- Published: 12 February 2009
- Written by Editor
American Italian Pasta Company Reports First Quarter 2009 Results
American Italian Pasta Company (Nasdaq: AIPC), the largest producer of dry pasta in North America, today announced results for its first quarter of fiscal year 2009, which ended January 2, 2009.
The first quarter of fiscal year 2009 contained 14 weeks, one week longer than the Company's comparative first quarter of fiscal year 2008. The Company reports on a 52/53 week basis with the extra week occurring approximately every six years. Fiscal year 2009 will be a 53-week fiscal year and ends on October 2, 2009. Fiscal year 2008 was a 52-week year that ended on September 26, 2008. Thus, all year-over-year comparisons reflect a 14-week first quarter for fiscal year 2009 and a 13-week first quarter in fiscal year 2008.
FIRST QUARTER FINANCIAL HIGHLIGHTS
Revenues for the 14-week first quarter increased $59.5 million, or 53%, to $171.2 million, led by a 56% increase in the retail market and a 43% increase in the institutional market. Overall volume increased 13%. Net income for the 14-week first quarter increased $24.6 million to $26.0 million, or $1.23 per diluted share, versus a net income of $1.4 million, or $0.07 per diluted share, in the 13-week first quarter of fiscal 2008.
"Our strong first quarter results continue the trend that began in fiscal year 2007, as we continue to deliver solid growth in revenue and net income," said Jack Kelly, president and CEO. "Our growth strategy to leverage our market leadership in 'customer brands' and focus resources on our strongest proprietary retail brands is paying off. Under this market approach, we will continue to look for new ways to partner with our customers to promote the nutritional and economic value of pasta as well as its versatility as a center-of-the-plate staple. While economic uncertainty and fluctuating commodity prices continue to pose challenges, we remain confident in our strategic plan and growth prospects going forward."
Operational Highlights
-- Retail Revenues: Retail revenues increased $48.9 million, or 56%, to $136.1 million for the 14-week 2009 quarter, from $87.2 million for the 13-week 2008 quarter. The increase is primarily the result of a $39.1 million, or 45%, increase related to higher average selling prices; and a $13.6 million, or 16%, increase in volume, offset by a $3.8 million decrease in payments received from the U.S. government under the Continued Dumping and Subsidy Offset Act of 2000.
-- Institutional Revenues: Institutional revenues increased $10.6 million, or 43%, to $35.1 million for the 14-week first quarter of 2009, from $24.5 million for the first quarter of 2008. The revenue increase is primarily the result of a $8.9 million, or 36%, increase due to higher average selling prices, and a $1.7 million, or 7%, increase due to higher volume.
-- Cost of Goods Sold: Cost of goods sold increased $35.0 million, or 40%, to $122.4 million for the 14-week first quarter of 2009, from $87.4 million for the first quarter of 2008. As a percentage of revenues, cost of goods for the first quarter of 2009 decreased to 72%, from 78% for the comparable prior period. The Company experienced higher commodity prices during the first quarter of 2009 versus the first quarter of 2008, specifically in the price of durum, additives and packaging costs.
-- Gross profit: Gross profit increased $24.5 million to $48.8 million for the 14-week first quarter of 2009, from $24.3 million for the first quarter of 2008. Gross profit, as a percentage of revenues, increased to 28% during the first quarter, compared to 22% during the first quarter of 2008.
-- Selling and marketing expense: Selling and marketing expense increased $1.4 million, or 23%, to $7.4 million for the 14-week first quarter of 2009, from $6.0 million for the first quarter of 2008. Selling and marketing expense, as a percentage of revenue, decreased to 4% for the first quarter of 2009, from 5% for the first quarter of 2008. The increase in total selling and marketing expense is primarily due to higher broker expense, brand amortization and stock based compensation.
-- General and administrative expense: General and administrative expense decreased 15% to $8.7 million for the 14-week first quarter of 2009, from $10.2 million for the first quarter of 2008. General and administrative expenses, as a percentage of revenues, decreased to 5% for the first quarter of 2009, from 9% for the first quarter of 2008. The decrease is primarily due to lower total professional fees partially offset by higher compensation.
-- Operating profit: Operating profit for the 14-week first quarter of 2009 was $32.5 million, an increase of $24.3 million, as compared to $8.2 million for the first quarter of 2008. Operating profit increased, as a percentage of revenues, to 19% for the first quarter of 2009, from 7% for the first quarter of 2008.
ABOUT AIPC
Founded in 1988 and based in Kansas City, Missouri, 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, Missouri; Columbia, South Carolina; Tolleson, Arizona and Verolanuova, Italy. The Company has approximately 600 employees located in the United States and Italy. For more information, visit http://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, cost of goods, 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 September 26, 2008. 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)
Quarter Ended
January 2, 2009 December 28, 2007
(Fourteen Weeks) (Thirteen Weeks)
Revenues $171,206 $111,723
Cost of goods sold 122,362 87,388
Gross profit 48,844 24,335
Selling and marketing expense 7,364 6,020
General and administrative expense 8,653 10,160
Losses related to long-lived assets 347 -
Operating profit 32,480 8,155
Interest expense, net 5,878 7,088
Other (income) expense, net 95 (17)
Income before income taxes 26,507 1,084
Income tax expense (benefit) 479 (310)
Net income $26,028 $1,394
Net income per common share (basic) $1.28 $0.07
Weighted-average common shares
outstanding (basic) 20,257 18,727
Net income per common share (diluted) $1.23 $0.07
Weighted-average common shares
outstanding (diluted) 21,078 18,938
AMERICAN ITALIAN PASTA COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
January 2, 2009 September 26, 2008
ASSETS
Current assets:
Cash and cash equivalents $42,316 $38,623
Short-term investments 1,459 2,370
Trade and other receivables, net 45,397 49,197
Inventories 59,489 66,026
Other current assets 9,363 5,819
Deferred income taxes 1,251 2,126
Total current assets 159,275 164,161
Property, plant and equipment, net 299,022 303,503
Brands 79,356 79,769
Other assets 4,952 5,591
Total assets $542,605 $553,024
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $30,162 $29,541
Accrued expenses 24,112 37,357
Short term debt and current maturities
of long term debt 1,752 24,913
Total current liabilities 56,026 91,811
Long term debt, less current maturities 217,000 217,000
Income taxes payable 1,810 1,783
Deferred income taxes 32,771 34,054
Other long term liabilities 3,176 2,405
Total liabilities 310,783 347,053
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 23 22
Issued and outstanding shares -
22,561,601 and 20,364,122, respectively,
at January 2, 2009; 22,454,145 and
20,259,060, respectively, at
September 26, 2008
Class B common stock, par value $.001
Authorized shares - 25,000,000;
Issued and outstanding - none - -
Additional paid-in capital 262,886 261,772
Treasury stock, 2,197,479 shares
at January 2, 2009 and (52,115) (52,076)
2,195,085 shares at September 26,
2008, at cost
Accumulated other comprehensive income 15,475 16,728
Retained earnings (accumulated deficit) 5,553 (20,475)
Total stockholders' equity 231,822 205,971
Total liabilities and stockholders'
equity $542,605 $553,024
