SOURCE: Overhill Farms, Inc.

Overhill Farms, Inc.

February 10, 2011 09:15 ET

Overhill Farms Reports Net Income of 10 Cents per Share on Revenues of $44.8 Million for First Quarter

LOS ANGELES, CA--(Marketwire - February 10, 2011) - Overhill Farms, Inc. (NYSE Amex: OFI) today reported net income of $1.6 million, or $0.10 per basic and diluted common share, on revenues of $44.8 million for the first quarter of fiscal year 2011, which ended January 2, 2011. This compares to a net income of $3.1 million, or $0.19 per basic and diluted common share, on net revenues of $56.2 million for the first quarter of fiscal year 2010, which ended December 27, 2009.

James Rudis, the Company's Chairman, President and Chief Executive Officer, said, "Overall, we continue to perform relatively well, remaining profitable and financially sound in an economic environment that continued to be difficult for our clients and for us. Notably, we improved our margins in the first quarter of fiscal 2011 over the fourth quarter of fiscal 2010, with basically the same net revenues. Industry-wide, our customers generally saw reduced dollar and unit sales, and unprecedented price promotions by their competitors."

As previously announced, during the first quarter of fiscal year 2011 the Company entered into a five-year licensing agreement with Boston Market Corporation to manufacture, distribute and sell Boston Market branded foods to retailers. The five-year agreement commences on July 1, 2011, and includes options for two five-year renewal terms.

Also as previously announced, the Company signed an agreement during the first quarter of fiscal 2011 to produce a line of 16 private label frozen meals for a major national retailer with more than 1,000 locations across the nation. Full production is expected to begin in April of 2011, and is expected to generate initial annual sales of approximately $7 million, with the opportunity for increased volume over time. For competitive reasons, the customer has asked that its name not be disclosed.

"In addition to the new Boston Market and national retailer opportunities, the Company has a more robust pipeline of new products for both existing and potentially significant new customers than we have experienced in some time," Mr. Rudis said. "With these new products, this pipeline and what appears to be a gradually improving economy, we are optimistic about future retail sales."

Retail net revenues were $29.5 million for the first quarter of fiscal year 2011, a decrease of $5.5 million, or 15.7%, from the $35.0 million for the first quarter of fiscal year 2010. The majority of the decrease was attributable to reduced volume from H. J. Heinz Company of $3.8 million, due to its previously announced decision to self-manufacture; $2.3 million from Safeway, Inc.; and $1.7 million from Jenny Craig, Inc. The slow economic recovery and price promotions by national brands negatively affected most of our retail customers. These decreases were partially offset by increases of $2.1 million to other existing customers.

Foodservice net revenues decreased by $6.1 million, or 31.6%, to $13.2 million for the first quarter of fiscal year 2011, from $19.3 million for the same quarter of the prior fiscal year, due to reduced sales to the Panda Restaurant Group, Inc. (PRG). Although net revenues from PRG for the first quarter of fiscal year 2011 were lower than the first quarter of fiscal year 2010, based on current run rates the Company anticipates that annualized net revenues for calendar year 2011 from PRG will be similar to those of calendar year 2010.

Airline net revenues increased by $233,000, or 12.3%, to $2.1 million for the first quarter of fiscal year 2011, from $1.9 million for the first quarter of the prior fiscal year, due to increased volume to one customer.

Gross profit as a percentage of net revenues was 11.2% for the first quarter of fiscal year 2011, compared to 14.0% for the first quarter of fiscal year 2010. Gross profit for the first quarter of fiscal 2011 decreased by $2.9 million, or 36.7%, to $5.0 million, from $7.9 million for the first quarter of fiscal 2010. This decrease was largely due to lower sales volume and a less favorable sales mix.

Conference Call

The Company will host a conference call on February 10, 2011, at 11:00 a.m. PST (2:00 p.m. EST). Shareholders and investment professionals can participate by dialing 877-407-9210. A webcast of accompanying slides will be at www.investorcalendar.com/ClientPage.asp?ID=163358.

About Overhill Farms

Overhill Farms, Inc. (www.OverhillFarms.com) is a 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., Safeway, Inc., Panda Restaurant Group, Inc., Pinnacle Foods Group LLC and American Airlines, Inc.

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, 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 our Boston Market and new national retailer opportunities, continuing or future price promotions by our customers or their competitors, 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," "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. We caution 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; 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 26, 2010, Quarterly Report on Form 10-Q for the quarter ended January 2, 2011, and other reports filed with the Securities and Exchange Commission.

   
   
OVERHILL FARMS, INC.  
CONDENSED SUMMARY OF OPERATIONS  
(Unaudited)  
   
    For the Quarter Ended  
    January 2,
2011
    December 27,
2009
 
                 
Net revenues   $ 44,761,458     $ 56,232,538  
Cost of sales     39,791,035       48,346,408  
Gross profit     4,970,423       7,886,130  
                 
Selling, general and administrative expenses     2,274,890       2,561,781  
                 
Operating income     2,695,533       5,324,349  
                 
Interest expense:                
  Interest expense     (63,601 )     (331,114 )
  Amortization of debt discount and deferred financing costs     (28,209 )     (101,504
Total interest expense     (91,810 )     (432,618 )
                 
Other expense     -       (1,000 )
                 
Income before income taxes     2,603,723       4,890,731  
                 
Income taxes     994,622       1,837,936  
                 
Net income   $ 1,609,101     $ 3,052,795  
                 
Net income per share:                
  Basic   $ 0.10     $ 0.19  
  Diluted   $ 0.10     $ 0.19  
                 
Shares used in computing net income per share:                
  Basic     15,823,271       15,823,271  
  Diluted     16,046,124       16,051,619  
                 

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
    Email Contact