Sepp's Gourmet Foods Ltd.
TSX : SGO

Sepp's Gourmet Foods Ltd.

June 12, 2006 14:45 ET

Sepp's Nine Month 2006 Results: Sales higher, Gross Profit Up, Cash Flow Improves

SURREY, BRITISH COLUMBIA--(CCNMatthews - June 12, 2006) - Sepp's Gourmet Foods Ltd. (TSX:SGO) ("Sepp's" or the "Company") announces results for the third quarter 2006 and for the nine months ending April 30, 2006. Detailed information is available by visiting the Company's site on the SEDAR website at www.sedar.com and reviewing the MD&A and Financial Statements.

The first nine months of 2006

- Sales for the nine months ending April 30, 2006 were $18.7 million, up 13% from the $16.5 million in the comparable period 2005 (see chart below).

- Gross profit increased to $2.5 million in 2006 up 3% from the $2.4 million in the comparable period last year.

- Operating EBITDAS for the first nine months was $727,000, down slightly from operating EBITDAS of $790,000 experienced last year. Operating EBITDAS was lower due to increased energy costs, increased freight costs, higher overheads associated with the expanded bakery operations in Ontario, and one time costs associated with a significant plant expansion while continuing to maintain high levels of service to our customers.

- The Company incurred a net loss of $584,000 for the nine month period compared to a net loss of $174,000 last year.

- In the nine months ending April 30, 2006 the Company had operating cash flow from continuing operations of $1.3 million, an improvement over the $129,000 in the similar period last year.

Third Quarter 2006

- Sales for the three months ending April 30, 2006 were $6.0 million, up 15% from the $5.2 million in the comparable period 2005.

- Gross profit decreased to $622,000 in Q3 2006 from the $724,000 in the comparable period last year. The reduction was due to inefficiencies associated with the new production line in Ontario.

- Operating EBITDAS for the three months was $107,000, up from operating EBITDAS of $86,000 experienced last year.

- The Company incurred a net loss of $393,000 for the three month period compared to a net loss of $53,000 last year.

- In the three months ending April 30, 2006 the Company had operating cash flow from continuing operations of $529,000, down from the $765,000 in the similar period last year. In the comparable period last year, the company had a decrease in other assets of $220,000, which is a non-cash add back to the cash flow statement. In 2006 there was not a repeat occurrence.

Subsequent to quarter end the company completed a restructuring of its senior operating and term debt.

Mr. Tom Poole, President and CEO, stated: "We are encouraged by the higher sales, gross profits and cash flow from continuing operations. The third quarter loss is largely attributable to inefficiencies associated with continuing to maintain high levels of service to our customers during the installation of new equipment in our Ontario operations."

Sepp's Gourmet Foods Ltd. is a producer and marketer of specialty prepared foods for the retail grocery and food service sectors in North and South America, Iceland, and Southeast Asia. Sepp's is a publicly traded company traded on The TSX under the symbol SGO.

This release may contain forward-looking statements. Various factors could cause actual results to differ materially from those projected in forward-looking statements. Although the Company believes that the forward-looking statements contained herein are reasonable, it can give no assurance that the Company's expectations are correct. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.



Comparative figures for the period ended April 30, 2006 compared to
the period ended April 30, 2005
(except for balance sheet information which is compared to July 31,
2005)

Comparative figures for first nine months of fiscal period 2006 and
2005

--------------------------------------------------------------------
($000's) except per
share data Ended April 30, 2006 Ended April 30, 2005
--------------------------------------------------------------------
Sales 18,650 16,456
--------------------------------------------------------------------
Cost of Sales 16,194 14,068
--------------------------------------------------------------------
Gross Profit 2,456 2,388
--------------------------------------------------------------------
Expenses 3,043 2,564
--------------------------------------------------------------------
Operating EBITDAS 727 790
--------------------------------------------------------------------
Net Loss (584) (174)
--------------------------------------------------------------------
Cash flows from
operating activities
(continuing ops) 1,328 129
--------------------------------------------------------------------
Working Capital (1,549) (279)
--------------------------------------------------------------------
Property Plant and
Equipment 6,957 5,126
--------------------------------------------------------------------
Total Assets 11,302 11,363
--------------------------------------------------------------------
Long Term Debt (ex.
convertible debenture) 779 1,228
--------------------------------------------------------------------
Total interest bearing
debt 4,302 4,039
--------------------------------------------------------------------
Shareholder's Equity 2,931 3,445
--------------------------------------------------------------------
Loss per share (after
discontinued ops) ($0.04) ($0.01)
--------------------------------------------------------------------
Shares Outstanding 16,017,971 16,017,971
--------------------------------------------------------------------


Comparative figures for three months ending April 30, 2006 and 2005

--------------------------------------------------------------------
($000's) except per
share data April 30, 2006 April 30, 2005
--------------------------------------------------------------------
Sales 5,972 5,209
--------------------------------------------------------------------
Cost of Sales 5,350 4,485
--------------------------------------------------------------------
Gross Profit 622 724
--------------------------------------------------------------------
Expenses 995 850
--------------------------------------------------------------------
Operating EBITDA 107 86
--------------------------------------------------------------------
Cash flows from
operating activities
(continuing ops) 529 765
--------------------------------------------------------------------
Net Loss (393) (53)
--------------------------------------------------------------------
Loss per share (after
discontinued ops) ($0.02) ($0.00)
Shares Outstanding 16,017,971 16,017,971
--------------------------------------------------------------------


The Toronto Stock Exchange has not reviewed nor has accepted the responsibility for the accuracy and adequacy of this news release.

Contact Information

  • Sepp's Gourmet Foods Ltd.
    Tom Poole
    President
    (604) 535-5457
    or
    Sepp's Gourmet Foods Ltd.
    Jim Pratt
    Chief Financial Officer
    (604) 574-2166
    www.seppsfoods.com