Penford Products, with an industrial starch and ethanol plant in Cedar Rapids, on Wednesday reported first-quarter earnings nearly tripled on higher sales.
Centennial, Colo.-based Penford recorded net income of $1.7 million, or 14 cents per share, for the quarter that ended on Nov. 30, compared with net income of $600,000, or 5 cents per share, in the quarter that ended on Nov. 30, 2011. Consolidated sales increased 4.5 percent to $94.9 million from $90.7 million in the same quarter a year ago.
Industrial revenue increased 4 percent to $67.2 million in the first quarter on growth in industrial starch volumes, as well as contributions from the Carolina Starches business acquired in January 2012. The revenue gain was partially offset by lower ethanol sales, down 28 percent due to weaker pricing and lower volume.
Penford’s industrial division shifted more of its production to higher margin starches. Ethanol revenue represented 35 percent of the division’s sales in the first quarter, down from 50 percent last year.
Penford’s gross margin improved 44 percent to $5.2 million in the first quarter, and operating income rose 87 percnet over the prior year on higher starch sales, lower unit costs and better manufacturing yields. The results were slightly offset by increased investment in research and development, and commercial support for the company’s bioproducts operation.
Penford’s food ingredient division posted record quarterly sales of $27.7 million. Revenue gains of 6.7 percent were primarily led by strong sales in protein and sauce markets.
The revenue increase was partially offset by a 3 percent decline in sales of coatings applications, which reflected a pipeline build from a new product introduction in the same quarter a year ago.
During the first quarter, Penford received approval from the Cedar Rapids City Council for an agreement that will permit the company to acquire an 11-acre park adjacent to its plant for future expansion of the Penford’s bioproducts and other operations.
The city will retain title to the parcel and will use the site as a park until Penford has a specific expansion plan to present to the city. The council must sign off on the site development plan before Penford will receive the deed to the park.