Overhill Farms, Inc. (NYSE Amex: OFI) today reported net income of
$974,400, or $0.06 per basic and diluted common share, on net
revenues of $50.2 million, for the second quarter of fiscal 2012,
which ended April 1, 2012. This compares to net income of $1.52
million, or $0.10 per basic and $0.09 per diluted common share, on
net revenues of $40.5 million for the second quarter of fiscal
2011, which ended April 3, 2011.
James Rudis, Chairman and Chief Executive Officer of Overhill
Farms, said, "We are pleased to be able to report an increase in
revenues, primarily a result of increased sales in both our
foodservice and retail sectors, including sales of the Boston
Market line. Our net income reflects the continuing very
challenging conditions in the market, which include the high cost
of freight and energy, increases in commodity prices, and strong
price competition in the retail segment."
Mr. Rudis noted that higher freight costs, including those for
shipments of Boston Market products, accounted for a major portion
of the decrease in gross profit margins for the most recent fiscal
quarter compared to prior-year second quarter levels. He said the
Company has undertaken several initiatives to mitigate freight
costs, including rebidding its freight arrangements and evaluating
alternative distribution strategies.
The Boston Market line was profitable during the most recent
fiscal quarter, Mr. Rudis said, reflecting the normalization of
manufacturing and marketing expenses from the above-normal levels
during the startup phase of the line during the prior quarter.
"We have identified significant potential near-term savings in
production and marketing expenses of the Boston Market line, and
believe there is room for us to achieve more," Mr. Rudis said.
Mr. Rudis noted that strong retail and foodservice sales reflect
the Company's successful efforts to offset the effects of a
difficult economy. In addition, he said, commodity prices appear to
have peaked, which would reduce pressure on margins. Also, he said,
the Company is actively pursuing product development activities for
new and existing customers.
The Company did not purchase any of its stock during the second
fiscal quarter of 2012 under a previously announced share buyback
program, based on the Company's possession of potentially material
nonpublic information. There is no certainty that the events giving
rise to the potentially material nonpublic information will in fact
occur.
Net revenues for the second quarter of fiscal 2012 increased by
$9.7 million, or 24.0%, from year-earlier second quarter levels,
due primarily to net revenues of $8.7 million in sales of the
Company's portion of Boston Market products and higher foodservice
sales volume.
By customer category, retail net revenues increased by $5.7
million, or 21.4%, to $32.3 million for the second quarter of
fiscal year 2012, from $26.6 million for the second quarter of
fiscal year 2011. The increase in retail net revenues was primarily
due to sales of the Company's portion of Boston Market products of
$8.7 million. This was partially offset by reduced sales to Jenny
Craig, Inc. of $3.7 million.
As previously announced, the Company entered into a
co-manufacturing, sales and distribution agreement with Bellisio
Foods, Inc., for the Boston Market line. This includes the
production of Boston Market products to serve retailers in the
Eastern half of the United States.
Foodservice net revenues increased by $4.3 million, or 35.8%, to
$16.3 million for the second quarter of fiscal year 2012, from
$12.0 million for the second quarter of fiscal year 2011, due
primarily to increased sales volume to Panda Restaurant Group of
$4.5 million. The Company continues to increase its sales efforts
in this category, and believes that foodservice represents a
significant opportunity in 2012 and beyond.
Airline net revenues decreased by $352,000, or 18.5%, to $1.6
million for the second quarter of fiscal year 2012, from $1.9
million for the second quarter of fiscal year 2011, due to
continuing airline industry initiatives to cut costs. In future
quarters, the Company said, it will include airline revenues in
foodservice net revenues.
Gross profit for the second quarter of fiscal year 2012
increased by $172,000, or 3.8%, to $4.7 million for the second
quarter of fiscal year 2012 from $4.5 million for the second
quarter of fiscal year 2011.
Gross margin decreased to 9.4% of net sales for the second
quarter of fiscal year 2012 from 11.1% for the second quarter of
fiscal year 2011, due largely to higher freight and raw material
costs and slightly higher labor costs.
Selling, General and Administrative Expenses increased by $1.1
million, or 55.0%, to $3.1 million for the second quarter of fiscal
year 2012 from $2.0 million for the second quarter of fiscal year
2011. The increase was due primarily to higher brokerage, royalty
and marketing expenses related to the Boston Market brand, which
totaled $856,000 for the second quarter of fiscal year 2012.
Operating income for the second quarter of fiscal year 2012
decreased by $870,000, or 34.8%, to $1.6 million (3.2% of net
revenues) from $2.5 million (6.2% of net revenues) for the second
quarter of fiscal year 2011. The decrease in operating income was
the result of lower gross margin and higher SG&A expenses as
noted above.
For the six month period ended April 1, 2012 (a 26 week period),
the Company reported net revenues of $97.7 million, an increase of
$12.4 million or 14.5% from the $85.3 million reported for the
first six months of fiscal year 2011 (a 27 week period). The higher
net revenues were due to increases in retail and foodservice net
revenues partially offset by decrease in airline net revenues.
Operating income for the first six months of fiscal year 2012
decreased by $1.7 million, or 32.7%, to $3.5 million from $5.2
million for the first six months of fiscal year 2011. The decrease
in operating income was the result of decreased gross profit and
higher SG&A expenses as noted above.
Net income for the first six months of fiscal year 2012 was $2.1
million, or $0.13 per basic and diluted share, compared to net
income of $3.1 million, or $0.20 per basic and diluted share, for
the first six months of fiscal year 2011.
Conference Call
Overhill Farms will host a conference call on May 9, 2012, at
8:00 a.m. PDT (11:00 a.m. EDT). Shareholders and investment
professionals can participate by dialing 877-407-9210. A webcast of
accompanying slides will be at
www.InvestorCalendar.com/IC/CEPage.asp?ID=168406.
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 entrées, 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, the
results of test marketing of new products, implementation of a
stock repurchase program, 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 April 1, 2012 and other reports
filed with the Securities and Exchange Commission.
OVERHILL FARMS, INC.
CONDENSED SUMMARY OF OPERATIONS
(Unaudited)
For the Quarter Ended
------------------------
April 1, April 3,
2012 2011
----------- -----------
Net revenues $50,201,781 $40,539,552
Cost of sales 45,498,635 36,008,722
----------- -----------
Gross profit 4,703,146 4,530,830
Selling, general and administrative expenses 3,081,145 2,039,032
----------- -----------
Operating income 1,622,001 2,491,798
Total interest expense (77,784) (80,024)
----------- -----------
Income before income tax expense 1,544,217 2,411,774
Income tax expense 569,816 889,945
----------- -----------
Net income $ 974,401 $ 1,521,829
=========== ===========
Net income per common share - basic $ 0.06 $ 0.10
=========== ===========
Net income per common share - diluted $ 0.06 $ 0.09
=========== ===========
Shares used in computing net income per common
share, basic 15,823,271 15,823,271
Weighted average common shares outstanding 16,023,073 16,061,133
OVERHILL FARMS, INC.
CONDENSED SUMMARY OF OPERATIONS
(Unaudited)
For the Six Months Ended
------------------------
April 1, April 3,
2012 2011
----------- -----------
Net revenues $97,711,491 $85,301,010
Cost of sales 88,323,265 75,799,756
----------- -----------
Gross profit 9,388,226 9,501,254
Selling, general and administrative expenses 5,895,896 4,313,921
----------- -----------
Operating income 3,492,330 5,187,333
Total interest expense (174,154) (171,834)
----------- -----------
Income before income tax expense 3,318,176 5,015,499
Income tax expense 1,223,783 1,884,567
----------- -----------
Net income $ 2,094,393 $ 3,130,932
=========== ===========
Net income per common share - basic $ 0.13 $ 0.20
=========== ===========
Net income per common share - diluted $ 0.13 $ 0.20
=========== ===========
Shares used in computing net income per common
share, basic 15,823,271 15,823,271
Weighted average common shares outstanding 16,016,226 16,053,629
Contacts: James Rudis Chairman, President and CEO Overhill
Farms, Inc. 323-582-9977 Alexander Auerbach Auerbach & Co.
Public Relations 1-800-871-2583 Email Contact
Overhill Farms (AMEX:OFI)
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