- Achieves record quarterly and annual revenues;
- Achieves record quarterly and annual operating profits and EPS, before unusual charges;
- Fourth quarter revenues up 41.5% to $92.1 million on 27.3% volume growth;
- Fourth quarter EPS, prior to unusual charges, up 14.3% to $0.48;
- Acquisition of Borden Foods brands successfully completed, after-tax charge of $2.4 million for acquisition-related costs and after-tax extraordinary charge of $1.5 million associated with acquisition financing;
- Reconfirms EPS guidance for 2002.
American Italian Pasta Company (NYSE: PLB) today announced record results for the quarter and fiscal year 2001 ended September 28, 2001. Revenues for the quarter increased 41.5% to $92.1 million and diluted earnings per share, before unusual charges, increased 14.3% for the fourth quarter to $0.48, in line with First Call analyst consensus estimates. Revenues for the year increased 24.9% to $310.8 million and earnings per share for the year, before unusual charges, increased 15.3% to $1.73. The Company also said it is reconfirming its prior guidance of fully diluted earnings per share for fiscal 2002 in the range of $2.09 to $2.15.
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“AIPC delivered an excellent fourth quarter and a superb year,” said Timothy S. Webster, President and Chief Executive Officer. “For the quarter we achieved volume growth of 27% and revenue growth of over 40%. If we exclude the impact of the recently acquired brands from Borden Foods, our core volumes grew by 18% and core revenues grew by nearly 25%. This growth in our core businesses was driven by strong performances once again by our private label business, up 24%, and ingredient business, up 31%. We were encouraged by the performance of the Mueller’s brand during the quarter as we increased trade marketing spending and have put the transitional challenges we faced earlier in the year largely behind us.
“We achieved strong performance for the quarter in our operations as well. Our manufacturing facilities ran extremely well and we implemented a number of significant changes in logistics strategy. This combination of supply chain activity resulted in significant productivity gains over last year. Operating profit before the acquisition-related charge grew by nearly 30% for the quarter. This was less than our revenue growth rate because the cost profile of the newly acquired brands did not yet reflect the expected synergies from integrating them into our low-cost model. Excluding the unusual charges, profit after taxes was 9.6% of sales for the quarter and 10.1% for the year. We think this is outstanding performance in a year in which we achieved excellent top-line growth and completed two major brand acquisitions.”
Webster added, “We continue to gain share in many of the markets that we serve due to our focus on remaining the low cost producer of high-quality pasta. During 2001, we increased our presence in the branded market with two strategic acquisitions. The Mueller’s brand acquisition closed in the first fiscal quarter and seven profitable brands were acquired from Borden Foods in the fourth fiscal quarter. We added several major new customers during the year including SuperValu, Super Target and production of ADM’s Martha Gooch and LaRosa brands. We opened our Italy plant early in the year, and now boast a customer base that includes Kroger, Wal*Mart, and several other significant customers in the U.S. and Europe. For the year, we achieved outstanding growth from our core businesses, particularly private label — up 27% for the year — and ingredient — up 35% for the year.
“The integration of the brands we acquired from Borden Foods is progressing smoothly. We have successfully completed the sales and distribution phase of the integration and expect to have the manufacturing phase fully completed by December 31, 2001.”
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By GlobalDataIndustry Update
“Consumer demand for dry pasta and convenience meals with dry pasta has grown modestly, and average retail prices have been increasing more rapidly,” Webster said. “The outlook for the industry has been brightened by several announcements of plant closings by our competitors. Finally, it is important to note that in times of economic uncertainty, consumers appreciate the versatility, low cost, and nutritional benefits of pasta.”
Unusual Charges
As previously announced, the Company also recorded two unusual charges in the fourth quarter. The first of these charges, $2.4 million after-tax resulted from acquisition-related costs of the seven pasta brands acquired from Borden Foods. The second was an extraordinary charge, required by accounting rules, to write off unamortized costs of $1.5 million after-tax associated with the previous line of credit following the Company’s completion of a new $300 million credit agreement.
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Horst W. Schroeder, Chairman of the Board, said, “Over the past several years we have invested heavily in improving our operational infrastructure with new plants, new milling technology and capacity, rebalancing and re- aligning our facilities to match current and future market demand. Our cost structure and product quality have continued to improve. This has put us in a position of financial and competitive strength that we have leveraged by making strategic acquisitions of leading pasta brands. With our growing presence in the branded business, and funded by the tremendous cost synergies we have and will realize, we will increase investments in advertising and consumer promotion spending to build the equity and long-term viability of our brands. These initiatives are consistent with our goal to profitably grow our brands for the long term and not to look at these brands as short term revenue enhancers.”
Guidance for Fiscal 2002
The Company also said it is reconfirming its prior guidance of fully diluted earnings per share in the range of $2.09 to $2.15 for fiscal 2002, based on expected revenues of approximately $400 million. The Company provided additional guidance today in a separate release.
Webster added, “We remain committed to our stated goals of averaging 15% to 20% top- and bottom-line growth and believe we can meet these goals in addition to investing in our brands while continuing to drive down costs to enhance our low-cost producer status.”
AIPC Honored by Forbes and SYSCO Corporation
For the second consecutive year, AIPC was honored by Forbes magazine as one of Forbes 200 Best Small Companies in America. For the sixth consecutive year, AIPC was selected by SYSCO Corporation as one of its Top 10 Gold Suppliers. “We are delighted with these honors,” said Schroeder. “They recognize the performance of our Company, the contributions of our employees, and our leadership in the pasta category.”
September 11th
“The tragic events of September 11th and thereafter have affected businesses everywhere and ours is no exception. Since September 11th, we have contributed substantial food to the relief effort, supported our military reserve employees, and increased our asset, people and product safety efforts in the plants,” said Webster.
Founded in 1988 and based in Kansas City, Missouri, American Italian Pasta Company is the largest- and the fastest-growing producer and marketer of dry pasta in North America. The Company has four plants that are strategically located in Excelsior Springs, Missouri, Columbia, South Carolina, Kenosha, Wisconsin and Verolanuova, Italy. The Company has approximately 560 employees located in the United States and Italy.
The statements contained in this release regarding guidance for 2002, the Company’s top- and bottom-line growth goals for the next three years, future cost reductions, and increased investments in advertising and consumer promotion, are forward-looking and based on current expectations. Actual future results could differ materially from those anticipated by such forward- looking statements. The differences could be caused by a number of factors, included but not limited to our dependence on a limited number of customers for a substantial portion of our revenue, our ability to manage rapid growth, our ability to obtain necessary raw materials and minimize fluctuations in raw material prices, the impact of the highly competitive environment in which we operate, reliance exclusively on a single product category, our limited experience in the branded retail pasta business, our ability to attract and retain key personnel, our ability to cost-effectively transport our products and the significant risks inherent in our recent international expansion. For additional discussion of the principal factors that could cause actual results to be materially different, refer to our Annual Report on Form 10-K dated December 22, 2000, filed by the Company with the Securities and Exchange Commission (Commission file No. 001-13403), any amendments thereto and other matters disclosed in the Company’s other public filings. The Company will not update any forward-looking statements in this press release to reflect future events.
AMERICAN ITALIAN PASTA COMPANY
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Three Months
Ended Ended
September 30, September 30,
2001 2000 % Change
Revenues
Retail $67,854 $45,714 48.4%
Institutional 24,201 19,353 25.1%
Total revenues 92,055 65,067 41.5%
Cost of goods sold 62,112 46,915 –
Gross profit 29,943 18,152 65.0%
32.5% 27.9%
Selling and marketing expense 11,144 3,964 181.1%
General and administrative
expense 2,523 1,616 56.1%
Provision for acquisition
expenses 3,710 – N/A
Operating profit 12,566 12,572 0.0%
13.7% 19.3%
Interest expense, net 2,729 1,302 109.6%
Income before income tax
expense and extraordinary
item 9,837 11,270 -12.7%
Income tax provision 3,393 4,001 -15.2%
Income before extraordinary loss 6,444 7,269 -11.3%
Extraordinary loss, net of tax 1,543 – N/A
Net income $4,901 $7,269 -32.6%
5.3% 11.2%
Basic Earnings Per Common Share:
Net income per common share
before provision for
acquisition expenses and
extraordinary item $0.51 $0.42 21.4%
Provision for acquisition
expenses, net of tax 0.14 – N/A
Loss per common share due
to early extinguishment of
long-term debt, net of tax 0.09 – N/A
Net income per common share $0.28 $0.42 -33.3%
Weighted average common
shares outstanding 17,537 17,151
Diluted Earnings Per common Share:
Net income per common share
before provision for
acquisition expenses and
extraordinary item $0.48 $0.42 14.3%
Provision for acquisition
expenses, net of tax 0.13 – N/A
Loss per common share due
to early extinguishment of
Long-term debt, net of tax 0.08 – N/A
Net income per common share $0.27 $0.42 -35.7%
Weighted average common
shares outstanding 18,517 17,356
AMERICAN ITALIAN PASTA COMPANY
Consolidated Statements of Income
(in thousands, except per share amounts)
Year Year
Ended Ended
September 30, September 30,
2001 2000 % Change
Revenues
Retail $223,321 $177,586 25.8%
Institutional 87,468 71,209 22.8%
Total revenues 310,789 248,795 24.9%
Cost of goods sold 213,086 178,810 –
Gross profit 97,703 69,985 39.6%
31.4% 28.1%
Selling and marketing expense 31,844 16,065 98.2%
General and administrative
expense 9,278 6,263 48.1%
Provision for acquisition
expenses 5,537 – N/A
Operating profit 51,044 47,657 7.1%
16.4% 19.2%
Interest expense, net 8,491 4,777 77.7%
Income before income
tax expense and extraordinary
item 42,553 42,880 -0.8%
Income tax provision 14,680 15,426 -4.8%
Income before extraordinary
loss 27,873 27,454 1.5%
Extraordinary loss, net of tax 1,543 – N/A
Net income $26,330 $27,454 -4.1%
8.5% 11.0%
Basic Earnings Per Common Share:
Net income per common share
before provision for
acquisition expenses and
extraordinary item $1.81 $1.53 18.3%
Provision for acquisition
expenses, net of tax 0.21 – N/A
Loss per common share due
to early extinguishment of
long-term debt, net of tax 0.09 – N/A
Net income per common share $1.51 $1.53 -1.3%
Weighted average common
shares outstanding 17,404 17,895
Diluted Earnings Per common Share:
Net income per common share
before provision for
acquisition expenses and
extraordinary item $1.73 $1.50 15.3%
Provision for acquisition
expenses, net of tax 0.20 – N/A
Loss per common share due
to early extinguishment of
long-term debt, net of tax 0.08 – N/A
Net income per common share $1.45 $1.50 -3.3%
Weighted average common
shares outstanding 18,186 18,298
AMERICAN ITALIAN PASTA COMPANY
Consolidated Balance Sheet
(in thousands, except per share amounts)
September 30, September 30,
2001 2000
Assets
Current assets:
Cash and temporary investments $5,284 $6,677
Trade and other receivables 37,546 27,479
Prepaid expenses and deposits 8,024 4,424
Inventory 43,866 28,390
Deferred income taxes 3,565 2,989
Total current assets 98,285 69,959
Property, plant and equipment:
Land and improvements 8,123 7,159
Buildings 99,548 85,157
Plant and mill equipment 269,751 230,383
Furniture, fixtures and equipment 10,957 10,011
388,379 332,710
Accumulated depreciation (80,453) (64,769)
307,926 267,941
Construction in progress 31,236 43,727
Total property, plant and equipment 339,162 311,668
Other assets 122,696 2,144
Total assets $560,143 $383,771
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $22,416 $12,261
Accrued expenses 19,652 8,352
Income tax payable 877 841
Current maturities of long-term debt 1,559 1,564
Total current liabilities 44,504 23,018
Long-term debt 236,783 138,502
Deferred income taxes 33,664 23,847
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value:
Authorized shares – 10,000,000 — —
Class A common stock, $.001 par value:
Authorized shares – 75,000,000 19 18
Class B common stock, $.001 par value:
Authorized shares – 25,000,000 — —
Additional paid-in capital 202,674 177,725
Treasury stock (34,394) (31,362)
Notes receivable from officers (61) (61)
Unearned compensation (223) —
Retained earnings 80,563 54,233
Accumulated other comprehensive loss (3,386) (2,149)
Total stockholders’ equity 245,192 198,404
Total liabilities and stockholders’ equity $560,143 $383,771
