November 14, 2008
Galaxy Nutritional Foods Reports Second Quarter Operating Results
ORLANDO, Fla., Nov. 14 /PRNewswire-FirstCall/ -- Galaxy Nutritional Foods, Inc. (BULLETIN BOARD: GXYF) , a leading developer and marketer of cheese alternatives, organic dairy and other organic and natural food products, today reported its operating results for the second quarter and first half of FY2009.
For the three months ended September 30, 2008, the Company reported net income of $195,878, or $0.01 per diluted share, on net sales of approximately $6.1 million. In the prior-year quarter, the Company reported net income of $660,341 or $0.03 per diluted share, on net sales of approximately $6.4 million.
For the six months ended September 30, 2008, the Company reported net income of $315,829, or $0.02 per diluted share, on net sales of approximately $12.2 million. For the six months ended September 30, 2007 the Company reported net income of $811,340, or $0.04 per diluted share, on net sales of approximately $12.3 million. Operating expenses during the first half of FY2008 included a previously disclosed non-recurring employment contract expense of $346,447. Exclusive of this charge, the Company would have reported net income of $1,157,787 in the six months ended September 30, 2007.
The Company generated EBITDA, as adjusted, (a non-GAAP measure), of $554,668 (4.6% of net sales) in the first half of FY2009, compared with EBITDA, as adjusted, of $1,424,901 (11.6% of net sales) in the first half of FY2008 (see EBITDA table at end of this release for further Non-GAAP information).
"Sales remain relatively strong given the declining economic conditions and we have continued to manage costs aggressively to deliver reasonable operating profits. We have begun to see a softening of certain commodity prices and should start to see better gross margins in the first quarter of FY2010." stated Michael E. Broll, Chief Executive Officer of Galaxy Nutritional Foods, Inc."
CONFERENCE CALL AND WEBCAST INFORMATION
The Company will host an investor conference call today, November 14, 2008 at 11:00 a.m. EST; Shareholders and other interested parties may participate in the conference call by dialing 888-200-8867 (international/local participants dial 973-935-8765) and referencing the ID code 73514695 a few minutes before 11:00 am EST on November 14, 2008. A replay of the conference call will be available on Galaxy Nutritional Foods Website at: http://www.galaxyfoods.com/investors/transcripts.asp starting on Monday, November 17, 2008.
About Galaxy Nutritional Foods, Inc.
Galaxy Nutritional Foods, Inc. (OTC BB: GXYF) develops and globally markets plant based cheese alternatives, organic dairy and other organic and natural food products to grocery and natural foods retailers, mass merchandisers and foodservice accounts. Veggie, the leading brand in the grocery cheese alternative category and the Company's top selling product group, is primarily merchandised in the produce section and provides calcium and protein without cholesterol, saturated fat or trans-fat. Other popular brands include: Rice, Veggy, Vegan, Rice Vegan and Wholesome Valley. Galaxy Nutritional Foods, Inc. is dedicated to developing nutritious and delicious food products made with high quality natural ingredients that exceed the expectations of today's health conscious consumers. Galaxy is also committed to reducing its environmental impact as part of an Eat Green for Body & Earth(TM) program that offsets carbon emissions associated with product shipping and emphasizes the use of organic ingredients. For more information on Galaxy's products or green initiatives, visit http://www.galaxyfoods.com/. Galaxy Nutritional Foods, Inc. is headquartered in Orlando, Florida, and its common stock is quoted on the OTC Bulletin Board under the symbol "GXYF".
Any statement of future expectations in this press release, including without limitation, as to future cost of goods sold, revenues, gross margins, earnings and profitability, plans and objectives for future operations, future economic performance or expected operational developments, and all other statements regarding the future are "forward looking" statements within the meaning of the Private Securities Litigation Act of 1995. These forward looking statements are based on the Company's strategic plans and involve risks and uncertainties that may cause actual results to differ materially and adversely from these forward looking statements. Such risks and uncertainties include, without limitation: the Company's ability to execute its business strategy in a very competitive service and pricing environment; the Company's ability to refinance or repay certain short-term indebtedness due an affiliate of the Company and its potential impact on the Company's ability to continue as a going concern; risks associated with the launch of new marketing campaigns; future costs and fluctuations in the price of goods sold (including in particular, casein); continued relations with and pricing dependence on third party suppliers; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's annual report on Form 10-K for the year ended March 31, 2008. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward- looking statements to reflect events or circumstances after the date hereof or to reflect unanticipated events or developments.
GALAXY NUTRITIONAL FOODS, INC. Balance Sheets SEPTEMBER 30, MARCH 31, 2008 2008 (Unaudited) ASSETS CURRENT ASSETS: Cash $2,275,604 $1,893,425 Trade receivables, net 2,256,049 2,516,496 Inventories, net 138,693 116,902 Prepaid expenses and other 223,799 95,906 Total current assets 4,894,145 4,622,729 PROPERTY AND EQUIPMENT, NET 58,896 65,671 OTHER ASSETS 55,745 68,463 TOTAL $5,008,786 $4,756,863 LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES: Secured borrowings $-- $-- Accounts payable 1,441,111 1,393,810 Accrued and other current liabilities 1,181,213 1,028,049 Accrued employment contracts 18,228 282,599 Related party note payable 2,685,104 2,685,104 Total current liabilities 5,325,656 5,389,562 COMMITMENTS AND CONTINGENCIES -- -- STOCKHOLDERS' DEFICIT: Common stock 171,100 171,100 Additional paid-in capital 70,167,149 70,167,149 Accumulated deficit (70,655,119) (70,970,948) Total stockholders' deficit (316,870) (632,699) TOTAL $5,008,786 $4,756,863 GALAXY NUTRITIONAL FOODS, INC. Statements of Income (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2008 2007 2008 2007 Net Sales $6,115,690 $6,401,124 $12,152,280 $12,317,261 Cost of Goods Sold 4,128,425 3,740,838 8,204,180 7,201,206 GROSS MARGIN 1,987,265 2,660,286 3,948,100 5,116,055 OPERATING EXPENSES: Selling 776,658 940,833 1,530,176 1,830,241 Delivery 254,326 262,018 493,057 508,863 General and administrative 591,377 587,501 1,249,906 1,211,117 Employment contract expense-general and administrative -- -- -- 346,447 Research and development 60,908 79,718 143,276 162,995 Total operating expenses 1,683,269 1,870,070 3,416,415 4,059,663 INCOME FROM OPERATIONS 303,996 790,216 531,685 1,056,392 INTEREST EXPENSE (108,118) (117,875) (215,856) (233,052) INCOME BEFORE TAXES 195,878 672,341 315,829 823,340 INCOME TAX EXPENSE -- (12,000) -- (12,000) NET INCOME $195,878 $660,341 $315,829 $811,340 BASIC NET INCOME PER COMMON SHARE $0.01 $0.04 $0.02 $0.05 DILUTED NET INCOME PER COMMON SHARE $0.01 $0.03 $0.02 $0.04 GALAXY NUTRITIONAL FOODS, INC. Statements of Cash Flows (UNAUDITED) Six Months Ended September 30, 2008 2007 CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES: Net Income $315,829 $811,340 Adjustments to reconcile net income to net cash from (used in) operating activities: Depreciation and amortization 22,983 22,062 Amortization of debt discount and financing costs 12,718 28,469 Provision for future credits and doubtful accounts on trade receivables (342,620) (538,500) Inventory reserve (23,533) (92,983) (Increase) decrease in: Trade receivables 603,067 297,228 Inventories 1,742 271,971 Prepaid expenses and other (127,893) 42,905 Increase (decrease) in: Accounts payable 47,301 (466,558) Accrued and other liabilities (111,207) (49,919) NET CASH FROM OPERATING ACTIVITIES 398,387 326,015 CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES: Purchase of property and equipment (16,208) (10,871) NET CASH USED IN INVESTING ACTIVITIES (16,208) (10,871) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: Net payments on secured borrowings -- (197,941) NET CASH USED IN FINANCING ACTIVITIES -- (197,941) NET INCREASE IN CASH 382,179 117,203 CASH, BEGINNING OF PERIOD 1,893,425 879,487 CASH, END OF PERIOD $2,275,604 $996,690 GALAXY NUTRITIONAL FOODS, INC. EBITDA, as adjusted, (a non-GAAP measure) Reconciliation (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2008 2007 2008 2007 NET SALES $6,115,690 $6,401,124 $12,152,280 $12,317,261 NET INCOME (LOSS) $195,878 $660,341 $315,829 $811,340 Plus: Employment contract expense -- -- -- 346,447 Interest expense 108,118 117,875 215,856 233,052 Taxes -- 12,000 -- 12,000 Depreciation and amortization expense 11,107 11,091 222,98 22,062 EBITDA, as adjusted $315,103 $801,307 $554,668 $1,424,901 As a % of Net Sales 5.2% 12.5% 4.6% 11.6% Footnote on non-GAAP Measures Presented Above
Management utilizes certain non-GAAP measures such as EBITDA, as adjusted, because it provides useful information to management and investors in order to accurately review the Company's current on-going operations and business trends related to its financial condition and results of operations. Additionally, these measures are key factors upon which the Company prepares its budgets and forecasts. In its determination of the foregoing non-GAAP measures, management excludes the September 30, 2007 employment contract expense from its analysis of operating income because it believes that this item does not accurately reflect the Company's current on-going operations. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures reported by other companies.
Galaxy Nutritional Foods, Inc.
CONTACT: Dawn M. Robert, Investor Relations, Galaxy Nutritional Foods,Inc., +1-407-854-0433
Web site: http://www.galaxyfoods.com/http://www.galaxyfoods.com/investors/transcripts.asp