EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 - Q4-07 EARNINGS RELEASE exhibit99-1.htm
EXHIBIT 99.1
                                          
 
 
ICO, Inc. Announces Record Financial Results for
Fourth Quarter Ended September 30, 2007

HOUSTON, TEXAS, December 6, 2007 – ICO, Inc. (NASDAQ: ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the year ended September 30, 2007 and the fourth quarter ended September 30, 2007.

Fourth Quarter Highlights

 
·
Record quarterly revenues of $123.6 million, an increase of $36.3 million or 42% from the prior year
 
·
Volume growth of 12% compared to the fourth quarter of fiscal 2006
 
·
Record quarterly operating income of $9.7 million, up 75% year-over-year
 
·
Income per share from continuing operations of $.22 fully diluted
 
·
Outlook remains positive


Fourth Quarter 2007 vs. Fourth Quarter 2006

Revenues increased $36.3 million or 42%, compared to the same quarter in the prior year, to $123.6 million.  An increase in volumes sold of 12% led to an increase in revenues of $18.0 million, or 50% of the revenue increase.  Volume improvements were driven by growth in Asia Pacific and Europe, where market demand has increased, as well as Bayshore Industrial, our North American compounding operation.  Increases in average selling prices primarily caused by changes in product sales mix caused revenues to increase $12.8 million.  In addition, stronger foreign currencies compared to the U.S. Dollar increased revenues by $5.5 million.

The growth in revenues led to an increase in gross profit of $5.3 million over the same quarter in fiscal 2006, or 33%, to $21.4 million for the three months ended September 30, 2007.  Gross margins declined from 18.4% to 17.3% due to a change in product and service sales mix.  Sales, general and administrative expenses (“SG&A”) increased $1.6 million due to higher employee compensation and benefit costs and the effect of stronger foreign currencies.  As a percentage of revenues, SG&A dropped to 8.3% from 9.9%, primarily due to the change in product and service sales mix.  Operating income for the quarter was $9.7 million, an increase of $4.2 million or 75%.  Operating income margins improved to 7.8%, compared to 6.3% last year.  Income from continuing operations increased $2.8 million (85%) to $6.0 million, or $.22 per fully diluted share, as a result of the improved operating income.

The quarter included $0.3 million of income included in impairment, restructuring and other costs on the face of the income statement.  This amount included $0.9 million for a gain relating to insurance proceeds to be received for the fire damage sustained by our operation in New Jersey.  This gain was partially offset by long-term asset impairments primarily related to certain equipment in Australia.



Fourth Quarter 2007 vs. Third Quarter 2007

Compared to the third quarter of fiscal 2007, revenues increased $10.2 million, or 9% largely due to a change in product mix.  Also contributing to the revenue growth was a 5% sequential increase in sales and service volumes.  The growth in volumes increased revenues by $2.0 million.  A change in product and service sales mix increased revenues by $7.4 million, and the effect of stronger foreign currencies increased revenues by $0.8 million.  The revenue increase led to an increase in gross profit of $0.8 million.

Similar to the year-over-year quarterly comparison, the sequential gross profit increase partially offset by higher SG&A expenses led to an increase in operating income of $0.7 million or 8%.  As a result of the higher operating income in the fourth quarter, income from continuing operations increased $0.4 million or 7% to $6.0 million.

“We just completed another record-setting quarter,” stated the Company’s President and CEO, Mr. A. John Knapp, Jr., “driven by broad based profitability improvements as fourth quarter operating income for all of our business segments improved year-over-year.  While we will see usual seasonal weakness in our next fiscal quarter, we expect that we will continue to see very satisfactory year-over-year revenue and diluted earnings per share growth in the quarter ended December 31, 2007.”

Balance Sheet and Liquidity

Our balance sheet remains in very good condition to support the continued growth of the Company.  Available credit under committed credit facilities increased $15.1 million during the fourth quarter to $70.6 million.  The strong earnings and a weaker U.S. Dollar increased stockholders’ equity by $6.7 million during the quarter to $91.0 million as of September 30, 2007.  Capital expenditures were $4.0 million during the fourth quarter and $11.6 million for fiscal year 2007.

Conference Call on the Web

A live Internet broadcast of ICO, Inc.’s conference call regarding fiscal 2007 fourth quarter results can be accessed at 10:00 a.m. Central Standard Time on Friday, December 7, 2007 at http://www.videonewswire.com/event.asp?id=44058, where the webcast replay will be accessible for thirty days.  The webcast replay will also be accessible on the Company’s website at www.icopolymers.com for a period of twelve months.  (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 847-413-3238, passcode 19572900.  A replay of the conference call will be available by dialing 630-652-3044, passcode 19572900.

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 
    
Twelve Months Ended
  
   
September 30,
    
June 30,
    
September 30,
  
   
2007
    
2006
    
2007
    
2007
    
2006
  
 Product Sales
   $
113,901
     $
77,829
     $
102,963
     $
379,344
     $
289,163
  
 Toll Services
    
9,658
      
9,402
      
10,415
      
38,573
      
35,168
  
 Total Revenues
    
123,559
      
87,231
      
113,378
      
417,917
      
324,331
  
Cost of sales and services (exclusive of depreciation shown
                                  
     separately below)
    
102,195
      
71,193
      
92,836
      
344,171
      
261,228
  
 Gross Profit (1)
    
21,364
      
16,038
      
20,542
      
73,746
      
63,103
  
      Selling, general and administrative expense
    
10,236
      
8,621
      
9,727
      
37,676
      
34,284
  
      Depreciation and amortization
    
1,785
      
1,885
      
1,855
      
7,251
      
7,386
  
      Impairment, restructuring and other costs (income)
     (343 )    
-
      
-
       (997 )    
118
  
 Operating income
    
9,686
      
5,532
      
8,960
      
29,816
      
21,315
  
 Other income (expense):
                                        
      Interest expense, net
     (926 )     (490 )     (799 )     (3,227 )     (2,091 )
      Other income (expense)
    
181
       (238 )     (129 )     (115 )    
75
  
 Income from continuing operations before income taxes
    
8,941
      
4,804
      
8,032
      
26,474
      
19,299
  
 Provision for income taxes
    
2,893
      
1,529
      
2,400
      
6,712
      
5,836
  
 Income from continuing operations
    
6,048
      
3,275
      
5,632
      
19,762
      
13,463
  
 Income (loss) from discontinued operations, net of income taxes
     (65 )     (1,407 )     (18 )    
1,356
       (1,459 )
 Net income
   $
5,983
     $
1,868
     $
5,614
     $
21,118
     $
12,004
  
 Preferred Stock dividends
     (82 )     (544 )     (82 )     (554 )     (2,176 )
 Net gain on redemption of Preferred Stock
    
-
      
-
      
-
      
6,023
      
-
  
 Net income applicable to Common Stock
   $
5,901
     $
1,324
     $
5,532
     $
26,587
     $
9,828
  
                                         
                                         
 Basic income from continuing operations per common share
   $
0.23
     $
0.11
     $
0.21
     $
0.97
     $
0.44
  
 Basic net income per common share
   $
0.22
     $
0.05
     $
0.21
     $
1.02
     $
0.38
  
                                         
 Diluted income from continuing operations per common share
   $
0.22
     $
0.10
     $
0.20
     $
0.71
     $
0.43
  
 Diluted net income per common share
   $
0.21
     $
0.05
     $
0.20
     $
0.76
     $
0.37
  
                                         
                                         
Gross Margin (2)
     17.3 %     18.4 %     18.1 %     17.6 %     19.5 %
                                         
                                         
                                         
(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)   
  
             
   
September 30,
    
September 30,
  
   
2007
    
2006
  
 ASSETS
            
 Current assets:
            
   Cash and cash equivalents
   $
8,561
     $
17,427
  
   Trade receivables
    
95,142
      
67,742
  
   Inventories
    
60,420
      
41,961
  
   Deferred income taxes
    
1,778
      
2,195
  
   Prepaid and other current assets
    
9,924
      
6,775
  
 Total current assets
    
175,825
      
136,100
  
                 
 Property, plant and equipment, net
    
57,396
      
50,884
  
 Goodwill
    
9,228
      
8,585
  
 Other assets
    
3,768
      
2,392
  
 Total assets
   $
246,217
     $
197,961
  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY
                
 Current liabilities:
                
 Short-term borrowings under credit facilities
   $
16,133
     $
17,214
  
 Current portion of long-term debt
    
11,611
      
4,696
  
 Accounts payable
    
66,906
      
35,809
  
 Accrued salaries and wages
    
7,313
      
5,360
  
 Income taxes payable
    
2,368
      
4,188
  
 Other current liabilities
    
13,636
      
11,332
  
     Total current liabilities
    
117,967
      
78,599
  
                 
 Long-term debt, net of current portion
    
29,605
      
21,559
  
 Deferred income taxes
    
4,820
      
4,210
  
 Other long-term liabilities
    
2,783
      
1,876
  
     Total liabilities
    
155,175
      
106,244
  
                 
 Commitments and contingencies
    
-
      
-
  
 Stockholders' equity:
                
      Convertible exchangeable preferred stock, without par value-
                
           345,000 shares authorized; 46,381 and 322,500 shares issued and
                
           outstanding, respectively, with a liquidation preference of $5,812 and
                
            $40,410, respectively
    
2
      
13
  
      Undesignated preferred stock, without par value-
                
           155,000 shares authorized; No shares issued and outstanding
    
-
      
-
  
      Common stock, without par value- 50,000,000 shares
                
           authorized; 26,709,370 and 25,792,168 shares issued
                
           and outstanding, respectively
    
47,659
      
45,087
  
      Additional paid-in capital
    
74,920
      
104,844
  
      Accumulated other comprehensive income (loss)
    
5,416
       (154 )
      Accumulated deficit
     (36,955 )     (58,073 )
          Total stockholders' equity
    
91,042
      
91,717
  
          Total liabilities and stockholders' equity
   $
246,217
     $
197,961
  
                 
 OTHER BALANCE SHEET DATA
                
 Working capital
   $
57,858
     $
57,501
  
 Current ratio
    
1.5
      
1.7
  
 Total debt
   $
57,349
     $
43,469
  
 Debt-to-capitalization
     38.6 %     32.2 %


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

Revenues
                                    
Three Months Ended September 30:
  
2007
    
% of Total
    
2006
    
% of Total
    
Change
    
%
  
ICO Europe
   $
45,957
       37%     $
34,210
       39%     $
11,747
       34%  
ICO Asia Pacific
    
25,166
       20%      
13,291
       15%      
11,875
       89%  
ICO Polymers North America
    
9,891
       8%      
11,755
       14%       (1,864 )     (16% )
ICO Brazil
    
3,650
       3%      
2,407
       3%      
1,243
       52%  
Total ICO Polymers
    
84,664
       68%      
61,663
       71%      
23,001
       37%  
Bayshore Industrial
    
38,895
       32%      
25,568
       29%      
13,327
       52%  
Consolidated
   $
123,559
       100%     $
87,231
       100%     $
36,328
       42%  
 

Fiscal Year Ended September 30:
  
2007
    
% of Total
    
2006
    
% of Total
    
Change
    
%
  
ICO Europe
   $
170,135
       41%     $
129,372
       40%     $
40,763
       32%  
ICO Asia Pacific
    
84,790
       20%      
47,819
       15%      
36,971
       77%  
ICO Polymers North America
    
41,377
       10%      
44,834
       14%       (3,457 )     (8% )
ICO Brazil
    
13,255
       3%      
9,301
       3%      
3,954
       43%  
Total ICO Polymers
    
309,557
       74%      
231,326
       72%      
78,231
       34%  
Bayshore Industrial
    
108,360
       26%      
93,005
       28%      
15,355
       17%  
Consolidated
   $
417,917
       100%     $
324,331
       100%     $
93,586
       29%  
 
 
Operating income (loss)
                        
Three Months Ended September 30:
  
2007
    
2006
    
Change
    
%
  
ICO Europe
   $
2,449
     $
1,090
     $
1,359
       125%  
ICO Asia Pacific
    
1,753
      
712
      
1,041
       146%  
ICO Polymers North America
    
1,709
      
1,320
      
389
       29%  
ICO Brazil
    
34
       (9 )    
43
    
NM
  
Total ICO Polymers
    
5,945
      
3,113
      
2,832
       91%  
Bayshore Industrial
    
5,716
      
3,964
      
1,752
       44%  
Total Operations
    
11,661
      
7,077
      
4,584
       65%  
General Corporate Expense
     (1,747 )     (1,327 )     (420 )     32%  
Unallocated stock option compensation
     (228 )     (218 )     (10 )     5%  
Consolidated
   $
9,686
     $
5,532
     $
4,154
       75%  
 
 
Fiscal Year Ended September 30:
  
2007
    
2006
    
Change
    
%
  
ICO Europe
   $
9,008
     $
6,021
     $
2,987
       50%  
ICO Asia Pacific
    
5,914
      
2,412
      
3,502
       145%  
ICO Polymers North America
    
6,022
      
5,037
      
985
       20%  
ICO Brazil
    
301
       (459 )    
760
    
NM
  
Total ICO Polymers
    
21,245
      
13,011
      
8,234
       63%  
Bayshore Industrial
    
15,358
      
14,843
      
515
       3%  
Total Operations
    
36,603
      
27,854
      
8,749
       31%  
General Corporate Expense
     (6,117 )     (5,682 )     (435 )     8%  
Unallocated stock option compensation
     (670 )     (857 )    
187
       (22% )
Consolidated
   $
29,816
     $
21,315
     $
8,501
       40%  

Operating income (loss) as a percentage of revenues
Three Months Ended 
September 30,     
  
Fiscal Year Ended   
September 30,    
  
   
2007
  
2006
    
Change
  
2007
    
2006
  
Change
  
ICO Europe
  
5%
  
3%
    
2%
  
5%
    
5%
  
0%
  
ICO Asia Pacific
  
7%
  
5%
    
2%
  
7%
    
5%
  
2%
  
ICO Polymers North America
  
17%
  
11%
    
6%
  
15%
    
11%
  
4%
  
ICO Brazil
  
1%
  
0%
    
1%
  
2%
    
(5%
 ) 
7%
  
Total ICO Polymers
  
7%
  
5%
    
2%
  
7%
    
6%
  
1%
  
Bayshore Industrial
  
15%
  
16%
    
(1%
 ) 
14%
    
16%
  
(2%
 ) 
Consolidated
  
8%
  
6%
    
2%
  
7%
    
7%
  
0%
  
                               
NM = Not meaningful
                              

 
 

ICO, Inc.
Supplemental Segment Information (cont'd.)
 (Unaudited and in thousands, except percentages)
 
Revenues
                                    
   
Three Months Ended         
  
   
September 30, 
    
June 30, 
              
   
2007
    
% of Total
    
2007
    
% of Total
    
Change
    
%
  
ICO Europe
   $
45,957
       37%     $
47,797
       42%     $ (1,840 )     (4% )
ICO Asia Pacific
    
25,166
       20%      
25,528
       22%       (362 )     (1% )
ICO Polymers North America
    
9,891
       8%      
11,083
       10%       (1,192 )     (11% )
ICO Brazil
    
3,650
       3%      
3,286
       3%      
364
       11%  
Total ICO Polymers
    
84,664
       68%      
87,694
       77%       (3,030 )     (3% )
Bayshore Industrial
    
38,895
       32%      
25,684
       23%      
13,211
       51%  
Consolidated
   $
123,559
       100%     $
113,378
       100%     $
10,181
       9%  

Operating income (loss)
                        
   
Three Months Ended       
   
September 30,
    
June 30,
              
   
2007
    
2007
    
Change
    
%
  
ICO Europe
   $
2,449
     $
3,376
     $ (927 )     (27% )
ICO Asia Pacific
    
1,753
      
2,315
       (562 )     (24% )
ICO Polymers North America
    
1,709
      
1,553
      
156
       10%  
ICO Brazil
    
34
      
63
       (29 )     (46% )
Total ICO Polymers
    
5,945
      
7,307
       (1,362 )     (19% )
Bayshore Industrial
    
5,716
      
3,329
      
2,387
       72%  
Total Operations
    
11,661
      
10,636
      
1,025
       10%  
General Corporate Expense
     (1,747 )     (1,511 )     (236 )     16%  
Unallocated stock option compensation
     (228 )     (165 )     (63 )     38%  
Consolidated
   $
9,686
     $
8,960
     $
726
       8%  
 
 
Operating income (loss) as a percentage of revenues
Three Months Ended   
  
   
September 30,
  
June 30,
        
   
2007
  
2007
    
Change
  
ICO Europe
  
5%
  
7%
    
(2%
 ) 
ICO Asia Pacific
  
7%
  
9%
    
(2%
 ) 
ICO Polymers North America
  
17%
  
14%
    
3%
 
ICO Brazil
  
1%
  
2%
    
(1%
 ) 
Total ICO Polymers
  
7%
  
8%
    
(1%
 ) 
Bayshore Industrial
  
15%
  
13%
    
2%
  
Consolidated
  
8%
  
8%
    
0%