 employees located in the
United States and Italy. For more information, visit
www.aipc.com.
When used in this release, the words "anticipate," "projected,"
"believe," "estimate," and "expect" and similar expressions are
intended to identify forward-looking statements, but are not the
exclusive means of identifying these statements. The statements by
the Company regarding the pasta market, and financial performance
are forward-looking. There are numerous risks and uncertainties
that could cause actual future results to differ materially from
those anticipated by such forward-looking statements. The risks and
uncertainties could be caused by a number of factors, including,
but not limited to: (1) our dependence on a limited number of
customers for a substantial portion of our revenue; (2) our ability
to obtain necessary raw materials and minimize fluctuations in raw
material prices; (3) the potential adverse impact on revenue and
margins of the highly competitive environment in which we operate;
(4) our reliance exclusively on a single product category; (5) our
ability to cost-effectively transport our products; (6) consumption
trends for our product; (7) the status of production capacity in
the U.S. and the level of imports from foreign producers; (8) our
ability to sustain quality and service requirements for our
customers; and (9) our ability to attract and retain key personnel.
For a discussion of factors that could cause actual results to
materially differ from those anticipated, see the risk factors set
forth in Item 1A of the Company's Form 10-K for the fiscal year
ended October 2, 2009. The Company will not update any
forward-looking statements in this press release to reflect future
events.
AMERICAN ITALIAN PASTA COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share amounts)
Second Quarter Ended Year-to-date Period Ended
------------------------ -------------------------
April 2, April 3, April 2, April 3,
2010 2009 2010 2009
(Thirteen (Thirteen (Twenty-six (Twenty-seven
Weeks) Weeks) Weeks) Weeks)
----------- ----------- ----------- -----------
Revenues $ 145,904 $ 162,325 $ 294,850 $ 333,531
Cost of goods sold 92,607 118,164 191,589 240,526
----------- ----------- ----------- -----------
Gross profit 53,297 44,161 103,261 93,005
Selling and marketing
expense 6,955 7,290 14,203 14,654
General and
administrative expense 9,174 8,104 17,857 16,757
Losses related to
long-lived assets 240 258 343 605
----------- ----------- ----------- -----------
Operating profit 36,928 28,509 70,858 60,989
Interest expense, net 1,290 4,070 3,066 9,948
Other (income) expense,
net (265) (43) (275) 52
----------- ----------- ----------- -----------
Income before income
taxes 35,903 24,482 68,067 50,989
Income tax expense
(benefit) 12,668 (1,714) 24,133 (1,235)
----------- ----------- ----------- -----------
Net income $ 23,235 $ 26,196 $ 43,934 $ 52,224
=========== =========== =========== ===========
Net income per common
share (basic) $ 1.09 $ 1.27 $ 2.07 $ 2.56
Weighted-average common
shares outstanding
(basic) 21,372 20,598 21,209 20,421
=========== =========== =========== ===========
Net income per common
share (diluted) $ 1.05 $ 1.21 $ 2.00 $ 2.44
Weighted-average common
shares outstanding
(diluted) 22,114 21,583 21,977 21,365
=========== =========== =========== ===========
AMERICAN ITALIAN PASTA COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
April 2, October 2,
2010 2009
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 35,669 $ 30,959
Trade and other receivables, net 42,970 45,828
Income tax receivable 6,712 -
Inventories 41,424 50,996
Other current assets 8,062 6,372
Deferred income taxes 11,147 22,202
---------- ----------
Total current assets 145,984 156,357
Property, plant and equipment, net 280,870 291,212
Brands 78,110 79,074
Other assets 2,645 3,420
---------- ----------
Total assets $ 507,609 $ 530,063
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,681 $ 29,852
Accrued expenses 21,952 24,147
Current maturities of long term debt 45,000 5,900
---------- ----------
Total current liabilities 85,633 59,899
Long term debt, less current maturities - 104,100
Deferred income taxes 55,633 52,972
Other long term liabilities 3,401 5,676
---------- ----------
Total liabilities 144,667 222,647
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value:
Authorized shares - 10,000,000; Issued and
outstanding shares - none - -
Class A common stock, $.001 par value:
Authorized shares - 75,000,000
Issued and outstanding shares - 24,019,114
and 21,749,030, respectively, at April 2,
2010; 23,198,013, respectively, at
October 2, 2009 24 23
Class B common stock, par value $.001
Authorized shares - 25,000,000; Issued and
outstanding - none - -
Additional paid-in capital 292,784 274,142
Treasury stock, 2,270,084 shares at April 2,
2010 and 2,216,100 shares at October 2, 2009,
at cost (54,504) (52,529)
Accumulated other comprehensive income 12,891 17,957
Retained earnings (accumulated deficit) 111,747 67,813
---------- ----------
Total stockholders' equity 362,942 307,416
---------- ----------
Total liabilities and stockholders' equity $ 507,609 $ 530,063
========== ==========
AMERICAN ITALIAN PASTA COMPANY
RECONCILIATION OF NON-GAAP MEASURES
Unaudited
(in thousands, except per share amounts)
Second Quarter Year-to-date Period
Ended April 3, 2009 Ended April 3, 2009
(Thirteen Weeks) (Twenty-seven Weeks)
------------------- -------------------
Diluted Diluted
Earnings Earnings
Dollars Per Share Dollars Per Share
--------- --------- --------- ---------
Adjusted net income and diluted EPS $ 15,844 $ 0.73 $ 32,911 $ 1.54
Plus: Non-GAAP income tax expense 8,638 0.40 18,078 0.84
--------- ---------
Reported income before taxes 24,482 50,989
Plus: Reported income tax benefit 1,714 0.08 1,235 0.06
--------- --------- --------- ---------
Reported net income and diluted
EPS $ 26,196 $ 1.21 $ 52,224 $ 2.44
========= ========= ========= =========
Contact: Paul R. Geist EVP & Chief Financial Officer
816-584-5228
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