EX-99.1 PRESS REL 2 exhibit99-1.htm EXHIBIT 99.1 - PRESS RELEASE DATED AUGUST 3, 2006 EX-99.1 Press Rel
 

 
LOGO
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. Announces Record Results for
Fiscal Year Third Quarter 2006

HOUSTON, TEXAS, August 3, 2006 - ICO, Inc. (NASDAQ: ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the three and nine months ended June 30, 2006. Highlights for the quarter included:

§  
Record revenues of $82.4 million and year-over-year volume growth of 12% for the quarter
§  
Operating income of $5.9 million, up 350% from previous year
§  
Earnings per share 16 cents (14 cents fully diluted)

Year-Over-Year Quarterly Comparison

Third quarter 2006 revenues from continuing operations of $82.4 million hit an all time high for ICO, Inc. This represented an increase of $6.7 million or 9% from the fiscal third quarter of 2005. Revenues increased due to growth in sales and service volumes (up 12% year-over-year) and higher average selling prices as a result of higher raw material prices. Partially offsetting those benefits were the effects of a stronger U.S. Dollar as compared to relevant foreign currencies and a change in product mix as a result of growth in sales at Bayshore.

As a result of the strong growth in volumes and revenues, gross profit improved $3.4 million or 27%. The Company’s North American operations, including Bayshore Industrial and ICO Polymers North America, experienced the most significant gross profit improvements. Bayshore’s improvement was primarily the result of sales volume growth of 54%, while an increase in specialty toll grinding business generated by ICO Polymers North America contributed to their gross profit improvement.
 
Selling, general and administrative expenses (“SG&A”) declined $1.2 million or 13% due to our continuing focus on controlling costs. This decline was a result of lower third party Sarbanes-Oxley implementation costs, professional legal fees, and effects of the stronger U.S. Dollar relative to relevant foreign currencies.

Operating income improved $4.6 million or 350% to $5.9 million as a result of the improvement in gross profit and reduction in SG&A. Net income from continuing operations was $4.1 million, or $.16 per share ($.14 per share fully diluted).

Sequential Quarter Comparison

Sequentially, an increase in volumes sold of 3% and an increase in average selling prices due to rising resin prices caused revenues to increase $2.9 million or 4%. The growth in sales and service volumes led the way to improved gross profit. Gross profit improved $0.8 million or 5%. The improvement in gross profit and a reduction in SG&A of $0.4 million drove the operating income increase of $1.1 million or 22% compared to the quarter ended March 31, 2006.

“Our business was very strong in the third quarter and we expect the momentum we now have to continue into the fourth quarter,” stated the Company’s President and CEO, Mr. A. John Knapp, Jr. “Our volume improvement this year has been led by our Bayshore Industrial operation. The expansion at Bayshore is expected to be on line late in the fourth quarter and will increase our capacity in that operation by approximately 10%. We are also considering several expansion opportunities within our Australasian business which should fuel our growth in these markets. I thank all of ICO’s employees for their efforts to produce good operating results so far this year.”
 
Balance Sheet and Liquidity

At June 30, 2006, the Company had $7.0 million in cash on hand, $35.8 million in debt, and $40.3 million of available borrowing capacity under committed credit facilities. The improvement in liquidity during fiscal year 2006 was due to strong earnings and cash flow the Company has generated from operations and from many of the refinancings the Company has completed over the course of 2006. During the third quarter of fiscal 2006, the Company closed on new term loans of $9.7 million and used the proceeds to repay existing long-term and short-term debt. This caused total short-term debt to fall $3.7 million compared to March 31, 2006. Capital expenditures were $2.9 million during the third quarter and were $7.0 million for the nine months ended June 30, 2006.

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 September 30, 2006.

Conference Call on the Web

A live Internet broadcast of ICO, Inc.’s conference call regarding fiscal 2006 third quarter results can be accessed at 9:00 a.m. Central Standard Time on Friday, August 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 847-413-3237, passcode 15219128.
 
About ICO, Inc.
 
With 18 locations in 9 countries, ICO Polymers 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.
 
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
  
Nine Months Ended
  
   
June 30,
  
March 31,
  
June 30,
  
   
2006
  
2005
  
2006
  
2006
  
2005
  
                       
Product Sales
 
$
73,186
  
$
67,530
  
$
70,473
  
$
211,334
  
$
199,054
  
Toll Services
   
9,258
   
8,232
   
9,070
   
25,766
   
26,273
 
Total Revenues
   
82,444
   
75,762
   
79,543
   
237,100
   
225,327
 
Cost of sales and services
   
66,330
   
63,051
   
64,188
   
190,035
   
185,139
 
Gross Profit
   
16,114
   
12,711
   
15,355
   
47,065
   
40,188
 
     Selling, general and administrative expense
    
8,278
   
9,470
   
8,722
   
25,663
   
28,169
 
     Depreciation and amortization
   
1,917
   
1,934
   
1,782
   
5,501
   
5,986
 
     Impairment, restructuring and other costs
   
-
   
-
   
-
   
118
   
343
 
Operating income
   
5,919
   
1,307
   
4,851
   
15,783
   
5,690
 
Other income (expense):
                               
     Interest expense, net
   
(505
)
  
(748
)
  
(562
)
  
(1,601
)
  
(2,208
)
     Other income (expense)
   
167
   
(65
)
  
68
   
313
   
(21
)
Income from continuing operations before income taxes
   
5,581
   
494
   
4,357
   
14,495
   
3,461
 
Provision for income taxes
   
1,470
   
475
   
1,375
   
4,307
   
1,030
 
Income from continuing operations
   
4,111
   
19
   
2,982
   
10,188
   
2,431
 
Loss from discontinued operations, net of benefit for
                               
     income taxes
   
(19
)
  
(63
)
  
-
   
(52
)
  
(383
)
 
                                
Net income (loss)
 
$
4,092
  
$
(44
)
$
2,982
  
$
10,136
  
$
2,048
  
 
                                
Basic income from continuing operations per common share
 
$
0.16
  
$
0.00
  
$
0.12
  
$
0.40
  
$
0.10
  
Basic net income per common share
 
$
0.16
  
$
0.00
  
$
0.12
  
$
0.40
  
$
0.08
  
 
                                
Diluted income from continuing operations per common share
 
$
0.14
  
$
0.00
  
$
0.10
  
$
0.34
  
$
0.08
  
Diluted net income per common share
 
$
0.14
  
$
0.00
  
$
0.10
  
$
0.34
  
$
0.07
  
 
                                
 
                                
Gross Margin
   
19.5%
 
  
16.8%
 
  
19.3%
 
  
19.9%
 
  
17.8%
 
 
                                
 
 

ICO, Inc.
 
Consolidated Balance Sheet
 
(Unaudited and in thousands, except share data and ratios)
 
           
   
June 30,
  
September 30,
  
   
2006
  
2005
  
ASSETS
         
Current assets:
         
     Cash and cash equivalents
 
$
7,032
  
$
3,234
  
     Trade receivables
   
65,965
   
57,132
 
     Inventories
   
38,261
   
35,006
 
     Deferred income taxes
   
2,413
   
2,579
 
     Prepaid and other current assets
   
6,351
   
5,542
 
          Total current assets
   
120,022
   
103,493
 
               
Property, plant and equipment, net
   
51,618
   
49,274
 
Goodwill
   
8,325
   
8,831
 
Other assets
   
2,497
   
2,657
 
          Total assets
 
$
182,462
  
$
164,255
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
             
     Short-term borrowings under credit facilities
 
$
10,619
  
$
8,989
  
     Current portion of long-term debt
   
4,433
   
5,657
 
     Accounts payable
   
32,947
   
31,387
 
     Accrued salaries and wages
   
4,936
   
4,181
 
     Income taxes payable
   
4,189
   
1,459
 
     Other current liabilities
   
9,629
   
10,438
 
          Total current liabilities
   
66,753
   
62,111
 
               
Long-term debt, net of current portion
   
20,756
   
18,993
 
Deferred income taxes
   
4,097
   
4,383
 
Other long-term liabilities
   
1,849
   
1,678
 
          Total liabilities
   
93,455
   
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 $39,866 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; 25,751,842 and 25,544,997 shares issued
             
          and outstanding, respectively
   
44,922
   
44,265
 
     Additional paid-in capital
   
104,658
   
104,134
 
     Accumulated other comprehensive loss
   
(645
)
  
(1,245
)
     Accumulated deficit
   
(59,941
)
  
(70,077
)
          Total stockholders' equity
   
89,007
   
77,090
 
          Total liabilities and stockholders' equity
  
$
182,462
  
$
164,255
  
               
OTHER BALANCE SHEET DATA
              
Working capital
  
$
53,269
  
$
41,382
  
Current ratio
    
1.8
   
1.7
 
Total debt
 
$
35,808
  
$
33,639
  
Debt-to-capitalization
    
28.7%
 
  
30.4%
 
               
               
 
 


ICO, Inc.     
Supplemental Segment Information     
(Unaudited and in thousands, except percentages)     
                             
Revenues
                            
Three Months Ended June 30:
  
2006
  
% of Total
  
 2005
  
% of Total
  
 Change
  
%
ICO Europe
  
$
35,181
    
43%
 
$
33,754
    
44%
 
$
1,427
    
4%
 
ICO Courtenay - Australasia
    
10,356
   
13%
 
  
12,228
   
16%
 
  
(1,872
)
  
(15%
)
ICO Polymers North America
    
12,261
   
15%
 
  
10,691
   
14%
 
  
1,570
   
15%
 
ICO Brazil
    
2,072
   
2%
 
  
2,009
   
3%
 
  
63
   
3%
 
Total ICO Polymers
    
59,870
   
73%
 
  
58,682
   
77%
 
  
1,188
   
2%
 
Bayshore Industrial
    
22,574
   
27%
 
  
17,080
   
23%
 
  
5,494
   
32%
 
Consolidated
  
$
82,444
    
100%
 
$
75,762
    
100%
 
$
6,682
    
9%
 
                                       
 
Nine Months Ended June 30:
  
2006
  
 % of Total
  
 2005
  
 % of Total
  
 Change
  
%
ICO Europe
  
$
95,162
    
40%
 
$
99,227
    
44%
 
$
(4,065
)
  
(4%
)
ICO Courtenay - Australasia
    
34,528
   
15%
 
  
34,564
   
15%
 
  
(36
)
  
0%
 
ICO Polymers North America
    
33,079
   
14%
 
  
30,369
   
14%
 
  
2,710
   
9%
 
ICO Brazil
    
6,894
   
3%
 
  
6,017
   
3%
 
  
877
   
15%
 
Total ICO Polymers
    
169,663
   
72%
 
  
170,177
   
76%
 
  
(514
)
  
0%
 
Bayshore Industrial
    
67,437
   
28%
 
  
55,150
   
24%
 
  
12,287
   
22%
 
Consolidated
  
$
237,100
    
100%
 
$
225,327
    
100%
 
$
11,773
    
5%
 
                                       
 
Operating income (loss)
               
Three Months Ended June 30:
  
2006
  
2005
  
 Change
  
ICO Europe
  
$
1,659
  
$
646
  
$
1,013
  
ICO Courtenay - Australasia
    
340
   
555
   
(215
)
ICO Polymers North America
    
1,862
   
310
   
1,552
 
ICO Brazil
    
(114
)
  
(192
)
  
78
 
Total ICO Polymers
    
3,747
   
1,319
   
2,428
 
Bayshore Industrial
    
3,720
   
1,869
   
1,851
 
Total Operations
    
7,467
   
3,188
   
4,279
 
General Corporate Expense
    
(1,361
)
  
(1,638
)
  
277
 
Unallocated stock option compensation
    
(187
)
  
(243
)
  
56
 
Consolidated
  
$
5,919
  
$
1,307
  
$
4,612
  
                     
 
Nine Months Ended June 30:
  
2006
  
2005
  
 Change
  
ICO Europe
  
$
4,931
  
$
3,560
  
$
1,371
  
ICO Courtenay - Australasia
    
1,700
   
1,877
   
(177
)
ICO Polymers North America
    
3,717
   
514
   
3,203
 
ICO Brazil
    
(450
)
  
(767
)
  
317
 
Total ICO Polymers
    
9,898
   
5,184
   
4,714
 
Bayshore Industrial
    
10,879
   
6,377
   
4,502
 
Total Operations
    
20,777
   
11,561
   
9,216
 
General Corporate Expense
    
(4,355
)
  
(5,231
)
  
876
 
Unallocated stock option compensation
    
(639
)
  
(640
)
  
1
 
Consolidated
  
$
15,783
  
$
5,690
  
$
10,093
  
 
 
Operating income (loss) as a
percentage of revenues
  
Three Months Ended
  
Nine Months Ended
  
   
June 30,
  
June 30,
  
   
 
  
 
  
 Increase/
  
 
  
 
  
Increase/
  
   
 2006
  
 2005
  
(Decrease)
  
 2006
  
  2005
  
(Decrease)
  
ICO Europe
    
5%
 
  
2%
 
  
3%
 
  
5%
 
  
4%
 
  
1%
 
ICO Courtenay - Australasia
    
3%
 
  
5%
 
  
(2%
)
  
5%
 
  
5%
 
  
0%
 
ICO Polymers North America
    
15%
 
  
3%
 
  
12%
 
  
11%
 
  
2%
 
  
9%
 
ICO Brazil
    
(6%
)
  
(10%
)
  
4%
 
  
(7%
)
  
(13%
)
  
6%
 
Total ICO Polymers
    
6%
 
  
2%
 
  
4%
 
  
6%
 
  
3%
 
  
3%
 
Bayshore Industrial
    
16%
 
  
11%
 
  
5%
 
  
16%
 
  
12%
 
  
4%
 
Consolidated
    
7%
 
  
2%
 
  
5%
 
  
7%
 
  
3%
 
  
4%
 
                                       
 
 


ICO, Inc.     
Supplemental Segment Information (cont'd.)     
(Unaudited and in thousands, except percentages)     
                             
Revenues
                            
   
Three Months Ended    
   
June 30,
  
 March 31,
           
   
2006
  
 % of Total
  
 2006
  
 % of Total
  
 Change
  
%
  
ICO Europe
  
$
35,181
    
43%
 
$
32,439
    
41%
 
$
2,742
    
8%
 
ICO Courtenay - Australasia
    
10,356
   
13%
 
  
11,458
   
14%
 
  
(1,102
)
  
(10%
)
ICO Polymers North America
    
12,261
   
15%
 
  
10,819
   
14%
 
  
1,442
   
13%
 
ICO Brazil
    
2,072
   
2%
 
  
2,665
   
3%
 
  
(593
)
  
(22%
)
Total ICO Polymers
    
59,870
   
73%
 
  
57,381
   
72%
 
  
2,489
   
4%
 
Bayshore Industrial
    
22,574
   
27%
 
  
22,162
   
28%
 
  
412
   
2%
 
Consolidated
  
$
82,444
    
100%
 
$
79,543
    
100%
 
$
2,901
    
4%
 
 

Operating income (loss)
               
   
Three Months Ended  
   
June 30,
  
March 31,
       
   
2006
  
2006
  
 Change
  
ICO Europe
  
$
1,659
  
$
1,973
  
$
(314
)
ICO Courtenay - Australasia
    
340
   
305
   
35
 
ICO Polymers North America
    
1,862
   
1,161
   
701
 
ICO Brazil
    
(114
)
  
(199
)
  
85
 
Total ICO Polymers
    
3,747
   
3,240
   
507
 
Bayshore Industrial
    
3,720
   
3,411
   
309
 
Total Operations
    
7,467
   
6,651
   
816
 
General Corporate Expense
    
(1,361
)
  
(1,631
)
  
270
 
Unallocated stock option compensation
    
(187
)
  
(169
)
  
(18
)
Consolidated
  
$
5,919
  
$
4,851
  
$
1,068
  
 

Operating income (loss) as a
percentage of revenues
  
Three Months Ended  
   
June 30,
  
March 31,
  
 Increase/
  
   
2006
  
2006
  
 (Decrease)
  
ICO Europe
    
5%
 
  
6%
 
  
(1%
)
ICO Courtenay - Australasia
    
3%
 
  
3%
 
  
0%
 
ICO Polymers North America
    
15%
 
  
11%
 
  
4%
 
ICO Brazil
    
(6%
)
  
(7%
)
  
1%
 
Total ICO Polymers
    
6%
 
  
6%
 
  
0%
 
Bayshore Industrial
    
16%
 
  
15%
 
  
1%
 
Consolidated
    
7%
 
  
6%
 
  
1%