SOURCE: American Italian Pasta Company

American Italian Pasta Company

August 06, 2009 07:00 ET

American Italian Pasta Company Reports Third Quarter and Year-to-Date 2009 Results

Year-to-Date Total Revenue of $479 Million; Operating Profit of $90 Million; Year-to-Date EPS of $3.39 per Diluted Share

KANSAS CITY, MO--(Marketwire - August 6, 2009) - American Italian Pasta Company (NASDAQ: AIPC), the largest producer of dry pasta in North America, today announced its third quarter and year-to-date fiscal year 2009 results for the period ended July 3, 2009.

The third quarters of fiscal year 2009 and fiscal year 2008 contained 13 weeks of operation. The year-to-date fiscal year 2009 contains 40 weeks of operations compared to 39 weeks of operations for 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. Therefore, all year-over-year comparisons reflect a 40-week year-to-date period for fiscal 2009 and a 39-week year-to-date period for fiscal 2008.

FINANCIAL HIGHLIGHTS

Net income for the quarter increased $19.2 million to $20.2 million, or $0.93 per diluted share, versus a net income of $1.0 million, or $0.05 per diluted share, in the third quarter of fiscal 2008. Net income for the 40-week year-to-date period increased $60.7 million to $72.5 million, or $3.39 per diluted share, versus a net income of $11.8 million, or $0.62 per diluted share, in the 39-week year-to-date period of fiscal 2008.

Revenues for the third quarter decreased $10.3 million, or 7%, to $145.5 million, as a 3% increase in the retail market was offset by a 29% decrease in the institutional market. Overall volume decreased 1.5%. Revenues for the 40-week year-to-date period increased $72.0 million, or 18%, to $479.1 million, as a result of a 24% increase in the retail market combined with a 2% decrease in the institutional market.

"Our strategy to focus on store brands and our strongest-performing proprietary pasta brands continues to pay off," said Jack Kelly, CEO of AIPC. "Despite the ongoing consolidation of AIPC brands, we were able to continue to boost sales volume in our Retail channel. Our strong net income and gross margins also are enabling us to continue to strengthen our balance sheet and aggressively pay down debt. As a result, we have even more strategic flexibility moving forward to implement our strategy and new growth initiatives, including product development and innovative marketing partnerships with our retail customers to increase pasta consumption."

Operational Highlights

--  Retail Revenues:  Retail revenues increased $3.2 million, or 3%, to
    $113.0 million for the third quarter of 2009, from $109.8 million for the
    third quarter of 2008.  The revenue increase is primarily the result of
    increased volume.  Retail revenues increased $74.0 million, or 24%, to
    $376.8 million for fiscal year-to-date 2009, from $302.8 million for fiscal
    year-to-date 2008.  The year-to-date revenue increase is primarily the
    result of a $48.6 million, or 16%, increase related to higher average
    selling prices, and a $29.2 million, or 10%, increase in volume, partially
    offset by a $3.8 million decrease in payments received from the Continued
    Dumping and Subsidy Offset Act of 2000.
    
--  Institutional Revenues:  Institutional revenues decreased $13.5
    million, or 29%, to $32.5 million for the third quarter of 2009, from $46.0
    million for the third quarter of 2008.  The revenue decrease is primarily
    the result of a $5.1 million, or 11%, decrease due to lower volume -- last
    year we provided $7.5 million of product pursuant to a government contract
    -- combined with an $8.4 million, or 18%, decrease in average selling
    prices -- primarily related to pass-through contracts on which we receive a
    fixed conversion fee.  Institutional revenues decreased $2.0 million, or
    2%, to $102.3 million for fiscal year-to-date 2009, from $104.3 million for
    fiscal year-to-date 2008.
    
--  Cost of Goods Sold:  For the third quarter, cost of goods sold
    decreased $27.9 million, or 21%, to $102.9 million, from $130.8 million for
    the prior year third quarter.  As a percent of revenues, cost of goods
    decreased to 70.7% for the third quarter, from 84.0% for the prior year
    third quarter.  Cost of goods sold increased $17.8 million, or 5%, to
    $343.4 million for fiscal year-to-date 2009, from $325.6 million for fiscal
    year-to-date 2008.  As a percentage of revenues, cost of goods decreased to
    71.7%for fiscal year-to-date 2009, from 80.0% for fiscal year-to-date 2008.
    
--  Gross profit:  Gross profit increased $17.6 million, or 70%, to $42.6
    million for the third quarter of 2009, from $25.0 million for the third
    quarter of 2008.  Gross profit, as a percent of revenues, increased to
    29.3% during the third quarter, compared to 16.0% during the third quarter
    of 2008.  Gross profit increased $54.1 million, or 66%, to $135.7 million
    for fiscal year-to-date 2009, from $81.6 million for fiscal year-to-date
    2008.  Gross profit, as a percent of revenues, increased to 28.3% during
    fiscal year-to-date 2009, compared to 20.0% during fiscal year-to-date
    2008.
    
--  Selling and marketing expense:  Selling and marketing expense
    decreased $1.0 million, or 14%, to $6.1 million for the third quarter of
    2009, from $7.1 million for the third quarter of 2008.  Selling and
    marketing expense, as a percent of revenue, decreased to 4.2% for the third
    quarter of 2009, from 4.6% for the third quarter of 2008.  Selling and
    marketing expense increased $1.5 million, or 8%, to $20.8 million for
    fiscal year-to-date 2009, from $19.3 million for fiscal year-to-date 2008.
    Selling and marketing expense, as a percent of revenue, decreased to 4.3%
    for fiscal year-to-date 2009, from 4.7% for fiscal year-to-date 2008.
    
--  General and administrative expense:  General and administrative
    expense decreased $3.1 million, or 30%, to $7.2 million for the third
    quarter of 2009, from $10.3 million for the third quarter of 2008. General
    and administrative expenses, as a percent of revenues, decreased to 4.9%
    for the third quarter of 2009, from 6.6% for the third quarter of 2008.
    General and administrative expense decreased $5.9 million, or 20%, to $23.9
    million for fiscal year-to-date 2009, from $29.8 million for fiscal year-to-
    date 2008. General and administrative expenses, as a percentage of
    revenues, decreased to 5.0% for fiscal year-to-date 2009, from 7.3% for
    fiscal year-to-date 2008.
    
--  Operating profit:  Operating profit for the third quarter of 2009 was
    $28.9 million, an increase of $21.4 million, as compared to $7.5 million
    for the third quarter of 2008.  Operating profit increased as a percent of
    revenues to 19.9% for the third quarter of 2009 from 4.8% for the third
    quarter of 2008.  Operating profit for fiscal year-to-date 2009 was $89.9
    million, an increase of $57.8 million as compared to $32.1 million for
    fiscal year-to-date 2008.  Operating profit increased as a percent of
    revenues to 18.8% for fiscal year-to-date 2009, from 7.9% for fiscal year-
    to-date 2008.
    
--  Interest expense:  Interest expense for the third quarter of 2009 was
    $3.0 million, a decrease of $3.7 million as compared to $6.7 million for
    the third quarter of 2008.  Interest expense for fiscal year-to-date 2009
    was $13.0 million, a decrease of $7.7 million as compared to $20.7 million
    for the fiscal year-to-date 2008.
    
--  Income before income taxes:  Income before income taxes for the third
    quarter of 2009 was $25.9 million, an increase of $24.9 million as compared
    to $1.0 million for the third quarter of 2008.  Income before income taxes
    increased as a percent of revenues to 17.8% for the third quarter of 2009
    from 0.6% for the third quarter of 2008.  Income before income taxes for
    fiscal year-to-date 2009 was $76.9 million, an increase of $65.7 million,
    as compared to $11.2 million for fiscal year-to-date 2008.  Income before
    income tax increased as a percent of revenues to 16.1% for fiscal year-to-
    date 2009, from 2.8% for fiscal year-to-date 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 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 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)

                                                          Year-to-date
                                Third Quarter Ended       Period Ended
                                --------------------  --------------------
                                 July 3,    June 27,   July 3,    June 27,
                                ---------  ---------  ---------  ---------
                                  2009        2008      2009       2008
                                (Thirteen  (Thirteen   (Forty   (Thirty-
                                  Weeks)     Weeks)     Weeks)  nine Weeks)
                                ---------  ---------  ---------  ---------

Revenues                        $ 145,527  $ 155,844  $ 479,058  $ 407,135
Cost of goods sold                102,885    130,847    343,411    325,563
                                ---------  ---------  ---------  ---------
  Gross profit                     42,642     24,997    135,647     81,572

Selling and marketing expense       6,123      7,112     20,777     19,250
General and administrative
 expense                            7,153     10,331     23,910     29,833
Losses related to long-lived
 assets                               455        109      1,060        344
                                ---------  ---------  ---------  ---------
  Operating profit                 28,911      7,445     89,900     32,145

Interest expense, net               3,034      6,662     12,982     20,706
Other (income) expense, net           (65)      (190)       (12)       224
                                ---------  ---------  ---------  ---------
  Income before income taxes       25,942        973     76,930     11,215

Income tax expense (benefit)        5,710         (5)     4,474       (601)
                                ---------  ---------  ---------  ---------
  Net income                    $  20,232  $     978  $  72,456  $  11,816
                                =========  =========  =========  =========


Net income per common share
 (basic)                        $    0.97  $    0.05  $    3.52  $    0.62

Weighted-average common shares
 outstanding (basic)               20,957     19,387     20,602     18,988
                                =========  =========  =========  =========

Net income per common share
 (diluted)                      $    0.93  $    0.05  $    3.39  $    0.62

Weighted-average common shares
 outstanding  (diluted)            21,735     19,644     21,359     19,172
                                =========  =========  =========  =========




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

                                                    July 3,   September 26,
                                                      2009        2008
                                                  -----------  -----------
ASSETS
Current assets:
    Cash and cash equivalents                     $    44,481  $    38,623
    Trade and other receivables, net                   43,197       49,197
    Inventories                                        63,822       66,026
    Other current assets                                5,328        8,189
    Deferred income taxes                               1,398        2,126
                                                  -----------  -----------
Total current assets                                  158,226      164,161
Property, plant and equipment, net                    292,862      303,503
Brands                                                 78,934       79,769
Other assets                                            6,103        5,591
                                                  -----------  -----------
Total assets                                      $   536,125  $   553,024
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                              $    28,775  $    29,541
    Accrued expenses                                   25,292       37,357
    Short term debt and current maturities of
     long term debt                                         -       24,913
                                                  -----------  -----------
Total current liabilities                              54,067       91,811
Long term debt, less current maturities               160,000      217,000
Deferred income taxes                                  30,178       34,054
Other long term liabilities                             5,369        4,188
                                                  -----------  -----------
Total liabilities                                     249,614      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
        Issued and outstanding shares - 23,168,445
         and 20,954,937, respectively, at July 3,
         2009; 22,454,145 and 20,259,060,
         respectively, at September 26, 2008               23           22
    Class B common stock, par value $.001
        Authorized shares - 25,000,000; Issued
         and outstanding - none                             -            -
    Additional paid-in capital                        271,709      261,772
    Treasury stock, 2,213,508 shares at
     July 3, 2009 and 2,195,085 shares at
     September 26, 2008, at cost                      (52,462)     (52,076)
    Accumulated other comprehensive income             15,260       16,728
    Retained earnings (accumulated deficit)            51,981      (20,475)
                                                  -----------  -----------
Total stockholders' equity                            286,511      205,971
                                                  -----------  -----------
Total liabilities and stockholders' equity        $   536,125  $   553,024
                                                  ===========  ===========

Contact Information

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