HOUSTON, Aug. 6 /PRNewswire-FirstCall/ -- ICO, Inc. (Nasdaq: ICOC), global
producer of custom polymer powders and plastic film concentrates, today
announced its results for the quarter ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO)
Third Quarter Highlights
------------------------
-- Revenues of $115.7 million, an increase of $2.3 million or 2% from the
prior year
-- Volumes declined 9% compared to the third quarter of fiscal 2007
-- Operating income of $6.5 million, down 28% year-over-year
-- Net income per share of $.17 fully diluted
-- Total debt outstanding decreased $10.0 million or 15% as a result of
positive cash flow
Third Quarter 2008 vs. Third Quarter 2007
-----------------------------------------
Revenues for the three months ended June 30, 2008 were $115.7 million, an
increase of $2.3 million or 2% compared to the same quarter of the previous
year. The translation effect of stronger foreign currencies caused $8.9
million of the increase, while higher average selling prices and changes in
product mix caused $1.8 million of the increase. A 9% decrease in volumes
sold reduced revenues by $8.3 million.
Gross margins declined from 18.1% to 16.0% primarily as a result of lower
volumes sold, pricing pressures and higher operating costs, especially in our
Bayshore Industrial segment and Australian locations. The decline in gross
margins led to a decline in operating income of $2.5 million or 28% compared
to the prior year quarter. During the third quarter the Company reversed its
valuation allowance on previous tax losses incurred in Brazil, which resulted
in a reduction to income tax expense of $0.7 million. Compared to the prior
year quarter, income from continuing operations decreased $1.0 million or 18%,
to $.17 per share for the three months ended June 30, 2008 as a result of the
above items.
Third Quarter 2008 vs. Second Quarter 2008
------------------------------------------
Comparing the sequential quarterly results, revenues increased $3.6
million or 3% caused by the translation effect of stronger foreign currencies
and changes in product sales mix and prices. A 4% decline in volumes sold,
combined with a decrease in feedstock margins, led to a reduction in gross
margin from 17.2% to 16.0%. The decline in gross margins, as well as lower
net insurance recoveries of $1.2 million related to the July 2007 fire in the
Company's New Jersey location, led to a decline in operating income of $2.2
million or 25%. Similar to the year-over-year quarterly comparison,
profitability in our Bayshore Industrial segment and Australian locations also
declined during the quarter, contributing to the sequential quarter reduction
in operating income. The reversal of the valuation allowance in Brazil and
the Company's lower pre-tax income led to lower quarterly tax expense of $1.5
million. Income from continuing operations declined $0.4 million or 7% as a
result of the above.
'Although our third quarter results were disappointing to us, we can see
the benefits of being diversified,' stated A. John Knapp, Jr., the Company's
President and CEO. 'Our European region produced tremendous results for the
quarter which helped offset some of the weakness we saw in our Bayshore
Industrial segment and Australian locations. During the quarter, we generated
good cash flow as we reduced our debt levels by $10.0 million. We remain
confident in the success of our business over the long-term due to our product
and geographic diversity.'
Balance Sheet and Liquidity
---------------------------
Total debt outstanding as of June 30, 2008 was $58.5 million, a decline of
$10.0 million from March 31, 2008. This reduction was accomplished by
positive cash flow from operations of $13.5 million less net capital
expenditures of $3.3 million. Approximately $1.7 million of the capital
expenditures related to our facility relocation from New Jersey to
Pennsylvania. For the first nine months of fiscal year 2008, shareholders'
equity increased $22.4 million or 25%, primarily as a result of year-to-date
net earnings and the effect of stronger foreign currencies compared to the
U.S. Dollar. Our available borrowing capacity at June 30, 2008 was $68.0
million, an increase from March 31, 2008 by $11.0 million.
Conference Call on the Web
--------------------------
A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal
2008 third quarter results can be accessed at 10:00 a.m. Central Time on
Thursday, August 7, 2008 at http://www.videonewswire.com/event.asp?id=50067,
where the webcast replay will be accessible for ninety days. The webcast
replay will also be accessible on the Company's website at
http://www.icopolymers.com for a period of twelve months. (Minimum
requirements to listen to the broadcast are: The Windows Media Player
software, downloadable free from
http://www.microsoft.com/windows/windowsmedia/player/download/download.aspx
and at least a 28.8Kbps connection to the Internet.)
Investors are invited to participate in the conference by dialing 847-413-
3733, passcode 22186048. A replay of the conference call will be available by
dialing 630-652-3044, passcode 22186048.
About ICO, Inc.
---------------
With 20 locations in 10 countries, ICO produces custom polymer powders for
rotational molding and other polymer related businesses, such as the textile,
metal coating and masterbatch markets. ICO remains an industry leader in size
reduction, compounding and other tolling services for plastic and non-plastic
materials. ICO's Bayshore Industrial subsidiary produces specialty compounds,
concentrates and additives primarily for the plastic film industry.
Additional information about ICO, Inc. can be found on the Company's website
at http://www.icopolymers.com.
This press release contains forward-looking statements, which are not
statements of historical facts and involve certain risks, uncertainties and
assumptions. These include, but are not limited to, restrictions imposed by
the Company's outstanding indebtedness, changes in the cost and availability
of resins (polymers) and other raw materials, demand for the Company's
services and products, business cycles and other industry conditions,
international risks, operational risks, currency translation risks, the
Company's lack of asset diversification, the Company's ability to manage
global inventory, develop technology and proprietary know-how, and attract and
retain key personnel, as well as other factors detailed in the Company's form
10-K for the fiscal year ended September 30, 2007 and its other filings with
the Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated.
ICO, Inc.
Consolidated Statement of Operations
(Unaudited and in thousands, except per share data and percentages)
Three Months Ended Nine Months Ended
June 30, March 31, June 30,
---------------------- ---------- ---------------------
2008 2007 2008 2008 2007
---------- ---------- ---------- ---------- ----------
Product Sales $105,494 $102,963 $102,120 $308,802 $265,443
Toll Services 10,224 10,415 10,006 29,907 28,915
---------- ---------- ---------- ---------- ----------
Total Revenues 115,718 113,378 112,126 338,709 294,358
Cost of sales
and services
(exclusive of
depreciation
shown
separately
below) 97,234 92,836 92,838 281,845 241,976
---------- ---------- ---------- ---------- ----------
Gross Profit (1) 18,484 20,542 19,288 56,864 52,382
Selling, general
and
administrative
expense 10,441 9,727 10,387 31,431 27,440
Depreciation
and
amortization 1,932 1,855 1,853 5,580 5,466
Impairment,
restructuring
and other
costs (income) (356) - (1,598) (1,756) (654)
---------- ---------- ---------- ---------- ----------
Operating income 6,467 8,960 8,646 21,609 20,130
Other income
(expense):
Interest expense,
net (1,039) (799) (1,096) (3,158) (2,301)
Other income
(expense) 165 (129) (68) (36) (296)
---------- ---------- ---------- ---------- ----------
Income from
continuing
operations
before income
taxes 5,593 8,032 7,482 18,415 17,533
Provision for
income taxes 960 2,400 2,489 5,263 3,819
---------- ---------- ---------- ---------- ----------
Income from
continuing
operations 4,633 5,632 4,993 13,152 13,714
Income (loss)
from
discontinued
operations, net
of income taxes - (18) - (16) 1,421
---------- ---------- ---------- ---------- ----------
Net income $4,633 $5,614 $4,993 $13,136 $15,135
Preferred Stock
dividends - (82) - (1) (472)
Net gain on
redemption of
Preferred Stock - - - - 6,023
---------- ---------- ---------- ---------- ----------
Net income
applicable to
Common Stock $4,633 $5,532 $4,993 $13,135 $20,686
========== ========== ========== ========== ==========
Basic income from
continuing
operations per
common share $0.17 $0.21 $0.18 $0.48 $0.74
========== ========== ========== ========== ==========
Basic net income
per common
share $0.17 $0.21 $0.18 $0.48 $0.80
========== ========== ========== ========== ==========
Diluted income
from continuing
operations per
common share $0.17 $0.20 $0.18 $0.47 $0.49
========== ========== ========== ========== ==========
Diluted net
income per
common share $0.17 $0.20 $0.18 $0.47 $0.54
========== ========== ========== ========== ==========
Basic weighted
average
shares
outstanding 27,433,000 26,056,000 27,263,000 27,202,000 25,934,000
========== ========== ========== ========== ==========
Diluted
weighted
average
shares
outstanding 27,975,000 27,598,000 27,949,000 27,975,000 27,892,000
========== ========== ========== ========== ==========
Gross Margin (2) 16.0% 18.1% 17.2% 16.8% 17.8%
(1) Calculated as Total Revenues minus Cost of Sales and Services,
exclusive of Depreciation Expense.
(2) Calculated as Gross Profit divided by Total Revenues.
ICO, Inc.
Consolidated Balance Sheet
(Unaudited and in thousands, except share data and ratios)
June 30, September 30,
2008 2007
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $3,909 $8,561
Trade receivables 89,438 95,142
Inventories 72,302 60,420
Deferred income taxes 2,140 1,778
Prepaid and other current assets 8,868 9,924
------------- -------------
Total current assets 176,657 175,825
------------- -------------
Property, plant and equipment, net 65,039 57,396
Goodwill 9,258 9,228
Other assets 4,250 3,768
------------- -------------
Total assets $255,204 $246,217
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings under credit
facilities $13,468 $16,133
Current portion of long-term debt 17,089 11,611
Accounts payable 54,601 66,906
Accrued salaries and wages 7,010 7,313
Other current liabilities 13,517 16,004
------------- -------------
Total current liabilities 105,685 117,967
------------- -------------
Long-term debt, net of current portion 27,906 29,605
Deferred income taxes 4,894 4,820
Other long-term liabilities 3,255 2,783
------------- -------------
Total liabilities 141,740 155,175
------------- -------------
Commitments and contingencies - -
Stockholders' equity:
Convertible exchangeable preferred stock - 2
Undesignated preferred stock - -
Common stock 54,302 47,659
Additional paid-in capital 72,158 74,920
Accumulated other comprehensive income 10,823 5,416
Accumulated deficit (23,819) (36,955)
------------- -------------
Total stockholders' equity 113,464 91,042
------------- -------------
Total liabilities and stockholders'
equity $255,204 $246,217
============= =============
OTHER BALANCE SHEET DATA
Working capital $70,972 $57,858
Current ratio 1.7 1.5
Total debt $58,463 $57,349
Debt-to-capitalization 34.0% 38.6%
ICO, Inc.
Supplemental Segment Information
(Unaudited and in thousands, except percentages)
Revenues
Three Months Ended June 30: % of % of
2008 Total 2007 Total Change %
-------- ------ -------- ------ -------- -----
ICO Europe $58,226 50% $47,797 42% $10,429 22%
Bayshore Industrial 19,044 16% 25,684 23% (6,640) (26%)
ICO Asia Pacific 21,417 19% 25,528 22% (4,111) (16%)
ICO Polymers North America 12,081 10% 11,083 10% 998 9%
ICO Brazil 4,950 5% 3,286 3% 1,664 51%
-------- ------ -------- ------ --------
Consolidated $115,718 100% $113,378 100% $2,340 2%
======== ====== ======== ====== ========
Nine Months Ended June 30: % of % of
2008 Total 2007 Total Change %
-------- ------ -------- ------ -------- -----
ICO Europe $158,720 47% $124,178 42% $34,542 28%
Bayshore Industrial 71,563 21% 69,465 24% 2,098 3%
ICO Asia Pacific 58,989 18% 59,624 20% (635) (1%)
ICO Polymers North America 34,971 10% 31,486 11% 3,485 11%
ICO Brazil 14,466 4% 9,605 3% 4,861 51%
-------- ------ -------- ------ --------
Consolidated $338,709 100% $294,358 100% $44,351 15%
======== ====== ======== ====== ========
Operating income (loss)
Three Months Ended June 30: 2008 2007 Change %
------ ------- ------- -----
ICO Europe $3,901 $3,376 $525 16%
Bayshore Industrial 2,045 3,329 (1,284) (39%)
ICO Asia Pacific (11) 2,315 (2,326) (100%)
ICO Polymers North America 1,811 1,553 258 17%
ICO Brazil 224 63 161 256%
------ ------- -------
Total Operations 7,970 10,636 (2,666) (25%)
Unallocated General
Corporate Expense (1,503) (1,676) 173 (10%)
------ ------- -------
Consolidated $6,467 $8,960 $(2,493) (28%)
====== ======= =======
Nine Months Ended June 30: 2008 2007 Change %
------- ------- ------- -----
ICO Europe $10,419 $6,559 $3,860 59%
Bayshore Industrial 8,755 9,642 (887) (9%)
ICO Asia Pacific 1,612 4,161 (2,549) (61%)
ICO Polymers North America 5,194 4,313 881 20%
ICO Brazil 553 267 286 107%
------- ------- -------
Total Operations 26,533 24,942 1,591 6%
Unallocated General
Corporate Expense (4,924) (4,812) (112) 2%
------- ------- -------
Consolidated $21,609 $20,130 $1,479 7%
======= ======= =======
Operating income (loss)
as a percentage of
revenues Three Months Ended Nine Months Ended
June 30, June 30,
------------------------- -------------------
2008 2007 Change 2008 2007 Change
------- ------- ------- ----- ----- ------
ICO Europe 7% 7% 0% 7% 5% 2%
Bayshore Industrial 11% 13% (2%) 12% 14% (2%)
ICO Asia Pacific 0% 9% (9%) 3% 7% (4%)
ICO Polymers North America 15% 14% 1% 15% 14% 1%
ICO Brazil 5% 2% 3% 4% 3% 1%
Consolidated 6% 8% (2%) 6% 7% (1%)
ICO, Inc.
Supplemental Segment Information (cont'd.)
(Unaudited and in thousands, except percentages)
Revenues
Three Months Ended
-------------------------------------------------
June 30, March 31,
------------------ ----------------
% of % of
2008 Total 2008 Total Change %
-------- ------ -------- ------ ------- ----
ICO Europe $58,226 50% $54,181 48% $4,045 7%
Bayshore Industrial 19,044 16% 20,742 18% (1,698) (8%)
ICO Asia Pacific 21,417 19% 19,627 18% 1,790 9%
ICO Polymers North America 12,081 10% 12,559 11% (478) (4%)
ICO Brazil 4,950 5% 5,017 5% (67) (1%)
-------- ------ -------- ------ -------
Consolidated $115,718 100% $112,126 100% $3,592 3%
======== ====== ======== ====== =======
Operating income (loss)
Three Months Ended
----------------------------------
June 30, March 31,
2008 2008 Change %
--------- -------- -------- -----
ICO Europe $3,901 $3,520 $381 11%
Bayshore Industrial 2,045 2,782 (737) (26%)
ICO Asia Pacific (11) 761 (772) (101%)
ICO Polymers North America 1,811 2,937 (1,126) (38%)
ICO Brazil 224 192 32 17%
--------- -------- --------
Total Operations 7,970 10,192 (2,222) (22%)
Unallocated General
Corporate Expense (1,503) (1,546) 43 (3%)
--------- -------- --------
Consolidated $6,467 $8,646 $(2,179) (25%)
========= ======== ========
Operating income (loss)
as a percentage of
revenues Three Months Ended
----------------------------
June 30, March 31,
2008 2008 Change
-------- --------- -------
ICO Europe 7% 6% 1%
Bayshore Industrial 11% 13% (2%)
ICO Asia Pacific 0% 4% (4%)
ICO Polymers North America 15% 23% (8%)
ICO Brazil 5% 4% 1%
Consolidated 6% 8% (2%)
SOURCE ICO, Inc.
