ICO, Inc. Announces Financial Results for Quarter Ended December 31, 2009

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HOUSTON, Feb. 4 /PRNewswire-FirstCall/ -- ICO, Inc. ICOC, global producer of custom polymer powders and plastic film concentrates, today announced its results for the quarter ended December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO)

First Quarter Highlights

  • Volumes increased 6% sequentially and 11% over prior year
  • Revenues increased 6% sequentially and 8% over prior year
  • Net income of $1.0 million, or $.04 per share, after merger related expenses of $0.9 million, or $.03 per share
  • Net debt (total debt outstanding less cash) at $15.0 million as of December 31, 2009

First Quarter 2010 vs. First Quarter 2009

Revenues for the three months ended December 31, 2009 were $85.4 million, an increase of $6.0 million or 8% compared with the same quarter of the previous year. Volumes, which increased 11%, increased revenues by $8.0 million. The volume increase was seen throughout the Company's business units, a good indication of the recovery the Company is experiencing. The translation effect of stronger foreign currencies increased revenues by $8.1 million. Lower average selling prices, as a result of lower resin prices, reduced revenues by $10.1 million. As a result of the volume and revenue improvements, gross profit increased $4.5 million or 44% to $14.6 million. Gross margins improved 440 basis points from 12.7% to 17.1%. This improvement was a result of the increased volumes as well as a more stable resin pricing environment. Selling, general and administrative expenses ("SG&A") increased $1.0 million or 11% primarily as a result of $0.9 million of merger related expenses. Operating income increased $2.7 million to $2.3 million as a result of the gross profit increase partially offset by the higher SG&A.

Net income was $1.0 million or $.04 per share in the three months ended December 31, 2009 compared with a net loss of $1.1 million or $.04 per share in the first quarter of fiscal year 2009. The improvement in net income of $2.1 million was primarily caused by the increase in volumes.

"Our business has continued to pick up as we recover from the global recession as evidenced by our volumes growing 11% compared to last year. Additionally, the first quarter was the second consecutive quarter to show sequential volume improvement, despite the fact that the first quarter is typically a seasonally slow quarter due to December," stated President and CEO, A. John Knapp, Jr.

First Quarter 2010 vs. Fourth Quarter 2009

In the first quarter of fiscal year 2010, revenues increased 6% or $4.9 million over the revenues in the fourth quarter of fiscal year 2009. The revenue improvement was a result of an increase in demand, as volumes sold improved 6%, as well as from the translation effect from stronger foreign currencies. The benefit from the improved revenues was offset by a reduction in gross margin of 130 basis points. SG&A increased $0.3 million or 3% due to an increase in merger related expenses. As a result, operating income declined $0.4 million or 15%.

Balance Sheet and Liquidity

Liquidity remained strong as of December 31, 2009 with cash on hand of $13.9 million and available global borrowing capacity of $49.4 million. Total outstanding borrowings were $28.9 million, with net debt of $15.0 million. Capital expenditures were $1.0 million in the first quarter of fiscal year 2010.

Common Stock Dividend

The Company's Board of Directors has declared a cash dividend of $0.037 per common share, payable February 19, 2010, to shareholders of record on February 15, 2010.

On December 2, 2009, the Company announced the execution of a merger agreement with A. Schulman, Inc. SHLM, which is expected to close in the spring of 2010. The merger is subject to approval from ICO shareholders and customary regulatory approvals. On January 18, 2010, the Company announced that the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The merger agreement allows for a quarterly dividend to the extent of the Company's earnings per share for the applicable prior fiscal quarter not to exceed $0.05 per common share. The Company also obtained the consent of KeyBank and Wells Fargo to pay the dividend.

Conference Call on the Web

A live Internet broadcast of ICO, Inc.'s conference call regarding quarter ended December 31, 2009 results can be accessed at 10:00 a.m. Central Standard Time on Friday, February 5, 2010 at http://www.videonewswire.com/event.asp?id=65602 where the webcast replay will be accessible for ninety days. The webcast replay will also be accessible on the Company's website at www.icopolymers.com for a period of twelve months.

Investors are invited to participate in the conference by dialing 847-413-3235, passcode 26236658. A replay of the conference call will be available by dialing 630-652-3044, passcode 26236658.

Use of Non-GAAP Financial Measures

This earnings release includes the use of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measure is net debt. The Company uses this financial measure to monitor and evaluate the ongoing liquidity of the Company, and believes that the additional non-GAAP measure is useful to investors for financial analysis. There are limitations associated with the use of this measure. This non-GAAP financial measure is not prepared in accordance with GAAP, may not be reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for this limitation by using this non-GAAP financial measure as a supplement to GAAP financial measures and by providing the reconciliation of the non-GAAP financial measure to its most comparable GAAP financial measure.

About ICO, Inc.

With 20 locations in 9 countries, ICO 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 www.icopolymers.com.

Certain matters discussed in this press release are "forward-looking statements," involving certain risks, uncertainties, and assumptions, intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. The Company's statements regarding trends in the marketplace, potential future results, and statements regarding the merger (including the valuation, benefits, results, effects and timing thereof), the combined company and attributes thereof, and whether and when the transactions contemplated by the merger agreement will be consummated are examples of such forward-looking statements. The following is a non-exclusive list of risks and uncertainties, and circumstances that present risks, that could cause the forward-looking statements to become untrue: the failure to receive the approval of the merger from the Company's stockholders; satisfaction of the conditions to the closing of the merger; costs and difficulties related to integration of businesses and operations; delays, costs and difficulties relating to the merger and related transactions; restrictions imposed by the Company's outstanding indebtedness; changes in the cost and availability of resins (polymers) and other raw materials; changes in demand for the Company's services and products; business cycles and other industry conditions; general economic conditions; international risks; operational risks; currency translation risks; the Company's lack of asset diversification; the Company's ability to manage global inventory, develop technology and proprietary know-how, and attract and retain key personnel; failure of closing conditions in any transaction to be satisfied; integration of acquired businesses; as well as risk factors and other factors detailed in the Company's and A. Schulman's respective most recent Form 10-K and other filings with the Securities and Exchange Commission.

Should one or more of such risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Any forward-looking statements are made only as of the date of this press release, and the Company undertakes no obligation to publicly update any such forward-looking statements to reflect subsequent events or circumstances.

Additional Information and Where to Find It

In connection with the proposed transaction, A. Schulman has filed a Registration Statement on Form S-4 with the SEC (Reg. No. 333-164085) containing a preliminary proxy statement/prospectus regarding the proposed merger. STOCKHOLDERS OF ICO ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/ PROSPECTUS THAT IS PART OF THE REGISTRATION STATEMENT, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final proxy statement/prospectus will be mailed to stockholders of ICO. Investors and security holders will be able to obtain the documents free of charge at the SEC's website, www.sec.gov, from A. Schulman, Inc. at its website, www.aschulman.com, or from ICO, Inc. at its website, www.icopolymers.com, or 1811 Bering Drive, Suite 200, Houston, Texas, 77057, attention: Corporate Secretary.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Participants in Solicitation

A. Schulman and ICO and their respective directors and executive officers, other members of management and employees and the proposed directors and executive officers of the combined company, may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information concerning the proposed directors and executive officers of the combined company, A. Schulman's and ICO's respective directors and executive officers and other participants in the proxy solicitation, including a description of their interests, is included in the proxy statement/prospectus contained in the above-referenced Registration Statement on Form S-4.



                                 ICO, Inc.                              
                    Consolidated Statement of Operations                
                        (Unaudited and in thousands)                    
                                                                        
                                                                        
                                       Three Months         Three Months  
                                          Ended                Ended      
                                        December 31,        September 30, 
                                        ------------        ------------- 
                                      2009        2008           2009 
                                      ----        ----           ---- 
     Revenues                        $85,371     $79,358        $80,480 
     Cost of sales and services                                       
      (exclusive of                                                    
       depreciation and                                                 
       amortization shown                                            
       separately below)              70,800      69,248         65,705 
                                      ------      ------         ------ 
     Gross Profit (1)                 14,571      10,110         14,775 
     Selling, general and                                               
      administrative expense          10,152       9,138          9,854 
      Depreciation and                                                  
      amortization                     2,022       1,713          2,094 
     Long-lived asset                                                 
      impairment, restructuring 
      and other costs (income)           142        (293)           185 
                                         ---        ----            --- 
     Operating income (loss)           2,255        (448)         2,642 
     Other income (expense):                                            
          Interest expense, net         (527)       (639)          (517)
          Other income (expense)          (8)       (331)           (11)
                                          --        ----            --- 
    Income (loss) before income                                       
     taxes                             1,720      (1,418)         2,114 
    Provision (benefit) for income
     taxes                               674        (342)           518 
                                         ---        ----            --- 
    Net income (loss)                 $1,046     $(1,076)        $1,596 
                                      ======     =======         ====== 
                                                                        
    Basic net income (loss) per
     common share                      $0.04      $(0.04)         $0.06 
                                       =====      ======          ===== 
    Diluted net income (loss) 
     per common share                  $0.04      $(0.04)         $0.06 
                                       =====      ======          ===== 
                                                                        
    Basic weighted average                                            
     shares outstanding           27,691,000  27,412,000     27,624,000 
                                  ==========  ==========     ========== 
    Diluted weighted average                                          
     shares outstanding           28,025,000  27,412,000     27,897,000 
                                  ==========  ==========     ========== 
                                                                        
    Gross Margin (2)                    17.1%       12.7%          18.4%
                                                                        
                                                                        
                                                                        
    (1)   Calculated as Total Revenues minus Cost of Sales and Services,
          exclusive of Depreciation and Amortization Expense. 
    (2)   Calculated as Gross Profit divided by Total Revenues. 



                             ICO, Inc.                          
                     Consolidated Balance Sheet                 
                    (Unaudited and in thousands)                
                                                                
                                           December   September  
                                              31,         30,    
                                             2009        2009 
                                             ----        ---- 
    ASSETS                                                     
    --------                                                    
    Current assets:                                            
      Cash and cash equivalents            $13,921     $21,880 
      Trade receivables, net                57,444      57,124 
      Inventories                           40,997      37,397 
      Deferred income taxes                  1,751       1,848 
      Prepaid and other current assets       6,178       6,446 
                                             -----       ----- 
         Total current assets              120,291     124,695 
                                           -------     ------- 
                                                                
    Property, plant and equipment, net      56,158      57,144 
    Goodwill                                 4,549       4,549 
    Deferred Income Taxes                    4,596       4,128 
    Other assets                             1,767       1,757 
                                             -----       ----- 
         Total assets                     $187,361    $192,273 
                                          ========    ======== 
                                                                
    LIABILITIES AND                                           
     STOCKHOLDERS' EQUITY                                      
    -----------------------                                     
    Current liabilities:                                       
      Short-term borrowings under                             
       credit facilities                      $557          $- 
      Current portion of long-term debt     11,935      12,980 
      Accounts payable                      32,410      33,281 
      Other current liabilities             13,849      14,341 
                                            ------      ------ 
           Total current liabilities        58,751      60,602 
                                            ------      ------ 
                                                                
    Long-term debt, net of current portion  16,420      18,823 
    Deferred income taxes                    4,717       4,786 
    Other long-term liabilities              2,108       2,907 
                                             -----       ----- 
           Total liabilities                81,996      87,118 
                                            ------      ------ 
                                                                
     Commitments and contingencies               -           - 
     Stockholders' equity:                                      
       Undesignated preferred stock              -           - 
       Common stock                         55,787      55,248 
       Additional paid-in capital           71,905      73,081 
       Accumulated other                                    
        comprehensive income                 2,524       2,723 
       Accumulated deficit                 (21,834)    (22,880)
       Treasury Stock                       (3,017)     (3,017)
                                            ------      ------ 
           Total stockholders' equity      105,365     105,155 
                                           -------     ------- 
           Total liabilities and                             
            stockholders' equity          $187,361    $192,273 
                                          ========    ======== 
                                                                
                                                                
    OTHER BALANCE SHEET DATA                                   
    --------------------------                                  
    Working capital                        $61,540     $64,093 
    Current ratio                              2.0         2.1 
    Total debt                             $28,912     $31,803 
    Debt-to-capitalization                    21.5%       23.2%



                                       ICO, Inc.                             
                            Supplemental Segment Information                 
                    (Unaudited and in thousands, except percentages)         
                                                                             
    Revenues                                                                 
    Three Months Ended              % of               % of
    December 31:           2009     Total      2008   Total   Change    %  
                           ----     ------     ----   -----   ------   --  
    ICO Europe           $36,375     43%     $34,762    44%  $1,613    5% 
    Bayshore Industrial   16,864     20%      18,330    23%  (1,466)  (8%)
    ICO Asia Pacific      17,076     20%      14,481    18%   2,595   18% 
    ICO Polymers                                                           
     North America         9,716     11%       8,889    11%     827    9% 
    ICO Brazil             5,340      6%       2,896     4%   2,444   84% 
                           -----     --        -----    --    -----      
    Consolidated         $85,371    100%     $79,358   100%  $6,013    8% 
                         =======    ===      =======   ===   ======      



    Operating income (loss)                                               
    Three Months Ended December 31:    2009      2008     Change      %   
                                       ----      ----     ------      --   
    ICO Europe                        $1,657     $(149)   $1,806     *N.M.
    Bayshore Industrial                1,818     1,718       100       6% 
    ICO Asia Pacific                    (192)   (1,287)    1,095     (85%)
    ICO Polymers North America           742       582       160      27% 
    ICO Brazil                           419       (58)      477     *N.M.
                                         ---       ---       ---          
    Total Operations                   4,444       806     3,638      451% 
    Unallocated General Corporate                                         
     Expense                          (2,189)   (1,254)     (935)      75% 
                                      ------    ------      ----          
    Consolidated                      $2,255     $(448)   $2,703     *N.M. 
                                      ======     =====    ======          
       


    Operating income (loss)                                               
    as a percentage of revenues        Three Months Ended                 
                                           December 31,                   
                                    ------------------------ 
                                    2009     2008     Change              
                                    ----     ----     ------              
    ICO Europe                       5%        0%       5%                
    Bayshore Industrial             11%        9%       2%                   
    ICO Asia Pacific                (1%)      (9%)      8%                   
    ICO Polymers North America       8%        7%       1%                   
    ICO Brazil                       8%       (2%)     10%                   
    Consolidated                     3%       (1%)      4%                   
                                                                             



                                          Three Months Ended             
                            --------------------------------------------- 
    Revenues                December 31,     September 30,                
                            ------------     -------------
                                    % of                      % of        
                            2009    Total     2009   Total    Change   %  
                            ----    -----     ----    -----   ------  --  
    ICO Europe           $36,375     43%     $35,895    44%    $480    1% 
    Bayshore Industrial   16,864     20%      15,046    19%   1,818   12% 
    ICO Asia Pacific      17,076     20%      16,760    21%     316    2% 
    ICO Polymers                                                          
     North America         9,716     11%       8,489    11%   1,227   14% 
    ICO Brazil             5,340      6%       4,290     5%   1,050   24% 
                           -----     --        -----    --    -----       
    Consolidated         $85,371    100%     $80,480   100%  $4,891    6% 
                         =======    ===      =======   ===   ======       
                                                                          



    Operating income (loss)                    Three Months Ended         
                                      ----------------------------------- 
                                      December September
                                        31,       30,                     
                                       2009      2009     Change       %  
                                       ----      ----     ------      --  
    ICO Europe                        $1,657    $2,620     $(963)    (37%) 
    Bayshore Industrial                1,818     1,067       751      70% 
    ICO Asia Pacific                    (192)       (5)     (187)    *N.M. 
    ICO Polymers North America           742       572       170      30% 
    ICO Brazil                           419       218       201      92% 
                                         ---       ---       ---          
    Total Operations                   4,444     4,472       (28)     (1%) 
    Unallocated General Corporate                                         
     Expense                          (2,189)   (1,830)     (359)     20% 
                                      ------    ------      ----          
    Consolidated                      $2,255    $2,642     $(387)    (15%) 
                                      ======    ======     =====          
                                                                          
                                                                          
    Operating income (loss)                                               
    as a percentage of revenues        Three Months Ended                 
                                   -------------------------              
                                   December September   
                                     31,       30,
                                    2009      2009   Change               
                                    ----      ----   ------               
    ICO Europe                       5%        7%      (2%)               
    Bayshore Industrial             11%        7%       4%                
    ICO Asia Pacific                (1%)       0%      (1%)               
    ICO Polymers North America       8%        7%       1%                
    ICO Brazil                       8%        5%       3%                
    Consolidated                     3%        3%       0%                
                                                                          
    *Not meaningful 



                        ICO, Inc.                 
        Reconciliation of Non-GAAP Financial Measures 
                 (Unaudited and in thousands)       
                                               
                                               
    Net Debt Reconciliation           December 31,
                                      ------------
                                           2009
                                           ----
    Total debt                           $28,912
    Less cash and cash equivalents        13,921
                                          ------
    Net debt                             $14,991
                                         =======

SOURCE ICO, Inc.

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Posted In: MaterialsSpecialty Chemicals
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