• H1 net profit turns positive
  • EBITDA up 10.3%
  • Sales gain 5.3%

Michael Foods has booked an increase in first-half net profit as lower financing costs, improved margins and higher sales boosted the bottom line. 

The US egg packer said today (14 August) its net earnings for the six months to 30 June rose to US$7.6m, up from a loss of $5.6m in the comparable period of last year. The company said the figure was boosted by lower financing expenses and higher margins, which more than offset a legal expense relating to the loss of a patent infringement case in the second quarter.

First-half EBITDA rose 10.3% year-on-year, climbing to $114.5m. Sales were boosted by pricing action and new customer wins during the half, gaining 5.3% to $881.5m.

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Michael Foods Reports Second Quarter Results

MINNETONKA, Minn., Aug. 14, 2012 /PRNewswire/ -- Michael Foods Group, Inc. today reported financial results for the second quarter of 2012.

Net sales for the quarter ended June 30, 2012 were $436.7 million, compared to $420 million in 2011, an increase of 4%.

Net loss for the quarter ended June 30, 2012 was $1.7 million, compared to a net loss of $5.2 million in 2011. The loss in the current year was primarily due to recording a $5.8 million charge for damages awarded in National Pasteurized Eggs, Inc. and National Pasteurized Eggs, LLC v. Michael Foods, Inc. et al., a patent infringement case that went to trial in June.

Net sales for the six months ended June 30, 2012 were $881.5 million, compared to $837.1 million in 2011, an increase of 5.3%.

Net earnings for the six months ended June 30, 2012 were $7.6 million, compared to a net loss of $5.6 million in 2011. The earnings increase was primarily due to 2011 credit agreement refinancing-related costs of approximately $8 million, the resulting reduction in interest expense, and improved margins in 2012 due to better alignment of pricing with our input costs.

Earnings before interest, taxes, depreciation, amortization ("EBITDA") and other adjustments ("Adjusted EBITDA," as defined in the Company's credit facility) for the quarter ended June 30, 2012 were $52.7 million, compared to $47.4 million in 2011, an increase of 11.2%. Adjusted EBITDA for the six months ended June 30, 2012 were $114.5 million, compared to $103.8 million in 2011, an increase of 10.3%.

"Our second quarter net earnings improvement highlights the underlying strength of our business model," said Jim Dwyer, CEO and President. "While offset in part by legal costs in the second quarter, new customer acquisitions and pricing pass-through mechanisms continue to fuel our growth."

Michael Foods Group, Inc. uses Adjusted EBITDA as a measurement of financial results, as an indication of the relative strength of its operating performance, and to determine incentive compensation levels. Management believes that EBITDA and Adjusted EBITDA provide potential investors with useful information with which to analyze and compare with other companies in our industry our operating performance and our ability to service debt.

Original source: Michael Foods