EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 - 2Q FY07 EARNINGS RELEASE 050307 Exhibit 99.1 - 2Q FY07 Earnings Release 050307
 
Exhibit 99.1
 
 

ICO, Inc. Announces Record Second Quarter Financial Results

HOUSTON, TEXAS, May 2, 2007 - ICO, Inc. (NASDAQ: ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the second quarter ended March 31, 2007.

Second Quarter Highlights

·  
Record quarterly revenues of $94.7 million, an increase of $15.2 million or 19% from the prior year
·  
Record quarterly operating income of $6.9 million (up 42%) and net income per share from continuing operations of $.20 fully diluted (up 122%)
·  
Outlook remains positive

Second Quarter 2007 vs. Second Quarter 2006 

Revenues increased $15.2 million or 19%, compared to the prior year, to $94.7 million. Almost half of the revenue increase, or $7.4 million, was a result of an increase in sales and service volumes of 3%. The volume improvement occurred primarily in Europe and Australasia where market demand has strengthened considerably. The translation effect from stronger foreign currencies caused revenues to increase $4.5 million. Last, an increase in average selling prices and changes in product mix increased revenues by $3.3 million.

The increase in revenues led to an increase in operating income of $2.0 million, or 42%, to $6.9 million for the quarter. Income from continuing operations increased $2.5 million or 85% to $5.5 million, or $.20 per diluted share. The results include a tax benefit of $1.4 million that reduced income tax expense during the quarter, due to the reversal of a valuation allowance relating to an operation in Europe that was previously unprofitable.

During the fiscal 2007 second quarter, we settled a dispute with our insurance carrier related to the previously settled environmental indemnity claims involving the sale of our former oilfield services business, and recognized a pre-tax gain on this settlement of $2.3 million. This gain is included in discontinued operations net of tax in the amount of $1.5 million. Net income increased $4.0 million or 135%, compared to last year, to $7.0 million or $.26 per diluted share.

Second Quarter 2007 vs. First Quarter 2007

Sequentially, revenues increased $8.5 million, or 10% primarily as a result of an increase in sales and service volumes of 7%. The growth in volumes increased revenues $10.4 million, and was primarily driven by our operations in Europe and Australasia. Partially offsetting the impact of the volume increase was the effect of lower average selling prices and a change in product mix which reduced revenues by $2.7 million.



Similar to the year-over-year quarterly comparison, the revenue increase led to an increase in operating income of $2.6 million or 60%. Income from continuing operations increased $3.0 million or 116% and net income increased $4.5 million or 177%.

“Our management team did a great job rebounding from the difficult pricing environment in our first fiscal quarter,” stated the Company’s President and CEO, Mr. A. John Knapp, Jr. “Resin prices stabilized during the quarter and, in some markets, rose modestly. Of particular interest is the strength of our foreign operations, which provided 68% of our revenues during the quarter. Our operating results strengthened over the course of our fiscal second quarter, and we expect this momentum to carry into our third quarter.”

Balance Sheet and Liquidity

During the second quarter, we generated cash flow from continuing operations of $6.6 million caused by the income we generated, combined with the impact of changes in working capital. This solid cash flow allowed us to reduce debt, net of cash by $4.7 million, to $49.6 million during the second quarter. The strong earnings and a weaker U.S. dollar increased stockholders’ equity by $8.2 million for the quarter to $76.4 million at March 31, 2007. Capital expenditures were $2.4 million during the second quarter with the majority of the investment consisting of expansion projects.

The Company’s Board of Directors has declared a dividend on its depositary shares, each representing ¼ of a share of its $6.75 convertible exchangeable preferred stock, of $.42 per depositary share payable to shareholders of record on June 22, 2007.

Conference Call on the Web
 
A live Internet broadcast of ICO, Inc.’s conference call regarding fiscal 2007
second quarter results can be accessed at 10:00 a.m. Central Time on Thursday,
May 3, 2007 at http://www.videonewswire.com/event.asp?id=39094, 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 847-619-6547, passcode 17591192.
 

About ICO, Inc.
 
With 19 locations in 10 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. Contact: CFO - Jon C. Biro at 713-351-4100.




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, 2006 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
          
2006
  
   
2007
  
(as restated)
  
2006
  
2007
  
(as restated)
  
Product Sales
 
$
84,893
  
$
70,473
  
$
77,587
  
$
162,480
  
$
138,148
  
Toll Services
   
9,826
   
9,070
   
8,674
   
18,500
   
16,508
 
Total Revenues
   
94,719
   
79,543
   
86,261
   
180,980
   
154,656
 
Cost of sales and services (exclusive of depreciation shown
                               
   separately below)
   
77,371
   
64,188
   
71,769
   
149,140
   
123,705
 
Gross Profit (1)
   
17,348
   
15,355
   
14,492
   
31,840
   
30,951
 
     Selling, general and administrative expense
    
9,274
   
8,722
   
8,439
   
17,713
   
17,385
 
     Depreciation and amortization
   
1,855
   
1,782
   
1,756
   
3,611
   
3,584
 
     Impairment, restructuring and other costs (income)
   
(654
)
  
-
   
-
   
(654
)
  
118
 
Operating income
   
6,873
   
4,851
   
4,297
   
11,170
   
9,864
 
Other income (expense):
                               
     Interest expense, net
   
(838
)
  
(562
)
  
(664
)
  
(1,502
)
  
(1,096
)
     Other income (expense)
   
88
   
68
   
(255
)
  
(167
)
  
146
 
Income from continuing operations before income taxes
   
6,123
   
4,357
   
3,378
   
9,501
   
8,914
 
Provision for income taxes
   
601
   
1,375
   
818
   
1,419
   
2,837
 
Income from continuing operations
   
5,522
   
2,982
   
2,560
   
8,082
   
6,077
 
Income (loss) from discontinued operations, net of income taxes
   
1,475
   
-
   
(36
)
  
1,439
   
(33
)
Net income
 
$
6,997
  
$
2,982
  
$
2,524
  
$
9,521
  
$
6,044
  
Undeclared Preferred Stock dividends, as restated
   
-
   
(544
)
  
(226
)
  
(226
)
  
(1,088
)
Preferred Stock dividends declared
   
(82
)
  
-
   
(82
)
  
(164
)
  
-
 
Net gain on redemption of Preferred Stock
   
-
   
-
   
6,023
   
6,023
   
-
 
Net income applicable to Common Stock, as restated
 
$
6,915
  
$
2,438
  
$
8,239
  
$
15,154
  
$
4,956
  
                                 
Basic income from continuing operations per common share,
                               
   as restated
  
$
0.21
  
$
0.10
  
$
0.32
  
$
0.53
  
$
0.19
  
Basic net income per common share, as restated
 
$
0.27
  
$
0.10
  
$
0.32
  
$
0.59
  
$
0.19
  
Diluted income from continuing operations per common share,
                               
   as restated
  
$
0.20
  
$
0.09
  
$
0.09
  
$
0.29
  
$
0.19
  
Diluted net income per common share, as restated
 
$
0.26
  
$
0.09
  
$
0.09
  
$
0.34
  
$
0.19
  
                                 
                                 
Gross Margin (2)
    
18.3
%
  
19.3
%
  
16.8
%
  
17.6
%
  
20.0
%
                                 
                                 
(1) Calculated as Total Revenues minus Cost of Sales and Services, exclusive of Depreciation Expense.
      
(2) Calculated as Gross Profit divided by Total Revenues.

 
ICO, Inc.
Consolidated Balance Sheet
(Unaudited and in thousands, except share data and ratios)

   
March 31,
  
September 30,
  
   
2007
  
2006
  
ASSETS
         
Current assets:
         
   Cash and cash equivalents
 
$
1,592
  
$
17,427
  
   Trade receivables
   
71,714
   
67,742
 
   Inventories
   
42,981
   
41,961
 
   Deferred income taxes
   
1,516
   
2,195
 
   Prepaid and other current assets
   
9,040
   
6,775
 
          Total current assets
   
126,843
   
136,100
 
               
Property, plant and equipment, net
   
52,615
   
50,884
 
Goodwill
   
8,975
   
8,585
 
Other assets
   
3,639
   
2,392
 
          Total assets
 
$
192,072
  
$
197,961
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
             
   Short-term borrowings under credit facilities
 
$
12,065
  
$
17,214
  
   Current portion of long-term debt
   
11,063
   
4,696
 
   Accounts payable
   
40,387
   
35,809
 
   Accrued salaries and wages
   
4,776
   
5,360
 
   Income taxes payable
   
1,611
   
4,188
 
   Other current liabilities
   
11,548
   
11,332
 
          Total current liabilities
   
81,450
   
78,599
 
               
Long-term debt, net of current portion
   
28,055
   
21,559
 
Deferred income taxes
   
4,126
   
4,210
 
Other long-term liabilities
   
2,064
   
1,876
 
          Total liabilities
   
115,695
   
106,244
 
               
Commitments and contingencies
   
-
   
-
 
Stockholders' equity:
             
   Convertible exchangeable preferred stock, without par value-
             
      345,000 shares authorized; 48,537 and 322,500 shares issued and
             
      outstanding, respectively, with a liquidation preference of $6,082 and
             
      $40,410, respectively
   
2
   
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; 25,931,368 and 25,792,168 shares issued
             
      and outstanding, respectively
   
45,791
   
45,087
 
Additional paid-in capital
   
76,458
   
104,844
 
Accumulated other comprehensive income (loss)
   
2,678
   
(154
)
Accumulated deficit
   
(48,552
)
  
(58,073
)
      Total stockholders' equity
   
76,377
   
91,717
 
      Total liabilities and stockholders' equity
  
$
192,072
  
$
197,961
  
               
OTHER BALANCE SHEET DATA
              
Working capital
  
$
45,393
  
$
57,501
  
Current ratio
    
1.6
   
1.7
 
Total debt
 
$
51,183
  
$
43,469
  
Debt-to-capitalization
    
40.1
%
  
32.2
%
               

 
 
ICO, Inc.
Supplemental Segment Information
(Unaudited and in thousands, except percentages) 

Revenues
                            
Three Months Ended March 31:
  
2007
  
% of Total
  
 2006
  
% of Total
  
 Change
  
%
  
ICO Europe
  
$
42,114
    
44%
 
$
32,439
    
41%
 
$
9,675
    
30%
 
ICO Courtenay - Australasia
    
18,483
   
20%
 
  
11,458
   
14%
 
  
7,025
   
61%
 
ICO Polymers North America
    
10,797
   
11%
 
  
10,819
   
14%
 
  
(22
)
  
0%
 
ICO Brazil
    
3,424
   
4%
 
  
2,665
   
3%
 
  
759
   
28%
 
Total ICO Polymers
    
74,818
   
79%
 
  
57,381
   
72%
 
  
17,437
   
30%
 
Bayshore Industrial
    
19,901
   
21%
 
  
22,162
   
28%
 
  
(2,261
)
  
(10%
)
Consolidated
  
$
94,719
    
100%
 
$
79,543
    
100%
 
$
15,176
    
19%
 
 
 
Six Months Ended March 31:
  
2007
  
% of Total
  
 2006
  
% of Total
  
 Change
  
%
  
ICO Europe
  
$
76,381
    
42%
  
$
59,981
    
39%
  
$
16,400
    
27%
  
ICO Courtenay - Australasia
    
34,096
   
19%
    
24,172
   
16%
    
9,924
   
41%
  
ICO Polymers North America
    
20,403
   
11%
    
20,818
   
13%
    
(415
)
  
(2%
)
ICO Brazil
    
6,319
   
4%
    
4,822
   
3%
    
1,497
   
31%
  
Total ICO Polymers
    
137,199
   
76%
    
109,793
   
71%
    
27,406
   
25%
  
Bayshore Industrial
    
43,781
   
24%
    
44,863
   
29%
    
(1,082
)
  
(2%
)
Consolidated
  
$
180,980
    
100%
  
$
154,656
    
100%
  
$
26,324
    
17%
  
 
 
Operating income (loss)
               
Three Months Ended March 31:
  
2007
  
2006
  
 Change
  
ICO Europe
  
$
2,508
  
$
1,973
  
$
535
  
ICO Courtenay - Australasia
    
1,128
   
305
   
823
 
ICO Polymers North America
    
1,752
   
1,161
   
591
 
ICO Brazil
    
127
   
(199
)
  
326
 
Total ICO Polymers
    
5,515
   
3,240
   
2,275
 
Bayshore Industrial
    
3,023
   
3,411
   
(388
)
Total Operations
    
8,538
   
6,651
   
1,887
 
General Corporate Expense
    
(1,520
)
  
(1,631
)
  
111
 
Unallocated stock option compensation
    
(145
)
  
(169
)
  
24
 
Consolidated
  
$
6,873
  
$
4,851
  
$
2,022
  
 

Six Months Ended March 31:
  
2007
  
2006
  
 Change
  
ICO Europe
  
$
3,183
  
$
3,272
  
$
(89
)
ICO Courtenay - Australasia
    
1,846
   
1,360
   
486
 
ICO Polymers North America
    
2,760
   
1,855
   
905
 
ICO Brazil
    
204
   
(336
)
  
540
 
Total ICO Polymers
    
7,993
   
6,151
   
1,842
 
Bayshore Industrial
    
6,313
   
7,159
   
(846
)
Total Operations
    
14,306
   
13,310
   
996
 
General Corporate Expense
    
(2,859
)
  
(2,994
)
  
135
 
Unallocated stock option compensation
    
(277
)
  
(452
)
  
175
 
Consolidated
  
$
11,170
  
$
9,864
  
$
1,306
  
 
 
Operating income (loss) as a
percentage of revenues
  
Three Months Ended
March 31,
  
Six Months Ended
March 31,
  
     
2007
    
2006
  
 
Increase
    
2007
    
 2006
  
Increase/
(Decrease)
  
ICO Europe
    
6%
 
  
6%
 
  
0%
 
  
4%
 
  
5%
 
  
(1%
)
ICO Courtenay - Australasia
    
6%
 
  
3%
 
  
3%
 
  
5%
 
  
6%
 
  
(1%
)
ICO Polymers North America
    
16%
 
  
11%
 
  
5%
 
  
14%
 
  
9%
 
  
5%
 
ICO Brazil
    
4%
 
  
(7%
)
  
11%
 
  
3%
 
  
(7%
)
  
10%
 
Total ICO Polymers
    
7%
 
  
6%
 
  
1%
 
  
6%
 
  
6%
 
  
0%
 
Bayshore Industrial
    
15%
 
  
15%
 
  
0%
 
  
14%
 
  
16%
 
  
(2%
)
Consolidated
    
7%
 
  
6%
 
  
1%
 
  
6%
 
  
6%
 
  
0%
 
 
 
 
ICO, Inc.
Supplemental Segment Information (cont'd.)
(Unaudited and in thousands, except percentages)
 

Revenues
                            
   
Three Months Ended
  
   
March 31,
  
 December 31,
           
   
2007
  
% of Total
  
 2006
  
% of Total
  
 Change
  
%
  
ICO Europe
  
$
42,114
    
44%
  
$
34,267
    
40%
  
$
7,847
    
23%
  
ICO Courtenay - Australasia
    
18,483
   
20%
    
15,613
   
18%
    
2,870
   
18%
  
ICO Polymers North America
    
10,797
   
11%
    
9,606
   
11%
    
1,191
   
12%
  
ICO Brazil
    
3,424
   
4%
    
2,895
   
3%
    
529
   
18%
  
Total ICO Polymers
    
74,818
   
79%
    
62,381
   
72%
    
12,437
   
20%
  
Bayshore Industrial
    
19,901
   
21%
    
23,880
   
28%
    
(3,979
)
  
(17%
)
Consolidated
  
$
94,719
    
100%
  
$
86,261
    
100%
  
$
8,458
    
10%
  
 

Operating income (loss)
               
   
Three Months Ended
  
   
March 31,
  
December 31,
      
   
2007
  
2006
  
 Change
  
ICO Europe
  
$
2,508
  
$
675
  
$
1,833
  
ICO Courtenay - Australasia
    
1,128
   
718
   
410
 
ICO Polymers North America
    
1,752
   
1,008
   
744
 
ICO Brazil
    
127
   
77
   
50
 
Total ICO Polymers
    
5,515
   
2,478
   
3,037
 
Bayshore Industrial
    
3,023
   
3,290
   
(267
)
Total Operations
    
8,538
   
5,768
   
2,770
 
General Corporate Expense
    
(1,520
)
  
(1,339
)
  
(181
)
Unallocated stock option compensation
    
(145
)
  
(132
)
  
(13
)
Consolidated
  
$
6,873
  
$
4,297
  
$
2,576
  
 

Operating income (loss) as a
percentage of revenues
  
 
Three Months Ended
   
March 31,
  
December 31,
   
   
2007
  
2006
    
Increase
ICO Europe
  
6%
  
2%
    
4%
ICO Courtenay - Australasia
  
6%
  
5%
    
1%
ICO Polymers North America
  
16%
  
10%
    
6%
ICO Brazil
  
4%
  
3%
    
1%
Total ICO Polymers
  
7%
  
4%
    
3%
Bayshore Industrial
  
15%
  
14%
    
1%
Consolidated
  
7%
  
5%
    
2%