Overhill Farms Reports Revenues of $49.9 Million, Net Income of 2 Cents per
Share, for First Quarter
LOS ANGELES, CA -- (Marketwire) -- 02/13/13 -- Overhill Farms, Inc.
(NYSE MKT: OFI) today reported revenues of $49.9 million, and net
income of $331,000, or $0.02 per basic and diluted common share, for
the first quarter of fiscal year 2013, which ended December 30, 2012.
This compares to revenues of $47.5 million and net income of $1.1
million, or $0.07 per basic and diluted common share, for the first
quarter of fiscal year 2012, which ended January 1, 2012.
James Rudis, the Company's Chairman, President and Chief Executive
Officer, said, "While we are pleased to report increased revenues and
profitable operation in a market environment that continues to be
extremely challenging, we recognize the necessity to expedite our
efforts to move gross margins back toward historic levels."
"After several months of operational review and planning, we have
launched a number of initiatives aimed at improving profitability,
and are planning additional measures that we believe could be
favorable to gross margins."
"Within the last month we have implemented product and promotional
strategies to improve margins on our Boston Market line. We believe
these changes should significantly increase margins for the brand
over the next 12 months."
To improve its margins on its private label and foodservice products,
Mr. Rudis said, the Company is currently negotiating price increases
with customers as contracts renew, particularly for meals whose
components have increased in cost significantly. "We believe that
reasonable price increases are obtainable even in this highly
competitive retail environment," he said.
In addition, Mr. Rudis said, "We have been working closely with our
key customers to re-launch or replace low-margin products and items
that have not met sales expectations." The Company recently received
final approval to refresh a substantial portion of one customer's
line of private label frozen foods, he noted.
The Company has negotiated significantly improved prices for
ingredients and packaging with several suppliers, and is continuing
to seek further cost reductions. "We are also looking at all of our
products to see if cost savings can be achieved by o
components we currently make or, conversely, by making components we
now buy from others," Mr. Rudis said.
The Company is proceeding with a number of relatively low-cost,
short-payback improvements for both of its manufacturing plants which
will increase efficiency and capacity, and reduce labor costs, Mr.
To build on its success with the Boston Market line, the Company is
seeking additional licensing agreements and is considering another
brand that does not compete with the Boston Market line and could be
complementary with it, Mr. Rudis said.
The Company is evaluating its sales and distribution agreement with
Bellisio Foods, and possible alternatives, as it approaches the end
of the agreement's current term, Mr. Rudis noted.
Mr. Rudis also stated that, in conjunction with its investment
banking firm Piper Jaffray, it is reviewing a potential transaction.
"We are currently engaged in discussions with an outside party. At
this point it is not clear whether any transaction will occur, and
the management team continues to operate the Company focused on its
long-term growth," he said.
Retail net revenues for the first fiscal quarter of 2013 decreased by
$2.7 million, or (8.3%) to $29.9 million, from the $32.6 million for
the first quarter of fiscal year 2012, due primarily to reduced sales
to Jenny Craig, Inc., Safeway Inc. and other retail accounts of $3.4
million, $1.0 million and $900,000, respectively. The decreases were
partially offset by increased revenues from Boston Market products of
Foodservice net revenues increased by $5.0 million, or 33.3%, to
$20.0 million for the first quarter of fiscal year 2013 from $15.0
million for the first quarter of fiscal year 2012, due primarily to
increased sales volume to Panda Restaurant Group of $6.4 million,
offset by decreased airline and other (non-Panda) foodservice
customer net revenues of $627,000 and $773,000, respectively.
Gross profit for the first quarter of fiscal year 2013 decreased by
$1.2 million, or 25.5%, to $3.5 million from $4.7 million for the
first quarter of fiscal year 2012, due largely to a shift in product
mix, less favorable commodity prices, and increased freight and
storage expense primarily related to shipments for Boston Market
Gross profit as a percentage of net revenues for the first quarter of
fiscal year 2013 was 7.1% of net sales, compared to 9.9% for the
first quarter of fiscal year 2012.
The Company will host a conference call on February 14, 2013, at 8:30
a.m. Pacific time (11:30 a.m. Eastern time). Shareholders and
investment professionals can participate by dialing 877-407-9210. A
webcast of accompanying slides will be at
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 and foodservice 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 or
increased sales volumes and revenues, margins, profitability,
production efficiencies and expansions, anticipated freight and
storage costs, 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, expectations concerning the Company's Boston Market line,
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 strate
gies or prospects, and possible future
company actions, which may be provided by management, are also
forward-looking statements. The Company cautions 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
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; 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 September 30, 2012, Quarterly Report on Form 10-Q for the
quarter ended December 30, 2012, and other reports filed with the
Securities and Exchange Commission.
OVERHILL FARMS, INC.
CONDENSED SUMMARY OF OPERATIONS
For the Quarter Ended
December 30, January 1,
Net revenues $ 49,879,994 $ 47,509,710
Cost of sales 46,332,275 42,824,630
Gross profit 3,547,719 4,685,080
Selling, general and administrative expenses 2,971,731 2,814,751
Operating income 575,988 1,870,329
Interest expense (48,107) (69,212)
Amortization of deferred financing costs (13,933) (27,158)
Total interest expense (62,040) (96,370)
Income before income taxes 513,948 1,773,959
Income taxes 183,222 653,967
Net income $ 330,726 $ 1,119,992
Net income per share:
Basic $ 0.02 $ 0.07
Diluted $ 0.02 $ 0.07
Shares used in computing net income per share:
Basic 16,046,544 15,823,271
Diluted 16,124,750 16,009,380
Chairman, President and CEO
Overhill Farms, Inc.
Auerbach & Co. Public Relations
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