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 third quarter and first nine months of FY2009.
In the three months ended December 31, 2008, the Company reported net income of $224,079 or $0.01 per diluted share, on net sales of approximately $6.3 million. For the three months ended December 31, 2007, the Company reported net income of $295,365, or $0.01 per diluted share, on net sales of approximately $6.4 million. This decline in net income versus the prior year third quarter is primarily due to a decrease in gross margin caused by the substantial increase in the cost of one of our primary ingredients, casein. We currently expect the fourth quarter of the current fiscal year to be similarly affected due to the higher priced casein. However, we are anticipating higher gross margins beginning in the first quarter of FY2010 due to forecasted lower casein prices in the upcoming fiscal year.
In the nine months ended December 31, 2008, the Company reported net income of $539,908, or $0.03 per diluted share, on net sales of approximately $18.4 million. For the nine months ended December 31, 2007, the Company reported net income of $1,106,705, or $0.05 per diluted share, on net sales of approximately $18.8 million. Operating expenses during the first nine months of FY2008 included a previously disclosed non-recurring employment contract expense of $346,447. Exclusive of this charge, the Company would have reported net income of $1,453,152 in the nine months ended December 31, 2007. This decline in year to date net income versus the first three quarters of our prior fiscal year was primarily due to the aforementioned substantial increase in ingredient costs.
The Company generated EBITDA, as adjusted, (a non-GAAP measure), of $855,070 (4.6% of net sales) in the first nine months of FY2009, compared with EBITDA, as adjusted, of $1,842,285 (9.8% of net sales) in the first nine months of FY2008 (see EBITDA table at end of this release for further non-GAAP information). This decline in EBITDA, as adjusted, versus the prior year is primarily due to the lower net income in the current year as mentioned above.
"While dealing with higher costs and a softening economy, management's focus has been on nurturing sales and controlling expenses in order to deliver a positive bottom line along with generating positive operating cash flow," stated Michael E. Broll, Chief Executive Officer of Galaxy Nutritional Foods, Inc.
"Our third fiscal quarter results reflect a strong team effort toward that goal," concluded Broll.
CONFERENCE CALL AND WEBCAST INFORMATION
The Company will host an investor conference call today, February 11, 2009 at 11:00 a.m. EST; Shareholders and other interested parties may participate in the conference call by dialing 888-200-8867 (international/local participants dial 973-935-8765) and referencing the ID code 84870733, a few minutes before 11:00 am EST on February 11, 2009. A replay of the conference call will be available on Galaxy Nutritional Foods Website at: http://www.galaxyfoods.com/investors/transcripts.asp starting on Thursday, February 12, 2009.
About Galaxy Nutritional Foods, Inc.
Galaxy Nutritional Foods, Inc., develops and internationally 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. Galaxy Nutritional Foods Veggie(R), 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: Galaxy Nutritional Foods Rice(R), Veggy(R), Vegan(R), Rice Vegan(R), and Wholesome Valley Organic(R). 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. For more information on Galaxy's products or green initiatives, visit www.galaxyfoods.com. Galaxy Nutritional Foods, Inc. is headquartered in Orlando, Florida, and its common stock is quoted on the OTC Bulletin Board under the symbol "GXYF."
Any statement of future expectations in this press release, including without limitation, as to future cost of goods sold, casein prices, gross margins, revenues, earnings and profitability, plans and objectives for future operations, future economic performance or expected operational developments, and all other statements regarding the future are "forward looking" statements within the meaning of the Private Securities Litigation Act of 1995. These forward looking statements are based on the Company's strategic plans and involve risks and uncertainties that may cause actual results to differ materially and adversely from these forward looking statements. Such risks and uncertainties include, without limitation: the Company's ability to execute its business strategy in a very competitive service and pricing environment; risks associated with the launch of new marketing campaigns; future costs and fluctuations in the price of goods sold (including in particular, casein); continued relations with and pricing dependence on third party suppliers; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, the Company's annual report on Form 10-K for the year ended March 31, 2008. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect unanticipated events or developments.