Galaxy Foods (AMEX:GXY)
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Galaxy Nutritional Foods Reports 1st Quarter Fiscal 2005 Results
Reports Substantial Growth in Net Sales
ORLANDO, Fla., Aug. 12 /PRNewswire-FirstCall/ -- Galaxy Nutritional Foods,
Inc. (AMEX:GXY), a leading producer of nutritious plant-based dairy
alternatives for the retail and foodservice markets, today reported results for
its first quarter of fiscal 2005, ended June 30, 2004.
The Company reported that net sales grew substantially from $8,695,781 in the
quarter ended June 30, 2003 compared to $11,191,678 in the quarter ended June
30, 2004, an increase of $2,495,897 or 29%. The large increase in net sales is
primarily due to higher sales volume in contract manufacturing, Wholesome
Valley organic products and our Food Service business. The contract
manufacturing sales consist primarily of products that generate lower margins.
However, the higher sales volume helped to reduce the fixed cost of production
resulting in a gross profit decline of only 4% while generating an additional
$295,683 of gross margin for the quarter ended June 30, 2004 versus the same
period in the prior year.
The results for the first quarter of fiscal 2005 and fiscal 2004 include
non-cash compensation expense of $162,374 and $1,307,131, respectively.
Excluding these non-cash compensation charges, the Company had operating
income, as adjusted, (a non-GAAP measure) of $180,594 in the quarter ended June
30, 2004 compared to an operating loss, as adjusted, of ($167,588) in the
quarter ended June 30, 2003. This $348,182 improvement in non-GAAP operating
income was primarily the result of the gross margin increase mentioned above
and a decrease in general and administrative expenses.
Net loss for the quarter ended June 30, 2004 was $241,596 compared to a net
loss of $1,970,104 for the quarter ended June 30, 2003. Excluding the non-cash
compensation charges noted above, the Company had a net loss, as adjusted, (a
non-GAAP measure) of $79,222 for the quarter ended June 30, 2004 compared to a
net loss, as adjusted, of $662,973 for the quarter ended June 30, 2003. This
$583,751 decrease in non-GAAP net loss was primarily the result of the increase
in gross margin as mentioned above as well as the substantial decrease in
interest expense due to lower principal balances and lower interest rates on
the Company's credit facilities after the refinancing in May 2003.
After non-cash preferred stock dividends and non-cash preferred stock accretion
for estimated redemption value, net loss available to common shareholders was
$796,163, or $0.05 per diluted share for the quarter ended June 30, 2004 versus
a net loss available to common shareholders of $2,919,813, or $0.21 per diluted
share for the quarter ended June 30, 2003.
EBITDA, as adjusted, (a non-GAAP measure) for the quarter ended June 30, 2004
was $726,635, or 6.5% of net sales, versus EBITDA, as adjusted, for the quarter
ended June 30, 2003 of $390,537, or 4.5% of net sales. EBITDA, as adjusted, was
calculated as net income before interest, taxes, depreciation and amortization,
and is exclusive of non-cash compensation related to stock options and
warrants.
Cash flow provided by operating activities for the quarter ended June 30, 2004
was $578,038 compared to cash flow used in operating activities of ($138,377)
for the quarter ended June 30, 2003. This increase in operating cash flow was
primarily due to the reduction in non-GAAP net loss, as described above, versus
the prior year.
Michael E. Broll, Galaxy's CEO, stated, "The 29% increase in net sales for the
first quarter has been a very positive achievement for the company. In fact,
our overall financial performance for the first quarter of Fiscal 2005 is a
genuinely significant improvement over the prior year. Our focus going forward
in addition to growing net sales, will be to minimize the higher operational
costs we experienced during the ramp up and continue our efforts toward
improving our gross margin percentage."
Mr. Broll went on to say, "We remain committed to strengthening our Brands and
are refining a number of projects related to product improvement, new products
and consumer marketing programs, a number of which we hope to execute later
this fiscal year."
Footnote on non-GAAP Measures Presented Above
Management utilizes certain non-GAAP measures such as operating income, as
adjusted, net income, as adjusted and 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, forecasts and
evaluates loan covenants. In its determination of non-GAAP measures, management
excludes the non-cash compensation related to options and warrants as well as
the employment contract expense from its analysis of operating income because
it believes that these items do not accurately reflect the Company's current
on-going operations. With respect to non-cash compensation, it is calculated
based on fluctuations in the Company's stock price which are outside the
Company's control and typically do not reflect the Company's 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.
CONFERENCE CALL AND WEBCAST INFORMATION
There will be a teleconference and web-cast of the Company's 1st Quarter Fiscal
2005 Earnings Results at 10:00 a.m. EDT on Friday, August 13, 2004. The
conference call invites all shareholders and interested parties to call in on a
toll-free line to ask questions about the Company's results and discuss future
plans. The toll-free number for U.S. and Canada callers is 1-888-202-2422. All
other international callers should dial: 1-913-981-5592. The conference call
pass code for all participants is 996704.
The call will be simultaneously web cast at the following link:
http://www.vcall.com/ClientPage.asp?ID=89041
The call will be posted to our website the following Monday, August 16, 2004
at: http://www.galaxyfoods.com/corporate.html
About Galaxy Nutritional Foods, Inc.
Galaxy Nutritional Foods is the leading producer of great-tasting, health-
promoting plant-based dairy and dairy-related alternatives for the retail and
foodservice markets. These phytonutrient-enriched products, made from nature's
best grains -- soy, rice and oats -- are low and no fat (no saturated fat and
no trans-fatty acids), have no cholesterol, no lactose, are growth hormone and
antibiotic free and have more calcium, vitamins and minerals than conventional
dairy products. Because they are made with plant proteins, they are more
environmentally friendly and economically efficient than dairy products derived
solely from animal proteins. Galaxy's products are part of the nutritional or
functional foods category, the fastest growing segment of the retail food
market. Galaxy brand names include: Galaxy Nutritional Foods(R), Veggie(R),
Veggie Nature's Alternative to Milk(R), Veggie Slices(R), Soyco(R), Soymage(R),
Wholesome Valley(R), formägg(R), and Lite Bakery(R). For more information,
please visit Galaxy's website at http://www.galaxyfoods.com/.
This press release contains "forward-looking" statements within the meaning of
the private securities litigation reform act of 1995. Such forward- looking
statements involve known and unknown risks, uncertainties, or other factors
which may cause actual results, performance or achievements of the company to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Readers are cautioned
not to place undue reliance on those forward-looking statements, which speak
only as of the date hereof. The company undertakes no obligation to release
publicly 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
JUNE 30, MARCH 31,
2004 2004
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $766,779 $449,679
Trade receivables, net 4,834,191 3,964,198
Inventories, net 4,713,641 4,632,843
Prepaid expenses and other 547,987 266,301
Total current assets 10,862,598 9,313,021
PROPERTY AND EQUIPMENT, NET 19,760,573 20,232,089
OTHER ASSETS 379,149 416,706
TOTAL $31,002,320 $29,961,816
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $4,658,851 $4,605,277
Accounts payable 2,563,368 1,266,346
Accrued liabilities 1,934,352 1,812,300
Current portion of accrued employment
contract 366,305 366,305
Current portion of term notes payable 1,320,000 1,140,000
Current portion of obligations under
capital leases 206,841 231,432
Total current liabilities 11,049,717 9,421,660
ACCRUED EMPLOYMENT CONTRACT, less current
portion 1,201,529 1,293,142
TERM NOTES PAYABLE, less current portion 7,911,985 8,241,985
OBLIGATIONS UNDER CAPITAL LEASES, less
current portion 162,071 204,967
Total liabilities 20,325,302 19,161,754
COMMITMENTS AND CONTINGENCIES -- --
REDEEMABLE CONVERTIBLE PREFERRED STOCK 2,950,488 2,573,581
STOCKHOLDERS' EQUITY:
Common stock 157,241 156,573
Additional paid-in capital 64,261,061 64,520,084
Accumulated deficit (43,799,111) (43,557,515)
20,619,191 21,119,142
Less: Notes receivable arising from the
exercise of stock options and sale of
common stock (12,772,200) (12,772,200)
Treasury stock (120,461) (120,461)
Total stockholders' equity 7,726,530 8,226,481
TOTAL $31,002,320 $29,961,816
GALAXY NUTRITIONAL FOODS, INC.
Statements of Operations
(UNAUDITED)
Three Months Ended June 30, 2004 2003
NET SALES $11,191,678 $8,695,781
COST OF GOODS SOLD 8,251,330 6,051,116
Gross margin 2,940,348 2,644,665
OPERATING EXPENSES:
Selling 1,460,400 1,313,873
Delivery 593,326 451,817
Non-cash compensation related to options
and warrants 162,374 1,307,131
General and administrative 633,342 983,479
Research and development 72,686 63,084
Total operating expenses 2,922,128 4,119,384
INCOME (LOSS) FROM OPERATIONS 18,220 (1,474,719)
Interest expense 259,816 495,385
NET LOSS $(241,596) $(1,970,104)
Preferred Stock Dividends 42,392 54,780
Preferred Stock Accretion to Redemption Value 512,175 894,929
NET LOSS TO COMMON SHAREHOLDERS $(796,163) $(2,919,813)
BASIC & DILUTED NET LOSS PER COMMON SHARE $(0.05) $(0.21)
GALAXY NUTRITIONAL FOODS, INC.
Statements of Cash Flows
(UNAUDITED)
Three Months Ended June 30, 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(241,596) $(1,970,104)
Adjustments to reconcile net loss to net
cash from (used in) operating activities:
Depreciation and amortization 546,041 558,125
Amortization of debt discount and
financing costs 33,349 99,440
Provision for losses on trade receivables 107,000 (91,000)
Non-cash compensation related to options
and warrants 162,374 1,307,131
(Increase) decrease in:
Trade receivables (976,993) 991,452
Inventories (80,798) 133,003
Prepaid expenses and other (281,686) (14,354)
Increase (decrease) in:
Accounts payable 1,297,022 (824,061)
Accrued liabilities 13,325 (328,009)
NET CASH FROM (USED IN) OPERATING ACTIVITIES 578,038 (138,377)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (74,525) (91,388)
Decrease in other assets -- 1,807
NET CASH FROM (USED IN) INVESTING ACTIVITIES (74,525) (89,581)
CASH FLOWS FROM FINANCING ACTIVITIES:
Book overdrafts -- (957,396)
Net borrowings (payments) on lines of credit 53,574 (249,676)
Repayments on subordinated note payable -- (4,000,000)
Borrowings on term note payable -- 2,000,000
Repayments on term notes payable (150,000) (437,393)
Principal payments on capital lease
obligations (67,487) (93,934)
Financing costs for long term debt -- (188,361)
Proceeds from issuance of common stock, net
of offering costs (22,500) 3,793,120
Proceeds from exercise of common stock warrants -- 360,000
NET CASH FROM (USED IN) FINANCING ACTIVITIES (186,413) 226,360
NET INCREASE (DECREASE) IN CASH 317,100 (1,598)
CASH, BEGINNING OF PERIOD 449,679 1,598
CASH, END OF PERIOD $766,779 $--
GALAXY NUTRITIONAL FOODS, INC.
EBITDA, as adjusted, (a non-GAAP measure) Reconciliation
(Unaudited)
Three months ended June 30, 2004 2003
NET SALES $11,191,678 $8,695,781
NET LOSS $(241,596) $(1,970,104)
Plus:
Non-cash compensation expense 162,374 1,307,131
Interest expense 259,816 495,385
Depreciation and amortization expense 546,041 558,125
EBITDA, as adjusted $726,635 $390,537
As a % of Net Sales 6.5% 4.5%
http://www.vcall.com/ClientPage.asp?ID=89041DATASOURCE: 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/corporate.html