Orlando, Fla., Aug. 13 - Galaxy Nutritional Foods, Inc., a leading developer and marketer of cheese alternatives, organic dairy and other organic and natural food products, today reported its operating results for the first quarter of its Fiscal Year 2009.
For the three months ended June 30, 2008, the Company reported income from operations of $227,689 and net income of $119,951, or $0.01 per basic and diluted share, on net sales of approximately $6 million. In the prior-year quarter ended June 30, 2007, the Company reported net income of $150,999, or $0.01 per basic and diluted share, on net sales of approximately $5.9 million. Operating expenses in the prior year quarter included a non-recurring employment contract expense of $346,447. Exclusive of this charge, the Company would have reported net income of $497,446 in the prior-year quarter. The Company generated EBITDA, as adjusted, a non-GAAP measure, of $239,565 (4.0% of net sales) in the quarter ended June 30, 2008 compared with $623,594 (10.5% of net sales) in the prior-year quarter (see EBITDA table at end of this release for further non-GAAP information and disclosure). This substantial decline in EBITDA versus the prior year is primarily due to lower gross margin in the current year which was driven by a substantial increase in our cost of goods sold.
"Given the significantly higher ingredient and transportation costs during the first quarter of this fiscal year versus the prior year, we managed to deliver a modest level of operating income while maintaining an acceptable level of consumer programs," stated Michael E. Broll, Chief Executive Officer of Galaxy Nutritional Foods, Inc.
"While commodity costs seem to have stabilized, we have not yet seen any signs of potential softening," concluded Broll.
About Galaxy Nutritional Foods, Inc.
Galaxy Nutritional Foods, Inc. (OTC Bulletin Board: 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. Galaxy Nutritional Foods, Inc. is headquartered in Orlando, Florida, and its common stock is quoted on the OTC Bulletin Board under the symbol "GXYF."
GALAXY NUTRITIONAL FOODS, INC.
Balance Sheets
JUNE 30, MARCH 31,
2008 2008
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash 1,879,124 $1,893,425
Trade receivables, net 2,284,251 2,516,496
Inventories, net 157,098 116,902
Prepaid expenses and other 219,205 95,906
Total current assets 4,539,678 4,622,729
PROPERTY AND EQUIPMENT, NET 70,003 65,671
OTHER ASSETS 62,104 68,463
TOTAL 4,671,785 $4,756,863
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Secured borrowings $-- $--
Accounts payable 1,397,670 1,393,810
Accrued and other current liabilities 959,434 1,028,049
Accrued employment contracts 142,325 282,599
Related party note payable 2,685,104 2,685,104
Total current liabilities 5,184,533 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 (70,850,997) (70,970,948)
Total stockholders' deficit (512,748) (632,699)
TOTAL $4,671,785 $4,756,863
GALAXY NUTRITIONAL FOODS, INC.
Statements of Income
(UNAUDITED)
Three Months Ended June 30, 2008 2007
Net Sales $6,036,590 $5,916,137
Cost of Goods Sold 4,075,755 3,460,368
GROSS MARGIN 1,960,835 2,455,769
OPERATING EXPENSES:
Selling 753,518 889,408
Delivery 238,731 246,845
General and administrative 658,529 623,616
Employment contract expense - general and
administrative -- 346,447
Research and development 82,368 83,277
Total operating expenses 1,733,146 2,189,593
INCOME FROM OPERATIONS 227,689 266,176
INTEREST EXPENSE (107,738) (115,177)
INCOME BEFORE TAXES 119,951 150,999
INCOME TAX EXPENSE -- --
NET INCOME $119,951 $150,999
BASIC NET INCOME PER COMMON SHARE $0.01 $0.01
DILUTED NET INCOME PER COMMON SHARE $0.01 $0.01
GALAXY NUTRITIONAL FOODS, INC.
Statements of Cash Flows
(UNAUDITED)
Three Months Ended June 30, 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $119,951 $150,999
Adjustments to reconcile net income to net
cash from (used in) operating activities:
Depreciation and amortization 11,876 10,971
Amortization of debt discount and financing
costs 6,359 13,782
Provision for future credits and doubtful
accounts on trade receivables (199,313) (304,000)
Inventory reserve (11,333) 46,696
(Increase) decrease in:
Trade receivables 431,558 265,182
Inventories (28,863) (29,820)
Prepaid expenses and other (123,299) (10,833)
Increase (decrease) in:
Accounts payable 3,860 (460,034)
Accrued and other liabilities (208,889) (59,189)
NET CASH FROM (USED IN) OPERATING ACTIVITIES 1,907 (376,246)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (16,208) (9,311)
NET CASH FROM (USED IN) INVESTING ACTIVITIES (16,208) (9,311)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on secured borrowings -- 2,751
NET CASH FROM (USED IN) FINANCING ACTIVITIES -- 2,751
NET INCREASE (DECREASE) IN CASH (14,301) (382,806)
CASH, BEGINNING OF PERIOD 1,893,425 879,487
CASH, END OF PERIOD $1,879,124 $496,681
GALAXY NUTRITIONAL FOODS, INC.
EBITDA, as adjusted, (a non-GAAP measure) Reconciliation
(Unaudited)
THREE MONTHS ENDED JUNE 30,
2008 2007
NET SALES $6,036,590 $5,916,137
NET INCOME (LOSS) $119,951 $150,999
Plus:
Employment contract expense -- 346,447
Interest expense 107,738 115,177
Depreciation and amortization expense 11,876 10,971
EBITDA, as adjusted $239,565 $623,594
As a % of Net Sales 4.0% 10.5%