Michael Foods Group, Inc. reported financial results for the second quarter of 2011.
(On June 29, 2010, M-Foods Holdings, Inc. together with its subsidiaries, merged with and into MFI Acquisition Corporation, and the surviving entity was renamed Michael Foods Group, Inc. ("Company"). The merger was accounted for as a business combination and a new accounting basis was established. The accounting policies followed by us in the preparation of the Company's consolidated financial statements are consistent with those used prior to the merger transaction.)
Net loss for the quarter ended July 2, 2011 was $5.2 million, compared to a net loss of $49.3 million in 2010. Net sales for the quarter ended July 2, 2011 were $420 million, compared to $348.7 million in 2010, an increase of 20%. Net loss for the six months ended July 2, 2011 was $5.6 million, compared to a net loss of $34.3 million in 2010. Net sales for the six months ended July 2, 2011 were $837.1 million, compared to $744 million in 2010, an increase of 12.5%. The quarter and six-month periods ended July 2, 2011 were 13 and 26-week periods, while the quarter and six-month periods ended June 26, 2010 were 12 and 25-week periods due to the June 2010 merger transaction. The additional week represented an estimated $29 million or approximately 7% of the net sales for the quarter ended July 2, 2011 and approximately 3% of the net sales for the six months ended July 2, 2011. The merger transaction had a significant impact on earnings in both periods, with transaction-related costs impacting the 2010 period and higher depreciation, amortization of intangibles, and interest expense impacting the 2011 period.
Earnings before interest, taxes, depreciation, amortization and other adjustments (Adjusted EBITDA, as defined in Michael Foods' credit facility) for the quarter ended July 2, 2011 (13-week period) were $47.4 million, compared to $45.4 million in 2010 (12-week period), an increase of 4%. Adjusted EBITDA for the six months ended July 2, 2011 (26-week period) was $103.8 million, compared to $102 million in 2010 (25-week period), an increase of 2%.
Michael Foods Group, Inc. uses Adjusted EBITDA as a measurement of financial results, as an indication of the relative strength of its operating performance, and to determine incentive compensation levels. Management believes that EBITDA and Adjusted EBITDA provide potential investors with useful information with which to analyze and compare our operating performance and our ability to service debt with other companies in our industry.