Horizon Organic Holding Corporation (Nasdaq: HCOW), the nation’s leading producer of organic dairy products, announced yesterday results for its fourth quarter and fiscal year ended December 31, 2000. Net sales for the fourth quarter reached $37.8 million, an increase of more than 50 percent over the fourth quarter of 1999. The company previously announced there would be a charge taken during the fourth quarter of 2000 to restructure its United Kingdom operations. This charge amounted to $203,000 after tax. Including this charge, the company reported a net loss in the fourth quarter of $579,000 or $0.06 per diluted share versus a net loss of $527,000 or $0.05 per diluted share for the comparable period a year ago. Net income before the restructuring charge was a loss of $376,000 or $0.04 per diluted share, which includes earnings per share of $0.02 for U.S. operations combined with a loss of $0.06 in the U.K.
For the year ended December 31, 2000, net sales rose 50 percent to $127.2 million compared with $84.8 million reported in 1999. Net income for fiscal 2000 was $519,000 or $0.05 per diluted share versus $1.4 million or $.14 per diluted share last year. Net income before the restructuring charge was $722,000 or $0.07 per diluted share.
Go deeper with GlobalData
As Horizon Organic stated previously, fourth quarter results in the U.S. were basically on track, but the company reported a loss due to lower sales in its U.K. business. The company acquired Meadow Farms Ltd. and Organic Matters Ltd. in June of 2000, propelling the company from a relatively small U.K. presence with its Rachel’s Organic brand yogurt to the leading organic milk supplier in that country. Unfortunately, the company lost a major customer after its acquisition of Meadow Farms and has experienced lower overall growth in the U.K. than anticipated. As a result, operating income was not sufficient to cover interest and goodwill expenses associated with these acquisitions.
“The plan we put in place to deliver profitable growth in the U.S. is having the desired impact. We now are focusing our attention on addressing the issues in the U.K.,” said Chuck Marcy, president and chief executive officer of Horizon Organic.
Marcy cited three major accomplishments in the U.S. “First, the success of our expanded line of ultra pasteurized (UP) milk products introduced early last year enabled us to build distribution of fluid milk products to more than 43 percent of conventional grocery stores and provides the platform to add more new customers in 2001. Importantly, this broadened milk distribution base sets the stage for rapid expansion of other Horizon Organic products as part of organic dairy sections in 2001.
“Second, we developed and improved relationships with UP milk, dairy and juice processors during 2000 that are more efficient and provide adequate capacity for future growth,” Marcy continued.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData“Finally, the logistics improvements we have been making are helping to reduce expenses and increase productivity across the U.S. operations. With these challenges behind us, we believe we have made great strides, as evidenced by our outstanding sales growth, and we are well positioned for 2001,” added Marcy.
To address the issues in the U.K., Horizon Organic is implementing a three-tier plan. The plan includes restructuring the organization to reduce overhead and utilize resources more effectively, enhancing distribution through direct store delivery and focusing on building the image and awareness of the Horizon Organic brand. The company has consolidated its U.K. administrative offices and eliminated several management positions. Marcy has reduced the number of people reporting to him in the U.S. so he can focus more attention on U.K. issues.
To enhance distribution, Horizon Organic is working with distributors in the U.K. to both deliver Horizon Organic products to retail outlets and stock the shelves, which should result in high impact displays and expanded shelf space. Such arrangements should facilitate expansion of the Horizon Organic product line throughout the U.K.
In order to build the image and awareness of the Horizon Organic brand, the company is moving aggressively to obtain distribution of its branded milk products beyond the London specialty stores where they are currently sold. In addition, Horizon Organic is expanding its product line to include a new branded twin-tub yogurt. Two major supermarket chains already have agreed to stock this new product.
“We are confident these initiatives will result in improved performance throughout the year and we hope to reach a break-even position in the U.K. by year-end. We think the long-term prospects for the U.K. are very strong and we are going to take the steps necessary to maintain our leadership position there,” said Marcy.
“On a company-wide basis, we anticipate our operating performance in the first quarter to be similar to the fourth quarter 2000, resulting in a loss of $0.03 to $0.05 per share. For the year, we are comfortable with the current range of analyst estimates for earnings per share which are in the high teens to low twenties,” he concluded.
Horizon Organic management will host an investment community conference call on Wednesday, February 7, 2001 at 11:00 a.m. Eastern Time to discuss the results for fiscal 2000 fourth quarter and year ended December 31, 2000. To hear the call in a listen only mode, participants should dial 212-676-5282 and refer to reservation #17686956, ten minutes prior to the start of the event, or visit the company’s web site at www.horizonorganic.com for a live simulcast and replay of the call.
Horizon Organic produces and markets the leading brand of certified organic milk and a full line of refrigerated, certified organic dairy products. The company also markets certified organic eggs and juices. Horizon Organic products can be found in conventional supermarkets and natural foods stores across the U.S. and in the U.K. For more information, please visit the Company’s web site at www.horizonorganic.com.
Note on Forward-Looking Statements: This news release contains forward- looking statements that involve risks and uncertainties. Future events may differ materially from those discussed herein, due to a number of factors, including uncertainties related to the company’s ability to continue strong growth, to achieve distribution and operational efficiencies, and to expand domestically and internationally, as well as increased milk costs, inbound and outbound freight and distribution costs, higher costs related to new-product introductions and increased personnel costs. These factors and others are more fully discussed in the company’s Annual Report on Form 10-K for the year ended December 31,1999.
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Three Months Ended December 31,
2000 %NS 1999 %NS
Net sales $37,787 100.0% $24,960 100.0%
Growth vs. prior year 51.4% 69.8%
Cost of sales 26,413 69.9% 17,677 70.8%
Gross profit 11,374 30.1% 7,283 29.2%
Selling expense 7,634 20.2% 5,572 22.3%
General and
administrative 2,867 7.6% 2,067 8.3%
Goodwill Amortization 820 2.2% 381 1.5%
Operating income (loss) 52 0.1% (736) -2.9%
Interest and other, net (974) -2.6% (39) -0.2%
Pretax income (loss) (921) -2.4% (775) -3.1%
Income tax benefit
(expense) 342 0.9% 249 1.0%
Net income (loss) (579) -1.5% (527) -2.1%
Earnings per share
Basic ($0.06) ($0.05)
Diluted ($0.06) ($0.05)
Weighted average shares
outstanding:
Basic 9,839 9,736
Diluted 9,969 9,976
Selected Balance Sheet Data
Dec 31, Dec 31,
2000 1999
Working capital $24,179 $18,435
Total assets 132,164 84,612
Current liabilities 24,779 14,225
Long-term debt,
less current portion 46,151 11,255
Stockholders’ equity 58,644 57,888
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Twelve Months Ended December 31,
2000 %NS 1999 %NS
Net sales $127,206 100.0% $84,772 100.0%
Growth vs. prior year 50.1% 71.7%
Cost of sales 86,903 68.3% 56,591 66.8%
Gross profit 40,303 31.7% 28,180 33.2%
Selling expense 25,387 20.0% 18,399 21.7%
General and
administrative 8,964 7.0% 6,185 7.3%
Goodwill Amortization 2,545 2.0% 1,215 1.4%
Operating income (loss) 3,408 2.7% 2,381 2.8%
Interest and other, net (2,495) -2.0% 58 0.1%
Pretax income (loss) 913 0.7% 2,439 2.9%
Income tax benefit
(expense) (393) -0.3% (1,037) -1.2%
Net income (loss) 519 0.4% 1,402 1.7%
Earnings per share
Basic $0.05 $0.15
Diluted $0.05 $0.14
Weighted average shares
outstanding:
Basic 9,796 9,544
Diluted 10,030 9,868
