Overhill Farms Reports Revenues of $50.4 Million, Net Income of
Overhill Farms Reports Revenues of $50.4 Million, Net Income of 4 Cents per Share, for Third Quarter
LOS ANGELES, CA -- (Marketwire) -- 08/14/12 -- Overhill Farms, Inc. (NYSE MKT: OFI) reported net revenues of $50.4 million for the third fiscal quarter ended July 1, 2012. This represents an increase of $10.7 million or 27% from the net revenues of $39.7 million reported for the third fiscal quarter ended July 3, 2011.
The Company reported net income of $698,125, or $0.04 per basic and diluted share, for the most recent quarter, compared to a net loss of $331,971, or ($0.02) per basic and diluted share, for the same quarter in 2011.
The Company attributed the increase in net revenues to sales of Boston Market products and increased foodservice sales, partially offset by decreased sales to one of the Company's retail customers and decreased sales in the airline sector.
Gross profit more than doubled to $4.1 million for the fiscal quarter ended July 1, 2012, compared to $2.0 million for the year-earlier fiscal quarter. Gross margin (profits as a percentage of revenues) was 8.1% for the fiscal quarter ended July 1, 2012, compared to 5.0% for the year-earlier fiscal quarter. The improvement in gross profit, both in dollars and as a percentage of revenues, was due to increased production efficiencies and yields as a result of higher volume production runs during the third fiscal quarter of 2012, partially offset by higher freight and energy costs.
James Rudis, Chairman, President and Chief Executive Officer of Overhill Farms, said, "We are pleased by the strong improvement in revenues, which reflect the contribution of the Boston Market line of frozen foods. We have added several new grocery retailers for the Boston Market product line, and we have expanded distribution of Boston Market meals to additional stores of retailers that were already carrying the line, most notably Walmart. We are confident that there is significant potential for further growth and for improvement in the profitability of the Boston Market line."
Mr. Rudis noted that the sales gains for the Boston Market line were achieved at a time when the frozen meal market has contracted. Profitability of the line has been impacted by high freight costs and commodity prices, Mr. Rudis noted. "We have already taken a number of cost-control measures, and are planning to implement additional steps that we anticipate will have a positive impact on the profitability of the Boston Market line," he said. "We will roll out a significant cost reduction plan beginning in our fourth fiscal quarter and continuing into our first fiscal quarter of fiscal 2013. We believe this will have a positive impact in fiscal 2013."
Mr. Rudis said the Company also expects to achieve increased sales in the foodservice category during the rest of fiscal and calendar 2012, as a result of increased sales to a major existing customer and new customer initiatives.
By customer category, the Company's net revenues from retail customers for the third quarter of fiscal 2012 increased by $5.8 million, or 22.2%, to $31.9 million, from the $26.1 million reported for the third quarter of fiscal 2011. This increase was due primarily to sales of the Company's $8.4 million portion of Boston Market branded products, which was partially offset by reduced sales to Jenny Craig, Inc. of $2.4 million.
Foodservice net revenues increased by $5.5 million, or 47.4%, to $17.1 million for the third quarter of fiscal 2012, from $11.6 million for the third quarter of fiscal 2011. The increase was primarily attributable to a $5.5 million increase in sales volume to Panda Restaurant Group, Inc. We continue to increase our sales efforts in this category, and believe that foodservice represents a significant opportunity for us in 2012 and beyond.
Airline net revenues decreased $661,000, or 33.1%, to $1.4 million for the third quarter of fiscal 2012 from $2.0 million for the third quarter of fiscal 2011.Selling, General and Administrative expenses increased by $409,000, or 16.4%, to $2.9 million (5.8% of net revenues) for the third quarter of fiscal 2012, from $2.5 million (6.3% of net revenues) for the third quarter of fiscal year 2011, but decreased as a percentage of net revenues. The increase in SG&A expenses was due to higher brokerage and royalty expenses, primarily related to the Boston Market brand.
For the nine months ended July 1, 2012, a 39-week period, net revenues were $148.1 million, an increase of $23.1 million, or 18.5%, from the $125.0 million reported for the nine months ended July 3, 2011, a 40-week period.
Net income for the first nine months of fiscal 2012 was $2.8 million, or $0.18 per basic and $0.17 per diluted share, unchanged from the $2.8 million, or $0.18 per basic and $0.17 per diluted share for the first nine months of fiscal 2011.
Conference Call Overhill Farms will host a conference call on August 14, 2012, at 1:00 p.m. EDT (10:00 a.m. PDT). Shareholders and investment professionals can participate by dialing 877-407-9210. A webcast of accompanying slides will be at http://tinyurl.com/9uc56zp.
About Overhill Farms Overhill Farms, Inc. (www.OverhillFarms.com) is a value-added supplier of custom high quality prepared frozen foods for branded retail, private label foodservice and airline customers. Its product line includes entrees, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, as well as organic and vegetarian offerings. The Company's capabilities give its customers a one-stop solution for new product development, precise replication of existing recipes, product manufacturing and packaging. Its customers include prominent nationally recognized names such as Panda Restaurant Group, Inc., Jenny Craig, Inc., Safeway Inc., Target Corporation, Pinnacle Foods Group LLC, and American Airlines, Inc. The Company also sells frozen foods under the Boston Market brand, under exclusive license with Boston Market Corporation.
This news release contains disclosures that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs and include, but are not limited to, statements about the Company's operations and financial performance and condition and statements regarding expectations of continued, increased or improved sales volumes and revenues, margins, profitability, production efficiencies and expansions, brokerage, freight, commodity and promotional expenses and/or savings, cash flows and growth, anticipated amounts and timing of growth in the Company's customer base and business in the foodservice and retail market sectors, revenue growth from new customers and as a result of additional business from existing customers, expectations concerning our Boston Market line, implementation of cost reduction plans, the results of test marketing of new products, contemplated or potential acquisitions or similar transactions and general economic pressures. For this purpose, statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "potential," "may," "goal," "target," "prospects," "optimistic," "confident ," "likely," "probable," "hope," "should," "growth," "opportunities" or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), on-going business strategies or prospects, and possible future company actions, which may be provided by management, are also forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company's and other parties' ability to satisfy conditions precedent to proposed acquisitions or similar transactions, including, without limitation, obtaining any applicable regulatory and stockholder approvals, the impact of competitive products and pricing; fulfillment by suppliers of existing raw material contracts; market conditions that may affect the costs and/or availability of raw materials and the Company's ability to obtain favorable long-term purchase commitments for raw materials, and of fuels, energy, logistics and labor as well as the market for the Company's products, including customers' ability to pay and consumer demand; changes in business environment, including actions of competitors and changes in customer preferences, as well as disruptions to customers' businesses; certifications obtained by competitors; seasonality in the retail category; blackout periods and other factors that may limit the Company's ability to repurchase shares under a stock repurchase program; loss of key customers due to competitive environment or production being moved in-house by customers; natural disasters that can impact, among other things, costs of fuel and raw materials; the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; changes in governmental laws and regulations; change in control due to takeover or other significant changes in ownership; financial viability and resulting effect on revenues and collectability of accounts receivable of customers during deep recessionary periods; ability to obtain additional financing as and when needed, and rising costs of credit that may be associated with new borrowings; voluntary or government-mandated food recalls; and other factors as may be discussed in the Company's Annual Report on Form 10-K for the year ended October 2, 2011, Quarterly Report on Form 10-Q for the quarter ended July 1, 2012 and other reports filed with the Securities and Exchange Commission.
OVERHILL FARMS, INC. CONDENSED SUMMARY OF OPERATIONS For the Quarter Ended ---------------------------- July 1, July 3, 2012 2011 ------------- ------------- Net revenues $ 50,364,881 $ 39,666,756 Cost of sales 46,250,525 37,692,943 ------------- ------------- Gross profit 4,114,356 1,973,813 Selling, general and administrative expenses 2,928,864 2,520,145 ------------- ------------- Operating income (loss) 1,185,492 (546,332) Total interest expense (81,404) (79,043) ------------- ------------- Income (loss) before income tax expense (benefit) 1,104,088 (625,375) Income tax expense (benefit) 405,963 (293,404) ------------- ------------- Net income (loss) $ 698,125 $ (331,971) ============= ============= Net income (loss) per share - basic $ 0.04 $ (0.02) ============= ============= Net income (loss) per share - diluted $ 0.04 $ (0.02) ============= ============= Shares used in computing net income per share, basic 15,823,271 15,823,271 Weighted average shares outstanding 16,029,032 15,823,271 OVERHILL FARMS, INC. CONDENSED SUMMARY OF OPERATIONS For the Nine Months Ended --------------------------- July 1, July 3, 2012 2011 ------------- ------------- Net revenues $ 148,076,374 $ 124,967,766 Cost of sales 134,573,791 113,492,700 ------------- ------------- Gross profit 13,502,583 11,475,066 Selling, general and administrative expenses 8,824,760 6,834,066 ------------- ------------- Operating income 4,677,823 4,641,000 Total interest expense (255,559) (250,876) ------------- ------------- Income before income tax expense 4,422,264 4,390,124 Income tax expense 1,629,746 1,591,164 ------------- ------------- Net income $ 2,792,518 $ 2,798,960 ============= ============= Net income per share - basic $ 0.18 $ 0.18 ============= ============= Net income per share - diluted $ 0.17 $ 0.17 ============= ============= Shares used in computing net income per share, basic 15,823,271 15,823,271 Weighted average shares outstanding 16,020,495 16,055,684
Contacts: James Rudis Chairman, President and CEO Overhill Farms, Inc. 323-582-9977
Alexander Auerbach Auerbach & Co. Public Relations 1-800-871-2583 firstname.lastname@example.org