EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 - PRESS RELEASE DATED MAY 4, 2006
1811 Bering Drive, Suite 200
Houston, Texas 77057
 
Company Contact: Jon C. Biro
Phone: 713-351-4100
Fax: 713-335-2222
www.icopolymers.com
    


ICO, Inc. reports net income of $3.0 million
or $.12 per share ($.10 per share - diluted) for the three months
ending March 31, 2006

HOUSTON, TEXAS, May 3, 2006 - ICO, Inc. (NASDAQ: ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the three and six months ended March 31, 2006. Highlights for the quarter, compared to the prior year, included:

§  
Revenues up $1.4 million (2%) and volumes up 8%
§  
Operating income up $2.7 million or 122% to $4.9 million
§  
Outlook remains positive

Year-Over-Year Quarterly Comparison

For the quarter ending March 31, 2006, revenues increased $1.4 million, or 2%, compared to the same quarter in the prior fiscal year, to $79.5 million. This was caused by an 8% growth in sales and service volumes (which led to an increase in revenues of $5.3 million), offset partially by a stronger U.S. Dollar which reduced revenues by $2.5 million. In addition, despite higher average selling prices, a change in product mix, as a result of increased sales volumes at Bayshore Industrial, caused a decline in revenues of $1.4 million. Gross profit improved $1.4 million or 10% to $15.4 million. The improvements were most significant within the Company’s Bayshore Industrial and ICO Polymers North America business units. Selling, general and administrative expenses declined $1.0 million due to lower compensation costs, weaker foreign currencies relative to the U.S. Dollar, reduced legal expenses and lower Sarbanes-Oxley implementation expenses.

As a result of the increase in gross profit and reduced SG&A, operating income improved 122% or $2.7 million. Net income from continuing operations was $3.0 million, or $.12 per share ($.10 per share-diluted).

Sequential Quarter Comparison

Revenues improved $4.4 million or 6% during the quarter ended March 31, 2006 compared to the quarter ended December 31, 2005 as a result of an increase in sales and service volumes sold of 4%. The volume improvement was due in large part to the Company’s European operations as volumes rebounded from the seasonally slow fiscal first quarter. Operating income was down slightly, $162,000 or 3%, as a result of lower profit margins on product sales, more than offsetting the gains due to volume growth. Net income from continuing operations was very comparable to the first quarter, down $113,000 or 4% to $3.0 million.
 
      The Company’s President and CEO, Mr. A. John Knapp, Jr., stated, “The first half of fiscal 2006 has started strong. Our volumes and margins are growing compared to the prior year and our SG&A expenses are down. All of our regions are showing improvements in operating income for the first half of fiscal 2006, compared to the first half of fiscal 2005. Fiscal third quarter business levels should continue to be strong led by continuing robust customer demand for Bayshore Industrial and ICO Polymers North America. We expect operating income, excluding charges, for the three months ended June 30, 2006 to significantly exceed the operating income of the same quarter of fiscal year 2005.”

Balance Sheet and Liquidity

On March 31, 2006, the Company had $2.0 million in cash on hand, $33.2 million in debt, and $31.0 million of available borrowing capacity under committed credit facilities. During the second quarter of fiscal 2006 capital expenditures were $2.7 million bringing the total capital expenditures for the first six months of the fiscal year to $4.1 million.

Preferred Dividend

The Company’s Board of Directors has determined not to declare any dividend on its depositary shares, each representing ¼ of a share of its $6.75 convertible exchangeable preferred stock, for the quarter ending on June 30, 2006.

Conference Call on the Web

A live Internet broadcast of ICO, Inc.’s conference call regarding fiscal 2006 second quarter results can be accessed at 10:00 a.m. Central Standard Time on Thursday, May 4, 2006 at 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 719-457-2660, passcode 4749664.
 
About ICO, Inc.
 
With 18 locations in 9 countries, ICO Polymers produces custom polymer powders for rotational molding and other polymers segments, including textiles, metal coatings and masterbatch. 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.
 
      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
  
Six Months Ended
   
March 31,
  
December 31,
 
March 31,
 
 
2006
 
2005
 
2005
 
2006
 
2005
                     
Product Sales
 
$ 70,473
 
$ 69,283
 
$ 67,675
 
$ 138,148
 
$ 131,524
Toll Services
 
9,070
 
8,852
 
7,438
 
16,508
 
18,041
Total Revenues
 
79,543
 
78,135
 
75,113
 
154,656
 
149,565
Cost of sales and services
 
64,188
 
64,179
 
59,517
 
123,705
 
122,088
Gross Profit
 
15,355
 
13,956
 
15,596
 
30,951
 
27,477
Selling, general and administrative expense
  
8,722
 
9,736
 
8,663
 
17,385
 
18,699
Depreciation and amortization
 
1,782
 
2,016
 
1,802
 
3,584
 
4,052
Impairment, restructuring and other costs
 
-
 
22
 
118
 
118
 
343
Operating income
 
4,851
 
2,182
 
5,013
 
9,864
 
4,383
Other income (expense):
                   
Interest expense, net
 
(562)
  
(774)
  
(534)
  
(1,096)
  
(1,460)
Other income (expense)
 
68
 
(97)
  
78
 
146
 
44
Income from continuing operations before income taxes
 
4,357
 
1,311
 
4,557
 
8,914
 
2,967
Provision for income taxes
 
1,375
 
289
 
1,462
 
2,837
 
555
Income from continuing operations
 
2,982
 
1,022
 
3,095
 
6,077
 
2,412
Loss from discontinued operations, net of benefit for
                   
income taxes
 
-
 
(143)
  
(33)
  
(33)
  
(320)
                     
Net income
 
$ 2,982
 
$ 879
 
$ 3,062
 
$ 6,044
 
$ 2,092
                     
Basic income from continuing operations per common share
 
$ 0.12
 
$ 0.04
 
$ 0.12
 
$ 0.24
 
$ 0.09
Basic net income per common share
 
$ 0.12
 
$ 0.03
 
$ 0.12
 
$ 0.24
 
$ 0.08
                     
Diluted income from continuing operations per common share
 
$ 0.10
 
$ 0.03
 
$ 0.11
 
$ 0.21
 
$ 0.08
Diluted net income per common share
 
$ 0.10
 
$ 0.03
 
$ 0.10
 
$ 0.20
 
$ 0.07
                     
                     
Gross Margin
 
19.3%
  
17.9%
  
20.8%
  
20.0%
  
18.4%
                     
 

ICO, Inc.
Consolidated Balance Sheet
(Unaudited and in thousands, except share data and ratios)
         
   
March 31,
 
September 30,
 
 
2006
 
2005
ASSETS
        
Current assets:
       
Cash and cash equivalents
 
$ 2,020
 
$ 3,234
Trade receivables
 
62,195
 
57,132
Inventories
 
36,738
 
35,006
Deferred income taxes
 
2,364
 
2,579
Prepaid and other current assets
 
5,345
 
5,542
Total current assets
 
108,662
 
103,493
         
Property, plant and equipment, net
 
49,487
 
49,274
Goodwill
 
8,360
 
8,831
Other assets
 
2,468
 
2,657
Total assets
 
$ 168,977
 
$ 164,255
         
LIABILITIES AND STOCKHOLDERS' EQUITY
        
Current liabilities:
       
Short term borrowings under credit facilities
 
$ 13,645
 
$ 8,989
Current portion of long-term debt
 
5,061
 
5,657
Accounts payable
 
29,994
 
31,387
Accrued salaries and wages
 
3,851
 
4,181
Other current liabilities
 
12,984
 
11,897
Total current liabilities
 
65,535
 
62,111
         
Long-term debt, net of current portion
 
14,458
 
18,993
Deferred income taxes
 
3,988
 
4,383
Other long-term liabilities
 
1,736
 
1,678
Total liabilities
 
85,717
 
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 $39,322 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; 25,731,214 and 25,544,997 shares issued
       
and outstanding, respectively
 
44,855
 
44,265
Additional paid-in capital
 
104,492
 
104,134
Accumulated other comprehensive loss
 
(2,067)
  
(1,245)
Accumulated deficit
 
(64,033)
  
(70,077)
Total stockholders' equity
 
83,260
 
77,090
Total liabilities and stockholders' equity
  
$ 168,977
 
$ 164,255
         
OTHER BALANCE SHEET DATA
        
Working capital
  
$ 43,127
 
$ 41,382
Current ratio
  
1.7
 
1.7
Total debt
 
$ 33,164
 
$ 33,639
Debt-to-capitalization
  
28.5%
  
30.4%
         
 

ICO, Inc.
Supplemental Segment Information
(Unaudited and in thousands, except percentages)
                       
Revenues
                      
Three Months Ended March 31:
2006
 
% of Total
 
2005
 
% of Total
 
Change
 
%
ICO Europe
$ 32,439
 
41%
  
$ 34,704
 
44%
  
$ (2,265)
  
(7%)
ICO Courtenay - Australasia
11,458
 
14%
  
11,596
 
15%
  
(138)
  
(1%)
ICO Polymers North America
10,819
 
14%
  
10,854
 
14%
  
(35)
  
0%
ICO Brazil
2,665
 
3%
  
1,771
 
2%
  
894
 
50%
Total ICO Polymers
57,381
 
72%
  
58,925
 
75%
  
(1,544)
  
(3%)
Bayshore Industrial
22,162
 
28%
  
19,210
 
25%
  
2,952
 
15%
Consolidated
$ 79,543
 
100%
  
$ 78,135
 
100%
  
$ 1,408
 
2%
                       
                       
Six Months Ended March 31:
2006
 
% of Total
 
2005
 
% of Total
 
Change
 
%
ICO Europe
$ 59,981
 
39%
  
$ 65,473
 
44%
  
$ (5,492)
  
(8%)
ICO Courtenay - Australasia
24,172
 
16%
  
22,336
 
15%
  
1,836
 
8%
ICO Polymers North America
20,818
 
13%
  
19,678
 
13%
  
1,140
 
6%
ICO Brazil
4,822
 
3%
  
4,008
 
3%
  
814
 
20%
Total ICO Polymers
109,793
 
71%
  
111,495
 
75%
  
(1,702)
  
(2%)
Bayshore Industrial
44,863
 
29%
  
38,070
 
25%
  
6,793
 
18%
Consolidated
$ 154,656
 
100%
  
$ 149,565
 
100%
  
$ 5,091
 
3%
                       
                       
Operating income (loss)
                      
Three Months Ended March 31:
2006
 
2005
 
Change
            
ICO Europe
$ 1,973
 
$ 1,645
 
$ 328
           
ICO Courtenay - Australasia
305
 
387
 
(82)
            
ICO Polymers North America
1,161
 
327
 
834
           
ICO Brazil
(199)
  
(547)
  
348
           
Total ICO Polymers
3,240
 
1,812
 
1,428
           
Bayshore Industrial
3,411
 
2,390
 
1,021
           
Total Operations
6,651
 
4,202
 
2,449
           
General Corporate Expense
(1,631)
  
(1,830)
  
199
           
Unallocated stock option compensation
(169)
  
(190)
  
21
           
Consolidated
$ 4,851
 
$ 2,182
 
$ 2,669
           
                       
                       
Six Months Ended March 31:
2006
 
2005
 
Change
            
ICO Europe
$ 3,272
 
$ 2,914
 
$ 358
           
ICO Courtenay - Australasia
1,360
 
1,322
 
38
           
ICO Polymers North America
1,855
 
204
 
1,651
           
ICO Brazil
(336)
  
(575)
  
239
           
Total ICO Polymers
6,151
 
3,865
 
2,286
           
Bayshore Industrial
7,159
 
4,508
 
2,651
           
Total Operations
13,310
 
8,373
 
4,937
           
General Corporate Expense
(2,994)
  
(3,593)
  
599
           
Unallocated stock option compensation
(452)
  
(397)
  
(55)
            
Consolidated
$ 9,864
 
$ 4,383
 
$ 5,481
           
                       
                       
Operating income (loss) as a percentage of revenues
Three Months Ended
  
Six Months Ended
 
March 31,
  
March 31,
     
Increase/
 
 
 
Increase/
 
2006
 
2005
 
(Decrease)
 
2006
 
2005
 
(Decrease)
ICO Europe
6%
  
5%
  
1%
  
5%
  
4%
  
1%
ICO Courtenay - Australasia
3%
  
3%
  
0%
  
6%
  
6%
  
0%
ICO Polymers North America
11%
  
3%
  
8%
  
9%
  
1%
  
8%
ICO Brazil
(7%)
  
(31%)
  
24%
  
(7%)
  
(14%)
  
7%
Total ICO Polymers
6%
  
3%
  
3%
  
6%
  
3%
  
3%
Bayshore Industrial
15%
  
12%
  
3%
  
16%
  
12%
  
4%
Consolidated
6%
  
3%
  
3%
  
6%
  
3%
  
3%
                       
 

ICO, Inc.
Supplemental Segment Information (cont'd.)
(Unaudited and in thousands, except percentages)
                         
Revenues
                        
   
Three Months Ended
   
March 31,
  
December 31,
        
   
2006
 
% of Total
 
2005
 
% of Total
 
Change
 
%
ICO Europe
  
$ 32,439
 
41%
  
$ 27,542
 
37%
  
$ 4,897
 
18%
ICO Courtenay - Australasia
  
11,458
 
14%
  
12,714
 
17%
  
(1,256)
  
(10%)
ICO Polymers North America
  
10,819
 
14%
  
9,999
 
13%
  
820
 
8%
ICO Brazil
  
2,665
 
3%
  
2,157
 
3%
  
508
 
24%
Total ICO Polymers
  
57,381
 
72%
  
52,412
 
70%
  
4,969
 
9%
Bayshore Industrial
  
22,162
 
28%
  
22,701
 
30%
  
(539)
  
(2%)
Consolidated
  
$ 79,543
 
100%
  
$ 75,113
 
100%
  
$ 4,430
 
6%
                         
                         
Operating income (loss)
                        
   
Three Months Ended
            
   
March 31,
 
December 31,
 
 
 
 
 
 
 
 
 
 
2006
 
2005
 
Change
 
          
ICO Europe
  
$ 1,973
 
$ 1,299
 
$ 674
           
ICO Courtenay - Australasia
  
305
 
1,055
 
(750)
            
ICO Polymers North America
  
1,161
 
694
 
467
           
ICO Brazil
  
(199)
  
(137)
  
(62)
            
Total ICO Polymers
  
3,240
 
2,911
 
329
           
Bayshore Industrial
  
3,411
 
3,748
 
(337)
            
Total Operations
  
6,651
 
6,659
 
(8)
            
General Corporate Expense
  
(1,631)
  
(1,363)
  
(268)
            
Unallocated stock option compensation
  
(169)
  
(283)
  
114
           
Consolidated
  
$ 4,851
 
$ 5,013
 
$ (162)
            
                         
                         
Operating income (loss) as a percentage of revenues
  
Three Months Ended
            
   
March 31,
 
December 31,
 
Increase/
 
 
 
 
 
 
 
 
2006
 
2005
 
(Decrease)
            
ICO Europe
  
6%
  
5%
  
1%
            
ICO Courtenay - Australasia
  
3%
  
8%
  
(5%)
            
ICO Polymers North America
  
11%
  
7%
  
4%
            
ICO Brazil
  
(7%)
  
(6%)
  
(1%)
            
Total ICO Polymers
  
6%
  
6%
  
0%
            
Bayshore Industrial
  
15%
  
17%
  
(2%)
            
Consolidated
  
6%
  
7%
  
(1%)