Opta Food Ingredients, Inc. (Nasdaq:OPTS), a leading developer and manufacturer of proprietary food ingredients, ytoday reported that revenue for the third quarter ended September 30, 2001 was $5.8 million compared with $6.5 million for the comparable 2000 quarter. The net loss for the quarter amounted to $1.3 million, or $.12 per share, compared with net income of $217,000, or $.02 per share, for the same period last year. Results for the third quarter of 2001 included a one-time charge of $713,000, or $.07 per share, related to the write-off of inventory that no longer meets the company’s quality specifications.
For the nine months ended September 30, 2001, revenue was $19.1 million compared with $19.8 million for the same period in 2000. The net loss for the first nine months of 2001–including the third-quarter inventory charge–was $2.1 million, or $.19 per share, compared with a net loss of $107,000, or $.01 per share, for the same period last year. Results for the first nine months of 2000 included non-recurring charges of $650,000, or $.06 per share, for personnel costs and the consolidation of the company’s starch-based and stabilizer blend operations.
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According to Arthur J. McEvily, president and chief executive officer, revenue for the quarter was lower than anticipated due to a significant decrease in sales to suppliers for a major quick-service restaurant customer, as well as lower sales to two other major customers. The lower sales led to lower production levels, less efficient utilization of plant manufacturing capacity and higher than anticipated inventory levels. Gross margin for the quarter averaged 22 percent of revenue compared with 31 percent for the same quarter in 2000.
McEvily attributed the disappointing sales results to insufficient diversification across a broad customer base and orders falling short of internal forecasts. “The same issues that have impacted our progress throughout this year continued to affect us in the third quarter,” he said.
Despite the disappointing quarter, McEvily said the company is making progress in strengthening its sales and customer support functions under the direction of a new vice president of sales. “We believe we have the right leadership in place. Our sales team is focused on the key opportunities to broaden our customer base and leverage the commercial success of our existing products,” he said, noting that improving the company’s financial performance is management’s highest priority. “We are examining everything we are doing as a company and developing a plan to get the organization back on track. It is clear that our overall business model has to change, and we have to take aggressive measures to return this company to profitability as rapidly as possible.”
Opta Food Ingredients, Inc. is a leading innovator, manufacturer and marketer of proprietary food ingredients that improve the nutritional content, healthfulness, texture and taste of its customers’ food products. Opta’s food ingredients are used by more than 200 food companies, including 10 of the 15 largest U.S. consumer packaged food companies and three of the world’s largest quick service restaurant chains.
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By GlobalDataNote: This press release contains forward-looking statements based on management’s current expectations. Factors which could cause actual results to differ from such expectations are discussed in the Company’s periodic reports filed with the Securities and Exchange Commission (including Reports on Form 10-K and Form 10-Q) and include sales to a small number of food and food service companies, the size and timing of significant orders, as well as deferral of orders, over which the Company has no control; the extended product testing and launch cycles of the Company’s potential customers; the variation of the Company’s sales cycles from customer to customer; increased competition posed by food ingredient manufacturers; changes in pricing policies by the Company or its competitors; possible delays in securing production equipment and retrofitting production facilities and processes; the Company’s success in expanding its sales and marketing programs and its ability to gain increased market acceptance for its existing product lines; the Company’s ability to timely develop and successfully introduce new products in its pipeline at acceptable costs; the potential for significant quarterly variations in the mix of sales among the Company’s products; the challenges of integrating the operations of acquired businesses; and general economic conditions.
Opta Food Ingredients, Inc.
Statement of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
Product revenue $5,829 $6,539 $19,133 $19,811
Cost and expenses:
Cost of revenue (A) 5,289 4,535 (A) 15,738 13,696
Selling, general
and administrative 1,222 1,143 3,728 4,072
Research and development 680 776 2,033 2,265
Restructuring costs — — — 300
7,191 6,454 21,499 20,333
Income (loss) from
operations (1,362) 85 (2,366) (522)
Other income (expense):
Interest income 84 177 345 527
Interest expense (43) (62) (136) (183)
Other income, net 40 17 65 71
Net income (loss) ($1,281) $217 ($2,092) ($107)
Basic net income
(loss) per share ($0.12) $0.02 ($0.19) ($0.01)
Diluted net income
(loss) per share ($0.12) $0.02 ($0.19) ($0.01)
Weighted average shares
outstanding – basic 10,825 10,752 10,803 10,811
Weighted average shares
outstanding – diluted 10,825 10,784 10,803 10,811
(A) The 2001 results include a one-time charge of $713,000, or $.07
per share related to the write-off of inventory due to product quality
