MOORE, Okla., May 8, 2008 (PRIME NEWSWIRE) -- Vaughan Foods, Inc. (Nasdaq:FOOD), a regional leader in fresh-cut vegetables and fruit products, and a broad line of refrigerated prepared salads, sauces, soups, and side-dishes, announced its operating results for the quarter ended March 31, 2008.
Net sales increased by 66.0 percent to $20.8 million in the first quarter of 2008, compared to $12.5 million in the year-earlier quarter. The acquisition of Allison's Gourmet Kitchens LP, represented $5.6 million of the $8.3 million revenue increase. Gross profit increased by $659,000 to $2.0 million, or 9.8 percent of net sales, in the first quarter of 2008, from $1.4 million, or 11.1 percent of net sales, in the year-earlier quarter. Gross profit was weakened by significantly higher ingredient and energy costs, which were not entirely passed on to Vaughan's customers during the quarter.
Selling, general and administrative expenses amounted to $2.4 million in the first quarter of 2008, compared to $833,000 in the year-earlier quarter. The increase in selling, general and administrative expenses was incurred primarily to support the Company's higher revenue level and in connection with (a) operating as a public company, (b) strengthening Vaughan's management team and board of directors at all levels, and (c) enhancements in administration and accounting processes and internal controls.
The Company incurred a net loss of $418,000, or $0.09 per share, compared to a net loss of $111,000, or $0.05 per share, in the year-earlier quarter.
Cash provided by operating activities was $1.1 million in the first quarter of 2008 compared to $1.1 million in the year-earlier quarter. Vaughan voluntarily extinguished $1,000,000 of short term borrowings during the quarter, previously due on June 30, 2008. The Company has a $5.0 million revolving line of credit which remains unused.
Herb Grimes, Chairman and CEO of Vaughan Foods, commented, "We expected the first quarter to be challenging, due to normal seasonal considerations and the anticipation of rising outlays for commodities and other manufacturing and transportation costs. However, the escalation of costs outpaced our pricing adjustments. Although, our gross margins came in at 9.8 percent, which is below the 10-12 percent guidance range we have provided for the year, we still believe we are on track to deliver the margins we anticipated at the beginning of 2008. We are now coming into our strong season for prepared foods, which is our higher margin business. Our Fresh Cut Produce division performed better than we expected in the first quarter despite high energy costs, owing in part to our new grower direct sourcing initiatives, improved plant efficiencies and stable produce costs. On the other hand, our Prepared Food operations, which use more dairy products, soybean oil, corn syrup, eggs and wheat were challenged to maintain their margins. With more timely pricing adjustments and continued improvements in plant efficiencies, we expect to be able to achieve better margins than we saw in the first quarter," concluded Mr. Grimes.
Conference Call Information
Vaughan management will host an investor conference call on Friday, May 9, 2008 at 10:00 a.m. ET to discuss these results.
Interested parties should call 877-419-6603 (domestic) or 719-325-4885 (international) at least 5 minutes before the scheduled start time (no passcode required). You may also access this call via the Internet at: http://www.vaughanfoods.com
For those who are unavailable to listen to the live broadcast, a replay will be available through June 8, 2008 and can be accessed by dialing 888-203-1112 (domestic), and 719-457-0820 (international). The pass code is 3483200.
About Vaughan Foods, Inc.
Vaughan Foods and its subsidiaries prepare refrigerated salads, soups and sauces, as well as fresh-cut produce (salad and salad mixes), which it distributes to its customers in the Midwest, Southeast, and Southwest. Among its customers are restaurants, grocery store delis and food service businesses.
The Vaughan Foods, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4726
Forward-Looking Statement
Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in the Company's Form 10-K, Form 8-K and Form 10-Q reports. The Company undertakes no obligation to update or revise any forward-looking statement.
Vaughan Foods, Inc.
Consolidated Statements of Operations
For the three month periods ended March 31, 2008 and 2007
(dollars in thousands)
Three Months Ended
March 31,
2008 2007
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Net sales $ 20,816 $ 12,533
Cost of sales 18,771 11,146
Gross profit 2,045 1,387
Selling, general and administrative 2,420 833
Operating income (375) 554
Interest expense (179) (619)
Other income, net 21 106
Income (loss) before income taxes (533) 41
Income tax expense (benefit) (115) 152
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Net income (loss) $ (418) $ (111)
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Weighted average shares outstanding (basic and
diluted) 4,623,077 2,300,000
Net income (loss) per share (basic and
diluted) $ (0.09) $ (0.05)
Vaughan Foods, Inc.
Consolidated Balance Sheets
As of March 31, 2008 and December 31, 2007
(dollars in thousands)
March 31, December 31,
2008 2007
Assets
Current assets:
Cash and cash equivalents $ 1,785 $ 2,698
Accounts receivable, net of allowance for
credit losses of $92,782 at March 31, 2008
and $173,561 at December 31, 2007 6,145 5,981
Inventories 2,910 2,846
Prepaid expenses and other assets 144 119
Deferred tax assets 35 40
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Total current assets 11,019 11,684
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Restricted assets:
Investments 906 709
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Total restricted assets 906 709
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Property and equipment, net 16,792 16,569
Other assets:
Loan origination fees, net of amortization 373 377
Intangible assets 489 715
Deferred tax assets, noncurrent 513 393
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Total assets $ 30,092 $ 30,447
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 6,162 $ 4,941
Short-term borrowings -- 1,000
Note payable to former owners of Allison's
Gourmet Kitchens, LP 1,000 1,000
Accrued liabilities 2,109 1,889
Current portion of long-term debt 817 865
Current portion of capital lease obligation 193 189
Amounts payable to former owners of Wild
About Food 100 222
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Total current liabilities 10,381 10,106
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Long term liabilities:
Long-term debt, net of current portion 9,011 9,146
Capital lease obligation, net of current
portion 248 297
Deferred gain on sale of assets 115 --
Payable to former owners of Wild About
Food, net of current portion 187 250
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Total long-term liabilities 9,561 9,693
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Total stockholders' equity 10,150 10,648
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Total liabilities and stockholders'
equity $ 30,092 $ 30,447
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Vaughan Foods, Inc.
Consolidated Statements of Cash Flows
For the three month periods ended March 31, 2008 and 2007
(dollars in thousands)
Three Months Ended
March 31,
2008 2007
-------- --------
Cash flows from operating activities:
Net (loss) $ (418) $ (111)
Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 414 613
Provision for credit losses (81) (3)
Deferred income taxes (115) 152
Changes in operating assets and liabilities:
Accounts receivable (83) (278)
Accounts receivable - related party -- (85)
Inventories (64) (283)
Prepaid expenses and other assets (25) (34)
Accounts payable 1,221 711
Accounts payable, related party -- 118
Accrued liabilities 220 336
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Net cash provided by operating activities 1,069 1,136
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Cash flows from investing activities:
Purchases of property and equipment (1,163) (441)
Investments in restricted assets (198) (200)
Proceeds from sale of assets 693 --
Deconsolidation of variable interest entity (80) --
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Net cash (used by) investing activities (748) (641)
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Cash flows from financing activities:
Cash paid for deferred public offering expense -- (250)
Payments of loan origination fees (5) --
Repayment of long-term debt and capital leases (229) (129)
Repayments of short-term borrowings (1,000) --
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Net cash (used by) financing activities (1,234) (379)
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Net increase (decrease) in cash and cash
equivalents (913) 116
Cash and cash equivalents at beginning of period 2,698 868
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Cash and cash equivalents at end of period $ 1,785 $ 984
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