Florida-based Galaxy Nutritional Foods Inc. reported a net loss of US$11.8m, or $0.59 per share, for the third quarter, against a restated net loss of $1m, or $0.06 a share, in the corresponding quarter a year ago.
Galaxy, which markets and distributes plant-based cheese alternatives and dairy alternatives, as well as processed organic cheese and cheese-based foods, said that approximately 84% of the third-quarter net loss reflected costs associated with a reserve against a stockholder note receivable, disposal activities related to the transition of production to an outside manufacturer, and losses on the sale of assets.
Net sales decreased to approximately $9.1m from around $10.6m in the third quarter of the previous fiscal year. The company attributed the decline to a reduction in sales of private label products to Wal-Mart, along with some consumer resistance to price increases.
“Our third-quarter financial results continued to be significantly impacted by non-recurring costs associated with the recent sale of our manufacturing assets and the transition of production and distribution activities to an outside manufacturer, along with a $9.1m reserve against a non-recourse stockholder note receivable where the collateral value is significantly below the face value of the note,” said CEO Michael E. Broll. “We expect to begin realising benefits from the production outsourcing and distribution relationship in the current quarter, when profitability should improve significantly relative to the prior-year quarter and first three quarters of fiscal 2006.”
For the nine months to the end of December, 2005, sales decreased to approximately $29.4m, compared with net sales of $33.7m in the first nine months of the previous fiscal year. Once again, the decline was attributed to a drop in sales to Wal-Mart. The company reported a net loss of $22.3m, or $1.14 per share, for the first nine months, against a restated net loss of $1.7m, or $0.10 per share, in the corresponding period last year.