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

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  Published in House and Home on Thursday, August 6th 2009 at 4:14 GMT, Last Modified on 2009-08-06 04:15:05 by Market Wire
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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 =========== ===========