Philadelphia, Pennsylvania, August 1, 2008 - Tasty Baking Company today reported net sales of $44.6 million for its second quarter ended June 28, 2008, a 1.8% increase from the $43.8 million reported for the second quarter last year. The company reported net income of $0.1 million in the second quarter of 2008 compared to $0.9 million in the second quarter of 2007. The results from the second quarter 2008 included $2.4 million, pre-tax, in higher ingredient and packaging costs, which drove a gross margin decline of 5.0 percentage points. In addition, net income in the second quarter of 2008 and 2007 included $0.8 million and $0.5 million, respectively, of accelerated after-tax depreciation expense due to a change in useful lives of assets at the Philadelphia bakery related to the company's plan to complete the move from its present Philadelphia facilities in 2010. EBITDA for the second quarter 2008 declined to $3.5 million versus $3.9 million in the second quarter 2007.
Charles P. Pizzi, president and chief executive officer of Tasty Baking Company, said, “In the second quarter of 2008, increasing commodity costs continued to have a significant impact on our financial results. We were, however, able to mitigate this impact by focusing on cost containment, efficiency improvements, and product pricing actions.”
“Specifically, during the quarter we reduced selling, general, and administrative expenses by $1.0 million or 7.6% compared to the same period a year ago and continued to improve operational performance at each of our manufacturing facilities. In addition, in the second quarter of 2008 we raised list prices on donuts and pies and made changes to our promotional pricing strategy.”
Mr. Pizzi continued, “In terms of the new bakery project, construction is proceeding as planned and we remain within budget. This new facility will be a transformational event for the company and we continue to make good progress towards its successful completion. At the same time, we are mindful of balancing these efforts against the resource requirements of managing the day to day needs of the business."
