PETALUMA, Calif., Aug 5, 2004 (BUSINESS WIRE) -- Spectrum Organic Products, Inc. (SPOP) reported that net sales for the three months ended June 30, 2004 reached a new quarterly record for the company of $12,811,400 compared to net sales of $11,380,800 for the same period of the prior year, an increase of 13 percent(1). The improved sales performance was primarily attributable to increased consumer awareness of the importance of healthy oils to overall health and nutrition. Additionally, many food manufacturers continued their push to eliminate partially hydrogenated oils (trans fats) from their products which drove the company's ingredient sales to record levels.
Spectrum reported net income for the quarter of $178,400 versus net income of $316,200 for the second quarter of 2003. The reduced profit for 2004 was primarily attributable to margin pressure on the company's consumer branded product lines as a result of increased raw material costs for certain key organic raw materials such as olive oil, canola oil and flaxseed. Also contributing to the reduced profit in 2004 was increased spending on several new sales and marketing initiatives during the second quarter. In particular, there was increased spending on Spectrum's new advertising campaign, "I am Spectrum."
Net sales for the six months ended June 30, 2004 were also an all-time record for the Company of $25,544,500 versus net sales of $21,689,400 for the first half of 2003, an increase of 18%. Net income for the six months ended June 30, 2004 was $69,400 versus $951,700 for the same period of the prior year. Once again the reduction in 2004 was primarily driven by increased raw material costs and higher spending on sales and marketing programs, particularly the new advertising campaign.
Management believes that earnings before interest, taxes, depreciation and amortization (EBITDA)(2) is an important measure of its financial performance. For the three months ending June 30, 2004, Spectrum reported EBITDA of $529,100 versus EBITDA of $532,900 for the second quarter of 2003. There was no major EBITDA variance between the two quarters as the increased sales in 2004 were offset by the increased raw material costs. For the six months ending June 30, 2004, Spectrum reported EBITDA of $569,700 versus EBITDA of $1,380,300 for the prior year. Higher costs for raw materials and increased operating expenses in 2004 were the driving forces behind the reduced EBITDA performance year-to-date.
"Our second quarter sales were another all-time record, with significant growth delivered in the Spectrum Naturals(R) and Spectrum Ingredients culinary business segments," said Neil G. Blomquist, Spectrum CEO. "The Company has committed considerable resources in infrastructure, new packaging and brand marketing programs to strengthen Spectrum's position as the Healthy Fats Company."
Spectrum Organic Products, Inc. is a leading manufacturer and marketer of natural and organic culinary oils, vinegar, condiments and butter substitutes under the Spectrum Naturals(R) brand and essential fatty acid nutritional supplements under the Spectrum Essentials(R) brand. The company also produces and sells a wide range of oils, vinegar and nutritional ingredients to other manufacturers through its Spectrum Ingredients Division. All of the company's products feature healthy oils that are mechanically extracted and free of trans fats and genetically modified organisms.
"Safe Harbor" statements under the Private Securities Act of 1995: The statements contained in this release, which are not historical facts, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by the forward-looking statements. These risks and uncertainties are described in the company's Securities and Exchange Commission filings under the trading symbol "SPOP.OB".