UAPH Uap Hldg Corp (MM)

Investments in Acquisitions Contributes to Strong First Half GREELEY, Colo., Oct. 4 /PRNewswire-FirstCall/ -- UAP Holding Corp. (NASDAQ:UAPH), the largest independent distributor of agricultural and non-crop inputs in the United States and Canada, today announced financial results for the second quarter and first half of fiscal 2008 that ended on August 26, 2007. (Logo: http://www.newscom.com/cgi-bin/prnh/20060420/UAPLOGO) First half sales increased by 14 percent to $2,468 million, compared to $2,166 million for the same period last year. Sales of fertilizer in the first half increased to $679 million from $491 million in the same period last year. Sales from acquired businesses contributed approximately $43 million. Increases in volumes sold and an improvement in per ton selling prices drove the remainder of the difference. Volume and price growth were due to increased grower demand, mainly as growers switched their planted acreage to corn from soybeans in the Midwest. Favorable weather conditions and higher commodity prices also supported increased applications. Sales of seed in the first half increased to $385 million, up 12 percent from the same period last year. Sales from acquired businesses contributed approximately $32 million. The remaining increase was due to volume growth in third party and proprietary brands of corn seed and higher prices due to increased corn acres and increased sales of seed with enhanced traits. Sales of cotton seed decreased due to lower planted acreage of cotton. Sales of chemicals in the first half increased to $1,342 million from $1,281 million in the same period last year. Sales from acquired businesses contributed approximately $104 million, some of which was offset by lost wholesale sales as some of our acquisitions were former wholesale customers. Sales of herbicides increased from last year, primarily due to acquisitions and increased sales of glyphosate herbicides as a result of increased adoption of glyphosate tolerant corn. Fungicide sales increased as a result of acquisitions and increased applications for general plant health. Insecticide sales decreased due to the lack of insect pressure and the adoption of insect resistant corn seed to protect from corn rootworm, resulting in less insecticides used at planting time. Gross profit grew to $378 million in the first half compared to $294 million for the same period last year. The increase in gross profit was primarily a result of higher increased sales of higher-margin proprietary chemical products, higher fertilizer volumes and better related unit profits, higher sales of corn seed and better unit margins across our seed business, and the effect of acquired businesses. The gross profit increase was also partially due to the difference in timing of some vendor rebates. Vendors are now supplying more timely information, better definition of criteria for earning rebates, and improved communication of local area programs, all resulting in increased visibility of recognizable rebates. In the prior fiscal year, these rebates were recognized later in the year. We believe the impact to be approximately $15 million in the first half of this fiscal year as compared to the same period last year. Selling, general and administrative expenses increased to $178 million in the first half of this fiscal year from $155 million for the same period last year. The increase in expenses was due to the additional expenses attributed to our acquired businesses, higher incentive-based compensation commensurate with the company's performance, and higher stock-based compensation expense. First half net income was $123 million or $2.32 per diluted share compared to ongoing net income(1) of $84 million or $1.61 per diluted share in the same period last year. "We are successfully implementing our strategy to grow the company while bringing greater value to our customers," said L. Kenny Cordell, UAP Holding Corp.'s president and chief executive officer. "As the largest provider of agricultural inputs in the U.S. and Canada, we have been able to maximize our opportunities for growth and margin expansion in this strong external environment." For the second quarter of fiscal 2008, sales increased by 12% to $863 million, compared to $768 million for the same period last year, which was driven by acquisition activity and higher fertilizer prices. Gross profit increased to $138 million from $108 million. The increase in gross profit was primarily a result of increased sales of higher-margin proprietary chemical products and the effect of acquired businesses. The gross profit increase was also partially due to the difference in timing of some vendor rebates as addressed in the first half results. Net income for the second quarter of fiscal 2008 was $35.0 million or $0.66 per diluted share. At the end of the second quarter, average trade working capital(1) increased to $527 million from $360 million on a twelve month trailing average basis. Average trade working capital as a percentage of sales was 16.7 percent, up from 12.9 percent. "The success of our growth and acquisition strategy has driven an increase in average trade working capital," said David W. Bullock, UAP Holding Corp.'s chief financial officer. "However, we continue to believe our ten percent goal for average trade working capital is achievable in the long-term." Fiscal 2008 Earnings Per Share Guidance The company traditionally has more than 75 percent of annual net sales occur in the first and second fiscal quarters of the year. The company is affirming its earnings guidance for fiscal 2008 of $1.60 to $1.75 per diluted share excluding any dilution from potential acquisitions. UAP Holding Corp. Revenue Breakout Net Sales Q2 Q2 % 1st Half 1st Half % (millions) FY 2008 FY 2007 Chg FY 2008 FY 2007 Chg Chemical $609.4 $566.8 7.5% $1,341.5 $1,280.8 4.7% Fertilizer 198.7 156.5 27.0 678.8 490.8 38.3 Seed 27.0 21.6 25.0 384.6 343.2 12.1 Other 27.4 22.9 19.7 62.7 51.0 22.9 Total $862.5 $767.8 12.3% $2,467.6 $2,165.8 13.9% Conference call information The company will hold a conference call to discuss fiscal second quarter and first half 2008 results at 5:00 p.m. EDT this afternoon. The call will be webcast live over the Internet from the company's website at http://www.uap.com/ under "Investor Relations." Participants should follow the instructions provided on the website for downloading and installing the necessary audio applications. The conference call also is available by dialing 866-314-4865 (domestic) or 617-213-8050 (international) and entering passcode 69658589. Following the live webcast, a replay will be available on the Company's website. A telephonic replay will also be available one hour after the call and can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 43106802. 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 products in the United States and Canada. United Agri Products, Inc. markets a comprehensive line of products, including chemicals, fertilizer, and seed to farmers, commercial growers, and regional dealers. United Agri Products also provides a broad array of value-added services, including crop management, biotechnology advisory services, custom fertilizer blending, seed treatment, inventory management, and custom applications of crop inputs. United Agri Products maintains a comprehensive network of approximately 370 distribution and storage facilities and three formulation plants, strategically located in major crop-producing areas throughout the United States and Canada. Additional information can be found on the company's website, 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 including the fiscal 2008 earnings per share guidance, 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 senior secured credit facility, 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 April 26, 2007, and in the other documents the company files with the Securities and Exchange Commission from time to time. -Financial Tables Follow UAP HOLDING CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) UNAUDITED August 26, February 25, August 27, 2007 2007 2006 ASSETS Current assets: Cash and cash equivalents $12,079 $19,506 $7,249 Receivables, net 1,061,679 338,229 943,188 Inventories 613,003 883,033 570,648 Deferred income taxes 29,224 28,046 23,332 Vendor prepay 30,135 64,700 13,725 Other current assets 8,983 8,547 4,911 Total current assets 1,755,103 1,342,061 1,563,053 Property, plant and equipment 160,154 145,455 122,998 Less accumulated depreciation (41,487) (35,234) (29,490) Property, plant and equipment, net 118,667 110,221 93,508 Intangible assets, net 49,783 50,076 31,230 Goodwill 46,821 45,138 36,852 Deferred income taxes 6,080 4,448 8,239 Debt issuance costs, net 4,844 5,445 6,047 Other assets 1,830 1,797 1,639 Total assets $1,983,128 $1,559,186 $1,740,568 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $936,123 $926,632 $1,028,304 Short-term debt 402,484 184,739 191,765 Income taxes payable 46,205 - 12,981 Accrued payroll and related liabilities 23,229 5,820 18,241 Deferred income taxes 2,132 2,200 2,049 Other accrued liabilities 89,133 72,631 90,183 Total current liabilities 1,499,306 1,192,022 1,343,523 Long-term debt 171,515 172,390 174,952 Deferred income taxes 16,086 17,953 19,116 Other non-current liabilities 10,963 6,567 4,087 Commitments and contingencies Stockholders' equity: Common stock, $.001 par value, 90,000,000 shares authorized, 52,052,180, 51,194,620, and 50,967,958 issued and outstanding, respectively 52 51 51 Management stock - rabbi trust - - 1,978 Additional paid-in capital 154,019 138,569 124,106 Retained earnings 125,454 27,801 67,523 Accumulated other comprehensive income 5,733 3,833 5,232 Stockholders' equity 285,258 170,254 198,890 Total liabilities and stockholders' equity $1,983,128 $1,559,186 1,740,568 UAP HOLDING CORP. CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except share data) UNAUDITED Thirteen Weeks Ended Twenty-Six Weeks Ended August 26, August 27, August 26, August 27, 2007 2006 2007 2006 Net sales $862,532 $767,792 $2,467,550 $2,165,815 Cost of goods sold 724,375 659,446 2,089,392 1,871,820 Gross profit 138,157 108,346 378,158 293,995 Selling, general and administrative expenses 79,357 66,235 178,330 155,209 Royalties, service charges and other income and expenses (9,959) (7,946) (19,257) (15,294) Operating income 68,759 50,057 219,085 154,080 Interest expense, net 11,148 8,869 19,144 17,158 Finance related and other charges --- 47,366 --- 47,848 Income (loss) before income taxes 57,611 (6,178) 199,941 89,074 Income tax expense (benefit) 22,592 (1,880) 77,239 35,056 Net income (loss) $35,019 $(4,298) $122,702 $54,018 Earnings (loss) per share: Basic $0.67 $(0.08) $2.37 $1.06 Diluted $0.66 $(0.08) $2.32 $1.03 Cash dividends declared per share of common stock $0.225 $0.1875 $0.45 $0.375 Weighted average shares outstanding: Basic 51,987,499 50,967,958 51,706,743 50,909,734 Diluted 53,123,669 50,967,958 52,963,884 52,401,271 UAP HOLDING CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED Twenty-Six Weeks Ended August 26, August 27, 2007 2006 Operations Net income $122,702 $54,018 Adjustments to reconcile net income to net cash used for operating activities: Depreciation 6,406 5,709 Stock compensation 7,122 1,704 Amortization of intangibles 3,627 736 Deferred income taxes (4,746) (185) Write-off of debt issuance costs - 15,930 Premium paid to tender notes payable - 31,575 Other (1,562) 1,391 Change in operating assets and liabilities, net of effects of acquisitions: Increase in receivables, net (724,029) (654,011) Increase in current liabilities and non-current liabilities 113,371 257,378 Decrease in inventory 272,131 165,488 Decrease in other operating assets 35,044 54,761 Net cash used for operations (169,934) (65,506) Investing Additions to property, plant and equipment (13,642) (10,462) Additions to purchase price of previous acquisitions (4,212) - Addition of other long-lived assets (2,612) (1,928) Acquisitions, net of cash acquired (2,508) (15,088) Proceeds from sales of assets 138 9,324 Net cash used for investing (22,836) (18,154) Financing Net borrowings on revolving line of credit 217,745 190,015 Dividends and dividend equivalents paid (21,355) (19,102) Checks not yet presented (20,159) 4,687 Excess income tax benefits from stock-based compensation arrangements 8,268 3,145 Proceeds from common stock options exercised 1,777 300 Long-term debt payments and redemption (875) (336,212) Long-term debt issued --- 175,000 Debt issuance costs --- (6,348) Net cash provided by financing 185,401 11,485 Net effect of exchange rates on cash and cash equivalents (58) 256 Net change in cash and cash equivalents (7,427) (71,919) Cash and cash equivalents at beginning of period 19,506 79,168 Cash and cash equivalents at end of period $12,079 $7,249 Supplemental disclosure of cash flow information: Cash paid during the period for interest $18,578 $15,487 Cash paid for prior years' accreted discount on notes payable $--- $20,968 Cash paid during the period for income taxes $13,543 $9,757 Dividends and dividend equivalents declared but not yet paid $12,224 $9,556 (1) 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. UAP Holding Corp. (in thousands, except share data) (unaudited) Twenty-Six Twenty-Six Weeks Ended Weeks Ended August 26, August 27, Ongoing Net Income Reconciliation 2007 2006 Net income $122,702 $54,018 Adjustments, net of tax: Restructuring charges - 212 Secondary common stock offering - 134 Refinance charges - 30,045 Adjustments, net of tax - 30,391 Ongoing income from continuing operations $122,702 $84,409 Reported Earnings Per Share: Basic $2.37 $1.06 Diluted $2.32 $1.03 Ongoing Earnings Per Share: Ongoing Basic $2.37 $1.66 Ongoing Diluted $2.32 $1.61 Weighted Average Shares Outstanding: Basic 51,706,743 50,909,734 Diluted 52,963,884 52,401,271 Thirteen Thirteen weeks Ended weeks Ended August 26, August 27, Ongoing Net Income Reconciliation 2007 2006 Net income (loss) $35,019 $(4,298) Adjustments, net of tax: Restructuring charges - 146 Secondary common stock offering - 134 Refinance charges - 29,877 Sub-total Adjustments, net of tax - 30,157 Ongoing income from continuing operations $35,019 $25,859 Reported Earnings (Loss) Per Share: Basic $0.67 $(0.08) Diluted $0.66 $(0.08) Ongoing Earnings Per Share: Ongoing Basic $0.67 $0.51 Ongoing Diluted $0.66 $0.51 Weighted Average Shares Outstanding: Basic 51,987,499 50,967,958 Diluted 53,123,669 50,967,958 UAP Holding Corp. (in thousands) (unaudited) Working Capital Reconciliation to Trade Working Capital August 26, August 27, 2007 2006 Working capital $255,797 $219,530 Adjustments: Subtract cash and cash equivalents 12,079 7,249 Add back short-term debt 402,484 191,765 Trade working capital $646,202 $404,046 Trade working capital detail: Receivables, less allowance for doubtful accounts $1,061,679 $943,188 Inventories 613,003 570,648 Deferred income taxes 29,224 23,332 Vendor prepay 30,135 13,725 Other current assets 8,983 4,911 Subtotal 1,743,024 1,555,804 Accounts payable 936,123 1,028,304 Other accrued liabilities, including accrued payroll and related liabilities 112,362 108,424 Income taxes payable 46,205 12,981 Deferred income taxes 2,132 2,049 Subtotal 1,096,822 1,151,758 Trade working capital $646,202 $404,046 Fifty-Two Fifty-Two Weeks Ended Weeks Ended August 26, August 27, Average Trade Working Capital(a) 2007 2006 Accounts receivable, net $810,401 $699,698 Inventories 725,748 643,563 Prepaid expense(b) 65,555 71,275 Sub-total 1,601,704 1,414,536 Advances on sales 114,630 114,707 Trade payables 854,505 834,906 Sub-total accounts payable 969,135 949,613 Accrued expenses(c) 105,789 105,212 Sub-total 1,074,924 1,054,825 Average trade working capital $526,780 $359,711 Change in average trade working capital $167,069 (a) Trailing 12 month average for each period. (b) Includes deferred income taxes, vendor prepay, and other current assets (c) Includes other accrued liabilities, income taxes payable, accrued payroll and related liabilities, 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. http://www.newscom.com/cgi-bin/prnh/20060420/UAPLOGO http://photoarchive.ap.org/ DATASOURCE: UAP Holding Corp. CONTACT: Karla J. Kimrey, Vice President, Investor Relations of UAP Holding Corp., +1-970-356-4400 Web site: http://www.uap.com/

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