Smart Balance realigns for cash savings
May 7, 2010
by Jeff Gelski
PARAMUS, N.J. — Organizational realignment should result in an estimated ongoing cash savings of $2.7 million annually for Smart Balance, Inc., the company said while giving first-quarter financial results May 6. Associated with the changes, the company will have a charge to earnings of $3 million to $3.5 million in the second quarter.
“We believe this will enable us to reduce and re-allocate resources to invest in the business and ultimately increase cash operating income,” said Steve Hughes, chief executive officer.
Robert Gluck, chief operating officer and vice-chairman, has retired from the company. All functional leadership of the company now will report to Mr. Hughes.
For the first quarter ended March 31, Smart Balance had net income of $3 million, or 5c per share, up from $1.1 million, or 2c per share, in the previous year’s first quarter. Net sales in the quarter were $63.6 million, up from $62.6 million.
The company attributed the increased earnings to lower product unit costs and increased volume, which was offset partially by higher marketing, trade and product introduction costs. First-quarter net sales rose due to increased volume, primarily from the expanded distribution of the company’s dairy aisle products and new products in the core category of spreads. Higher trade and product introduction costs largely offset the net sales increase.
“I am pleased with our first-quarter results, a solid first step as we plan to transform the company from a Smart Balance spreads business to a multi-brand, multi-category growth platform,” Mr. Hughes said. “We reached 50% national distribution of our enhanced milk products, strengthened our gross margin and maintained a 15.2% market share in spreads despite the economic environment and significant competitive discounting pressures.”