Earnings News... Overhill Farms Announces Revenues of $56.8 Million and Net Income of 10 Cents per Share for First Quarter
6:55a ET February 7, 2008 (Market Wire)
Overhill Farms, Inc. (AMEX: OFI) reported record net revenues of $56,827,000 for the first quarter ended December 30, 2007, up $16.3 million or 40% from the $40,538,000 reported for the first quarter of fiscal 2007.
Net income for the first quarter of fiscal 2008 was $1,578,000 ($0.10 per basic and diluted share) up 1.4% from the $1,556,000 ($0.10 per basic and diluted share) for the year-ago quarter.
James Rudis, Chairman and Chief Executive Officer of Overhill Farms, said, "These record results for the first quarter reflect the Company's strengths in sales, product development, production, quality control and close attention to operating margins. These strengths have enabled us to obtain significant new business which we believe will enable us to exceed last year's double-digit growth rate. Our strong first-quarter revenues demonstrate our continuing success in attracting and retaining business from some of the leading companies in the food industry."
Operating income for the most recent quarter reflected improvements in gross profit margins compared to the second, third and fourth quarters of fiscal 2007, resulting from continuing manufacturing process improvements.
Gross profit margins declined in the first quarter of fiscal 2008 compared to the year-earlier period, to 10.5% from 13.6%, due largely to higher commodity costs as well as lower margins for sales to some of the Company's major customers.
"Like most other food manufacturers, we have seen dramatic increases in commodity costs during the past year," Mr. Rudis said. "While we cover most of our ingredient costs with long-term contracts, sales to several of our customers were higher than anticipated and required purchases in the spot market at higher prices, negatively affecting overall gross margins."
Mr. Rudis added, "The agreements we have recently negotiated and are now negotiating for existing and new customers reflect the prices we will be paying to our suppliers for raw materials during the terms of these contracts. We anticipate that this will enable us to continue to improve our operating margins in the coming quarters."
Foodservice net revenues for most recent quarter decreased by $1.6 million, or 9.9%, to $14.6 million from $16.2 million a year earlier, due to a previously announced decrease in volume for an existing foodservice customer.
During the quarter the Company reached an agreement with Panda Restaurant Group which calls for minimum sales of approximately $39 million for the fiscal year. The new agreement provides for a price increase to reflect rising raw material costs for Panda products. Mr. Rudis said, "The Company believes there is opportunity for additional revenue from Panda, both through their expected growth and through additional products."
Airline net revenues increased by $996,000, or 21.7%, to $5.6 million for the quarter. The higher revenue was due to increases in passenger travel.
"Overhill Farms is continuing to increase revenues and improve margins and operating profits," Mr. Rudis said. "The interest of two competing private equity groups in acquiring the Company, disclosed in yesterday's announcement, underscores the Company's fundamental strength and potential for profitable growth. The Board of Directors remains committed to exploring all opportunities to enhance stockholders' value."
