The company reported net income of $3.2m for the second quarter of fiscal 2011 ended December 31, compared with net income of $4.7m for the same period a year earlier. Last year’s results included several one-time items, including an income tax benefit of $4.6m and a loss of $3m related to the formation of the company’s distillery joint venture, Illinois Corn Processing.
Income from operations for Q2 increased to $4.3m compared with $504,000 for the prior year period, and sales grew from $48m for the quarter last year to $58m this year.
Company president and CEO Tim Newkirk said: “The key to our improved performance lies in our operating profits. We are pleased to report significant increases in sales and operating profits from a year ago. We also realize that we have further to go before we are executing at our highest level.
“On the distillery side, our growth continues to be driven by demand for high quality food grade alcohol.”
Distillery products pre-tax income of $7.3 million was up 74 percent from $4.2 million for the same quarter a year ago.
“Further improvements to our performance in this segment were affected by higher corn and energy costs,” Newkirk said.
He added that the company was also negatively affected by longer than anticipated slowdowns at its Atchison distillery during the quarter, related to a disruption of the water supply, and equipment repairs and upgrades, which have now been completed.
“Going forward we see stronger production rates. Our ICP [Illinois Corn Processing] joint venture is approaching peak capacity in food grade alcohol. Start-up issues at ICP are largely behind us, but our contribution from the joint venture was impacted from higher costs during the quarter as the facility has continued to step up its total capacity utilization levels. We are squarely focused on maintaining our gross margins in this segment, where the general trend is positive,” Newkirk said.
He added that the company’s ingredients business is still “a work in progress”.
“We are seeing increased demand for our unique specialty value-added ingredients and continue to concentrate much focus and resources on growing this area of our business. This includes methods to continually enhance our operational efficiencies, which experienced a decrease in the second quarter and contributed to higher production costs and affected segment profits,” he said.