Strong finish for contract, private label packer
That compares to net revenues of $238.8 million, and net income of $10.3 million or $0.66 per basic share and $0.65 per diluted common share, for the year ended September 28, 2008. The 2009 net income was second only to the year-earlier earnings, which were a record for the company.
Said Chairman, President & CEO James Rudis, "Overall, the company performed well in the most difficult economic environment our nation has faced in decades. In the face of these very challenging conditions, we reported strong earnings, generated $14.7 million in net cash from operations, reduced long-term debt by $12.9 million, and increased our retained earnings by $8.3 million. In addition, we plan to pay another $5 million on our debt at the end of December, 2009."
He noted, "Virtually all of our major accounts have decreased their purchases or have grown at a much slower pace than we and they had anticipated, because sales to their customers were down. Many of the companies we supply have reduced their inventories and have delayed marketing initiatives. We do not expect this to continue."
Rudis said Overhill agreed to have J. R. Simplot Company distribute certain Overhill products to some of the nation's largest foodservice accounts. Overhill also is increasing its own sales efforts in this category, he said.
Also during the fourth quarter, Overhill extended contracts with two of its largest customers, Jenny Craig, Inc. and Safeway, Inc.
In other news, Rudis said customer H.J. Heinz intends to move production of many of its co-packed products -- back into H.J. Heinz plants. Overhill estimates that sales to Heinz will decrease by approximately $18 million over the course of fiscal 2010, beginning in the second quarter.
"It is our objective to offset the reduction in Heinz volume during 2010 with higher margin sales in the retail and foodservice segments," said Rudis. "We anticipate this coming from increased sales to our existing customers and sales to new customers already in development, as well from our new arrangement with J. R. Simplot."
Rudis added that Overhill already has begun production for three new accounts, and is in the late stages of product development for other major accounts. The company also will continue to work with Heinz on potential new replacement products, he said.
Mr. Rudis attributed most of the $28.9 million decline in fiscal year 2009 net revenues to a decrease in sales to two retail customers. This included a previously disclosed reduction in volume from H.J. Heinz Company of $19.1 million, and a $5.8 million decline in sales to Jenny Craig, Inc.
Retail net revenues were $146.4 million for the 2009 fiscal year, a decrease of $27.6 million or 15.9 percent from the $174.0 million of the prior fiscal year. The retail category accounted for 69.7 percent of the company's 2009 net revenues, compared to 72.9 percent for the 2008 fiscal year.
Foodservice net revenues increased by $8.2 million, or 18.6 percent, to $52.3 million for the latest fiscal year, from $44.1 million for the prior year. Foodservice revenues increased to 24.9 percent of 2009 net revenues, from 18.5 percent the prior year.
Airline net revenues decreased by $9.6 million or 46.4 percent to $11.1 million for the 2009 fiscal year, compared to $20.7 million for the prior fiscal year. This decline reflects continuing efforts by the airline industry to cut costs, officials said.The airline category represents 5.3 percent of total net revenues, compared to 8.7 percent a year earlier.
Overhill Farms produces prepared frozen foods for branded retail, private label, foodservice and airline customers. Its product line includes entrées, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, as well as organic and vegetarian offerings.