MORRISVILLE, N.C., Aug. 5 NC-AllianceOne-erns
MORRISVILLE, N.C., Aug. 5 /PRNewswire-FirstCall/ -- Alliance One
International, Inc. (NYSE: AOI) today announced results for its first fiscal
quarter ended June 30, 2008.
First Quarter Results
For the quarter ended June 30, 2008, the Company reported net income of
$15.3 million, or $0.17 per basic share, compared to net income of $6.0
million, or $0.07 per basic share, for the prior year quarter.
Robert E. Harrison, Chief Executive Officer, said "While sales were
essentially flat, gross profit, operating income and net income were improved
versus the prior year quarter, reflecting our focus and execution on programs
that drive consistent operating performance. Looking forward, as long as
global stocks remain in tighter supply and if crop competition dynamics
escalate, it is anticipated that sales prices will continue to increase in
order to offset higher green tobacco costs.
"Despite the challenges of worldwide supply constraints, our
well-developed global footprint and quality initiatives are competitive
strengths that squarely position us to meet our customers' requirements,
particularly in the face of further industry consolidation. Our strategy to
apply innovative solutions to tackle challenging conditions in the key
producing countries, identify further cost saving opportunities, and introduce
more programs for customers centered on agronomy innovation is beginning to
generate traction.
"We are working to offset the further pressure on green tobacco costs
partly as a result of continued enhanced pricing for competing food and energy
crops, coupled with appreciating currencies in which we have costs and the
softening US dollar in which we principally sell. By focusing on improving
our operating efficiencies, and through working in even closer concert with
our global farmer base to ensure their sustainability, we hope to reduce some
of the pressure on green tobacco costs. Additionally, we continue to take the
necessary steps to ensure that we have sufficient liquidity to meet our
working capital requirements as production costs and raw material prices
increase.
Mr. Harrison concluded, "Customer-centric product innovation, expense
reduction, and capital management via continued long-term debt reduction are
all focal points. We believe executing this plan well is the basis for
enhancing shareholder value over time."
Performance Summary for the First Fiscal Quarter Ended June 30, 2008
The following is a brief overview of our financial results for the quarter
ended June 30, 2008. Additional information on our results may be found in
our Quarterly Report on Form 10-Q filed on August 5, 2008.
Sales and other operating revenues. Global demand for processed tobacco
is strong and average sales price per kilo increased 24.6% for the quarter
compared to the same period in 2007. Price increases though, were offset by a
21.0% decrease in kilos sold, as a result of declining global stocks and
timing of shipments. As a consequence, sales for the quarter decreased
slightly from $461.7 million in 2007 to $459.2 million in 2008, while
profitability improved.
South America Region. South America operating segment tobacco sales
decreased $5.4 million as a result of a 16.1 million decrease in kilos sold
that was substantially offset by a $0.99 increase in average sales prices per
kilo. The decrease in volumes for the quarter versus the prior year should be
partially recovered in the second quarter through the timing of shipments.
Improved customer pricing significantly offset the impact of the reduced
volumes.
Other Regions. Tobacco sales from the Other Regions operating segment
decreased $1.6 million primarily as a result of a 12.3 million decrease in
kilos sold that was essentially offset by a $0.68 increase in average sales
prices per kilo. Volumes sold decreased across all regions, with the main
driver being Africa, as a result of lower carryover volumes to be shipped in
this fiscal quarter versus a year ago. Average sales prices increased across
all regions with the most significant price movement attributable to European
Euro based sales which were positively impacted by continued strengthening of
the Euro. Processing and other revenues increased from $5.1 million in 2007
to $9.6 million in 2008 primarily as a result of increased processing volumes
and improved prices in the United States and in Asia.
Gross profit as a percentage of sales. Gross profit increased 6.8% from
$71.8 million in 2007 to $76.7 million in 2008 and gross profit as a
percentage of sales increased from 15.6% in 2007 to 16.7% in 2008.
South America Region. Gross profit in the South America operating segment
increased $2.3 million primarily as a result of increased average sales
prices, which were more than offset by a reduction in volumes for the quarter
and increased gains on derivative financial instruments. The increased
average sales prices are partially offset by higher green costs as a result of
the shortfall of tobacco available to satisfy demand. In addition, the
strengthening Brazilian Real also continues to increase both green and tobacco
processing costs. Gross profit from sales of the 2007 crop still remain
negatively impacted by the higher estimated grower bad debt provisions
resulting from the decline in market conditions of the 2006 and 2007 crops.
Other Regions. The increase in gross profit of $2.6 million is primarily
attributable to the Asia region as a result of advanced shipments from
Thailand and increased processing volumes in Indonesia. The remaining volumes
of the 2007 Malawi burley crop were substantially shipped this quarter which
included the significantly higher green and processing costs of the crop that
resulted from the reduced crop size and increased competition within the
Malawi market.
Selling, administrative and general expenses decreased 3.3% from $39.5
million in 2007 to $38.2 million in 2008. The decrease is primarily driven by
decreased taxes and licenses, travel costs and depreciation expense.
Other income of $2.3 million in 2008 relates primarily to gains on assets
held for sale while the $1.9 million in 2007 relates primarily to gains on
sales of fixed assets.
Debt retirement expense of $1.9 million in 2007 relates to accelerated
amortization of debt issuance costs as a result of debt prepayment during the
quarter.
Interest expense decreased $0.5 million from $24.9 million in 2007 to
$24.4 million in 2008 primarily due to lower average rates during the quarter.
Interest income decreased from $2.2 million in 2007 to $0.9 million in
2008 primarily due to lower average cash balances.
Effective tax rates for the first fiscal quarter were 10.7% in 2008 and
35.9% in 2007.
Income from discontinued operations. Discontinued operations resulted in
income of $0.5 million in 2008 compared to no income in 2007. The income in
2008 is primarily a result of the finalization of our exit from the
discontinued wool operations.
Liquidity and Capital Resources
As of June 30, 2008, available credit lines and cash increased 13.4% over
the fiscal year ended March 31, 2008 to $790.0 million comprised of
$179.5 million in cash, $580.8 million of credit lines and $29.7 million for
letters of credit.
Additionally, from time to time in the future, we may elect to redeem,
repay, make open market purchases, retire or cancel indebtedness prior to
stated maturity under our various global bank facilities or outstanding public
notes, as they may permit.
2009 Fiscal Year, First Quarter Financial Results Investor Call
The Company will hold a conference call to report financial results for
its first fiscal quarter ended June 30, 2008, on August 5, 2008 at 12:00 P.M.
ET. Those seeking to listen to the call may access a live broadcast on the
Alliance One website. Please visit www.aointl.com fifteen minutes in advance
to register.
For those who are unable to listen to the live event, a replay will be
available by telephone from 3:00 P.M. ET Tuesday, August 5 through 3:00 P.M.
ET Sunday, August 10. To access the replay, dial (888) 203-1112 within the
U.S., or (719) 457-0820 outside the U.S., and enter access code 9859141. Any
replay, rebroadcast, transcript or other reproduction of this conference call,
other than the replay accessible by calling the number above, has not been
authorized by Alliance One and is strictly prohibited. Investors should be
aware that any unauthorized reproduction of this conference call may not be an
accurate reflection of its contents.
Condensed Statement of Consolidated Income
Three Months Ended
June 30
(Unaudited - 000's Except Per Share Data) 2008 2007
Sales and other operating revenues $459,165 $461,708
Cost of goods and services sold 382,503389,886
Gross Profit 76,662 71,822
Selling, administrative and general expenses 38,234 39,489
Other income 2,273 1,936
Restructuring, asset impairment charges 495424
Operating income 40,206 33,845
Debt retirement expense- 1,930
Interest expense 24,429 24,893
Interest income 937 2,172
Income tax expense 1,792 3,304
Equity in net income of investee companies - -
Minority interest expense (income) 126 (41)
Net income before discontinued operations 14,796 5,931
Income from discontinued operations, net of tax 509 48
Net Income $15,305 $5,979
Basic Earnings Per Share
Income from continuing operations$ .16 $ .07
Income from discontinued operations.01 -
Net Income$.17 $.07
Diluted Earnings Per Share
Income from continuing operations$ .16 $ .07
Income from discontinued operations.01 -
Net Income$.17 $.07
Average number of shares outstanding:
Basic 88,207 87,872
Diluted 89,234 89,786
SOURCE Alliance One International, Inc.
