Monterey Pasta Company (Nasdaq:PSTA - news)
  • Thirteenth Consecutive Profitable Quarter: Net Income Up 41% Over Second Quarter '99

  • Quarterly Earnings of $.09 Per Diluted Share: Best Ever for Gourmet Fresh Food Maker

  • Gross profit up nearly 2 percentage points compared with First Quarter 2000

  • Sales Increase of 21% Compared to Second Quarter 1999
Monterey Pasta Company today reported net income for the second quarter ended June 25, 2000 of $1,312,000, or $.09 per diluted share, on net revenues of $11,045,000, based on 13.8 million diluted shares outstanding. Basic income was $.10 per share based on 13.3 million shares outstanding. This compares with a net income of $933,000 for the quarter ended June 27, 1999, which resulted in earnings of $.07 per share, on net revenues of $9,100,000, based on 13.0 million diluted shares outstanding.

On a year-to-date basis Monterey Pasta's net income of $2,406,000 on sales of $22,201,000 and diluted shares of 13.7 million, which resulted in earnings per share of $.18 per basic and diluted share, compared very favorably with 1999 results, which showed net income of $1,638,000 or $.13 per diluted share on sales of $17,073,000 and 12.9 million diluted shares outstanding.

Commenting on the results, Lance Hewitt, Chief Executive Officer and President, said, "We are very pleased to report our thirteenth consecutive profitable quarter as our most profitable quarter in the history of the company. Our sales increased 21% over the second quarter of 1999 and net income increased 41% vs. the same quarter. Our profitability was especially gratifying because the gross profit percent of nearly 39% vs. 37% for the first quarter 2000 reflected the initial increase resulting from our internal profit improvement initiatives we started in late January of this year. Our sales remained very strong during the traditional seasonal lull typically experienced in the second quarter of the year. Our year-to-date results are also noteworthy, with sales up 30% and net income up 47% compared to second quarter 1999."

"I was especially pleased with the nearly 2 point gross profit increase when compared with first quarter 2000. This increase demonstrates that the effort we are expending in this area is beginning to pay dividends. With our $3.5 million capital program nearly completed, we should also begin to reap the benefits of that investment in the third and fourth quarters of 1999 as we strive to meet our commitment to increase gross margin above 1999 levels," said Stephen L. Brinkman, CFO. "Sales, General, and Administrative expenses continue to exhibit a positive trend at 26% of sales for the year, an improvement of nearly 3% vs. the same period in 1999. Additionally, EBITDA was a robust $3.3 million for the first six months of 2000, compared with $2.4 million for the same period a year ago. This performance has allowed us to finance nearly all of the $3.5 million capital program internally prior to making this report," added Mr. Brinkman.

Founded as a regional brand, Monterey Pasta now has national distribution in over 4,900 retail and club stores throughout the United States and selected regions of Canada. Monterey Pasta manufactures USDA inspected, healthy, gourmet refrigerated fresh pasta, sauces and soups at its integrated corporate headquarters/ manufacturing facility in Salinas, (Monterey County) CA.

This press release contains forward-looking statements that involve a number of uncertainties and risks that could cause actual results to differ materially from those discussed in the forward-looking statements. Risks that could cause actual results to differ materially from those discussed in the forward-looking statements, include risks associated with the timely and successful completion of the Company's capital expansion program, retention of key personnel and retention of key management, the risks inherent in food production, and intense competition in the market in which the Company competes. Future projections are based on the assumption that we will continue to sell in existing retail and club stores and will continue to add new stores. For additional information regarding these and other risks, please read the Company's Annual Report on Form 10-K, for the year ended December 26, 1999, its Form 10Q for First Quarter 2000, and its 2000 Proxy.

                        MONTEREY PASTA COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(000's except earnings per share numbers)

Second Quarter Ended Six Months Ended
June 25, June 27, June 25, June 27,
2000 1999 2000 1999

Net revenues from
continuing operations $11,045 $9,100 $22,201 $17,073
Cost of sales 6,785 5,468 13,817 10,364

Gross profit 4,260 3,632 8,384 6,709
Selling, general
and administrative
expenses 2,815 2,645 5,747 4,917

Operating income 1,445 987 2,637 1,792

Gain (loss) on
disposition assets -- 21 -- (16)

Other income
(expense), net (7) (3) (3) (5)

Interest expense, net (26) (50) (53) (99)

Income from
continuing
operations
before provision
for income taxes 1,412 955 2,581 1,672
Provision for
income taxes (100) (22) (175) (34)

Net income from
continuing
operations $1,312 $933 $2,406 $1,638

Basic income per
share $0.10 $0.07 $0.18 $0.13

Diluted income per
share $0.09 $0.07 $0.18 $0.13

Primary shares
outstanding 13,255,655 12,579,768 13,151,883 12,561,515

Diluted shares
outstanding 13,846,620 12,969,956 13,733,096 12,857,336