ICO, Inc. Announces Financial Results for Second Quarter Ended March 31, 2009

Share Name	Share Symbol	Market	Type
Ico (MM)	NASDAQ:ICOC	NASDAQ	Common Stock

Ico (NASDAQ:ICOC)
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HOUSTON, May 7 /PRNewswire-FirstCall/ -- ICO, Inc. (NASDAQ:ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the quarter ended March 31, 2009. (Logo: http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO) Second Quarter Highlights -- Cash flow from operating activities of continuing operations in the second quarter of $13.8 million, up from $1.8 million in the prior year second quarter -- Fourth consecutive quarter of generating positive cash flow from operating activities less cash used for investing activities -- Net debt (total debt outstanding less cash) decreased $26.2 million or 59% from September 30, 2008 and $13.8 million or 43%, from December 31, 2008, to $18.1 million -- Revenues of $70.1 million, a decrease of $42.0 million or 37% from the prior year -- Volumes declined 23% compared to the prior year due to global economic downturn -- Operating income, as adjusted of $1.1 million excluding goodwill impairment of $3.5 million and an operating loss of $2.3 million including the goodwill impairment, compared with operating income of $8.6 million in the prior year second quarter -- Net income of $432,000, as adjusted to exclude goodwill impairment, or $.02 per share Second Quarter 2009 vs. Second Quarter 2008 Revenues for the three months ended March 31, 2009 were $70.1 million, a decrease of $42.0 million or 37% compared to the same quarter of the previous year. Several factors contributed to the decline in revenues. Volumes, which fell 23%, reduced revenues by $18.0 million. The volume decline was a result of reduced customer demand as a result of the global economic slowdown. Lower resin prices, which fell dramatically in the first quarter of fiscal year 2009, reduced revenues by $13.8 million. Finally, the translation effect of a stronger U.S. Dollar reduced revenues by $10.2 million. Net loss was $3.0 million or $.11 per share in the three months ended March 31, 2009 compared with net income of $5.0 million or $.18 per share in the second quarter of fiscal year 2008. Included in the results for the second quarter of fiscal year 2009 is a non-cash goodwill impairment charge of $3.5 million. Adjusting out the goodwill impairment charge, net income, as adjusted, was $0.4 million, or $.02 per share. The decline in net income, as adjusted, of 91% was primarily caused by the decline in volumes, as well as the results for the second quarter of fiscal year 2008 including a net benefit from insurance proceeds of $1.6 million. During the second quarter of fiscal 2009, the Company also recognized $0.5 million of bad debt expense and $0.2 million of severance costs. The non-cash goodwill impairment charge relates to the Company's goodwill in its Australia and New Zealand subsidiaries. The Company has experienced operating losses in these two subsidiaries in a challenging market. The Company is in the process of restructuring both locations to improve their operating performance. "Excluding the non-cash goodwill impairment charge, we were able to generate positive net income in very challenging times," stated A. John Knapp, Jr., President and CEO. "We are watching our costs carefully and have reduced our headcount by 12% from the level at September 30, 2008, and we have reduced the shifts in several of our plants to better match our customers' demands. Our balance sheet continued to strengthen as we reduced our net debt by $13.8 million during the quarter. We believe the changes we are making in our operations in Australia and New Zealand and our strong balance sheet will put us in a very good position when the economy recovers as well as to take advantage of opportunities as they come our way." Second Quarter 2009 vs. First Quarter 2009 Comparing the sequential quarterly results, revenues declined $9.2 million or 12%. The revenue decline was primarily a result of lower average selling prices due to lower resin prices which reduced revenues by $13.3 million, partially offset by an improvement in our product sales volumes which increased revenues $5.3 million. Our fiscal first quarter is typically impacted by seasonality factors due to the holiday period in December. Our gross margins improved from 12.7% to 16.9% as a result of resin prices stabilizing in the second quarter compared to the dramatic and historic fall in resin prices experienced in the first quarter. This fact, along with the improved product sales volumes, caused the increase in net income, as adjusted, of $1.5 million. Balance Sheet and Liquidity Total debt outstanding as of March 31, 2009 was $35.2 million, a decline of $7.6 million or 18% from December 31, 2008. Our cash balance at March 31, 2009 was $17.1 million, a sequential increase of $6.1 million, or 56%. Net debt (equal to outstanding debt less cash) improved $13.8 million or 43% from $31.9 million at December 31, 2008 to $18.1 million at March 31, 2009. These improvements were accomplished by positive cash flow from operating activities of continuing operations of $13.8 million during the quarter. Our available global borrowing capacity at March 31, 2009 was $47.3 million. Conference Call on the Web A live Internet broadcast of ICO, Inc.'s conference call regarding fiscal year 2009 second quarter results can be accessed at 10:00 a.m. Central Standard Time on Friday, May 8, 2009 at http://www.videonewswire.com/event.asp?id=58116 where the webcast replay will be accessible for ninety days. The webcast replay will also be accessible on the Company's website at http://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 24366896. A replay of the conference call will be available by dialing 630-652-3044, passcode 24366896. Use of Non-GAAP Financial Measures This earnings release includes the use of both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures are net income (loss), as adjusted, net income (loss) per common share, as adjusted, operating income (loss), as adjusted, and net debt. The Company uses these financial measures to monitor and evaluate the ongoing performance of the Company, and believes that the additional non-GAAP measures are useful to investors for financial analysis. There are limitations associated with the use of these measures. These non-GAAP financial measures are not prepared in accordance with GAAP, may not be reported by all of the Company's competitors and may not be directly comparable to similarly titled measures of the Company's competitors due to potential differences in the exact method of calculation. The Company compensates for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by providing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures. About ICO, Inc. With 20 locations in 9 countries, ICO 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 http://www.icopolymers.com/. Contact: CFO - Bradley T. Leuschner at 713-351-4100. Certain matters discussed in this press release are "forward-looking statements," involving certain risks, uncertainties, and assumptions, intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. The Company's statements regarding trends in the marketplace and potential future results are examples of such forward-looking statements. The forward-looking statements include, but are not limited to: restrictions imposed by the Company's outstanding indebtedness; changes in the cost and availability of resins (polymers) and other raw materials; general economic conditions; demand for the Company's services and products; business cycles and other industry conditions; international risks; operational risks; currency translation risks; the Company's lack of asset diversification; the Company's ability to manage inventories, develop technology and proprietary know-how, and attract and retain key personnel; as well as other factors detailed in the Company's form 10-K for the fiscal year ended September 30, 2008 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. Any forward-looking statements are made only as of the date of this press release, and the Company undertakes no obligation to publicly update any such forward-looking statements to reflect subsequent events or circumstances. ICO, Inc. Consolidated Statement of Operations (Unaudited and in thousands, except per share data and percentages) Three Months Ended Six Months Ended December March 31, 31, March 31, --------- -------- --------- 2009 2008 2008 2009 2008 ---- ---- ---- ---- ---- Product Sales $63,417 $102,120 $71,857 $135,274 $203,308 Toll Services 6,713 10,006 7,501 14,214 19,683 ----- ------ ----- ------ ------ Total Revenues 70,130 112,126 79,358 149,488 222,991 Cost of sales and services (exclusive of depreciation shown separately below) 58,247 92,838 69,248 127,495 184,611 ------ ------ ------ ------- ------- Gross Profit (1) 11,883 19,288 10,110 21,993 38,380 Selling, general and administrative expense 9,010 10,387 9,138 18,148 20,990 Depreciation and amortization 1,719 1,853 1,713 3,432 3,648 Goodwill impairment 3,450 - - 3,450 - Impairment, restructuring and other costs (income) 20 (1,598) (293) (273) (1,400) --- ------ ---- ---- ------ Operating income (loss) (2,316) 8,646 (448) (2,764) 15,142 Other income (expense): Interest expense, net (535) (1,096) (639) (1,174) (2,119) Other income (expense) (48) (68) (331) (379) (201) --- --- ---- ---- ---- Income (loss) from continuing operations before income taxes (2,899) 7,482 (1,418) (4,317) 12,822 Provision (benefit) for income taxes 119 2,489 (342) (223) 4,303 --- ----- ---- ---- ----- Income (loss) from continuing operations (3,018) 4,993 (1,076) (4,094) 8,519 Income (loss) from discontinued operations, net of income taxes - - - - (16) --- --- --- --- --- Net income (loss) $(3,018) $4,993 $(1,076) $(4,094) $8,503 Preferred Stock dividends - - - - (1) --- --- --- --- --- Net income (loss) applicable to Common Stock $(3,018) $4,993 $(1,076) $(4,094) $8,502 ======= ====== ======= ======= ====== Basic income (loss) from continuing operations per common share $(0.11) $0.18 $(0.04) $(0.15) $0.31 ====== ===== ====== ====== ===== Basic net income (loss) per common share $(0.11) $0.18 $(0.04) $(0.15) $0.31 ====== ===== ====== ====== ===== Diluted income (loss) from continuing operations per common share $(0.11) $0.18 $(0.04) $(0.15) $0.30 ====== ===== ====== ====== ===== Diluted net income (loss) per common share $(0.11) $0.18 $(0.04) $(0.15) $0.30 ====== ===== ====== ====== ===== Basic weighted average shares outstanding 27,072,000 27,263,000 27,099,000 27,086,000 27,088,000 ========== ========== ========== ========== ========== Diluted weighted average shares outstanding 27,072,000 27,949,000 27,099,000 27,086,000 27,978,000 ========== ========== ========== ========== ========== Gross Margin (2) 16.9% 17.2% 12.7% 14.7% 17.2% (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, 2009 2008 ---- ---- ASSETS ------ Current assets: Cash and cash equivalents $17,096 $5,589 Trade receivables 50,171 75,756 Inventories 32,817 53,458 Deferred income taxes 1,894 2,056 Prepaid and other current assets 4,903 10,514 ----- ------ Total current assets 106,881 147,373 ------- ------- Property, plant and equipment, net 56,455 61,164 Goodwill 4,549 8,689 Deferred income taxes 3,356 2,709 Other assets 1,279 1,161 ----- ----- Total assets $172,520 $221,096 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Short-term borrowings under credit facilities $1,147 $9,607 Current portion of long-term debt 12,884 15,201 Accounts payable 23,863 37,674 Accrued salaries and wages 3,708 5,978 Other current liabilities 8,521 11,912 ----- ------ Total current liabilities 50,123 80,372 ------ ------ Long-term debt, net of current portion 21,181 25,122 Deferred income taxes 4,463 5,039 Other long-term liabilities 2,223 2,728 ----- ----- Total liabilities 77,990 113,261 ------ ------- Commitments and contingencies - - Stockholders' equity: Undesignated preferred stock - - Common stock 55,247 54,756 Treasury stock (3,017) (543) Additional paid-in capital 72,697 72,241 Accumulated other comprehensive income (loss) (4,662) 3,022 Accumulated deficit (25,735) (21,641) ------- ------- Total stockholders' equity 94,530 107,835 ------ ------- Total liabilities and stockholders' equity $172,520 $221,096 ======== ======== OTHER BALANCE SHEET DATA ------------------------ Working capital $56,758 $67,001 Current ratio 2.1 1.8 Total debt $35,212 $49,930 Debt-to-capitalization 27.1% 31.6% ICO, Inc. Supplemental Segment Information (Unaudited and in thousands, except percentages) Revenues Three Months Ended March % of % of 31: 2009 Total 2008 Total Change % ---- ------ ---- ----- ------ --- ICO Europe $32,624 46% $54,181 48% $(21,557) (40%) Bayshore Industrial 15,843 23% 20,742 18% $(4,899) (24%) ICO Asia Pacific 11,182 16% 19,627 18% (8,445) (43%) ICO Polymers North America 7,757 11% 12,559 11% (4,802) (38%) ICO Brazil 2,724 4% 5,017 5% (2,293) (46%) ----- --- ----- --- ------ Consolidated $70,130 100% $112,126 100% $(41,996) (37%) ======= === ======== === ======== Six Months Ended % of % of March 31: 2009 Total 2008 Total Change % ---- ----- ---- ----- ------ --- ICO Europe $67,386 45% $100,494 45% $(33,108) (33%) Bayshore Industrial 34,173 23% 52,519 24% (18,346) (35%) ICO Asia Pacific 25,663 17% 37,572 17% (11,909) (32%) ICO Polymers North America 16,646 11% 22,890 10% (6,244) (27%) ICO Brazil 5,620 4% 9,516 4% (3,896) (41%) ----- --- ----- --- ------ Consolidated $149,488 100% $222,991 100% $(73,503) (33%) ======== === ======== === ======== Operating income (loss) Three Months Ended March 31: 2009 2008 Change ---- ---- ------ ICO Europe $1,915 $3,520 $(1,605) Bayshore Industrial 1,600 2,782 (1,182) ICO Asia Pacific (5,004) 761 (5,765) ICO Polymers North America 661 2,937 (2,276) ICO Brazil 28 192 (164) --- --- ---- Total Operations (800) 10,192 (10,992) Unallocated General Corporate Expense (1,516) (1,546) 30 ------ ------ --- Consolidated $(2,316) $8,646 $(10,962) ======= ====== ======== Six Months Ended March 31: 2009 2008 Change ---- ---- ------ ICO Europe $1,766 $6,518 $(4,752) Bayshore Industrial 3,318 6,710 (3,392) ICO Asia Pacific (6,291) 1,623 (7,914) ICO Polymers North America 1,243 3,383 (2,140) ICO Brazil (30) 329 (359) --- --- ---- Total Operations 6 18,563 (18,557) Unallocated General Corporate Expense (2,770) (3,421) 651 ------ ------ --- Consolidated $(2,764) $15,142 $(17,906) ======= ======= ======== Operating income (loss) as a percentage of revenues Three Months Ended Six Months Ended March 31, March 31, --------- --------- 2009 2008 Change 2009 2008 Change ---- ---- ------ ---- ---- ------ ICO Europe 6% 6% 0% 3% 6% (3%) Bayshore Industrial 10% 13% (3%) 10% 13% (3%) ICO Asia Pacific (45%) 4% (49%) (25%) 4% (29%) ICO Polymers North America 9% 23% (14%) 7% 15% (8%) ICO Brazil 1% 4% (3%) (1%) 3% (4%) Consolidated (3%) 8% (11%) (2%) 7% (9%) ICO, Inc. Supplemental Segment Information (cont'd.) (Unaudited and in thousands, except percentages) Revenues Three Months Ended ------------------ March 31, December 31, --------- ------------ % of % of 2009 Total 2008 Total Change % ---- ----- ---- ----- ------ --- ICO Europe $32,624 46% $34,762 44% $(2,138) (6%) Bayshore Industrial 15,843 23% 18,330 23% (2,487) (14%) ICO Asia Pacific 11,182 16% 14,481 18% (3,299) (23%) ICO Polymers North America 7,757 11% 8,889 11% (1,132) (13%) ICO Brazil 2,724 4% 2,896 4% (172) (6%) ----- --- ----- --- ---- Consolidated $70,130 100% $79,358 100% $(9,228) (12%) ======= === ======= === ======= Operating income (loss) Three Months Ended ------------------ March 31, December 31, 2009 2008 Change ---- ---- ------ ICO Europe $1,915 $(149) $2,064 Bayshore Industrial 1,600 1,718 (118) ICO Asia Pacific (5,004) (1,287) (3,717) ICO Polymers North America 661 582 79 ICO Brazil 28 (58) 86 --- --- --- Total Operations (800) 806 (1,606) Unallocated General Corporate Expense (1,516) (1,254) (262) ------ ------ ---- Consolidated $(2,316) $(448) $(1,868) ======= ===== ======= Operating income (loss) as a Three Months Ended percentage of ------------------ revenues March 31, December 31, 2009 2008 Change ---- ---- ------ ICO Europe 6% 0% 6% Bayshore Industrial 10% 9% 1% ICO Asia Pacific (45%) (9%) (36%) ICO Polymers North America 9% 7% 2% ICO Brazil 1% (2%) 3% Consolidated (3%) (1%) (2%) ICO, Inc. Reconciliation of Non-GAAP Financial Measures (Unaudited and in thousands except per share data) Net Income (Loss) and Income (Loss) Per Share Reconciliation Three Months Ended: March 31, December 31, --------- 2009 2008 2008 ---- ---- ---- Net income (loss) applicable to common stock $(3,018) $4,993 $(1,076) Goodwill impairment 3,450 - - ----- --- --- Net income (loss), as adjusted $432 $4,993 $(1,076) ==== ====== ======= Basic and diluted income (loss) per common share $(0.11) $0.18 $(0.04) Goodwill impairment 0.13 - - ---- --- --- Basic and diluted income (loss) per common share, as adjusted $0.02 $0.18 $(0.04) ===== ===== ====== Six Months Ended: March 31, --------- 2009 2008 ---- ---- Net income (loss) applicable to common stock $(4,094) $8,502 Goodwill impairment 3,450 - ----- --- Net income (loss), as adjusted $(644) $8,502 ===== ====== Basic net income (loss) per common share $(0.15) $0.31 Goodwill impairment 0.13 - ---- --- Basic net income (loss) per common share, as adjusted $(0.02) $0.31 ====== ===== Diluted income (loss) per common share $(0.15) $0.30 Goodwill impairment 0.13 - ---- --- Diluted net income (loss) per common share, as adjusted $(0.02) $0.30 ====== ===== Operating Income (Loss) Reconciliation Three months ended: March 31, December 31, --------- 2009 2008 2008 ---- ---- ---- Operating income (loss) $(2,316) $8,646 $(448) Goodwill impairment 3,450 - - ----- --- --- Operating income (loss), as adjusted $1,134 $8,646 $(448) ====== ====== ===== Six Months Ended: March 31, --------- 2009 2008 ---- ---- Operating income (loss) $(2,764) $15,142 Goodwill impairment 3,450 - ----- --- Operating income (loss), as adjusted $686 $15,142 ==== ======= Net Debt Reconciliation March 31, September 30, 2009 2008 ---- ---- Total debt $35,212 $49,930 Less cash and cash equivalents 17,096 5,589 ------ ----- Net debt $18,116 $44,341 ======= ======= http://www.newscom.com/cgi-bin/prnh/20030509/ICOCLOGO http://photoarchive.ap.org/ DATASOURCE: ICO, Inc. CONTACT: Bradley T. Leuschner, CFO of ICO, Inc., +1-713-351-4100 Web Site: http://www.icopolymers.com/

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ICOC Ico (MM)