Michael Foods Reports First Quarter Results

                 Michael Foods Reports First Quarter Results

PR Newswire

MINNETONKA, Minn., May 13, 2013

MINNETONKA, Minn., May 13, 2013 /PRNewswire/ -- Michael Foods Group, Inc.
today reported financial results for the first quarter of 2013.

Net sales for the quarter ended March 30, 2013 were $484.3 million, compared
to $444.8 million in 2012, an increase of 8.9%. Net earnings for the quarter
ended March 30, 2013 were $14.2 million, compared to $9.4 million in 2012, an
increase of 52.3%.

Earnings before interest, taxes, depreciation, amortization ("EBITDA") and
other adjustments ("adjusted EBITDA," as defined in the Company's credit
facility) for the quarter ended March 30, 2013 were $67.2 million, compared to
$61.8 million in 2012, an increase of 8.8%.

"In the first quarter, despite continued headwinds associated with weaker
consumer demand, we were able to find ways to help many of our customers grow
their volumes and revenues. We also continued to improve our operations while
maintaining safety, quality and service standards," said Jim Dwyer, CEO and
Chairman.

Michael Foods Group, Inc. uses Adjusted EBITDA as a measurement of financial
results, as an indication of the relative strength of its operating
performance, and to determine incentive compensation levels. Management
believes that EBITDA and Adjusted EBITDA provide potential investors with
useful information with which to analyze and compare with other companies in
our industry our operating performance and our ability to service debt.

Certain items contained in this release may be "forward-looking statements."
Forward-looking statements include statements concerning our plans,
objectives, goals, strategies, future events, future sales or performance,
capital expenditures, financing needs, ability to fund operations, intentions
relating to acquisitions, our competitive strengths and weaknesses, our
business strategy and the trends we anticipate in the industries and economies
in which we operate and other information that is not historical information.
When used herein, the words "estimates," "expects," "anticipates," "projects,"
"plans," "intends," "believes" and variations of such words or similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future performance.

All forward-looking statements are based upon our current expectations and
various assumptions. Our expectations, beliefs and projections are expressed
in good faith, and we believe there is a reasonable basis for them, but there
can be no assurance that our expectations, beliefs and projections will be
realized. There are a number of risks and uncertainties that could cause our
actual results to differ materially from the forward-looking statements
contained in this release, including the factors described under "Risk
Factors" in our 2012 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 22, 2013. Important factors that could cause our
actual results to differ materially from the forward-looking statements we
make in this release include changes in domestic and international economic
conditions.

Unaudited segment data follows (in thousands):

                                            Cheese &
                               Refrigerated Other
                   Egg         Potato       Dairy-Case
                   Products    Products     Products     Corporate     Total
Three months ended
March 30, 2013
External net sales $  345,321 $   41,846 $   97,104 $      - $ 
                                                                       484,271
Net earnings       16,225      2,848        3,560        (8,390)       14,243
(loss)
Adjusted EBITDA    52,262      8,144        8,957        (2,122)       67,241
Three months ended
March 31, 2012
External net sales $  310,615 $   36,820 $   97,391 $      - $ 
                                                                       444,826
Net earnings       12,394      2,185        4,257        (9,484)       9,352
(loss)
Adjusted EBITDA    48,113      6,920        9,729        (2,938)       61,824

Beginning January 1, 2013, we changed our retail selling costs allocation
methodology between segments. The allocation impacts the net earnings and
adjusted EBITDA reported by each segment. This change increased the net
earnings and adjusted EBITDA for the Cheese and Other Dairy-Case Products
segment and decreased the net earnings and adjusted EBITDA for the Egg
Products and Refrigerated Potato Products segments. The amounts for the March
31, 2012 three-month period have been restated to reflect the allocation
change.

Adjusted EBITDA is a financial indicator used to analyze and compare companies
on the basis of operating performance. It should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles and is not indicative
of operating profit or cash flow from operations as determined under generally
accepted accounting principles.

The following table reconciles net earnings (loss) to adjusted EBITDA for the
three-month period ended March 30, 2013 (unaudited, in thousands):

                                             Cheese &
                               Refrigerated  Other
                    Egg        Potato        Dairy-Case
                    Products   Products      Products     Corporate    Total
Net earnings        $  16,225 $    2,848 $   3,560 $  (8,390) $
(loss)                                                                 14,243
Unrealized loss on
currency            377        -             -            -            377
transactions (a)
 Consolidated net  16,602     2,848         3,560        (8,390)      14,620
earnings (loss)
Interest expense    101        77            -            21,656       21,834
Intercompany
interest expense    6,697      467           1,021        (8,185)      -
(income)
Income tax expense  8,601      1,326         2,130        (5,070)      6,987
(benefit)
Depreciation and    18,090     2,885         1,764        1            22,740
amortization
Non-cash and stock
option              -          -             -            535          535
compensation
Unusual charges     -          -             -            157          157
Equity sponsor      -          -             -            646          646
management fee
Expenses related
to industrial
revenue bonds
 guaranteed by
certain of our      115        -             -            -            115
subsidiaries
Unrealized gain on  (393)      -             -            -            (393)
swap contracts
Intercompany
allocation of       2,449      541           482          (3,472)      -
corporate admin
costs
Adjusted EBITDA,
as defined
 in the credit   $  52,262 $    8,144 $   8,957 $  (2,122) $
agreement                                                              67,241

(a) The unrealized loss on currency transactions relates to an intercompany
note receivable denominated in Canadian currency due from our Canadian
subsidiary, MFI Food Canada Ltd.

The following table reconciles net earnings (loss) to adjusted EBITDA for the
three-month period ended March 31, 2012 (unaudited, in thousands):

                                              Cheese &
                                Refrigerated  Other
                     Egg        Potato        Dairy-Case
                     Products   Products      Products     Corporate  Total
Net earnings (loss)  $  12,394 $    2,185 $   4,257 $ (9,484) $ 9,352
Unrealized gain on
currency             (403)      -             -            -          (403)
transactions (a)
 Consolidated net   11,991     2,185         4,257        (9,484)    8,949
earnings (loss)
Interest expense     202        130           -            22,470     22,802
Intercompany
interest expense     7,091      495           1,081        (8,667)    -
(income)
Income tax expense   6,937      1,010         2,286        (5,423)    4,810
(benefit)
Depreciation and     20,018     2,817         1,810        2          24,647
amortization
Non-cash and stock   -          -             -            524        524
option compensation
Equity sponsor       -          -             -            605        605
management fee
Expenses related to
industrial revenue
bonds
 guaranteed by
certain of our       147        -             -            -          147
subsidiaries
Unrealized gain on   (660)      -             -            -          (660)
swap contracts
Intercompany
allocation of        2,387      283           295          (2,965)    -
corporate admin
costs
Adjusted EBITDA, as
defined
 in the credit    $  48,113 $    6,920 $   9,729 $ (2,938) $61,824
agreement

(a) The unrealized gain on currency transactions relates to an intercompany
note receivable denominated in Canadian currency due from our Canadian
subsidiary, MFI Food Canada Ltd.

Michael Foods Group, Inc., based in Minnetonka, Minnesota, is a producer and
distributor of food products to the foodservice, retail and food-ingredient
markets. Its principal products are egg products, refrigerated potato
products, cheese and other dairy-case products.

Consolidated statements of earnings are as follows:

Michael Foods Group, Inc.
Consolidated Statements of Earnings
For the three-month periods ended March 30, 2013 and March 31, 2012
(In thousands)
                                                2013           2012
Net sales                                       $  484,271   $   444,826
Cost of sales                                   397,803        365,425
 Gross profit                                  86,468         79,401
Selling, general and administrative expenses    42,528         42,680
 Operating profit                              43,940         36,721
Interest expense, net                           21,823         22,769
Unrealized (gain) loss on currency              377            (403)
transactions
 Earnings before income taxes and equity
 in losses of unconsolidated subsidiary      21,740         14,355
Income tax expense                              6,987          4,810
Equity in losses of unconsolidated subsidiary   510            193
 Net earnings                                $   14,243  $     9,352
                                                March 30,      December 29,
                                                2013           2012
Selected Balance Sheet Information:
Cash and equivalents                            $   29,864  $    43,274
Accrued interest                                $    9,675  $    22,920
Long-term debt, including current maturities    $ 1,197,977    $  1,209,403



SOURCE Michael Foods Group, Inc.

Contact: Mark Westphal, Senior Vice President and Chief Financial Officer,
+1-952-258-4000