Sugar Land, Texas, May 12 - The Imperial Sugar Company today reported a net loss for the second fiscal quarter ended March 31, 2008, of $15.5 million, or $1.33 per share, compared to net income of $8.7 million, or $0.74 per share, for the same period last year. Results include a pre-tax charge of $12.1 million related to the company's Port Wentworth refinery explosion and fire that occurred on February 7, 2008. The total charge includes amounts for property impairment, inventory write-offs, and costs related to the fire totaling $28.0 million, offset by $15.9 million of insurance recoveries recognized from the company's property damage policy.
Imperial’s board of directors declared a regular quarterly dividend of $0.07 per share, payable June 2, 2008 to shareholders of record May 23, 2008.
For the second fiscal quarter, net sales were $145.2 million, compared to $212.6 million for the same period last year. The decline in year-over-year quarterly sales was primarily due to the Port Wentworth event that curtailed sugar production and consequently sugar sales volumes.
Gross margin for the second quarter decreased to 1.5% from 10.2% in the prior year quarter. This decline was primarily due to lower prices resulting from U.S. sugar oversupply conditions and higher energy and transportation costs, offset in part by lower raw sugar prices.
The operating loss for the second quarter ended March 31, 2008 was $21.9 million, which includes the $12.1 million charge related to the Port Wentworth fire, compared with operating income of $11.3 million for second quarter ended March 31, 2007.
“Results for the second quarter were dramatically impacted by the costs and reduced volumes resulting from the refinery explosion and fire. The recognition of probable insurance recoveries, which lags incurred losses, did not fully offset the impact of the refinery event on the quarterly loss. This will likely continue for near term quarters as the ramp up of expenditures outpaces the timing of insurance settlements,” said John Sheptor, president and CEO of Imperial. “While historically the second quarter has been the sector’s weakest as retailers make inventory adjustments in the post holiday period, other factors in the quarter also contributed to lower operational results. An oversupplied market eroded prices further from the first quarter levels, and transportation and energy costs per hundredweight of sales rose 19% and 15% respectively year over year.”
For the six month period ended March 31, the Company reported a net loss of $3.3 million, or $0.28 per share, compared with net income of $24.4 million, or $2.11 per share, for the same period last year. Included in the recent six-month period are the $12.1 million pre-tax charge related to the refinery explosion and fire and a $11.2 million first quarter gain from a limited partnership investment distribution. Net sales for the period declined to $360.7 million compared to $439.6 million last year mainly due to the Port Wentworth incident. Gross margin declined in the six months to 4.5% versus 13.2% primarily due to pricing and higher energy and transportation costs.
“In addition to our focus on rebuild efforts in the second half of the year, we are working towards expansion of our Mexican joint venture and diversification of our portfolio. Sugar operations improvements resulting from our Lean/Six Sigma activities will be incorporated into the start up of the Port Wentworth refinery as well as the Gramercy refinery. Long term raw sugar sourcing for our Louisiana operations will continue to be a strategic priority. The engineering team is progressing in their assessment of repairs to the refinery and in the design of the new packaging facility,” added Sheptor.
“Our prayers go out to those impacted by the Port Wentworth tragedy and we extend our sincere thanks to all who have made donations to the relief fund. Imperial’s dedicated employees, board of directors, customers and shareholders have been very supportive during this challenging time. We continue to assist the affected families and communities, as well as the regulatory agencies as they conclude their investigations.”
About Imperial
Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States to food manufacturers, retail grocers and foodservice distributors. The Company markets products nationally under the Imperial®, Dixie Crystals® and Holly® brands.
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
2008 2007 2008 2007
----------- ---------- ---------- ----------
Net Sales $ 145,222 $ 212,610 $ 360,727 $ 439,608
Cost of Sales (1) (143,005) (190,843) (344,315) (381,653)
----------- ---------- ---------- ----------
Gross Margin 2,217 21,767 16,412 57,955
Selling, General and
Administrative Expense 2 (12,095) (14,777) (22,692) (27,513)
Refinery Explosion
Related Charges (12,065) - (12,065) -
Gain on Commodity
Exchange Seats - 3,654 - 3,654
Gain on Operating Asset
Dispositions - 659 - 659
----------- ---------- ---------- ----------
Operating Income (Loss) (21,943) 11,303 (18,345) 34,755
Interest Expense (419) (463) (855) (943)
Interest Income 726 799 1,644 1,672
Loss on Auction Rate
Security (388) - (388) -
Other Income, Net 530 288 12,799 919
----------- ---------- ---------- ----------
Income (Loss) Before
Income Taxes (21,494) 11,927 (5,145) 36,403
(Provision) Credit for
Income Taxes 5,963 (3,225) 1,877 (12,001)
----------- ---------- ---------- ----------
Net Income (Loss) $ (15,531) $ 8,702 $ (3,268) $ 24,402
=========== ========== ========== ==========
Earnings (Loss) Per Share
of Common Stock:
----------- ---------- ---------- ----------
Basic $ (1.33) $ 0.76 $ (0.28) $ 2.16
=========== ========== ========== ==========
Diluted $ (1.33) $ 0.74 $ (0.28) $ 2.11
=========== ========== ========== ==========
(1) Includes depreciation of $2,968,000 and $2,980,000 for the three
months and $5,776,000 and $5,561,000 for the six months ended
March 31, 2008 and 2007, respectively.
(2) Includes depreciation of $719,000 and $690,000 for the three
months and $1,432,000 and $1,361,000 for the six months ended
March 31, 2008 and 2007, respectively.
IMPERIAL SUGAR COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(Unaudited)
March 31, September 30,
2008 2007
------------- -------------
Cash and Temporary Investments $ 86,414 $ 74,229
Marketable Securities 313 20,693
Accounts Receivable, Net 25,067 49,409
Inventory 74,406 100,120
Other Current Assets 3,551 7,342
------------- -------------
Current Assets 189,751 251,793
Property, Plant & Equipment, Net 75,500 88,649
Deferred Income Taxes, Net 13,408 13,226
Other Assets 15,303 6,397
------------- -------------
Total $ 293,962 $ 360,065
============= =============
Accounts Payable, Trade $ 35,665 $ 69,057
Other Current Liabilities 13,125 20,991
------------- -------------
Current Liabilities 48,790 90,048
Long-Term Debt - 1,500
Other Liabilities 74,469 68,426
Shareholders' Equity 170,703 200,091
------------- -------------
Total $ 293,962 $ 360,065
============= =============
Shares of Common Stock Outstanding 11,900,516 11,808,743