Premium Standard Farms, Inc. Reports Fiscal Third Quarter 2006 and Year-to-Date Results
February 07 2006 - 9:00AM
PR Newswire (US)
2006 Year-to-Date Highlights: -- Net income the first nine months
of fiscal 2006 was $41.4 million, or $1.32 per diluted share, which
includes an after-tax charge of $0.43 per diluted share for the
early extinguishment of debt. -- Export sales volume improved by
31% in the fiscal third quarter versus the comparable quarter last
year. -- Announced the planned expansion of Milan, MO processing
plant, which will increase total company processing capacity by
15%. KANSAS CITY, Mo., Feb. 7 /PRNewswire-FirstCall/ -- Premium
Standard Farms, Inc. (NASDAQ:PORK) (PSF), a leading vertically
integrated provider of pork products, today announced results for
its fiscal year 2006 third quarter ended December 24, 2005. Fiscal
Third Quarter Results Net sales for the quarter totaled $242.9
million, compared to $246.8 million during the third quarter of
fiscal 2005. The decrease in net sales during the quarter can be
primarily attributed to a 17% decline in hog prices, which was
partially offset by a combination of increased volume of $16.2
million and favorable hog hedging. Net income for the fiscal third
quarter was $13.8 million, or $0.44 per diluted share, compared to
net income of $23.0 million, or $0.74 per diluted share, for the
fiscal third quarter of 2005. "We are pleased with our third
quarter results, which were in line with internal expectations,"
commented John Meyer, CEO of Premium Standard Farms. "During the
quarter, our net income increased by 12.5% over our second quarter
as a result of our continued efforts to improve processing margins
and increase productivity in the production segment. Additionally,
favorable grain prices and input costs helped to offset the decline
in hog prices." Mr. Meyer continued, "Export demand from both our
plants showed continued strength throughout the quarter. Similar to
the third quarter, we feel that international business will
continue to have a positive effect on our future results. As
expected, we continued to experience reduced demand in our domestic
markets when compared to the historically high levels seen last
year." First Nine Months Fiscal 2006 Results Net sales for the
first nine months of fiscal 2006 were $701.4 million compared to
$677.7 million last year. Net income in the first nine months of
fiscal 2006 was $41.4 million, or $1.32 per diluted share, compared
to net income of $44.3 million, or $1.43 per diluted share, in the
same period last year. The results for the first nine months of
fiscal 2006 included a $21.7 million pre-tax charge from the early
extinguishment of debt, representing an after-tax charge of $0.43
per diluted share. In the first quarter of fiscal 2006, the Company
retired, through a tender offer, $173 million of 9.25% senior notes
previously outstanding, with a combination of cash and $157 million
of bank revolving loans. Subsequent to the tender offer, $125
million of revolving loans were converted into a 5.9% ten-year bank
term loan. Outlook According to the recently released December USDA
Hog & Pig report, favorable industry supply trends are likely
to continue into fiscal 2007. Despite some recent significant
declines in current cash hog prices and near term hog futures,
longer term hog futures continue to remain at historical levels, as
expected. Despite the recent issues surrounding US beef exports to
Japan, PSF believes that regardless of the final outcome, these
actions will have minimal impact on the pork industry and the
Company. The Company also expects export sales to further
contribute to the Company's organic growth and outpace the pork
industry. Mr. Meyer noted, "Our focus remains on increasing our
processing operations, and preparations are underway to expand the
processing capacity of our Milan, MO plant from 7,400 to 10,000
head per day. We expect to see the impact of this increased
processing in the spring of calendar 2007. In addition to our
organic growth initiatives, we are actively pursuing strategic
acquisition opportunities to add new further processing or
value-added capabilities to our business." About PSF PSF is one of
the largest vertically integrated providers of pork products in the
United States, producing consistent, high quality pork products for
the retail, wholesale, foodservice, export, and further processor
markets. PSF is the nation's second largest pork producer and sixth
largest pork processor, with approximately 4,100 employees working
at farms and processing facilities in Missouri, North Carolina, and
Texas. This news release contains "forward-looking statements"
within the meaning of the federal securities laws. Naturally, all
forward-looking statements involve risk and uncertainty and actual
results or events could be materially different. Although we
believe that our expectations are based on reasonable assumptions,
we can give no assurance that our goals will be achieved. Important
factors that could cause actual results to differ include: economic
conditions generally and in our principal markets; competitive
practices and consolidation in the pork production and processing
industries; the impact of current and future laws, government
regulations and fiscal policies affecting our industry and
operations, including environmental laws and regulations, trade
embargoes and tariffs; domestic and international transportation
disruptions; food safety; the availability of additional capital to
fund future commitments and expansion and the cost and terms of
financing; outbreaks of disease in our herds; feed ingredient
costs; fluctuations in live hog and wholesale pork prices; customer
demands and preferences; and the occurrence of natural disasters
and other occurrences beyond our control. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed
might not occur. A copy of the Company's Form 10-Q for third
quarter of fiscal 2006 will be available on the internet at
http://www.psfarms.com/ . Premium Standard Farms, Inc. and
Subsidiaries Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss) 13 and 39 weeks ended December 24, 2005
and December 25, 2004 (in 000's except share and per share data)
(Unaudited) 13 Weeks Ended 39 Weeks Ended December December
December December 24 25 24 25 2005 2004 2005 2004 Net sales
$242,899 $246,759 $701,437 $677,725 Cost of goods sold 212,306
198,159 586,897 574,869 Gross profit 30,593 48,600 114,540 102,856
Selling, general and administrative expenses 7,332 6,324 20,451
15,436 Loss on early extinguishment of debt - - 21,707 - Other
income (197) (213) (553) (875) Operating income 23,458 42,489
72,935 88,295 Interest expense (income): Interest expense 2,089
4,889 7,379 15,908 Interest income (91) (36) (243) (80) Interest
expense, net 1,998 4,853 7,136 15,828 Income before income taxes
21,460 37,636 65,799 72,467 Income tax expense 7,706 14,640 24,443
28,190 Net income $13,754 $22,996 $41,356 $44,277 Unrealized gain
on interest rate swap, net of tax 1,202 - 1,413 54 Comprehensive
income $14,956 $22,996 $42,769 $44,331 Earnings per share: Basic
$0.44 $0.74 $1.34 $1.43 Diluted $0.44 $0.74 $1.32 $1.43 Weighted
average number of common shares outstanding: Basic 31,067,575
30,928,593 30,974,874 30,928,593 Diluted 31,602,256 31,106,857
31,273,279 31,046,760 Dividends declared per share $0.06 $- $0.18
$- First Call Analyst: FCMN Contact: DATASOURCE: Premium Standard
Farms, Inc. CONTACT: Investor, Steve Lightstone, CFO of Premium
Standard Farms, Inc., +1-816-472-7675 Web site:
http://www.psfarms.com/
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