SOURCE: Overhill Farms, Inc.

April 27, 2005 09:30 ET

Overhill Farms Reports $1.1 Million Net Profit on 39% Increase in Net Sales for Second Quarter

LOS ANGELES, CA -- (MARKET WIRE) -- April 27, 2005 -- Overhill Farms, Inc. (AMEX: OFI) today reported net income for the second quarter of fiscal year 2005 of $1,062,000 or $0.07 per share compared to a net loss of $169,000 or ($0.01) per share for the second quarter of fiscal year 2004.

Net revenues for the second quarter, which ended April 3, 2005, were $43,339,000, an increase of 39.2% or $12,201,000 from the $31,138,000 reported for the second quarter of the prior year. New customer accounts contributed 43% of the increase in net revenues from the second quarter of fiscal year 2004:

--  Net revenues from customers in the retail sector (including weight
    loss) were up 72.5% to $21,610,000 for the quarter, an increase of
    $9,080,000 from $12,530,000 reported in the year-ago quarter.
    
--  Net revenues from foodservice customers rose 17.7% to $15,060,000 for
    the quarter, an increase of $2,262,000 from the $12,798,000 for the
    comparable period in fiscal year 2004.
    
--  Net revenues from airline customers increased 14.8% to $6,669,000 for
    the quarter, an increase of $858,000 from the $5,811,000 for the second
    quarter of fiscal year 2004.
    
Gross profit for the second quarter rose by 62.0% to $5,605,000, an increase of $2,145,000 from the $3,460,000 reported in the year-ago quarter. Gross profit as a percentage of net revenues was 12.9% for the quarter, compared to 11.1% for the comparable period in fiscal year 2004.

Selling, general and administrative (SG&A) expenses fell during the quarter to $2,014,000 or 4.6% of net revenues. This was an improvement of $200,000 or 9.0% from $2,214,000 or 7.1% of net revenues for the comparable period in 2004. This was primarily due to the reduction of spending on point-of-sale promotional activity.

Operating income for the quarter increased 188.1% to $3,590,000, up $2,344,000 from the $1,246,000 from the year-ago quarter. The increase was the result of revenue growth, improvements in production and material costs and lower SG&A expenses.

The Company generated net income for the first half of fiscal year 2005 of $1,663,000 or $0.11 per share compared to a net loss of $2,228,000 or ($0.15) per share for the first half of fiscal year 2004.

Net revenues for the first half of fiscal year 2005, which ended April 3, 2005, were $83,557,000, an increase of 35.8% or $22,025,000 from the $61,532,000 reported for the first half of the prior fiscal year. Growth from existing customers accounted for 51% of the increase in net revenues from the first half of fiscal year 2004 while new customer accounts contributed the remaining increase in net revenues:

--  Net revenues from customers in the retail sector (including weight
    loss) were up 60.7% to $38,238,000 for the first half of fiscal year 2005,
    an increase of $14,437,000 from $23,801,000 reported in the year-ago
    period.
    
--  Net revenues from airline customers increased 25.8% to $15,160,000 for
    the first half of fiscal year 2005, an increase of $3,111,000 from the
    $12,049,000 for the first half of fiscal year 2004.
    
--  Net revenues from foodservice customers rose 17.4% to $30,159,000 for
    the first half of fiscal year 2005, an increase of $4,478,000 from the
    $25,681,000 for the comparable period in fiscal year 2004.
    
Gross profit for the first half of fiscal year 2005 rose by 39.9% to $10,027,000, an increase of $2,861,000 from the $7,166,000 reported in the year-ago period. Gross profit as a percentage of net revenues was 12.0% for the first half of fiscal year 2005, compared to 11.6% for the comparable period in fiscal year 2004.

SG&A expenses declined during the first half of fiscal year 2005 to $3,798,000 or 4.5% of net revenues. This was an improvement of $605,000 or 13.7% from $4,403,000 or 7.2% of net revenues for the comparable period in 2004.

Operating income for the first half of fiscal year 2005 increased 125.4% to $6,229,000, up $3,466,000 from $2,763,000 reported in the year-ago period. The increase was the result of revenue growth, improvements in production and material costs and lower SG&A expenses.

In discussing the second quarter results, James Rudis, Overhill Farms' Chairman and Chief Executive Officer, said, "We are extremely pleased to report what we feel are strong second quarter results driven by significant revenue increases. We continue to improve profitability through cost control measures, manufacturing process improvements and the benefits of improved plant efficiency through increased sales volume." Mr. Rudis added, "We continue to remain optimistic about the prospects for the balance of fiscal 2005 and thereafter."

Overhill Farms is a value-added supplier of custom high quality frozen foods to airline, foodservice, and retail (including weight loss) customers.

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 concerning the Company's operations and financial performance and condition and statements regarding anticipated improvements in manufacturing processes, sales volume and overall gross margins, the potential for existing customers to generate significant sales volume in the future, and the Company's ability to decrease expenses, prepay its debt, strengthen its balance sheet and achieve solid financial performance in fiscal year 2005. For this purpose, statements of historical fact may be deemed to be forward-looking statements. All statements regarding the Company's expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, projected costs or cost savings, capital expenditures, competitive positions, continuation or expansion of governmental programs, growth opportunities for existing products or products under development, benefits from new technology, plans and objectives of management for future operations and markets for stock, and statements regarding future opportunities, acquisitions or business combinations are forward-looking statements. In addition, forward-looking statements include statements in which we use words such as "expect," "believe," "anticipate," "confident," "intend," "strategy," "plan," "will," "estimate," "project," "goal," "target," "prospects," "optimistic" or similar expressions. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, we cannot assure you that these expectations will prove to have been correct, and actual results may differ materially from those reflected in the 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 impact of competitive products and pricing; market conditions and weather patterns that may affect the cost of raw material as well as the market for the Company's products; changes in the Company's business environment, including actions of competitors and changes in customer preferences; the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; changes in governmental laws and regulations, including income taxes; market demand for new and existing products; and other factors as may be discussed in the Company's Annual Report on Form 10-K for the year ended September 26, 2004, and other reports filed with the Securities and Exchange Commission.


                          OVERHILL FARMS, INC.
                     CONDENSED SUMMARY OF OPERATIONS
                              (UNAUDITED)

                                          For the Three Months Ended
                                        April 3,               March 28,
                                          2005                   2004
                                    ---------------        ---------------

Net revenues                        $    43,338,648        $    31,137,910

Cost of sales                            37,734,108             27,677,887
                                    ---------------        ---------------

Gross profit                              5,604,540              3,460,023

Selling, general and
 administrative expenses                  2,014,349              2,214,232
                                    ---------------        ---------------

Operating income                          3,590,191              1,245,791

Other expenses                            1,748,732              1,518,415
                                    ---------------        ---------------

Income (loss) before income taxes         1,841,459               (272,624)

Income tax expense (benefit)                779,894               (103,324)
                                    ---------------        ---------------

Net income (loss)                   $     1,061,565        $      (169,300)
                                    ===============        ===============

Net income (loss) per share:
   Basic                            $          0.07        $         (0.01)
                                    ===============        ===============
   Diluted                          $          0.07        $         (0.01)
                                    ===============        ===============

Weighted average shares outstanding:
   Basic                                 14,805,556             14,805,556
   Diluted                               15,432,348             14,805,556


                          OVERHILL FARMS, INC.
                     CONDENSED SUMMARY OF OPERATIONS
                              (UNAUDITED)

                                           For the Six Months Ended
                                        April 3,               March 28,
                                          2005                   2004
                                    ---------------        ---------------

Net revenues                        $    83,557,483        $    61,531,516

Cost of sales                            73,530,291             54,365,250
                                    ---------------        ---------------

Gross profit                             10,027,192              7,166,266

Selling, general and
 administrative expenses                  3,798,410              4,403,099
                                    ---------------        ---------------

Operating income                          6,228,782              2,763,167

Other expenses                            3,420,355              6,350,801
                                    ---------------        ---------------

Income (loss) before income taxes         2,808,427             (3,587,634)

Income tax expense (benefit)              1,145,838             (1,359,324)
                                    ---------------        ---------------

Net income (loss)                   $     1,662,589        $    (2,228,310)
                                    ===============        ===============

Net income (loss) per share:
   Basic                            $          0.11        $         (0.15)
                                    ===============        ===============
   Diluted                          $          0.11        $         (0.15)
                                    ===============        ===============

Weighted average shares outstanding:
   Basic                                 14,805,556             14,805,556
   Diluted                               15,317,218             14,805,556


                          OVERHILL FARMS, INC.
                      CONDENSED BALANCE SHEET DATA

                                        April 3,            September 26,
                                          2005                   2004
                                    ---------------        ---------------
                                        (Unaudited)

Current assets                           28,697,278             27,775,800
Property and equipment, net              12,242,168             12,618,281

Other assets                             17,585,489             19,155,488
                                    ---------------        ---------------

   Total assets                     $    58,524,935        $    59,549,569
                                    ===============        ===============

Current liabilities                      12,544,382             14,255,200
Other liabilities                        46,676,127             47,775,484

Shareholders' equity (deficit)             (695,574)            (2,481,115)
                                    ---------------        ---------------

   Total liabilities and
    shareholders' equity (deficit)  $    58,524,935        $    59,549,569
                                    ===============        ===============

Contact Information

  • Contacts:

    James Rudis
    Chairman, President and CEO
    Overhill Farms, Inc.
    323-582-9977

    Alexander Auerbach
    Auerbach & Co. Public Relations
    1-800-871-2583
    auerbach@aapr.com