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American Pacific Corp. (APFC)
F4Q 2011 (Qtr End 09/30/2011) Earnings Call
December 14, 2011 04:30 pm ET
Linda Ferguson - VP and Corporate Secretary
Joe Carleone - President & CEO
Dana Kelley - VP, CFO & Treasurer
Donovan Chaney - Wells Fargo
Bruce Baughman - Franklin Templeton
Previous Statements by APFC
» American Pacific Corporation's CEO Discusses F3Q 2011 Results - Earnings Call Transcript
» American Pacific Corporation's CEO Discusses F2Q2011 Results - Earnings Call Transcript
» American Pacific CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good afternoon. Welcome to our review of the financial results for fiscal year 2011. Joe Carleone, Chief Executive Officer and Dana Kelley, Chief Financial Officer will each provide remarks. Following their remarks, we will be happy to take your questions. Today's call includes forward-looking statements. You can identify these statements by the fact that they use words such as will, expect, anticipate, believe and other words in terms of similar meaning. These forward-looking statements are not historical facts and are subject to risks and uncertainties. Our actual results may differ materially. For a description of the factors that may cause the actual results to differ materially from our forward-looking statements, please refer to the risk factors, forward-looking statement section of our earnings release furnished today on the SEC on Form 8-K, our most recent quarterly report on Form 10-Q and our other filings made with the SEC. All forward-looking statements are made as of the date hereof and we assume no obligation to update these statements except as required by law.
In addition, we will be referring to both GAAP and non-GAAP financial measures. Our recently published earnings release contains definitions of these non-GAAP measures and a reconciliation of these non-GAAP measures to the most comparable GAAP measures.
Our earnings release can be found in the news release section of our website at apfc.com. I will now turn the call over to Joe.
Thank you, Linda and good afternoon ladies and gentlemen and thank you for joining our conference call. As forecast, our fourth quarter provided a major contribution to the year’s financial performance. While much of this contribution had to do with timing of customer orders and revenue recognition, our impact team across the board had to produce, ship and invoice a record amount of finished product during a very compressed period.
We certainly proud of the success in meeting this demanding schedule of events. Our year of transition finished by demonstrating record fourth quarter sales of nearly $81 million and an adjusted EBITDA of $23 million. This brings our fiscal 2011 annual figures to sales of nearly $210 million, a 90% increase over the previous year and an adjusted EBITDA of $33 million or 38% increase from a year ago. Our operational excellence and cost reduction initiative continues to bear fruit with operating cost being reduced for the corporation by $3.4 million compared to the previous year.
We continue to build upon our core products and add new products and customers in both our Fine Chemicals and our Aerospace Equipment segments. Our Specialty Chemical segment remained stable and profitable. These product related and cost reduction activities will make us more profitable and secure our growth profile in the future.
Let us now discuss each of the business segments beginning with our Fine Chemicals segment. We are pleased to see another strong revenue quarter and growth for the year. It’s important to point out that development and product sales grew to 24% of total sales for this segment. Year-over-year, our Fine Chemicals segment increased revenue by 29%. While this is very promising, profit margins did not return to the levels we would expect. As sales go up in 2009 and 2010 from their peak in 2008, many reductions and cuts were made. The revenue hit bottom in 2010 and the rapid growth in 2011 required hiring a new process where a major antiviral product to meet throughput requirements and refurbishing and maintenance of idle equipments.
The running curve we are dealing with new people, new process improvements and new equipments exacerbated by increased maintenance requirements and competitive pricing pressures did not allow the team to achieve the profitability levels we have seen in the past. Despite these challenges, the team has done a very professional job of producing products of the highest quality and despite significant growth challenges maintain delivery schedule of high quality product for our customers.
As we enter fiscal 2012, we believe a large part of the regrowing pain is behind us and we will see margins improved in the latter part of the year. We are restructuring operations in this segment to streamline production and increase throughput through use of operational excellence tools. In fiscal 2012 we forecast the addition of at least two new core products. This represents a significant increase in the core products of our business.
One of our newer customers recently received approval for a new class of drug for treatment of cancers. We also shortly expect our Schedule II manufacturing license for controlled substances and expect to start validation of a chemical product used in pain medication by mid fiscal 2012.