Rockville, Maryland-based Sherwood Brands, a manufacturer, marketer and distributor of branded confectionery products and gift items, announced today that net income for the Q2 of fiscal 2002 ended 31 January 2002 was US$611,000, or US$0.14 per diluted share, on revenue of US$15.9m.
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This compares to net income for the Q2 of fiscal 2001 of US$938,000, or US$0.24 per diluted share, on revenue of US$20.8m.
For the six months ended 31 January 2002, net income was US$2.34m, or US$0.55 per diluted share. This compares to net income of US$2.42m, or US$0.63 per diluted share, for the same period of the prior fiscal year. Revenue was US$36.98m compared to US$40.56 for the first six months of fiscal 2001.
President and CEO Uziel Frydman attributed the decline in Q2 revenue primarily to lower- than- expected shipments to a major chain store customer, who requested that shipments against existing orders be delayed until later in the current fiscal year. He said that the recent bankruptcy filing of another large chain store customer had a minimal impact on the company’s Q2 results.
“While second quarter results were affected by delays in the shipment of certain firm orders, our orders are increasing. This reinforces the strong underlying growth trend that Sherwood Brands has established over the past few years. Before the impact of any acquisitions, we expect our organic sales growth to accelerate later this fiscal year, and even more significantly in fiscal 2003.
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By GlobalData“We are particularly excited by our customers’ enthusiastic response to our new line of licensed products, which include both candies and seasonal gift baskets. We currently are negotiating for additional licenses that will allow us to further expand this business, which we expect to become a major contributor to Sherwood’s growth,” Frydman said.
Acquisition update
The CEO continued: “We recently completed the purchase of certain assets of KR Candy Corp. in Brooklyn, a manufacturer of jelly beans and lollipops under the ‘Kastins’ brand name. These products are a terrific complement to our established lines of jelly beans and pops. We began selling the KR products in March, and have already experienced an increase in orders, which had been limited by working capital constraints at KR. We plan to move the KR assets to our expanded plant in Chase City, Virginia in April.”
Frydman said, “We are in active negotiations regarding a second, larger transaction that, if successful, will further expand our revenue base and our line of branded products. We are working hard to implement our strategy to combine organic growth with acquisitions to take Sherwood to the next level.” He cautioned that while the company is optimistic about the progress of these discussions, there can be no guarantee that a definitive agreement will be reached or that a transaction will be consummated.
Chase City expansion update – new plant manager
Frydman added, “The Chase City expansion is on schedule, as is the transfer of some of our manufacturing from our Rhode Island facility to the Chase City plant. We continue to expect annual savings from the consolidation of our facilities to exceed US$1m once the project is completed this summer.
“We also are pleased to announce that Chip Bayer, previously a Plant Manager for one of the largest manufacturers in our industry, joined Sherwood in February as manager of our Chase City plant. Under Chip’s expert guidance, we expect our Chase City facility to emerge as a model of efficiency and productivity in the candy business.”
