The Florida-based producer of healthy cheese alternatives and dairy-related products, Galaxy Nutritional Foods, has announced that it is to remain an independent concern and will not be seeking a buyer for the company.
The company has also announced that its shares will be de-listed from the American Stock Exchange (AMEX) following receipt of a non-compliance notification from AMEX which Galaxy says it does not intend to appeal.
The Orlando company said several months ago that it was exploring a variety of strategic alternatives, including the potential sale of the company but it has now said that these efforts have proved unsuccessful and the process was at an end, meaning that the company was going to remain an independent concern.
Galaxy further added that it would be pursuing a business strategy designed to enhance shareholder value by focusing on a number of initiatives including increasing gross margin by optimising cost of goods in collaboration with its outsource manufacturing partner. The company pointed out that efforts in this regard to date have allowed gross margin to improve above the 30% range in February and March 2006, from 23% in the nine months to the end of December 2005.
Also included in this raft of initiatives is the reduction or elimination of SKUs low-margin or unprofitable SKUs. The company said it will be focusing exclusively on popular core brands which it expects will result in a reduction in total revenues but also an increase in profitability and operating cash flow during FY2007.
“Galaxy’s core brands are very relevant to today’s health-conscious consumer and continue to enjoy strong support in the market,” said CEO Mike Broll. “We have regained a laser-like focus on growing the sales of these brands, while eliminating a number of private-label and non-core products that generate little or no profits. Initial results from this strategy are already evident, as illustrated by the fact that our company was cash-flow-positive and generated an operating profit (excluding non-recurring and non-cash items) in February and March.”
In addition, Galaxy has announced a restructuring of overhead costs to a level consistent with profitability at lower annualised revenues in FY2007, and a refinancing of its outstanding short-term debt, which was already significantly reduced in the second half of 2006.
Broll added that based upon information currently available to management, we expect Galaxy to be profitable and cash-flow-positive for the fiscal year that started at the beginning of April 2006.
“No longer burdened with the high fixed costs of a manufacturing facility, and with the price of our primary raw material (casein) beginning to ease in recent months, I am confident that Galaxy will regain credibility with investors, customers and employees as we execute our operating plan during Fiscal 2007,” Broll said.
The company also announced that it has received a letter from the American Stock Exchange (AMEX), giving notice that it was not in compliance with AMEX’s continued listing requirements and that AMEX intends to proceed with the filing of an application with the Securities and Exchange Commission (SEC) to strike the common stock from listing and registration on AMEX. Galaxy said it does not intend to appeal this decision by AMEX.
Upon the delisting of the company’s shares from AMEX the company’s stock will bw quoted on the OTC Bulletin Board.