• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

UAP Holding Corp. Announces Results for the Third Quarter and First Nine Months of Fiscal 2007

Posted on: Thursday, 4 January 2007, 18:00 CST

GREELEY, Colo., Jan. 4 /PRNewswire-FirstCall/ -- UAP Holding Corp. , the largest independent distributor of agricultural and non-crop inputs in the United States and Canada, today announced financial results for the third quarter and first nine months of fiscal 2007 that ended on November 26, 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20060420/UAPLOGO)

"Our third quarter results were below our expectations on chemical and fertilizer gross profits. Particularly, we suffered from margin pressure in our wholesale chemical business. However, we were able to make several strategic acquisitions at a time when others were constrained," said L. Kenny Cordell, UAP Holding Corp.'s chairman, president, and chief executive officer. "We remain optimistic about the future for UAP and the American farmer. We are positioning ourselves to maximize our opportunity through growing our market share, expanding our product offerings, and strategic acquisitions."

For the first nine months of fiscal 2007, sales increased 4.3% to $2,541.5 million compared to $2,437.5 million for the same period last year. All results presented include the acquisition of UAP Timberland as discussed in previous announcements.

Sales of seed increased 15.5% to $362.5 million in the first nine months of fiscal 2007, from $313.9 million in the same period last year. The increase was due to volume growth in both third-party and proprietary brands of corn, cotton, and soybeans and higher prices due to increased sales of seeds with enhanced traits.

Sales of chemicals increased 1.7% to $1,499.0 million in the nine months of fiscal 2007, from $1,474.2 million in the same period last year. Strategic acquisitions accounted for a net increase of approximately $101 million compared to last year. Fungicide sales were lower due to decreased demand for products that control Asian Soybean Rust. Sales of herbicides increased due to acquisitions and a sales volume increase in glyphosate herbicides, which was due to the continued adoption of seed varieties with Roundup Ready technology traits.

Sales of fertilizer 2007 increased 1.8% to $607.0 million in the first nine months of fiscal from $596.1 million in the same period last year. The increase was due to higher per ton selling prices which offset lower volumes sold compared to last year. We believe higher prices caused some of our growers to reduce the volume of fertilizer purchases compared to the same period last year.

Sales of other products increased 37.2% to $73.0 million in the first nine months of fiscal 2007, from $53.3 million in the same period last year, due to increased application fees, added contract service revenue from our non-crop business, and additional transportation and warehousing revenue from our Canadian business.

Gross profit for the first nine months of fiscal 2007 increased to $334.6 million compared to $329.6 million for the same period last year. The increase in gross profit was due primarily to the timing of vendor rebate income and acquisition activity. Vendor rebate timing added $20.2 million to rebate income compared to last year, when these additional rebates were recognized later in the fiscal year. Adjusted for rebate timing, gross profit would have been $314.4 million. Gross profit also was impacted by lower fertilizer sales volumes, lower fertilizer gross profit per ton, and lower gross margins on seed and chemicals due to competitive pressure. Increased application and contract service revenue improved gross profit in the other sales category.

Selling, general, and administrative expenses decreased 3.0% to $210.0 million in the first nine months of fiscal 2007 from $216.4 million in the same period last year. The decrease was due to lower management incentive expenses being recorded as a result of company performance being lower than incentive metrics. Insurance costs were also down. These decreases were partially offset by additional expenses incurred as a result of our recent acquisition activity as well as higher fuel costs and lower recoveries of previously written off accounts.

Finance related and other charges were $48.2 million in the first nine months of fiscal 2007, principally from the refinancing of our long-term debt in June 2006.

Net income for the first nine months of fiscal 2007 was $40.9 million or $0.78 per diluted share. When adjusted for charges related to the refinancing and other items, ongoing net income(1) was $70.4 million or $1.34 per diluted share compared to net income of $64.2 million or $1.23 per diluted share for the same period last year.

For the third quarter of fiscal 2007, sales increased by 16.3% to $375.7 million compared to $323.1 million for the same period last year, driven primarily by increases in chemical sales from acquisitions. Gross profit decreased to $40.6 million from $50.5 million, of which $4.9 million of the decrease was due to vendor rebate timing. These rebates were recognized earlier in the year compared to last year. Gross profit also was impacted by lower gross profits on fertilizer and to a lesser extent, seed and chemicals. The net loss for the third quarter of fiscal 2007 was $13.2 million or $0.26 per share. Ongoing net loss(1) for the third quarter was $12.9 million or $0.25 per share.

As of the end of the third quarter, average trade working capital(2) increased to $397.9 million on a twelve month trailing average basis. Average trade working capital as a percentage of rolling 12-month net sales rose to 14.1% from 12.1% as of the end of the third quarter of fiscal 2006.

Recent Acquisition Activity

UAP Holding Corp. announced that its subsidiary, UAP Distribution, Inc., has entered into a definitive agreement with AGSCO, Inc. to acquire certain assets of its retail distribution business and its affiliated services businesses, Ag Depot, Inc. AGSCO is a leading regional distributor of chemicals with a growing seed and fertilizer business. AGSCO has multiple retail locations in Minnesota, Montana, North Dakota, and South Dakota and approximately 37 sales people. CropLife Magazine, in its 23rd Annual CropLife 100 listing, recently ranked AGSCO as the 20th largest U.S. company as measured by retail sales. Ag Depot is a warehouse business for agricultural chemical suppliers. The acquisition is expected to close in our fourth fiscal quarter.

Guidance

Given the challenging external environment and the company's financial performance for the first nine months, the company is revising its fiscal 2007 full year guidance to $1.15 to $1.25 per diluted share, excluding charges related to the refinancing of debt. Guidance includes the dilutive effect of acquisitions closed during the off season so far this fiscal year of approximately $0.03 per diluted share.

UAP Holding Corp. Revenue Breakout 1st Nine 1st Nine Net Sales Q3 Q3 % Months Months % (millions) FY 2007 FY 2006 Chg FY 2007 FY 2006 Chg Chemical $218.3 $180.2 21.1% $1,499.0 $1,474.2 1.7% Fertilizer 116.2 112.9 2.9 607.0 596.1 1.8 Seed 19.3 14.9 29.3 362.5 313.9 15.5 Other 21.9 15.1 45.8 73.0 53.3 37.2 -------- -------- -------- -------- -------- -------- Total $375.7 $323.1 16.3% $2,541.5 $2,437.5 4.3% Conference call information

The company will hold a conference call to discuss fiscal 2007 third quarter and first nine months results at 5:00 p.m. EST this afternoon. The call will be webcast live over the Internet from the company's web site at http://www.uap.com/ under "Investor Information." Participants should follow the instructions provided on the web site for downloading and installing the necessary audio applications. The conference call also is available by dialing 866-543-6411 (domestic) or 617-213-8900 (international) and entering passcode 65836767.

Following the live conference call, a replay will be available on the company's web site. The replay also will be available one hour after the call by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 33580419. The telephonic replay will be available for seven days.

About the company

UAP Holding Corp. is the holding company of United Agri Products, Inc., the largest independent distributor of agricultural and non-crop inputs in the United States and Canada. United Agri Products, Inc. markets a comprehensive line of products, including chemicals, seeds, and fertilizers, to growers and regional dealers. United Agri Products also provides a broad array of value-added services, including crop management, biotechnology advisory services, custom blending, inventory management, and custom applications of crop inputs. United Agri Products maintains a comprehensive network of approximately 340 distribution and storage facilities and three formulation and blending plants, strategically located throughout the United States and Canada. Additional information can be found on the company's website, located at http://www.uap.com/.

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995

This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. These statements include, but are not limited to, discussions regarding industry outlook, the company's expectations regarding the performance of its business, its liquidity and capital resources and the other non-historical statements in the discussion and analysis. These forward- looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words "believe,""anticipate,""estimate,""expect,""intend" and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions, including risks related to the seasonality of the company's business and weather conditions in its markets, its substantial leverage and restrictions contained in its debt agreements, the possibility of liability for pollution and other damage that is not covered by insurance or that exceeds its insurance coverage, its dependence on rebate programs, its ability to build upon its distribution network through ongoing acquisitions, and other risks identified and discussed under Item 1A. Risk Factors in the company's Form 10-K filed with the Securities and Exchange Commission on May 12, 2006, and in the other documents the company files with the Securities and Exchange Commission from time to time.

UAP HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) (unaudited) November 26, February 26, November 27, 2006 2006 2005 ASSETS Current assets: Cash and cash equivalents $35,045 $79,168 $13,977 Receivables, less allowance for doubtful accounts of $16,589, $12,770 and $16,119 724,930 288,879 616,957 Inventories 599,474 730,771 536,641 Deferred income taxes 24,665 21,168 24,631 Vendor prepay 12,950 69,841 22,056 Other current assets 4,383 16,123 4,383 Total current assets 1,401,447 1,205,950 1,218,645 Property, plant and equipment 130,794 114,991 114,303 Less accumulated depreciation (32,288) (24,676) (23,345) Property, plant and equipment, net 98,506 90,315 90,958 Goodwill 41,611 27,167 32,431 Intangible assets, net 31,660 26,121 25,022 Deferred income taxes 6,370 9,951 9,960 Debt issue costs, net 5,746 17,155 18,014 Investment in unconsolidated affiliates 113 4,166 3,666 Other assets 1,873 1,085 466 Total assets $1,587,326 $1,381,910 $1,399,162 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $728,714 $819,071 $631,190 Short-term debt 373,615 -- 148,965 Other accrued liabilities 103,513 73,962 115,661 Income taxes payable -- -- 14,649 Deferred income taxes 2,087 1,433 1,580 Total current liabilities 1,207,929 894,466 912,045 Long-term debt 172,828 306,339 303,713 Other non-current liabilities 5,903 1,890 2,753 Deferred income taxes 18,677 19,476 19,884 Commitments and contingencies Stockholders' equity: Common stock, $.001 par value, 90,000,000 shares authorized, 50,980,858, 50,814,430 and 50,473,349 issued and outstanding, respectively 51 51 50 Management stock -- rabbi trust -- 3,956 4,518 Additional paid-in capital 133,344 117,392 111,867 Retained earnings 44,813 32,606 39,104 Accumulated other comprehensive income 3,781 5,734 5,228 Stockholders' equity 181,989 159,739 160,767 Total liabilities and stockholders' equity $1,587,326 $1,381,910 $1,399,162 UAP HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands, except share data) (unaudited) Thirteen Weeks Ended Thirty-Nine Weeks Ended November 26, November 27, November 26, November 27, 2006 2005 2006 2005 Net sales $375,728 $323,089 $2,541,542 $2,437,458 Costs and expenses: Cost of goods sold 335,107 272,547 2,206,926 2,107,891 Gross profit 40,621 50,542 334,616 329,567 Selling, general and administrative expenses 54,746 56,301 209,954 216,362 (Gain) loss on sale of assets 56 (59) 45 (1,532) Restructuring costs 85 970 429 1,460 Royalties, service charges and other income and expenses (4,320) (2,915) (19,946) (20,739) Operating income (loss) (9,946) (3,755) 144,134 134,016 Interest expense 11,472 10,885 28,631 28,179 Finance related and other charges 325 -- 48,172 -- Income (loss) before income taxes (21,743) (14,640) 67,331 105,837 Income tax expense (benefit) (8,592) (5,292) 26,464 42,490 Net income (loss) $(13,151) $(9,348) $40,867 $63,347 Earnings (loss) per share: Basic $(0.26) $(0.19) $0.80 $1.26 Diluted $(0.26) $(0.19) $0.78 $1.21 Cash dividends declared per share of common stock $0.1875 $0.1625 $0.5625 $0.45 Weighted average shares outstanding: Basic 50,978,306 50,472,405 50,932,591 50,449,776 Diluted 50,978,306 50,472,405 52,425,236 52,352,306 UAP HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Thirty-Nine Weeks Ended November 26, November 27, 2006 2005 Operations Net income $40,867 $63,347 Adjustments to reconcile net income to net cash used for operating activities: Depreciation 8,636 8,519 Amortization of intangibles 1,449 1,021 Amortization of debt issuance costs 2,735 3,290 Accretion of discount on notes -- 7,766 Write-off of debt issuance costs 15,957 -- Premium paid to tender notes payable 31,714 -- Gain on sales of fixed assets 45 (1,530) Equity in losses of unconsolidated affiliates -- -- Deferred tax benefit (57) (12,595) Stock compensation 2,979 586 Change in operating assets and liabilities (301,352) (239,634) Net cash used for operations (197,027) (169,230) Investing Additions to property, plant and equipment (16,960) (10,226) Addition of other long-lived assets (1,928) -- Other -- 405 Proceeds from sales of assets 9,399 2,184 Acquisition of businesses (31,511) -- Net cash used for investing activities (41,000) (7,637) Financing Checks not yet presented 10,988 8,143 Net borrowings on revolving line of credit 371,865 148,910 Debt issuance costs (6,374) (1,046) Long-term debt issued 175,000 -- Long-term debt redemption and payments (338,475) -- Dividends paid (28,660) (14,505) Excess tax benefits from stock based compensation arrangements 9,130 -- Proceeds from common stock options exercised 300 377 Net cash provided by financing activities 193,774 141,879 Net change in cash and cash equivalents (44,253) (34,988) Net effect of exchange rates on cash and cash equivalents 130 761 Net change in cash and cash equivalents (44,123) (34,227) Cash and cash equivalents at beginning of period 79,168 48,204 Cash and cash equivalents at end of period $35,045 $13,977 Supplemental disclosure of cash flow information: Cash paid during the period for interest (includes $20,968, and $0, respectively, paid for prior years accreted discount on notes payable) $48,976 $13,597 Net cash paid during the period for income taxes $14,076 $31,088 Dividends declared but not yet paid $9,559 $8,203 Reconciliations of Non GAAP Financial Measures to GAAP Financial Measures

(1) The following table reconciles the differences between net income as determined under United States of America generally accepted accounting principles (GAAP) and ongoing net income:

UAP Holding Corp. (dollars in thousands) (unaudited) Thirty-nine weeks Thirty-nine weeks Ended November 26, Ended November 27, Ongoing Net Income Reconciliation 2006 2005 Net income $40,867 $63,347 Adjustments, net of tax: Restructuring charges 260 890 Secondary common stock offering 245 -- Refinance charges 28,996 -- Sub-total Adjustments, net of tax 29,501 890 Ongoing income from continuing operations $70,368 $64,237 Reported EPS: Basic 0.80 1.26 Diluted 0.78 1.21 Ongoing Earnings Per Share Ongoing Basic 1.38 1.27 Ongoing Diluted 1.34 1.23 Weighted Average Shares Outstanding Basic 50,932,591 50,449,776 Diluted 52,425,236 52,352,306 Thirteen Weeks Thirteen Weeks Ended November 26, Ended November 27, Ongoing Net Income Reconciliation 2006 2005 Net loss $(13,151) $(9,348) Adjustments, net of tax: Restructuring charges 52 591 Secondary common stock offering 112 -- Refinance charges 84 -- Sub-total Adjustments, net of tax 248 591 Ongoing loss from continuing operations $(12,903) $(8,757) Reported Loss per Share: Basic (0.26) (0.19) Diluted (0.26) (0.19) Ongoing Loss Per Share Ongoing Basic (0.25) (0.17) Ongoing Diluted (0.25) (0.17) Weighted Average Shares Outstanding Basic 50,978,306 50,472,405 Diluted 50,978,306 50,472,405

(2) The following tables reconcile the difference between working capital, as determined under GAAP, trade working capital, and average trade working capital.

UAP Holding Corp. (dollars in thousands) (unaudited) Working Capital Reconciliation to Trade Working Capital November 26, 2006 November 27, 2005 Working capital $193,518 $306,600 Adjustments: Subtract cash and cash equivalents, and marketable securities 35,045 13,977 Add back short-term debt 373,615 148,965 Trade working capital $532,088 $441,588 Trade working capital detail: Receivables, less allowance for doubtful accounts $724,930 $616,957 Inventories 599,474 536,641 Deferred income taxes 24,665 24,631 Vendor prepay 12,950 22,056 Other current assets 4,383 4,383 Subtotal 1,366,402 1,204,668 Accounts payable 728,714 631,190 Other accrued liabilities 103,513 115,661 Income taxes payable -- 14,649 Deferred income taxes 2,087 1,580 Subtotal 834,314 763,080 Trade working capital $532,088 $441,588 Fifty-two weeks Fifty-two weeks ended ended Average Trade Working Capital (a) November 26, 2006 November 27, 2005 Accounts receivable, net $732,325 $634,619 Inventories 661,856 605,707 Prepaid expense (b) 69,672 93,620 Sub-total 1,463,853 1,333,946 Advances on sales 111,353 109,466 Trade payables 857,978 775,089 Sub-total accounts payable 969,331 884,555 Accrued expenses (c) 96,582 121,522 Sub-total 1,065,913 1,006,077 Average trade working capital $397,940 $327,869 Change in twelve month average trade working capital $70,071 (a) Trailing 12 month average for each period (b) Includes deferred income taxes and other current assets (c) Includes other accrued liabilities, income taxes payable and deferred income taxes

The press release furnished herewith uses the non-GAAP financial measures of ongoing net income, ongoing earnings per share, trade working capital, and average trade working capital. We believe that ongoing net income, ongoing earnings per share, trade working capital, and average trade working capital best reflect our ongoing performance and business operations during the periods presented and are more useful to investors for comparative purposes. In addition, management uses these financial measures in internal reporting, in its budgeting and long-range planning processes, and in determining performance-based compensation.

The presentation of ongoing net income, ongoing earnings per share, trade working capital, and average trade working capital is intended to supplement investors' understanding of our operating performance. These non-GAAP financial measures may not be comparable to similar measures used by other companies. Furthermore, these non-GAAP financial measures are not intended to replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accounting principles generally accepted in the United States.

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20060420/UAPLOGOAP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.com

UAP Holding Corp.

CONTACT: Karla J. Kimrey, Vice President, Investor Relations of UAPHolding Corp., +1-970-356-4400

Web site: http://www.uap.com/

Source: PRNewswire-FirstCall

More News in this Category