USA: The UniMark Group, Inc. announces 2000 third quarter financial results
Net sales for the 2000 third quarter were $7.7 million versus sales of $14.6 million for the 1999 third quarter, a decrease of 47.3%. The net income for the 2000 period was $0.1 million or $0.01 per share, versus a net loss of $3.0 million or $(0.21) per share for the 1999 period. For the nine months ended September 30, 2000, net sales were $34.9 million versus net sales of $50.4 million for the prior comparable period, a decrease of 30.9%. The net loss for the nine months ended September 30, 2000 was $4.4 million or $(0.31) per share versus a net loss of $8.4 million or $(0.63) per share for the prior comparable period. These results include the nonrecurring gains in the three month period of 2000 resulting from the Del Monte Foods Company ("DLM") transaction ($3.1 million) and the VAT tax refund ($1.7 million), the special charge in the nine month period of 2000 associated with the losses on the abandonment of a leased facility in Mexico ($2.5 million) and the 1999 nine month period losses associated with the operating results and loss of disposal of certain operations in 1999 ($1.4 million).
The 2000 third quarter and year-to-date periods decline in net sales, as compared to the prior comparable periods, reflects the impact of prior year decisions to reduce unprofitable product lines and product offerings, reduced demand associated with the loss of business volume at several wholesale club customers, reduced shipments to Japan caused by the timing of new product introductions by its Japanese customers and the initial impact of the DLM transaction on September 2000 net sales. The 2000 third quarter gross profit resulted in a loss of 15.8% as compared to 1999 period's positive gross profit of 15.6%. The significant decrease in gross profit in the 2000 period was primarily attributable to the sales volume decreases, lower absorption of fix manufacturing costs due to reduced production and by unfavorable worldwide market prices for frozen concentrate orange juice. For the nine-month period in the current year, these factors negatively impacted gross profit, which decreased to 12.0% as compared to 14.3% in the prior year period. Selling, general and administrative decreased by $0.3 million and $2.0 million during the three and nine months ended September 30, 2000 versus the same periods of the prior year. These decreases were largely due to reduced selling expenses associated with the lower sales volumes and tighter expense controls. As a result of the DLM transaction, costs in connection with the distribution, selling and marketing, accounting functions and interest expenses, along with approximately 50 executive, administrative, warehouse and sales employees associated with the U.S. retail and wholesale club business, have been substantially eliminated from future periods. Remaining U.S. selling and administrative expenses of the Company are those needed to operate its U.S. food service and industrial products business, develop its Mexico and European markets and those associated with a publicly-held company.
"During the third quarter, we focused on consummating the sale transaction with DLM and in the finalization of the long-term supply agreement and the license agreement for the rights to use the Sunfresh® brand, over a five year royalty free period, for specific areas, including Europe, Asia, the Pacific Rim and Mexico," stated Emilio Castillo, interim President and CEO of the Company. "We are very pleased and excited with how this strategic relationship is progressing with DLM. The Del Monte brand, which was first introduced in 1892, is one of the best known brands in the United States in processed fruit. We have already received increased volume commitments from DLM during the first year of the supply agreement approximating 33.0% over the agreements minimum quantities. In addition, the Company is in discussions with DLM to support them in the manufacturing and roll out of several new branded products to be introduced in the future."
He continued, "We have also received significant commitments from our Japan customers for next year's deliveries which are estimated at approximately $9.0 million, and recently exhibited at the SIAL food show held in October 2000 in Paris France, which is one of the top food industry trade events in the world. Our show goal was to formally introduce the Company and our products, which includes chilled and canned citrus products under the Sunfresh® brand, to the European markets with the objective of establishing a footprint in the European food industry. We are extremely pleased with the show results and in the contacts that were made. In addition, the Company has started distributing the Sunfresh® brand retail line of citrus products into several major national food retailers in Mexico."
Mr. Castillo also stated, "I am pleased with the progress of the Company's long-term supply contract (the "Lemon Project") with an affiliate of the Coca Cola Company for the planting and growing of Italian lemons. To date, approximately 5,800 acres have been planted, representing over 76% of the land acquired."
The UniMark Group, Inc.
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Net sales $7,681 $14,593 $34,867 $50,434
Loss (177) (3,412) (5,154) (8,487)
Net income (loss) 107 (2,959) (4,380) (8,350)
Income (loss) per share
basic and diluted $0.01 $(0.21) $(0.31) $(0.63)
Weighted average shares
outstanding 13,938 13,938 13,938 13,301
This press release contains 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 including, but not limited to, statements concerning the Company's operations and financial performance and condition. For this purpose, statements of historical fact may be deemed to be 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; risks related to product liability and recall; changes in the Company's business environment, including actions of competitors and changes in customer preferences; loss of significant customers; dependence on key management; changes in governmental laws and regulations, including income taxes; economic, political and social conditions in Mexico; exchange rate fluctuations and inflation; labor relations and costs; market demand for new and existing products; and other factors as may be discussed in the Company's Report on Form 10-K for the year ended December 31, 1999, those factors listed under "Risk Factors" in the Company's prospectus dated June 14, 1998 and other reports filed with the Securities and Exchange Commission.
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