House & Home
House and Home
House and Home 
Wed, August 5, 2009
Tue, August 4, 2009
Monterey Gourmet Foods: Monterey Gourmet Foods Reports Second Quarter 2009 Results
SALINAS, CA--(Marketwire - August 4, 2009) - Monterey Gourmet Foods (
"During the quarter the shipment schedules of two new non-branded products were pushed out, causing volume in our Salinas plant to fall below internal plan. As a result, lower overhead absorption overshadowed the benefits of lower raw material costs and production efficiencies, as well as gross margin improvement in our Sonoma Foods segment. Subsequent to the quarter close, however, we began shipping and are now on track to achieve our customer's targeted volumes of these non-branded products," said Eric C. Eddings, president and CEO.
"We continued to advance our strategy of focusing on our core, further penetrating the non-branded and Food Service channels and developing innovative items that address both consumer preferences for fresh, restaurant-quality specialty items for at-home preparation and the consumer shift in demand toward value-oriented products," Eddings added. "Based on the high quality of our products, we won several bids to distribute non-branded products to our retail and club customers and increased our share of the Food Service channel. As more retail customers evaluate their categories and pricing strategies in response to the economic downturn, we are creating opportunities to further leverage our high quality branded products in the growing non-branded channel.
"During the quarter we continued to invest in branding and innovation resources to drive long term growth. For example, we began initiatives to better communicate the restaurant-quality attributes and value proposition of our branded products and strengthen our retail pasta program. These investments advance our position as a leader in fresh at-home solution categories. Our performance for the first half of 2009 demonstrates the effectiveness of our growth strategy and our operational excellence."
Financial Highlights: Second Quarter 2009 Compared to Second Quarter 2008
All results exclude the discontinued Casual Gourmet brand, as previously announced.
-- Revenue was $19.3 million, compared to $21.6 million. -- Cost of goods sold was $14.2 million, compared to $15.5 million. -- Gross margin was 26.1 percent, compared to 28.4 percent. -- SG&A was $4.9 million or 25.2 percent of net revenue, compared to $5.7 million or 26.3 percent of net revenue. -- Net income from continuing operations was $219,000, or $0.01 per share, compared to a net loss from continuing operations of $(188,000), or $(0.01) per share. -- Net income was $204,000, or $0.01 per share, compared to a net loss of $(173,000), or $(0.01) per share.
At June 30, 2009, cash and cash equivalents were $3.8 million compared to $3.9 million at March 31, 2009.
"Our cost containment programs to cut just under $2.0 million from SG&A mitigated the impact of the quarter's lower gross profit on the bottom line," said Scott Wheeler, CFO. "As a result, we delivered positive earnings per share of $0.01 despite the quarter's revenue softness. Working capital reached $11.1 million, a 9% increase over the $10.1 million achieved in the first quarter of 2009.
"During the quarter we renewed our line of credit with our bank, without any change to the covenants under the facility, and extended the term through June 30, 2010," added Wheeler. "We remain debt free and well positioned to support growth initiatives."
Conference Call Information
Management will host a conference call at 1:00 p.m. Eastern Time / 10:00 a.m. Pacific Time today to discuss its second quarter 2009 financial results. To listen to the call live, please dial (877) 917-3614 at least 10 minutes prior to the start of the conference and mention participant pass code "Monterey." The call is also being webcast live at [ http://www.montereygourmetfoods.com ]. The call will be archived and available for replay for 90 days from the "Investor Relations" section of the company's website at [ http://www.montereygourmetfoods.com ]. A telephone replay will be available for 90 days by dialing (800) 583-8102. No pass code is required.
About Monterey Gourmet Foods (
Monterey Gourmet Foods manufactures USDA inspected, fresh gourmet refrigerated food products at its integrated manufacturing facilities in Salinas (Monterey County), CA; Kent, WA; and Eugene, OR. Monterey Gourmet Foods has national distribution of its products, which are sold under the brands Monterey Pasta Company, CIBO Naturals, Emerald Valley Kitchen and Sonoma Cheese in more than 11,000 retail and club stores throughout the United States and selected regions of Canada, the Caribbean, Latin America, and Asia Pacific. For more information about Monterey Gourmet Foods, visit [ www.MontereyGourmetFoods.com ].
Safe Harbor Statement
This press release contains forward-looking statements concerning unannounced results of operations for the most recent quarter and projections for future periods including without limitation such phrases and terms as "we are now on track" and "we are creating opportunities." Such forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Consequently, the company wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could cause Monterey Gourmet Foods' actual results to differ from such forward-looking statements are the following: (i) the process associated with the integrations of all the company's brands, plants and sales force, (ii) a significant reduction of sales to two major customers currently comprising a majority of total revenues, (iii) the retention of newly acquired customers including achieving volume projections for these new customers, (iv) the company's ability to achieve improved production efficiencies, (v) the timely and cost-effective introduction of new products in the coming months, (vi) the utilization of the recently-completed plant expansion and the increased fixed costs associated with increased plant capacity, (vii) retention of key personnel and retention of key management, (viii) the risks inherent in food production, (ix) intense competition in the market in which the company competes and (x) Monterey Gourmet Foods' ability to source competitively priced raw materials to achieve historical operating margins. In addition, the company's results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes, and laws and regulations in markets where the company competes. The company has provided additional information regarding risks associated with the business in the company's Annual Report on Form 10-K for fiscal 2008 as well as other filings with the SEC. These statements are based on information as of August 4, 2009 and the company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
MONTEREY GOURMET FOODS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) June 30, 2009 December 31, 2008 ----------------- ----------------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,802 $ 2,151 Accounts receivable less allowances of $880 and $862 5,584 5,725 Inventories 6,532 6,642 Prepaid expenses and other 826 808 ----------------- ----------------- Total current assets 16,744 15,326 Property and equipment, net 14,582 15,420 Deposits and other 183 249 Intangible assets, net 4,251 4,560 ----------------- ----------------- Total assets $ 35,760 $ 35,555 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,288 $ 4,316 Accrued payroll and related benefits 929 1,057 Accrued and other current liabilities 466 1,279 ----------------- ----------------- Total current liabilities 5,683 6,652 Other long-term liabilities 251 217 Stockholders' equity: Preferred stock, $.001 par value, 1,000,000 shares authorized, none outstanding - - Common stock, $.001 par value, 50,000,000 shares authorized, 17,406,571 and 17,391,342 issued and 16,781,700 and 16,766,471 outstanding 17 17 Additional paid-in capital 61,064 60,875 Treasury stock 624,871 and 624,871 shares, respectively, at cost (1,789) (1,789) Accumulated deficit (29,466) (30,417) ----------------- ----------------- Total stockholders' equity 29,826 28,686 ----------------- ----------------- Total liabilities and stockholders' equity $ 35,760 $ 35,555 ================= ================= MONTEREY GOURMET FOODS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands except earnings per share numbers and share totals) Three Months Ended Six Months Ended ---------------------- ---------------------- June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Net revenues $ 19,280 $ 21,643 $ 40,255 $ 45,599 Cost of sales 14,241 15,493 29,366 33,749 ---------- ---------- ---------- ---------- Gross profit 5,039 6,150 10,889 11,850 Selling, general and administrative expenses 4,865 5,702 9,922 12,007 Impairment and restructuring - - - 1,606 Gain (loss) on disposition of assets 10 (8) 10 (8) ---------- ---------- ---------- ---------- Operating income (loss) 184 440 977 (1,771) Other income, net 43 107 54 115 Interest income, net 1 22 2 48 ---------- ---------- ---------- ---------- Income (loss) before income taxes 228 569 1,033 (1,608) Income tax benefit (provision) (9) (757) (41) (3) ---------- ---------- ---------- ---------- Net income (loss) from continuing operations 219 (188) 992 (1,611) Income (loss) from discontinued operations, net of tax (15) 15 (41) (93) ---------- ---------- ---------- ---------- Net income (loss) $ 204 $ (173) $ 951 $ (1,704) ========== ========== ========== ========== Basic income (loss) per share Income (loss) from continuing operations $ 0.01 $ (0.01) $ 0.06 $ (0.10) Net income (loss) $ 0.01 $ (0.01) $ 0.06 $ (0.10) Diluted income (loss) per share Income (loss) from continuing operations $ 0.01 $ (0.01) $ 0.06 $ (0.10) Net income (loss) $ 0.01 $ (0.01) $ 0.06 $ (0.10) Weighted average primary shares outstanding 16,781,700 16,838,981 16,778,993 16,934,987 Weighted average diluted shares outstanding 16,805,042 16,838,981 16,779,429 16,934,987 MONTEREY GOURMET FOODS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands of dollars) Six Months Ended ---------------------------- June 30, 2009 June 30, 2008 ------------- ------------- Cash flows from operating activities: Net income (loss) $ 951 $ (1,704) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,556 1,498 Impairment and restructuring - 1,606 Provisions for inventory - 543 Stock-based compensation 179 192 (Gain) loss on disposition of assets (10) 16 Gain on acquisition of minority interest - (109) Changes in assets and liabilities: Accounts receivable 141 2,127 Inventories 110 612 Prepaid expenses (18) 126 Deposits and other 66 (50) Accounts payable (28) (917) Accrued liabilities (907) (343) ------------- ------------- Net cash provided by operating activities 2,040 3,597 ------------- ------------- Cash flows from investing activities: Purchase of property and equipment, net (409) (1,734) Proceeds from sale of property and equipment 10 15 Acquisition of businesses net of cash and minority interest - (50) ------------- ------------- Net cash used in investing activities (399) (1,769) ------------- ------------- Repayment of debt - (44) Repayment of capital lease obligations - (35) Purchase of treasury stock - (1,132) Proceeds from issuance of common stock 10 26 ------------- ------------- Net cash provided by (used in) financing activities 10 (1,185) ------------- ------------- Net increase in cash and cash equivalents 1,651 643 Cash and cash equivalents, beginning of period 2,151 5,541 ------------- ------------- Cash and cash equivalents, end of period $ 3,802 $ 6,184 ============= ============= Cash payments: June 30, 2009 June 30, 2008 ------------- ------------- Interest $ - $ 2 Income Taxes $ 7 $ 103 MONTEREY GOURMET FOODS SEGMENT REPORTING Three Months Ended Six Months Ended ---------------------------- ---------------------------- June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 -------------- ------------- -------------- ------------- Net Revenues Gourmet Foods Products 17,809 20,052 37,401 42,595 Sonoma Cheese Products $ 1,471 $ 1,591 $ 2,854 $ 3,004 -------------- ------------- -------------- ------------- Total Net Revenues $ 19,280 $ 21,643 $ 40,255 $ 45,599 ============== ============= ============== ============= Operating Income (Loss): Gourmet Foods Products 117 535 865 907 Sonoma Cheese Products $ 67 $ (95) $ 112 $ (2,678) -------------- ------------- -------------- ------------- Total Operating Income (Loss) $ 184 $ 440 $ 977 $ (1,771) ============== ============= ============== ============= December 31, Assets June 30, 2009 2008 -------------- ------------- Gourmet Foods Products 34,104 34,033 Sonoma Cheese Products $ 1,656 $ 1,522 -------------- ------------- Total Assets $ 35,760 $ 35,555 ============== =============