MOORE, Okla., May 12, 2011 (GLOBE NEWSWIRE) -- Vaughan Foods, Inc. (OTCBB:FOOD), a regional leader in fresh-cut vegetables and fruit products, and a broad line of refrigerated prepared salads, sauces, soups, and side-dishes, today announced its operating results for the first quarter ended March 31, 2011.
Revenues increased by $1.9 million or 8.7 percent in the first quarter compared to the year-earlier quarter, driven primarily by enhanced pricing and shifts in product mix from lower margin items to higher margin items. The Company expects this shift in product mix to continue throughout 2011, as management resumes its focus on the top line. Vaughan has a robust sales pipeline and will continue to increase its emphasis on top line growth during 2011.
Vaughan recorded a net loss of $0.2 million, or $0.02 per share, compared to net earnings of $0.1 million or $0.02 per share in the comparable quarter of 2010. Gross profit was 9.3 percent in the first quarter, compared with 12.7 percent in the first quarter of 2010.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $0.4 million in the 2011 first quarter, compared with $1.1 million in the first quarter of 2010.
Revenues improved during the first quarter, reversing a moderately negative trend. However, the quarter was also affected by several external factors, including (a) weather-related quality and supply issues in produce, leading to higher costs, lower quality, lower yields and increased plant labor, (b) two major blizzards in the Midwestern United States, and (c) spiking fuel costs.
In January 2011, our industry experienced a significant loss of crop acres and yields due to a fungal disease called Airborne Sclerotinia, which is caused by cold and wet conditions. The fungal disease has had an adverse effect on the quality of Iceberg and romaine lettuce. The loss in crop yields caused significant shortages of product for an extended period of time, resulting in high prices for raw materials. As noted in its full year 2010 earnings announcement in March, Vaughan experienced challenges during the first quarter of 2011 due to the raw material shortages and elevated costs. However, we were able to maintain our gross margin at the full year 2010 level due to an accompanying increase in revenue as noted above.
In late January and early February, a historic blizzard shut down the Oklahoma City metropolitan area for three business days, including the company's primary production plant in Moore, Oklahoma, resulting in lost sales and spoiled inventory. One week later, another major snowstorm affected businesses for 2 days. These snowstorms hampered Vaughan's ability to receive raw materials, deploy production labor, and schedule and move transportation equipment.
Fuel costs alone increased by $284,000 in the first quarter of 2011, compared with the year-earlier quarter.
Although Vaughan was able to partially mitigate the effects of higher product and transportation costs through pricing adjustments, the net effect of all of these factors was a reduction in gross profit of $585,000 for the quarter.
"Even though we reversed the top line trend, our operating results were not as strong as we would have liked, primarily reflecting the effects of a number of external factors," said Herb Grimes, Chairman and CEO of Vaughan Foods. "However, the company has worked to reposition its product mix with higher margin products and has put in place sales and marketing programs targeting both current and potential customers. We are now coming into our peak season, and expect to see growth in the top line this year. We also expect margins and earnings to return to a more normal range, as costs stabilize," concluded Mr. Grimes.
Investor Conference Call
Vaughan management will host an investor conference call on Friday, May 13, 2011 at 10:00 a.m. ET to discuss these results.
Interested parties should call 877-353-0040 (domestic) or 970-315-0529 (international) at least 5 minutes before the scheduled start time (no passcode required). You may also access this call via the Internet at:
For those who are unavailable to listen to the live broadcast, a replay will be available through June 3, 2011 and can be accessed by dialing 800 642-1687 (domestic), and 706 645-9291 (international). The conference ID is 66664894.
About Vaughan Foods, Inc.
Vaughan Foods is an integrated manufacturer and distributor of value-added, refrigerated foods. We are uniquely able to distribute fresh-cut produce items along with a full array of value-added refrigerated prepared foods multiple times per week. We sell to both food service and retail sectors. Our products consist of fresh-cut vegetables, fresh-cut fruits, salad kits, prepared salads, dips, spreads, soups, sauces and side dishes. Our primary manufacturing facility is in Moore, Oklahoma. Our soups and sauces are manufactured in our facility in Fort Worth, Texas.
The Vaughan Foods, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4726
Safe Harbor Statement
This press release contains forward-looking statements about the future performance of Vaughan Foods, Inc. based on Management's assumptions and beliefs in light of information currently available to it. There are a variety of factors that could cause actual and future results to differ materially from those anticipated by the statements made above. These factors are outlined in the Company's Forms 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Furthermore, Vaughan Foods, Inc. undertakes no obligation to update, amend or clarify forward-looking statements whether as a result of new information, future events, or otherwise.
| Vaughan Foods, Inc. | ||
| Consolidated Balance Sheets | ||
| March 31, 2011 and December 31, 2010 | ||
| (dollars in thousands) | ||
|
March 31, 2011 |
December 31, 2010 |
|
| (unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 221 | -- |
| Cash receipts subject to account control agreement | 889 | 534 |
|
Accounts receivable, net of allowance for credit losses of $78,180 at March 31, 2011 and December 31, 2010 |
7,279 | 6,088 |
| Inventories | 3,662 | 3,105 |
| Prepaid expenses and other assets | 621 | 246 |
| Deferred tax assets | 384 | 370 |
| Total current assets | 13,056 | 10,343 |
| Restricted assets: | ||
| Cash | 585 | 937 |
| Investments | 729 | 558 |
| Total restricted assets | 1,314 | 1,495 |
| Property and equipment, net | 14,383 | 14,576 |
| Other assets: | ||
| Loan origination fees, net of amortization | 265 | 287 |
| Intangible assets | 39 | 46 |
| Deferred tax assets, noncurrent | 2,735 | 2,604 |
| Total other assets | 3,039 | 2,937 |
| Total assets | $31,792 | $29,351 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable | 9,858 | 6,981 |
| Disbursements in transit | -- | 729 |
| Line of credit | 3,265 | 2,688 |
| Note payable to related party | 30 | 30 |
| Accrued liabilities | 2,003 | 1,945 |
| Current portion of long-term debt | 1,133 | 1,155 |
| Total current liabilities | 16,289 | 13,528 |
| Long term liabilities: | ||
| Long-term debt, net of current portion | 6,568 | 6,695 |
| Note Payable to related party , net of current portion | 810 | 812 |
| Deferred gain on sale of assets | 7 | 8 |
| Total long-term liabilities | 7,385 | 7,515 |
| Stockholders' equity: | ||
|
Common stock, $0.001 par value; authorized 50,000,000 shares; 9,380,577 shares issued and outstanding at March 31, 2011 and December 31, 2010 |
9 | 9 |
|
Preferred stock, $0.001 par value; authorized 5,000,000 shares; 0 shares issued and outstanding at March 31, 2011 and December 31, 2010 |
-- | -- |
| Paid in Capital | 14,548 | 14,525 |
| Retained Earnings (deficit) | (6,439) | (6,226) |
| Total stockholders' equity | 8,118 | 8,308 |
| Total liabilities and stockholders' equity | $31,792 | $ 29,351 |
| Vaughan Foods, Inc. | ||
| Consolidated Statements of Operations | ||
| For the Three Months Ended March 31, 2011 and 2010 | ||
| (dollars in thousands) | ||
| Three Months Ended March 31, | ||
| 2011 | 2010 | |
| (unaudited) | ||
| Net sales | $23,579 | $21,696 |
| Cost of sales | 21,401 | 18,934 |
| Gross profit | 2,178 | 2,762 |
| Selling, general and administrative expenses | 2,314 | 2,270 |
| Operating income (loss) | (136) | 492 |
| Interest expense | (223) | (269) |
| Gain (loss) on sale of assets | 1 | 9 |
| Other income and expense, net | (222) | (260) |
| Net income (loss) before income taxes | (358) | 232 |
| Income tax expense (benefit) | (145) | 115 |
| Net income (loss) | $ (213) | $117 |
| Weighted average shares outstanding - basic and diluted | 9,380,577 | 6,526,077 |
| Net income (loss) per share - basic and diluted | $ (0.02) | $ 0.02 |
| Vaughan Foods, Inc. | ||
| Consolidated Statements Cash Flows | ||
| For the Three Months Ended March 31, 2011 and 2010 | ||
| (dollars in thousands) | ||
| Three Months Ended March 31, | ||
| 2011 | 2010 | |
| (unaudited) | ||
| Cash flows from operating activities: | ||
| Net income (loss) | $ (213) | $ 117 |
|
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: |
||
| Depreciation and amortization | 577 | 727 |
| Provision for credit losses | -- | 51 |
| Loss (gain) on sale of assets | (1) | (9) |
| Stock option expense | 22 | 22 |
| Deferred income taxes | (145) | 115 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (1,191) | (783) |
| Inventories | (557) | 85 |
| Prepaid expenses and other assets | (375) | (6) |
| Accounts payable | 2,877 | (1,538) |
| Disbursements in transit | (729) | 122 |
| Accrued liabilities | 58 | 552 |
| Net cash provided (used by) by operating activities | 323 | (545) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (354) | (516) |
| Distributions of insurance proceeds from restricted assets | 353 | -- |
| Investments in Restricted assets | (172) | (182) |
| Net cash (used by) investing activities | (173) | (698) |
| Cash flows from financing activities: | ||
| Proceeds from stock issue | -- | 1,706 |
| Proceeds from line of credit | 576 | -- |
| Repayments of line of credit | -- | (338) |
| Cash receipts subject to account control agreement | (356) | 90 |
| Repayments on notes payable to related party | -- | (3) |
| Repayment of long-term debt and capital leases | (150) | (212) |
| Net cash provided by financing activities | 70 | 1,243 |
| Net increase (decrease) in cash and cash equivalents | 220 | -- |
| Cash and cash equivalents at beginning of period | -- | -- |
| Cash and cash equivalents at end of period | $ 220 | $ -- |
| Supplemental disclosures of cash flow information: | ||
| Cash paid during the period for: | ||
| Interest paid, net of capitalized interest | $ 145 | $ 181 |
| Software development costs, financed through note payable | 96 | -- |
|
Issuance of warrants to placement agent in connection with private placement transaction |
-- | 220 |