SOURCE: American Italian Pasta Company

American Italian Pasta Company

February 04, 2010 07:30 ET

American Italian Pasta Company Reports First Quarter 2010 Results

Total Revenue of $148.9 Million; Quarterly EPS of $0.95 per Diluted Share

KANSAS CITY, MO--(Marketwire - February 4, 2010) - 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 2010, which ended January 1, 2010.

The first quarter of fiscal year 2010 contained 13 weeks, one week less than the Company's comparative first quarter of fiscal year 2009 which contained 14 weeks. Thus, all year-over-year comparisons reflect a 13-week first quarter for fiscal year 2010 and a 14-week first quarter for fiscal year 2009. The Company reports on a 52/53 week basis with the extra week occurring approximately every six years. Fiscal year 2009 was a 53-week fiscal year and ended on October 2, 2009. Fiscal year 2010 is a 52-week year ending on October 1, 2010.

FIRST QUARTER FINANCIAL HIGHLIGHTS

"We are very pleased with these results," said Jack Kelly, CEO of AIPC. "Even as we implemented our strategy to extract our proprietary brands from underperforming markets, we were able to increase our penetration of proprietary and customer brands in strategic markets. As a result, on a weekly average basis, to adjust for the difference in weeks contained in the periods, we were able to increase our volume by 2%."

The Company noted gross profit increased to 33.5% of revenue, or nearly $50 million, for the 13-week first quarter of 2010 compared with 28.5% of revenue, or $48.8 million, for the 14-week first quarter of 2009.

Income before taxes increased $5.7 million to $32.2 million, or 21.6% of revenue, for the 13-week first quarter of 2010 compared with $26.5 million, or 15.5% of revenue, for the 14-week first quarter of 2009.

Tax expense increased $11 million as the Company's sustained profitability returned it to a normal effective tax rate. During the first quarter of 2009, the Company's tax expense was reduced due to the release of valuation reserves related to net operating loss carryforwards.

Net income decreased $5.3 million to $20.7 million and earnings per diluted share decreased to $0.95 per diluted share from $1.23 per diluted share as the Company's favorable results at the income before taxes level were offset by the $11 million ($0.50 per diluted share) increase in tax expense.

"Our strategy, which we implemented during 2009, to focus on our proprietary and customer brands in those strategic markets in which we are strongest, and to extract our proprietary brands from underperforming markets, continues to pay dividends. We increased volume in our strategic markets and improved our gross profit to 33.5% of revenue while also growing our operating profit and pre-tax income," said Mr. Kelly. "I'm particularly pleased that, on an average weekly basis, we were able to grow total volume, excluding our non-strategic brands in those markets that we are exiting, by over 6%. This volume growth was well ahead of the overall market volume growth of 2.2%."

Operational Highlights

-- Total Revenues: Total revenue was $148.9 million for the 13-week quarter
   ended January 1, 2010, a $22.3 million decrease compared with total
   revenue of $171.2 million for the 14-week 2009 quarter.  On a weekly
   average adjusted basis, our total volume increased 2%.

-- Retail Revenues: Retail revenue was $121.6 million for the 13-week 2010
   quarter, a $14.5 million decrease compared with retail revenue of $136.1
   million for the 14-week 2009 quarter.  The decrease resulted from the
   combination of a $7.5 million decrease in revenue related to the
   Company's strategic proprietary and customer brands and a $7.6 million
   decrease in revenue related to proprietary brands the Company is
   extracting from underperforming markets, partly offset by the $0.7
   million increase in payments received from the U.S. government under the
   Continued Dumping and Subsidy Offset Act of 2000.  The $7.5 million
   decrease in revenue related to strategic proprietary and customer
   brands was comprised of a $9.6 million decrease due to lower pricing
   partly offset by a $2.1 million increase due to increased volume during
   the 13-week first fiscal quarter of 2010 compared to the 14-week first
   fiscal quarter of 2009.  On a weekly average basis, to adjust for the
   difference in weeks contained in the periods, strategic proprietary and
   customer brand volume increased approximately 10%.

-- Institutional Revenues: Institutional revenue was $27.3 million for the
   13-week 2010 quarter, a $7.8 million decrease compared with
   institutional revenue of $35.1 million for the 14-week 2009 quarter.
   Revenues decreased $4.2 million, or 12%, due to lower average selling
   prices and $3.6 million, or 10%, due to lower volume.  On a weekly
   average basis, to adjust for the difference in weeks contained in the
   periods, institutional market volume decreased approximately 3%.

-- Cost of Goods Sold: Cost of goods sold decreased $23.4 million, or 19%,
   to $99.0 million for the 13-week first quarter of 2010, from $122.4
   million for the 14-week first quarter of 2009.  As a percentage of
   revenues, cost of goods sold for the first quarter of 2010 decreased to
   66.5%, from 71.5% for the first quarter of 2009.

-- Gross profit: Gross profit increased $1.1 million to $49.9 million for
   the 13-week first quarter of 2010, from $48.8 million for the 14-week
   first quarter of 2009.  Gross profit, as a percentage of revenues,
   increased to 33.5% during the first quarter of 2010, compared to 28.5%
   during the first quarter of 2009.

-- Other operating expenses: Other operating expenses totaled $16.0 million
   for the 13-week 2010 quarter, a $0.4 million decrease compared with
   other operating expense of $16.4 million for the 14-week 2009 quarter.

-- Operating profit: Operating profit for the 13-week first quarter of
   2010 was $33.9 million, an increase of $1.4 million, as compared to
   $32.5 million for the 14-week first quarter of 2009.  Operating profit
   increased, as a percentage of revenues, to 22.8% for the first quarter
   of 2010, from 19.0% for the first quarter of 2009.

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 675 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)


                                                    Quarter Ended
                                          ---------------------------------
                                          January 1, 2010  January 2, 2009
                                          ---------------  ----------------
                                         (Thirteen Weeks)  (Fourteen Weeks)

Revenues                                  $       148,946  $        171,206
Cost of goods sold                                 98,982           122,362
                                          ---------------  ----------------
  Gross profit                                     49,964            48,844

Selling and marketing expense                       7,248             7,364
General and administrative expense                  8,683             8,653
Loss related to long-lived assets                     103               347
                                          ---------------  ----------------
  Operating profit                                 33,930            32,480

Interest expense, net                               1,776             5,878
Other (income) expense, net                           (10)               95
                                          ---------------  ----------------
  Income before income taxes                       32,164            26,507

Income tax expense                                 11,465               479
                                          ---------------  ----------------
  Net income                              $        20,699  $         26,028
                                          ===============  ================


Net income per common share (basic)       $          0.98  $           1.28

Weighted-average common shares
 outstanding (basic)                               21,047            20,257
                                          ===============  ================

Net income per common share (diluted)     $          0.95  $           1.23

Weighted-average common shares
 outstanding (diluted)                             21,833            21,078
                                          ===============  ================




                     AMERICAN ITALIAN PASTA COMPANY
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                  (in thousands, except share amounts)


                                          January 1, 2010  October 2, 2009
                                          ---------------  ---------------
              ASSETS
Current assets:
Cash and cash equivalents                 $        31,871  $        30,959
Trade and other receivables, net                   46,901           45,828
Inventories                                        45,454           50,996
Other current assets                                6,740            6,372
Deferred income taxes                              16,793           22,202
                                          ---------------  ---------------
  Total current assets                            147,759          156,357
Property, plant and equipment, net                286,103          291,212
Brands                                             78,733           79,074
Other assets                                        3,032            3,420
                                          ---------------  ---------------
  Total assets                            $       515,627  $       530,063
                                          ===============  ===============
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                          $        22,162  $        29,852
Accrued expenses                                   20,657           24,147
Income tax payable                                  3,460                -
Current maturities of long term debt                    -            5,900
                                          ---------------  ---------------
  Total current liabilities                        46,279           59,899
Long term debt, less current maturities            80,000          104,100
Deferred income taxes                              54,157           52,972
Other long term liabilities                         6,184            5,676
                                          ---------------  ---------------
  Total liabilities                               186,620          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 - 23,357,185
     and 21,129,627, respectively, at
     January 1, 2010; 23,198,013 and
     20,981,913, respectively, at
     October 2, 2009                                   23               23
Class B common stock, par value $.001
    Authorized shares - 25,000,000; Issued
     and outstanding - none                             -                -
Additional paid-in capital                        276,677          274,142
Treasury stock 2,227,558 shares at
 January 1, 2010 and 2,216,100 shares at
 October 2, 2009, at cost                         (52,903)         (52,519)
Accumulated other comprehensive income             16,698           17,957
Retained earnings                                  88,512           67,813
                                          ---------------  ---------------
  Total stockholders' equity                      329,007          307,416
                                          ---------------  ---------------
  Total liabilities and stockholders'
   equity                                 $       515,627  $       530,063
                                          ===============  ===============

Contact Information

  • Contact:
    Paul R. Geist
    EVP & Chief Financial Officer
    816-584-5228
    Email Contact