LOS ANGELES, CA — (Marketwire) — 12/18/12 — Overhill Farms, Inc. (NYSE MKT: OFI) today reported net revenues of $194.4 million for the fiscal year ended September 30, 2012, an increase of $25.2 million or 14.9% from net revenues of $169.2 million for the fiscal year ended October 2, 2011.
Net income for fiscal 2012 was $3.1 million or $0.20 per basic and $0.19 per diluted common share, more than double the net income of $1.4 million or $0.09 per basic and diluted common share of the prior fiscal year.
The Company also reduced the outstanding balance of its credit facility by $4.0 million during fiscal 2012.
James Rudis, the Company’s Chairman, President and Chief Executive Officer, said, “We are pleased to report substantial increases in both revenues and net income despite an economic climate that continues to be challenging for us and for our customers.”
“We continue to see the positive effects of our Boston Market frozen food license. We are pleased to report that the Kroger supermarket chain, with 2,425 stores in 31 states, will begin carrying our Boston Market brand frozen foods, with initial shipments scheduled for February of 2013,” Mr. Rudis added.
As previously announced, after receiving several substantive proposals regarding potential transactions, the Company engaged the investment banking firm of Piper Jaffray & Co. to assist it in evaluating these and other alternatives. Mr. Rudis said that Piper Jaffray has presented proposals to the Company, which are currently being evaluated by management and the Board of Directors.
The increase in net revenues for fiscal 2012 was primarily due to higher sales volumes from the Company’s portion of Boston Market brand products and from a major food service account.
Retail net revenues for fiscal 2012 increased by $12.5 million, or 11.1%, to $125.4 million from $112.9 million for the prior fiscal year. The increase in retail net revenues was largely due to an increase in sales of Boston Market products (sold to various third party customers) of $25.7 million. This increase was partially offset by decreases in net revenues to Jenny Craig, Inc. of $11.0 million and $2.2 million to other retail accounts.
Foodservice and airline net revenues for fiscal 2012 increased by $12.5 million, or 22.2%, to $68.9 million from $56.4 million for fiscal 2011, due primarily to a $14.2 million increase in sales to Panda Restaurant Group Inc, partially offset by a $2.0 million decrease in airline net revenues. As a result of the decreased significance to the Company of airline revenues, the airline category will be included in the foodservice net revenue category going forward.
For fiscal 2012, the foodservice category as a percentage of net revenues increased to 35.4% from 33.3% for fiscal 2011. The Company continues to increase its sales efforts in this category, and believes foodservice represents a significant opportunity in fiscal 2013 and beyond.
Gross profit for fiscal 2012 increased by $4.0 million, or 30.8%, to $17.0 million from $13.0 million for fiscal 2011. Gross margin increased to 8.8% for fiscal 2012 from 7.7% for fiscal 2011.
The increase in gross profit dollars and margin was driven largely by more favorable overhead absorption as a result of higher volume production runs to fulfill increased sales volumes, along with some easing of commodity prices.
Freight and storage expenses were $3.8 million higher, due predominantly to increased shipments for Boston Market products and higher fuel surcharges. The Company anticipates increased freight and storage expenses as sales volumes for Boston Market increase and if fuel prices remain at their current levels or increase.
For the fourth quarter of fiscal 2012, the Company reported net revenues of $46.3 million, compared to $44.3 million for the fourth quarter of fiscal 2011. The Company reported net income of $322,447 or $0.02 per basic and diluted common share for the fourth quarter of fiscal 2012, compared to a net loss for the fourth quarter of fiscal 2011 of ($1.4 million), or ($0.09) per basic and diluted common share.
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 or increased sales volumes and revenues, margins, profitability, production efficiencies and expansions, anticipated freight and storage costs, 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, expectations concerning the Company’s Boston Market line, 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. The Company cautions 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 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; 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 September 30, 2012, and other reports filed with the Securities and Exchange Commission.