UAPH Uap Hldg Corp (MM)

Strength in Proprietary Products, Seed, and Fertilizer Expand Margins GREELEY, Colo., July 2 /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 first quarter of fiscal 2008 that ended on May 27, 2007. (Logo: http://www.newscom.com/cgi-bin/prnh/20060420/UAPLOGO) First quarter sales increased by 15 percent to $1,605 million compared to $1,398 million for the same period last year. Sales of fertilizer in the first quarter increased to $480 million from $334 million in the same period last year. Sales from acquired businesses contributed approximately $30 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 and needed to replenish nutrients in the soil. First quarter sales of seed increased to $358 million, up 11 percent from the same period last year. Sales from acquired businesses contributed approximately $28 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. As expected, sales of cotton and soybean seed decreased due to the shift of planted acres from cotton and soybeans. Sales of chemicals in the first quarter increased to $732 million from $714 million in the same period last year. Sales from acquired businesses contributed approximately $50 million. 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. Insecticide sales decreased due to the increased adoption of insect resistant corn seed to protect from corn rootworm. Fungicide sales increased as more applications for general plant health took place. Gross profit grew to $240 million in the first quarter compared to $186 million for the same period last year. The increase in gross profit was due to higher fertilizer volumes, better unit margins in fertilizer and seed, an increase in proprietary products sold, and the contributions of acquired businesses. Selling, general and administrative expenses increased to $99 million in the first quarter of this fiscal year from $89 million for the same period last year. The increase in expenses was due to the additional expenses related to our acquired businesses, fewer recoveries of accounts previously written off, the lack of the insurance refund received in the first quarter of last fiscal year, and higher incentive compensation expenses commensurate with company performance. First quarter net income was $88 million or $1.66 per diluted share compared to net income of $58 million or $1.11 per diluted share in the same period last year. "We are excited about our first quarter and the remainder of fiscal 2008," said L. Kenny Cordell, UAP Holding Corp.'s president and chief executive officer. "We have been positioning our company for this robust external environment by expanding our geographic footprint, appropriately investing in strategic assets and strong people, and bringing greater value to our farmers." In the first quarter, average trade working capital(1) increased to $466 million on a twelve month trailing average basis. Average trade working capital as a percentage of sales was 15.2 percent, up from 11.9 percent in fiscal first quarter 2007. "The success of our growth and acquisition strategy drove an initial increase in average trade working capital," said David W. Bullock, UAP Holding Corp.'s chief financial officer. "However, we continue to expect our average trade working capital to improve to ten percent of sales, or better." 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 narrowing its earnings guidance for fiscal 2008 to $1.60 to $1.75 per diluted share. Revenue Breakout Net Sales Q1 Q1 % (millions) 2008 2007 Chg Chemical $732.0 $714.0 2% Fertilizer 480.1 334.3 44% Seed 357.6 321.6 11% Other 35.3 28.1 25% Total $1,605.0 $1,398.0 15% Conference call information The company will hold a conference call to discuss fiscal first quarter 2008 results at 5:00 p.m. EDT this afternoon. The call will be webcast live over the Internet from the company's web site at http://www.uap.com/ under "Investor Relations." 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 866-270-6057 (domestic) or 617-213-8891 (international) and entering passcode 44320740. 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 84952447. 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 May 27, February 25, May 28, 2007 2007 2006 ASSETS Current assets: Cash and cash equivalents $13,049 $19,506 $29,800 Receivables, less allowance for doubtful accounts of $20,840, $15,735, and $14,634 1,280,852 338,229 1,131,516 Inventories 793,749 883,033 714,215 Deferred income taxes 27,887 28,046 21,546 Vendor prepay 10,558 64,700 9,833 Other current assets 10,116 8,547 5,642 Total current assets 2,136,211 1,342,061 1,912,552 Property, plant and equipment 154,575 145,455 119,264 Less accumulated depreciation (38,204) (35,234) (26,793) Property, plant and equipment, net 116,371 110,221 92,471 Intangible assets, net 48,259 50,076 26,255 Goodwill 45,581 45,138 35,551 Deferred income taxes 5,321 4,448 8,674 Debt issue costs, net 5,144 5,445 15,957 Other assets 1,766 1,797 1,715 Total assets $2,358,653 $1,559,186 $2,093,175 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,434,026 $926,632 $1,408,791 Short-term debt 313,278 184,739 133,784 Income taxes payable 37,357 --- 24,901 Accrued payroll and related liabilities 27,733 5,820 26,675 Deferred income taxes 2,214 2,200 1,496 Other accrued liabilities 93,441 72,631 89,514 Total current liabilities 1,908,049 1,192,022 1,685,161 Long-term debt 171,953 172,390 175,347 Deferred income taxes 17,097 17,953 19,152 Other non-current liabilities 9,585 6,567 1,854 Commitments and contingencies Stockholders' equity: Common stock, $.001 par value, 90,000,000 shares authorized, 51,534,193, 51,194,620, and 50,967,958 issued and outstanding, respectively 52 51 51 Management stock - rabbi trust --- --- 1,978 Additional paid-in capital 143,577 138,569 121,661 Retained earnings 102,642 27,801 81,377 Accumulated other comprehensive income 5,698 3,833 6,594 Stockholders' equity 251,969 170,254 211,661 Total liabilities and stockholders' equity $2,358,653 $1,559,186 $2,093,175 UAP HOLDING CORP. CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except share data) UNAUDITED Thirteen Weeks Ended May 27, 2007 May 28, 2006 Net sales $1,605,018 $1,398,023 Cost of goods sold 1,365,017 1,212,374 Gross profit 240,001 185,649 Selling, general and administrative expenses 98,973 88,974 Royalties, service charges and other (income) and expenses (9,298) (7,348) Operating income 150,326 104,023 Interest expense, net 7,996 8,289 Finance related and other charges --- 482 Income before income taxes 142,330 95,252 Income tax expense 54,647 36,936 Net income $87,683 $58,316 Earnings per share: Basic $1.71 $1.15 Diluted $1.66 $1.11 Cash dividends declared per share of common stock $0.2250 $0.1875 Weighted average shares outstanding: Basic 51,425,987 50,851,510 Diluted 52,759,521 52,370,178 UAP HOLDING CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED Thirteen Weeks Ended May 27, 2007 May 28, 2006 Operations Net income $87,683 $58,316 Adjustments to reconcile net income to net cash used for operating activities: Depreciation 3,080 2,876 Stock compensation 1,762 836 Amortization of intangibles 1,817 433 Deferred taxes (benefit) (1,869) 646 Accretion of discount on notes --- 2,792 Other (1,608) 850 Change in operating assets and liabilities, net of effects of acquisitions: Increase in receivables, net (940,287) (807,871) Increase in current liabilities and non-current liabilities 587,676 603,886 Decrease in inventory 90,001 31,884 Decrease in other operating assets and liabilities 53,657 63,457 Net cash used for operations (118,088) (41,895) Investing Additions to property, plant and equipment (8,756) (6,703) Additions to purchase price of previous acquisitions (4,294) --- Proceeds from sales of assets 44 7,542 Acquisition of business, net of cash acquired --- (13,627) Net cash used for investing (13,006) (12,788) Financing Net borrowings on revolving line of credit 128,483 --- Dividends paid (9,599) (9,528) Excess income tax benefits from stock based compensation arrangements 4,418 1,572 Checks not yet presented 1,531 12,906 Other 107 123 Net cash provided by financing 124,940 5,073 Net effect of exchange rates on cash and cash equivalents (303) 242 Net change in cash and cash equivalents (6,457) (49,368) Cash and cash equivalents at beginning of period 19,506 79,168 Cash and cash equivalents at end of period $13,049 $29,800 Supplemental disclosure of cash flow information: Cash paid during the period for interest $7,946 $662 Cash paid during the period for income taxes $250 $1,251 Dividends declared but not yet paid $11,595 $9,545 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures (1) The following tables reconcile the difference between working capital, as determined under GAAP, trade working capital, and average trade working capital. UAP Holding Corp. (in thousands) (unaudited) (1) Working Capital Reconciliation to Trade Working Capital May 27, 2007 May 28, 2006 Working capital $228,162 $227,391 Adjustments: Subtract cash and cash equivalents 13,049 29,800 Add back short-term debt 313,278 133,784 Trade working capital $528,391 $331,375 Trade working capital detail: Receivables, less allowance for doubtful accounts $1,280,852 $1,131,516 Inventories 793,749 714,215 Deferred income taxes 27,887 21,546 Vendor prepay 10,558 9,833 Other current assets 10,116 5,642 Subtotal 2,123,162 1,882,752 Accounts payable 1,434,026 1,408,791 Other accrued liabilities, including accrued payroll and related liabilities 121,174 116,189 Income taxes payable 37,357 24,901 Deferred income taxes 2,214 1,496 Subtotal 1,594,771 1,551,377 Trade working capital $528,391 $331,375 Fifty-Two Weeks Fifty-Two Weeks Ended Ended (1) Average Trade Working Capital (a) May 27, 2007 May 28, 2006 Accounts receivable, net $772,857 $665,284 Inventories 718,286 628,267 Prepaid expense (b) 60,012 71,737 Sub-total 1,551,155 1,365,288 Advances on sales 113,684 114,395 Trade payables 878,382 804,008 Sub-total accounts payable 992,066 918,403 Accrued expenses (c) 93,308 117,299 Sub-total 1,085,374 1,035,702 Average trade working capital $465,781 $329,586 Change in average trade working capital $136,195 (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 trade working capital and average trade working capital. We believe that trade working capital and average trade working capital help reflect our ongoing performance and business operations during the periods presented and are 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 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, cash flows, financial position, or comprehensive income, as determined in accordance with accounting principles generally accepted in the United States. 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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