Galaxy Nutritional Foods, a producer of nutritious plant-based dairy alternatives for the retail and foodservice markets, has posted fully diluted earnings per share (EPS) of US$0.06 for its Q1 2003, ended 30 June, compared to a diluted loss per share of US$(0.26) year on year.
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The Florida-based firm posted net income US$771,925, compared to a net loss of US$(2.56m), for the same period one year-ago. Operating income for the Q1 2003 was US$1.92m versus an operating loss of US$(1.53m) year on year. About US$1.6m of the US$1.9m net operating profit was income from a non-cash benefit related to stock options and warrants.
Gross margin in the latest Q1 was up to 28%, a significant increase from 19% for the FY ended 31 March 2002. EBITDA was US$670,454, or 6.7%, excluding US$179,037 related to collection of doubtful accounts and the US$1.6m non-cash benefit related to stock options and warrants. Comparatively, EBITDA for the Q1 2002 was US$498,673, or 4.2%, excluding about US$1.6m non-cash expense related to stock options and warrants. This represents an increase of about US$171,781 or 34%.
Net sales for the Q1 2003 were US$10m, down 15% on US$11.8m year on year. Although the sales had decreased year on year, however, they remained essentially flat compared to the previous quarter and were in line with Galaxy’s overall expectations.
Angelo S. Morini, chairman, CEO and president, stated: “We indicated that the Q1 would mark the earnings and operating profitability turnaround for Galaxy due primarily to increased efficiencies, a streamlining of operations, a strengthening of internal controls and a stabilisation of raw material costs. We also expect that these internal efficiencies and control measures will continue to positively impact our gross margin, operating profit, cash flow and EBITDA for the subsequent quarters of FY 2003. The flat sales level for the quarter, which was in line with our expectations, remains a result of past shipping difficulties and our emphasis on creating a more efficient operation. Moving forward and based upon contracts currently in place, sales are expected to improve during FY 2003 with the greatest sales improvement expected in our fiscal Q3 and Q4.”
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By GlobalDataMorini concluded: “During FY 2000 and FY 1999, when we experienced a profitable average sales growth rate of over 40%, we initiated a programme to significantly increase our production capacity. The investment of about US$12m in new production equipment now gives Galaxy the ability to sustain major growth for many years to come by providing us with the capacity to produce US$1bn in product sales. This new equipment also gives us the ability to take on major customers.
“We are most excited to have completed this programme. The improved efficiency, along with a significant reduction in selling expenses were the primary reasons why we are able to report an operating profit this quarter. As we continue to improve cash flow from operations, we anticipate sales growth will also steadily improve. Now, all that remains is to complete our financial restructuring, which we expect to finish within the current FY. This restructuring should enable Galaxy to return to its rapid sales growth patterns of the past by shipping all orders in full, growing our existing core business and introducing new products and concepts.”
Statement of operations (US$)
Three Months Ended 30 June 2002 2001
NET SALES $10,046,398 $11,801,669
COST OF GOODS SOLD 7,236,504 8,621,936
Gross margin 2,809,894 3,179,733
OPERATING EXPENSES:
Selling 1,058,331 1,620,485
Delivery 571,562 642,259
Non-cash compensation related
to options & warrants (1,637,261) 1,577,629
General and administrative 841,506 820,547
Research and development 57,774 53,316
Total operating expenses 891,912 4,714,236
INCOME (LOSS) FROM OPERATIONS 1,917,982 (1,534,503)
Interest expense 898,472 707,268
NET INCOME (LOSS) $1,019,510 $(2,241,771)
PREFERRED STOCK DIVIDENDS 247,585 325,014
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $771,925 $(2,566,785)
BASIC NET INCOME (LOSS) PER COMMON SHARE $0.07 $(0.26)
DILUTED NET INCOME (LOSS) PER COMMON SHARE $0.06 $(0.26)
