OFI starting to look cheap again after reporting decent #'s earlier in the month. There were, however, some cautious comments regarding the current quarter and seasonality in that report.
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Overhill Farms Announces Increased Earnings and Revenues for Third Quarter
Thursday August 7, 9:00 am ET
Net Income Rises 187%, to 20 Cents per Share
LOS ANGELES, CA--(MARKET WIRE)--Aug 7, 2008 -- Overhill Farms, Inc. (OFI - News) today reported net revenues of $62.4 million for the third quarter ended June 29, 2008, an increase of $9.3 million or 17.5% from the $53.1 million reported for the third quarter of fiscal 2007.
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Net income for the third quarter of fiscal 2008 was $3.2 million ($0.20 per basic and diluted share), up 187% from the $1.1 million ($0.07 per basic and diluted share) for the year-ago quarter.
Gross profit margins rose to 13.5% in the latest quarter, compared to 10.0% in the year-earlier period. The gain was attributed to increased sales, on-going improvements in manufacturing efficiencies, enhancements in financial and operational controls, and modest increases in sales prices to customers.
James Rudis, Chairman, President and Chief Executive Officer of Overhill Farms, said, "The Company continues to do well in a difficult economic environment, with rising costs for ingredients, energy and transportation, as well as slower sales growth in retail chains and the food service sector. We have been successful in overcoming these challenges by carefully managing our controllable costs as well as by generating significant additional business from both new and existing customers."
By customer category, the Company said net revenues from retail customers for the third quarter of fiscal 2008 increased by $15 million, or 45%, to $48.3 million from the $33.3 million reported a year earlier. This increase was largely due to significantly higher volume of products for several customers, including both a major national-brand food company and for Jenny Craig, Inc.
Foodservice net revenues for the most recent quarter declined by $5.5 million, or 37.7%, to $9.1 million from the $14.6 million of a year earlier. The decline was attributable to a softness in the foodservice industry due to a slowing economy and anticipated reduced volume from one customer. The Company believes the foodservice sector continues to represent an opportunity for growth through the acquisition of new accounts.
Airline net revenues decreased by $160,000, or 3.1%, to $5.0 million for the third quarter, from $5.2 million a year earlier.
During the third quarter, Overhill Farms entered into a five-year licensing agreement with Better Living Brands™ Alliance for the exclusive right to produce frozen entrees under the Eating Right™ and O Organics™ brands. The Company paid a $1 million one-time licensing fee and a $125,000 royalty advance. The agreement is renewable for two five-year terms. The Company expects new business under this alliance to begin in fiscal 2009.
"With our growth in sales into the retail sector, we expect to see some increased seasonality in our business," Mr. Rudis said. "Retail sales of frozen foods historically have trended higher in the winter months -- our second quarter -- and lower in the summer, our fourth quarter."
The Company also announced that during the fourth quarter of fiscal 2008 it plans to begin production of an additional 30 items for a retail customer. "We are scheduled to start this new product rollout late in the fourth quarter," Mr. Rudis said, "and we anticipate realizing the full impact of this new business in the first quarter of fiscal 2009."
Revenues for the nine months ended June 29, 2008 were $185.7 million, an increase of $46.1 million or 33% from the $139.6 million for the first nine months of fiscal 2007.
Net income for the first nine months of fiscal 2008 was $7.9 million or $0.50 per basic and diluted share, an increase of 126% from the $3.5 million or $0.23 per basic and $0.22 per diluted share for the year-earlier period.
Operating income for the latest nine months was $16.3 million, or 8.8% of net revenues, up from $9.3 million or 6.7% of net revenues, for the year-earlier period.
Overhill Farms is a leading 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 Jenny Craig, Inc., American Airlines, Inc., Safeway Inc., Pinnacle Foods Group LLC and Panda Restaurant Group, Inc.
