HOUSTON, Aug. 3 /PRNewswire-FirstCall/ -- ICO, Inc. , global producer of custom polymer powders and plastic film concentrates, today announced its results for the three and nine months ended June 30, 2006. Highlights for the quarter included:
* Record revenues of $82.4 million and year-over-year volume growth of
12% for the quarter
* Operating income of $5.9 million, up 350% from previous year
* Earnings per share 16 cents (14 cents fully diluted)
Year-Over-Year Quarterly Comparison
Third quarter 2006 revenues from continuing operations of $82.4 million hit an all time high for ICO, Inc. This represented an increase of $6.7 million or 9% from the fiscal third quarter of 2005. Revenues increased due to growth in sales and service volumes (up 12% year-over-year) and higher average selling prices as a result of higher raw material prices. Partially offsetting those benefits were the effects of a stronger U.S. Dollar as compared to relevant foreign currencies and a change in product mix as a result of growth in sales at Bayshore.
As a result of the strong growth in volumes and revenues, gross profit improved $3.4 million or 27%. The Company's North American operations, including Bayshore Industrial and ICO Polymers North America, experienced the most significant gross profit improvements. Bayshore's improvement was primarily the result of sales volume growth of 54%, while an increase in specialty toll grinding business generated by ICO Polymers North America contributed to their gross profit improvement.
Selling, general and administrative expenses ("SG&A") declined $1.2 million or 13% due to our continuing focus on controlling costs. This decline was a result of lower third party Sarbanes-Oxley implementation costs, professional legal fees, and effects of the stronger U.S. Dollar relative to relevant foreign currencies.
Operating income improved $4.6 million or 350% to $5.9 million as a result of the improvement in gross profit and reduction in SG&A. Net income from continuing operations was $4.1 million, or $.16 per share ($.14 per share fully diluted).
Sequential Quarter Comparison
Sequentially, an increase in volumes sold of 3% and an increase in average selling prices due to rising resin prices caused revenues to increase $2.9 million or 4%. The growth in sales and service volumes led the way to improved gross profit. Gross profit improved $0.8 million or 5%. The improvement in gross profit and a reduction in SG&A of $0.4 million drove the operating income increase of $1.1 million or 22% compared to the quarter ended March 31, 2006.
"Our business was very strong in the third quarter and we expect the momentum we now have to continue into the fourth quarter," stated the Company's President and CEO, Mr. A. John Knapp, Jr. "Our volume improvement this year has been led by our Bayshore Industrial operation. The expansion at Bayshore is expected to be on line late in the fourth quarter and will increase our capacity in that operation by approximately 10%. We are also considering several expansion opportunities within our Australasian business which should fuel our growth in these markets. I thank all of ICO's employees for their efforts to produce good operating results so far this year."
Balance Sheet and Liquidity
At June 30, 2006, the Company had $7.0 million in cash on hand, $35.8 million in debt, and $40.3 million of available borrowing capacity under committed credit facilities. The improvement in liquidity during fiscal year 2006 was due to strong earnings and cash flow the Company has generated from operations and from many of the refinancings the Company has completed over the course of 2006. During the third quarter of fiscal 2006, the Company closed on new term loans of $9.7 million and used the proceeds to repay existing long-term and short-term debt. This caused total short-term debt to fall $3.7 million compared to March 31, 2006. Capital expenditures were $2.9 million during the third quarter and were $7.0 million for the nine months ended June 30, 2006.
Preferred Dividend
The Company's Board of Directors has determined not to declare any dividend on its depositary shares, each representing 1/4 of a share of its $6.75 convertible exchangeable preferred stock, for the quarter ending on September 30, 2006.
Conference Call on the Web
A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal 2006 third quarter results can be accessed at 9:00 a.m. Central Standard Time on Friday, August 4, 2006 at http://www.firstcallevents.com/ , where the webcast replay will be archived. (Minimum requirements to listen to the broadcast are: The Windows Media Player software, downloadable free from http://www.microsoft.com/windows/windowsmedia/player/download/download.aspx and at least a 28.8Kbps connection to the Internet.)
Investors are invited to participate in the conference by dialing 847-413- 3237, passcode 15219128.
About ICO, Inc.
With 18 locations in 9 countries, ICO Polymers produces custom polymer powders for rotational molding and other polymer related businesses, such as the textile, metal coating and masterbatch markets. ICO remains an industry leader in size reduction, compounding and other tolling services for plastic and non-plastic materials. ICO's Bayshore Industrial subsidiary produces specialty compounds, concentrates and additives primarily for the plastic film industry. Additional information about ICO, Inc. can be found on the Company's website at http://www.icopolymers.com/ .
This press release contains forward-looking statements, which are not statements of historical facts and involve certain risks, uncertainties and assumptions. These include, but are not limited to, restrictions imposed by the Company's outstanding indebtedness, changes in the cost and availability of polymers, demand for the Company's services and products, business cycles and other industry conditions, the Company's lack of asset diversification, international risks, operational risks, and other factors detailed in the Company's form 10-K for the fiscal year ended September 30, 2005 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.
ICO, Inc.
Consolidated Statement of Operations
(Unaudited and in thousands, except per share data and percentages)
Three Months Ended Nine Months Ended
June 30, March 31, June 30,
2006 2005 2006 2006 2005
Product Sales $73,186 $67,530 $70,473 $211,334 $199,054
Toll Services 9,258 8,232 9,070 25,766 26,273
Total Revenues 82,444 75,762 79,543 237,100 225,327
Cost of sales and services 66,330 63,051 64,188 190,035 185,139
Gross Profit 16,114 12,711 15,355 47,065 40,188
Selling, general and
administrative expense 8,278 9,470 8,722 25,663 28,169
Depreciation and
amortization 1,917 1,934 1,782 5,501 5,986
Impairment,
restructuring and
other costs --- --- --- 118 343
Operating income 5,919 1,307 4,851 15,783 5,690
Other income (expense):
Interest expense, net (505) (748) (562) (1,601) (2,208)
Other income (expense) 167 (65) 68 313 (21)
Income from continuing
operations before income
taxes 5,581 494 4,357 14,495 3,461
Provision for income taxes 1,470 475 1,375 4,307 1,030
Income from continuing
operations 4,111 19 2,982 10,188 2,431
Loss from discontinued
operations, net of
benefit for income taxes (19) (63) --- (52) (383)
Net income (loss) $4,092 $(44) $2,982 $10,136 $2,048
Basic income from
continuing operations per
common share $0.16 $0.00 $0.12 $0.40 $0.10
Basic net income per
common share $0.16 $0.00 $0.12 $0.40 $0.08
Diluted income from
continuing operations per
common share $0.14 $0.00 $0.10 $0.34 $0.08
Diluted net income per
common share $0.14 $0.00 $0.10 $0.34 $0.07
Gross Margin 19.5% 16.8% 19.3% 19.9% 17.8%
ICO, Inc.
Consolidated Balance Sheet
(Unaudited and in thousands, except share data and ratios)
June 30, September 30,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $7,032 $3,234
Trade receivables 65,965 57,132
Inventories 38,261 35,006
Deferred income taxes 2,413 2,579
Prepaid and other current assets 6,351 5,542
Total current assets 120,022 103,493
Property, plant and equipment, net 51,618 49,274
Goodwill 8,325 8,831
Other assets 2,497 2,657
Total assets $182,462 $164,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings under credit
facilities $10,619 $8,989
Current portion of long-term debt 4,433 5,657
Accounts payable 32,947 31,387
Accrued salaries and wages 4,936 4,181
Income taxes payable 4,189 1,459
Other current liabilities 9,629 10,438
Total current liabilities 66,753 62,111
Long-term debt, net of current portion 20,756 18,993
Deferred income taxes 4,097 4,383
Other long-term liabilities 1,849 1,678
Total liabilities 93,455 87,165
Commitments and contingencies --- ---
Stockholders' equity:
Convertible preferred stock, without
par value-345,000 shares authorized;
322,500 shares issued and outstanding
with a liquidation preference of
$39,866 and $38,234, respectively 13 13
Undesignated preferred stock,
without par value-105,000 shares
authorized; No shares issued and
outstanding --- ---
Common stock, without par value-
50,000,000 shares authorized;
25,751,842 and 25,544,997 shares
issued and outstanding, respectively 44,922 44,265
Additional paid-in capital 104,658 104,134
Accumulated other comprehensive
loss (645) (1,245)
Accumulated deficit (59,941) (70,077)
Total stockholders' equity 89,007 77,090
Total liabilities and
stockholders' equity $182,462 $164,255
OTHER BALANCE SHEET DATA
Working capital $53,269 $41,382
Current ratio 1.8 1.7
Total debt $35,808 $33,639
Debt-to-capitalization 28.7% 30.4%
ICO, Inc.
Supplemental Segment Information
(Unaudited and in thousands, except percentages)
Revenues
Three Months Ended June 30: 2006 % of % of
Total 2005 Total Change %
ICO Europe $35,181 43% $33,754 44% $1,427 4%
ICO Courtenay - Australasia 10,356 13% 12,228 16% (1,872) (15%)
ICO Polymers North America 12,261 15% 10,691 14% 1,570 15%
ICO Brazil 2,072 2% 2,009 3% 63 3%
Total ICO Polymers 59,870 73% 58,682 77% 1,188 2%
Bayshore Industrial 22,574 27% 17,080 23% 5,494 32%
Consolidated $82,444 100% $75,762 100% $6,682 9%
Nine Months Ended June 30: 2006 % of % of
Total 2005 Total Change %
ICO Europe $95,162 40% $99,227 44% $(4,065) (4%)
ICO Courtenay - Australasia 34,528 15% 34,564 15% (36) 0%
ICO Polymers North America 33,079 14% 30,369 14% 2,710 9%
ICO Brazil 6,894 3% 6,017 3% 877 15%
Total ICO Polymers 169,663 72% 170,177 76% (514) 0%
Bayshore Industrial 67,437 28% 55,150 24% 12,287 22%
Consolidated $237,100 100% $225,327 100% $11,773 5%
Operating income (loss)
Three Months Ended June 30: 2006 2005 Change
ICO Europe $1,659 $646 $1,013
ICO Courtenay - Australasia 340 555 (215)
ICO Polymers North America 1,862 310 1,552
ICO Brazil (114) (192) 78
Total ICO Polymers 3,747 1,319 2,428
Bayshore Industrial 3,720 1,869 1,851
Total Operations 7,467 3,188 4,279
General Corporate Expense (1,361) (1,638) 277
Unallocated stock option compensation (187) (243) 56
Consolidated $5,919 $1,307 $4,612
Nine Months Ended June 30: 2006 2005 Change
ICO Europe $4,931 $3,560 $1,371
ICO Courtenay - Australasia 1,700 1,877 (177)
ICO Polymers North America 3,717 514 3,203
ICO Brazil (450) (767) 317
Total ICO Polymers 9,898 5,184 4,714
Bayshore Industrial 10,879 6,377 4,502
Total Operations 20,777 11,561 9,216
General Corporate Expense (4,355) (5,231) 876
Unallocated stock option compensation (639) (640) 1
Consolidated $15,783 $5,690 $10,093
Operating income (loss) as a
percentage of revenues Three Months Ended Nine Months Ended
June 30, June 30,
2006 2005 Increase/ 2006 2005 Increase/
(Decrease) (Decrease)
ICO Europe 5% 2% 3% 5% 4% 1%
ICO Courtenay
- Australasia 3% 5% (2%) 5% 5% 0%
ICO Polymers North America 15% 3% 12% 11% 2% 9%
ICO Brazil (6%) (10%) 4% (7%) (13%) 6%
Total ICO Polymers 6% 2% 4% 6% 3% 3%
Bayshore Industrial 16% 11% 5% 16% 12% 4%
Consolidated 7% 2% 5% 7% 3% 4%
ICO, Inc.
Supplemental Segment Information (cont'd.)
(Unaudited and in thousands, except percentages)
Revenues
Three Months Ended
June 30, March 31,
2006 % of % of
Total 2006 Total Change %
ICO Europe $35,181 43% $32,439 41% $2,742 8%
ICO Courtenay - Australasia 10,356 13% 11,458 14% (1,102) (10%)
ICO Polymers North America 12,261 15% 10,819 14% 1,442 13%
ICO Brazil 2,072 2% 2,665 3% (593) (22%)
Total ICO Polymers 59,870 73% 57,381 72% 2,489 4%
Bayshore Industrial 22,574 27% 22,162 28% 412 2%
Consolidated $82,444 100% $79,543 100% $2,901 4%
Operating income (loss)
Three Months Ended
June 30, March 31,
2006 2006 Change
ICO Europe $1,659 $1,973 $(314)
ICO Courtenay - Australasia 340 305 35
ICO Polymers North America 1,862 1,161 701
ICO Brazil (114) (199) 85
Total ICO Polymers 3,747 3,240 507
Bayshore Industrial 3,720 3,411 309
Total Operations 7,467 6,651 816
General Corporate Expense (1,361) (1,631) 270
Unallocated stock option
compensation (187) (169) (18)
Consolidated $5,919 $4,851 $1,068
Operating income (loss) as a
percentage of revenues Three Months Ended
June 30, March 31, Increase/
2006 2006 (Decrease)
ICO Europe 5% 6% (1%)
ICO Courtenay - Australasia 3% 3% 0%
ICO Polymers North America 15% 11% 4%
ICO Brazil (6%) (7%) 1%
Total ICO Polymers 6% 6% 0%
Bayshore Industrial 16% 15% 1%
Consolidated 7% 6% 1%
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