Spigadoro, Inc. (AMEX: SRO), a leading manufacturer of branded and private label products in the Mediterranean food sector, yesterday announced its consolidated results of operations for the quarter ended March 31, 2001. The Company noted that the first quarter 2001 results include the operations of Pastificio Gazzola S.p.A., the Company’s private label pasta subsidiary acquired in May 2000, and, as a result, quarter-to-quarter results are not necessarily comparable.
The Company reported that net sales for the first quarter 2001 increased 37% to approximately $39.3 million from $28.8 million in the prior year quarter, primarily due to a 9.2% increase in animal feed sales and a 110% increase in food sales, the latter being primarily due to the inclusion of the Gazzola operations in the 2001 quarter. The increase in animal feed sales was due to the effect of sales price increases implemented by the Company in the past few months, as well as a 2% increase in volume of feed sold.
Gross profit increased 8.2% to $8.1 million in the 2001 quarter from $7.5 million in the prior year quarter, primarily as a result of the inclusion of the Gazzola results in the current quarter. Gross margins declined from 26.0% in the 2000 quarter to 20.6% in the 2001 quarter, primarily due to higher raw material costs. However, the Company noted that overall margins had increased almost a full percentage point from the 19.7% recorded during the year ended December 31, 2000. In addition, gross profit margins at Petrini are approaching levels achieved in early 2000, while margins at Gazzola increased from 3.1% during fiscal 2000 to 8.8% in the first quarter 2001, primarily as a result of the Company’s ongoing restructuring efforts.
EBITDA for Petrini and Gazzola (stand-alone) for the first quarter 2001 decreased to $600,000 from $1.2 million in the first quarter of 2000. Consolidated Spigadoro EBITDA for the first quarter 2001 decreased to $40,000 from $900,000 during the prior year quarter.
The Company reported a net loss for the 2001 first quarter of $3.1 million, compared to net income of $9.3 million in the prior year quarter, which was primarily due to a one-time gain from the sale of the Company’s shares in Algo Vision.
The Company believes that its results confirm the positive impact of the efficiency measures it has implemented during the past year. Although a combination of higher raw material and energy costs negatively impacted results during fiscal 2000, through a combination of headcount reductions, selected price increases, production efficiencies and a focus on higher margin products, the Company has begun to see an improvement in revenues (in particular in its animal feed division) and in gross profit margins. The Company anticipates that these positive trends will continue during 2001, as the effect of its actions taken to date are expected to become even more pronounced and additional restructuring efforts planned for this year should begin to take effect.
Riccardo Carelli, the Chief Executive Officer of Spigadoro noted: “Our Q1 results are beginning to reflect the measures we have taken over the past several months to offset negative market conditions. At our core Petrini operations, our margins are approaching the levels achieved in early 2000, and we anticipate further improvements as our efficiency plan continues and its effects begin to flow through our results.”
Mr. Carelli continued, “Although the low margins at Gazzola continue to have a dramatic impact on our bottom line, our Gazzola restructuring efforts, which have only just begun, are also beginning to bear fruit. Gazzola’s margins, which were 3.1% during fiscal 2000, have improved to 8.8% during Q1 2001. We anticipate that this positive trend will continue as the market stabilizes and our restructuring plan is further implemented.”
Spigadoro is a leading manufacturer of branded and private label products in the Mediterranean food sector. Its pasta and other Mediterranean products are internationally recognized as high quality products and are marketed under the brand name “Spigadoro” (“Golden Ear of Wheat”) in Italy, Europe, the U.S. and the Far East. The Company’s animal feed products are manufactured at seven plants throughout Italy and are marketed under the “Petrini” name. The Company’s recent acquisition of Pastificio Gazzola also establishes it as a European leader in private label pasta. The Company has previously announced an aggressive growth strategy that includes a consolidation of small and mid-cap companies within the food and animal feed industries in Europe.
Statements in this press release that are not descriptions of historical facts are forward-looking statements that are subject to risks and uncertainties. Such statements, including those regarding among other things, our strategy, future prospects and results of operations, are dependent on any number of known and unknown factors, many of which are outside of our control. Actual results could differ materially from those currently anticipated or expressed or implied by any forward-looking statement due to a number of factors, including those set forth in our Securities and Exchange Commission filings under “Risk Factors.” These factors include the following: we have changed our principal business and we may not be successful operating a new business; Vertical Financial Holdings and affiliated entities control Spigadoro; our substantial debt may adversely affect our ability to obtain additional funds and increase our vulnerability to economic or business downturns; our operating results will be adversely affected by charges from acquisitions; our strategy of acquiring other companies for growth may not succeed and may adversely affect our financial condition, results of operations and cash flows; intense competition in the pasta and animal feed industries may adversely affect operating results; fluctuations in raw material costs could adversely affect our operating results; our business may be adversely affected by risks associated with foreign operations; and other risks. In addition, our acquisition discussions are in various stages and, except as previously announced, we have no agreements or arrangements relating to any acquisitions. We are unable to predict whether or when any of these negotiations will result in any definitive agreements. The words “anticipate”, “believe”, “expect”, “intend”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance upon any forward-looking statements contained in this press release, which speak only as of the date the statements are made. Spigadoro undertakes no obligation to update any forward-looking statement contained in this press release.