WESTCHESTER, Ill., Oct. 30 /PRNewswire-FirstCall/ -- Corn Products
International, Inc. (NYSE: CPO), a leading global provider of agriculturally
derived ingredients for diversified markets, today reported quarterly diluted
earnings per share of $0.66 for the third quarter ended September 30, 2007, a
35 percent increase compared with diluted earnings per share of $0.49 a year
ago. The third quarter of 2007 includes a 5-cent gain from the Company's
holdings in CME Group Inc. Net income of $51 million in the third quarter of
2007 improved 38 percent versus $37 million last year.
Net sales of $877 million in the third quarter of 2007, a record quarterly
level, improved 30 percent versus $674 million in the prior-year period. The
higher net sales resulted predominantly from improved price/product mix, along
with favorable foreign currency translations and slightly higher volumes. The
acquisitions of SPI Polyols, Getec and DEMSA contributed approximately $29
million of net sales in the third quarter.
Gross profit of $142 million in the third quarter of 2007 increased 26
percent versus $112 million a year ago. The improvement was driven by
significantly higher North and South American results, partially offset by
lower Asia/Africa profitability. The improvements in North and South America
were predominantly from higher pricing. Corn costs increased significantly,
while energy costs rose slightly. Gross margins of 16.2 percent compared with
16.6 percent last year.
The increase in other income reflected a pretax gain of $6 million, or $4
million after tax, associated with the Company's investment in the Chicago
Board of Trade Holdings, Inc. upon its July 2007 merger with Chicago
Mercantile Exchange Holdings Inc., which created CME Group Inc.
Operating income of $88 million in the third quarter of 2007 grew 36
percent versus $65 million last year. Operating margins improved to 10.0
percent from 9.6 percent in 2006.
Higher net financing costs in the third quarter of 2007 versus 2006 were
due primarily to lower capitalized interest, higher interest expense and
increased foreign currency losses, which more than offset an increase in
interest income from a higher cash position. The third-quarter effective tax
rate of 33.1 percent compared favorably with 34.5 percent in 2006.
"Our third-quarter results, excluding the 5-cent gain from our CME Group
shares, exceeded our expectations, driven by better-than-expected performances
from our North and South America regions," said Sam Scott, chairman, president
and chief executive officer of Corn Products International. "This performance
keeps us on course to deliver another record year in 2007 with expectations
that our full-year EPS will be in the upper range of our guidance of $2.35 to
$2.55."
Regional Business Segment Performance
Regional results for the quarter ended September 30, 2007 were as follows:
North America
Net sales of $542 million increased 32 percent versus $411 million in 2006
primarily due to improved price/product mix. Foreign currency translation and
volumes also were favorable. Operating income of $58 million grew 55 percent
from $38 million last year. The US, Canada and Mexico all posted significant
operating income increases.
South America
Net sales of $230 million increased 36 percent compared with $170 million
a year ago primarily as a result of improved price/product mix and positive
foreign currency translation, as well as slightly higher volumes. Operating
income of $26 million grew 20 percent from $22 million in the prior year due
primarily to a significant improvement in Brazil.
Asia/Africa
Net sales of $105 million increased 12 percent versus $94 million last
year primarily from improved price/product mix and favorable foreign currency
translation, partially offset by reduced volumes. Operating income of $10
million declined 33 percent versus $15 million last year. Significantly lower
results in South Korea, attributable to reduced volumes and sharply higher
corn and ocean freight costs, more than offset continued growth in Pakistan.
2007 Nine-Month Results
For the nine months of 2007 ended September 30, the Company reported net
income of $152 million, or $1.98 per diluted share, compared with net income
of $91 million, or $1.20 per diluted share, last year. Both gross and
operating margins of 17.8 percent and 10.7 percent, respectively, expanded
compared with 16.0 percent and 8.7 percent in the same period a year ago.
Net sales of $2.50 billion grew 29 percent versus $1.93 billion in the
prior year. Improved price/product mix accounted for the improvement, along
with slightly favorable volumes and foreign currency translation.
The effective tax rate of 33.3 percent for the nine months of 2007 was
lower than 36.5 percent last year.
Balance Sheet and Cash Flow
The Company's balance sheet remained strong and liquidity was excellent as
of September 30, 2007. Net debt (total debt minus cash) of $463 million at
the end of the third quarter of 2007 compared with $450 million a year ago.
Total debt to capitalization of 26.7 percent at September 30, 2007 was
unchanged from year-end 2006.
Cash provided by operations for the nine months of 2007 was $149 million
versus $121 million in the comparable period last year, primarily due to net
income growth.
2007 Outlook
We expect our 2007 full-year EPS to be in the upper range of our guidance
of $2.35 to $2.55," Scott said. "We believe solid performances should
continue in North and South America, but our results will be pressured by the
profitability shortfall in South Korea."
He noted that the Company expects to exceed in 2007 its long-term return
on capital employed (ROCE) target of 8.5 percent and annual net sales goal of
$3 billion.
Capital expenditures in 2007 are estimated to be in the range of $175-$200
million. Scott said the capital spending is focused on attractive growth
opportunities, including polyol investments in the U.S., Mexico and Brazil to
support recent acquisitions, new modified starch capacity in Mexico, and a new
plant investment in Pakistan. Product channel expansions in such countries as
Argentina, Colombia, Mexico, Pakistan and Thailand are also in progress.
"We are pleased to build on our record 2006 year with yet another year of
exceptional earnings growth in 2007," Scott said. "At the same time, we are
investing for growth in our base business, while looking at opportunities for
geographic expansion in Asia and additions to our value-added product
portfolio."
Conference Call and Webcast
Corn Products International will conduct a conference call today at 8:30
a.m. Eastern Time (7:30 a.m. Central Time) to be hosted by Sam Scott,
chairman, president and chief executive officer, and Cheryl Beebe, vice
president and chief financial officer.
The call will be broadcast in a real-time webcast. The broadcast will
consist of the call and a visual presentation accessible through the Corn
Products International web site at http://www.cornproducts.com. The
"listen-and-view-only" presentation will be available to download
approximately 60 minutes prior to the start of the call. A replay of the
webcast will be available at http://www.cornproducts.com.
Individuals without Internet access may listen to the live conference call
by dialing 719.325.4763. A replay of the audio call will be available through
Friday, November 16 by calling 719.457.0820 and using passcode 4291276.
About the Company
Corn Products International is one of the world's largest corn refiners
and a major supplier of high-quality food ingredients and industrial products
derived from the wet milling and processing of corn and other starch-based
materials. The Company, headquartered in Westchester, Ill., is the number-one
worldwide producer of dextrose and a leading regional producer of starch, high
fructose corn syrup and glucose. In 2006, Corn Products International reported
record net sales and diluted earnings per share of $2.62 billion and $1.63,
respectively, with operations in 15 countries at 35 plants, including wholly
owned businesses, affiliates and alliances. For more information, visit
http://www.cornproducts.com.
Forward-Looking Statement
This news release contains or may contain forward-looking statements
within the meaning of Section 27A of the Securities Exchange Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company intends these
forward looking statements to be covered by the safe harbor provisions for
such statements. These statements include, among other things, any
predictions regarding the Company's future financial condition, earnings,
revenues, expenses or other financial items, any statements concerning the
Company's prospects or future operation, including management's plans or
strategies and objectives therefor and any assumptions underlying the
foregoing. These statements can sometimes be identified by the use of forward
looking words such as "may," "will," "should," "anticipate," "believe,"
"plan," "project," "estimate," "expect," "intend," "continue," "pro forma,"
"forecast" or other similar expressions or the negative thereof. All
statements other than statements of historical facts in this release or
referred to in this release are "forward-looking statements." These
statements are subject to certain inherent risks and uncertainties. Although
we believe our expectations reflected in these forward-looking statements are
based on reasonable assumptions, stockholders are cautioned that no assurance
can be given that our expectations will prove correct. Actual results and
developments may differ materially from the expectations conveyed in these
statements, based on various factors, including fluctuations in worldwide
markets for corn and other commodities, and the associated risks of hedging
against such fluctuations; fluctuations in aggregate industry supply and
market demand; general political, economic, business, market and weather
conditions in the various geographic regions and countries in which we
manufacture and/or sell our products; fluctuations in the value of local
currencies, energy costs and availability, freight and shipping costs, and
changes in regulatory controls regarding quotas, tariffs, duties, taxes and
income tax rates; operating difficulties; boiler reliability; our ability to
effectively integrate acquired businesses; labor disputes; genetic and
biotechnology issues; changing consumption preferences and trends; increased
competitive and/or customer pressure in the corn-refining industry; the
outbreak or continuation of serious communicable disease or hostilities
including acts of terrorism; and stock market fluctuation and volatility. Our
forward-looking statements speak only as of the date on which they are made
and we do not undertake any obligation to update any forward-looking statement
to reflect events or circumstances after the date of the statement. If we do
update or correct one or more of these statements, investors and others should
not conclude that we will make additional updates or corrections. For a
further description of these risks, see Risk Factors included in our Annual
Report on Form 10-K for the year ended December 31, 2006 and subsequent
reports on Forms 10-Q or 8-K. This news release also may contain references
to the Company's long term objectives and goals or targets with respect to
certain metrics. These objectives, goals and targets are used as a
motivational and management tool and are indicative of the Company's long term
aspirations only, and they are not intended to constitute, nor should they be
interpreted as, an estimate, projection, forecast or prediction of the
Company's future performance.
Corn Products International, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In millions, except per share amounts)
Three Months Nine Months
Ended Change Ended Change
September 30, % September 30, %
2007 2006 2007 2006
Net sales before shipping
and handling costs $938.7 $733.4 28% $2,672.4 $2,100.3 27%
Less: shipping and
handling costs 61.3 59.2 4% 176.1 166.3 6%
Net sales $877.4 $674.2 30% $2,496.3 $1,934.0 29%
Cost of sales 735.7 562.0 31% 2,053.0 1,624.5 26%
Gross profit $141.7 $112.2 26% $443.3 $309.5 43%
Operating expenses 61.7 49.9 24% 184.1 147.1 25%
Other income-net 8.0 2.2 264% 7.2 5.4 33%
Operating income $88.0 $64.5 36% $266.4 $167.8 59%
Financing costs-net 10.0 6.6 52% 32.8 20.7 58%
Income before income taxes $78.0 $57.9 35% $233.6 $147.1 59%
Provision for income taxes 25.8 20.0 77.8 53.7
$52.2 $37.9 38% $155.8 $93.4 67%
Minority interest in
earnings 1.1 0.9 22% 4.1 2.8 46%
Net income $51.1 $37.0 38% $151.7 $90.6 67%
Weighted average common
shares outstanding:
Basic 75.0 74.0 74.8 74.0
Diluted 77.0 75.5 76.7 75.4
Earnings per common share:
Basic $0.68 $0.50 36% $2.03 $1.22 66%
Diluted $0.66 $0.49 35% $1.98 $1.20 65%
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except share and
per share amounts) September 30, 2007 December 31, 2006
(Unaudited)
Assets
Current assets
Cash and cash equivalents $157 $131
Accounts receivable - net 389 357
Inventories 380 321
Prepaid expenses 17 12
Deferred income taxes 17 16
Total current assets $960 $837
Property, plant and
equipment - net 1,450 1,356
Goodwill and other
intangible assets 432 381
Deferred income taxes 2 1
Investments 12 33
Other assets 96 54
Total assets $2,952 $2,662
Liabilities and equity
Current liabilities
Short-term borrowings and
current portion of long-term
debt 85 74
Deferred income taxes 14 14
Accounts payable and accrued
liabilities 457 429
Total current liabilities $556 $517
Non-current liabilities 159 147
Long-term debt 535 480
Deferred income taxes 117 121
Minority interest in
subsidiaries 20 19
Redeemable common stock (500,000
and 1,227,000 shares issued and
outstanding at September 30,
2007 and December 31, 2006,
respectively) stated at
redemption value 23 44
Share-based payments subject to
redemption 9 4
Stockholders' equity
Preferred stock - authorized
25,000,000 shares - $0.01 par
value, none issued -- --
Common stock - authorized
200,000,000 shares- $0.01 par
value - 74,819,774 and
74,092,774 issued at
September 30, 2007 and
December 31, 2006, respectively 1 1
Additional paid in capital 1,074 1,051
Less: Treasury stock (common
stock; 470,067 and 1,017,207
shares at September 30, 2007
and December 31, 2006,
respectively) at cost (15) (27)
Accumulated other comprehensive
loss (184) (223)
Retained earnings 657 528
Total stockholders' equity $1,533 $1,330
Total liabilities and equity $2,952 $2,662
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months Ended
September 30,
(In millions) 2007 2006
Cash provided by operating activities:
Net income $152 $91
Adjustments to reconcile net income to
net cash provided by (used for)
operating activities:
Depreciation 93 84
Increase in trade working capital (82) (76)
Other (14) 22
Cash provided by operating activities 149 121
Cash used for investing activities:
Capital expenditures, net of proceeds on
disposal (105) (116)
Payments for acquisition (net of cash
acquired of $7) (59) (22)
Other 1 --
Cash used for investing activities (163) (138)
Cash used for financing activities:
Proceeds from (payments on) borrowings, net 56 (10)
Issuances (repurchases) of common stock, net 3 (4)
Dividends paid (including to minority
interest shareholders) (24) (20)
Excess tax benefit on share-based
compensation 4 5
Other (1) --
Cash provided by (used for) financing
activities 38 (29)
Effect of foreign exchange rate changes
on cash 2 2
Increase (decrease) in cash and cash
equivalents 26 (44)
Cash and cash equivalents, beginning of
period 131 116
Cash and cash equivalents, end of period $157 $72
Corn Products International, Inc.
Supplemental Financial Information
(Unaudited)
(In millions, except per share amounts)
I. Geographic Information of Net Sales and Operating Income
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2007 2006 % 2007 2006 %
Net Sales
North America $542.2 $410.8 32% $1,543.7 $1,184.9 30%
South America 229.9 169.6 36% 648.8 476.2 36%
Asia/Africa 105.3 93.8 12% 303.8 272.9 11%
Total $877.4 $674.2 30% $2,496.3 $1,934.0 29%
Operating Income
North America $58.3 $37.5 55% $187.8 $98.8 90%
South America 26.2 21.8 20% 77.1 58.1 33%
Asia/Africa 9.9 14.7 (33%) 36.0 42.7 (16%)
Corporate (6.4) (9.5) (33%) (34.5) (31.8) 8%
Total $88.0 $64.5 36% $266.4 $167.8 59%
II. Estimated Sources of Diluted Earnings Per Share for the Three and
Nine Months ended September 30, 2007
The following is a list of the major items that impacted our third quarter
and first nine months results. The amounts are calculated on a net after
tax basis and attempt to estimate total business effects.
Earnings Per Share Earnings Per Share
Three Months Nine Months
Diluted Earnings Per Share -
September 30, 2006 $0.49 $1.20
Change
Operating margin 0.17 0.77
Foreign currency translation 0.03 0.06
Financing costs (0.03) (0.10)
Minority interest -- (0.02)
Effective tax rate 0.01 0.10
Shares outstanding (0.01) (0.03)
Net change 0.17 0.78
Diluted Earnings Per Share -
September 30, 2007 $0.66 $1.98
III. Capital expenditures
Capital expenditures, net of proceeds on disposals, for the quarters ended
September 30, 2007 and 2006, were $36 million and $40 million,
respectively. Capital expenditures for the full year 2007 are estimated
to be in the range of $175 million to $200 million.
IV. Non-GAAP Information
The Company uses certain key metrics to better monitor our progress
towards achieving our strategic business objectives. Among these metrics
is the Total Debt to Capitalization Percentage, which is not calculated
in accordance with Generally Accepted Accounting Principles ("GAAP").
Management believes that this non-GAAP information provides investors
with a meaningful presentation of useful information on a basis consistent
with the way in which management monitors and evaluates the Company's
operating performance. The information presented should not be considered
in isolation and should not be used as a substitute for our financial
results calculated under GAAP. In addition, these non-GAAP amounts are
susceptible to varying interpretations and calculations, and the amounts
presented below may not be comparable to similarly titled measures of
other companies. Our calculations of the Total Debt to Capitalization
Percentage at September 30, 2007 and December 31, 2006 are as follows:
Total Debt to Capitalization Percentage
September 30, December 31,
(Dollars in millions) 2007 2006
Short-term debt $85 $74
Long-term debt 535 480
Total debt (a) $620 $554
Deferred income tax liabilities 117 121
Minority interest in subsidiaries 20 19
Redeemable common stock 23 44
Share-based payments subject to
redemption 9 4
Stockholders' equity 1,533 1,330
Total capital $1,702 $1,518
Total debt and capital (b) $2,322 $2,072
Debt to capitalization percentage (a/b) 26.7% 26.7%
SOURCE
Corn Products International, Inc.
CONTACT:
Investors, Dave Prichard, +1-708-551-2592, or Media, Mark
Lindley, +1-708-551-2602, both of Corn Products International, Inc.
