LOS ANGELES, Calif. – Overhill Farms, Inc. had record net revenues but lower income from a year ago for the second quarter of fiscal 2007 ended April 1.
Net revenues of $46 million were up $2.3 million, or 5.3%, from $43.7 million reported by Overhill Farms in the same period last year.
But net income of $875,000, or 6c per diluted share, was $338,000, or 28%, from $1,213,000, or 8c per share, a year earlier.
Earnings were adversely affected by short-term production inefficiencies related to the start-up of 32 new products, and higher costs to meet one customer’s need for additional volume and changes in product formulation, the company said.
"The most recent results were impacted by what we believe are primarily one-time costs," said James Rudis, chairman and C.E.O. of Overhill Farms. "We experienced normal start-up inefficiencies for a product launch of this size."
Gross profits for the second quarter reflect inefficiencies relating to the start-up of eight products for H.J. Heinz Company, a new customer and 24 products for an existing supermarket customer, the company said.
"With production lines now fully staffed, and with the increased efficiency that comes with more experienced employees and sustained production of these new items, we expect to see improved productivity and cost efficiencies," Mr. Rudis said.
Revenues for the first six months of fiscal 2007 were $86.6 million, up $3.3 million, or 4%, from 83.3 million the same period a year earlier, the company said. Net income for the first half was $2.4 million, or 15c per diluted share, up $611,000, or 34%, from $1.8 million, or 11c per share, in the year-earlier period.
By customer category for the second quarter, net revenues for retail were $28.1 million, up 25% from a year earlier, foodservice $13.4 million, down 18%, airline $4.5 million, down 6%.
"Growth presents challenges and we are willing and able to deal with the short-term issues that have accompanied our growth," Mr. Rudis said.