Exhibit 99.1
[Logo of Michael Foods, Inc.]
NEWS
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301 Carlson Parkway¡ Suite 400¡ Minnetonka, MN 55305¡ (952) 258-4000 FAX (952) 258-4911 Visit Michael Foods, Inc. on the Internet: www.michaelfoods.com | ||||
| CONTACT: | Mark D. Witmer Treasurer & Secretary (952) 258-4906 | |||
For Immediate Release
MICHAEL FOODS REPORTS FOURTH QUARTER RESULTS
MINNETONKA, March 25 — Michael Foods, Inc. today reported financial results for the fourth quarter of 2009. Net earnings for the quarter ended January 2, 2010 were $19.6 million, compared to $13.3 million in 2008, an increase of 47%. Net sales for the quarter ended January 2, 2010 were $390.3 million, compared to $484.3 million in 2008, a decrease of 19%. Net earnings for the year ended January 2, 2010 were $69.5 million, compared to $46.9 million in 2008, an increase of 48%. Net sales for the year ended January 2, 2010 were $1,542.8 million, compared to $1,804.4 million in 2008, a decrease of 14.5%. 2008 was a 53-week year; the additional week represented 4% of the net sales for the quarter ended January 3, 2009 and approximately 1% of the net sales for the year ended January 3, 2009.
Earnings before interest, taxes, depreciation and amortization and other adjustments (EBITDA, as defined in Michael Foods’ credit facility) for the quarter ended January 2, 2010 were $54.1 million, compared to $54.2 million in 2008. EBITDA for the year ended January 2, 2010 was $214.4 million, compared to $200.0 million in 2008, an increase of 7%. Michael Foods, Inc. uses EBITDA as a measurement of financial results, as an indication of the relative strength of its operating performance and to determine incentive compensation levels.
Commenting on the results, Chief Executive Officer and President James E. Dwyer, Jr. said, “Our fourth quarter EBITDA results were driven by improved performance in the foodservice egg products portfolio, reflecting our continued focus on moving our customers to more convenient, value-added products. Fourth quarter volumes declined by 10% across all of our businesses, due, in large part, to economic conditions and the 53rd week in 2008, which represented about half of the quarterly volume decline. Our focus on our higher-margin products and tight cost controls allowed us to offset the difficult volume environment.”
Dwyer concluded, “Our free cash flow remains strong. We made a $37.3 million voluntary prepayment on our term debt in late December 2009 and continued to invest in our businesses, especially in our new Chaska, Minnesota potato processing facility, which is currently ramping up production.”
Unaudited segment data follows (in thousands):
| Egg Products | Potato Products | Crystal Farms | Corporate | Total | ||||||||||||
Quarter ended January 2, 2010: | ||||||||||||||||
External net sales | $ | 253,584 | $ | 33,413 | $ | 103,294 | $ | — | $ | 390,291 | ||||||
Net earnings | 16,958 | 3,529 | 2,179 | (3,106 | ) | 19,560 | ||||||||||
EBITDA* | 44,352 | 5,321 | 6,880 | (2,450 | ) | 54,103 | ||||||||||
Quarter ended January 3, 2009: | ||||||||||||||||
External net sales | $ | 326,197 | $ | 35,200 | $ | 122,906 | $ | — | $ | 484,303 | ||||||
Net earnings | 10,250 | 1,941 | 4,425 | (3,288 | ) | 13,328 | ||||||||||
EBITDA* | 42,299 | 5,959 | 9,228 | (3,296 | ) | 54,190 | ||||||||||
Year ended January 2, 2010: | ||||||||||||||||
External net sales | $ | 1,046,791 | $ | 119,219 | $ | 376,769 | $ | — | $ | 1,542,779 | ||||||
Net earnings | 77,940 | 2,478 | 20,760 | (31,714 | ) | 69,464 | ||||||||||
EBITDA* | 173,316 | 12,078 | 39,137 | (10,130 | ) | 214,401 | ||||||||||
Year ended January 3, 2009: | ||||||||||||||||
External net sales | $ | 1,265,641 | $ | 125,059 | $ | 413,673 | $ | — | $ | 1,804,373 | ||||||
Net earnings | 57,858 | 7,894 | 10,115 | (28,989 | ) | 46,878 | ||||||||||
EBITDA* | 170,184 | 20,575 | 21,822 | (12,565 | ) | 200,016 | ||||||||||
| * | As defined in Michael Foods’ credit facility. |
EBITDA is a widely accepted financial indicator used to analyze and compare companies on the basis of operating performance. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles and is not indicative of operating profit or cash flow from operations as determined under generally accepted accounting principles.
The following table reconciles net earnings to EBITDA for the quarter ended January 2, 2010 (unaudited, in thousands):
| Egg Products | Potato Products | Crystal Farms | Corporate | Total | ||||||||||||||
Net earnings (loss) | $ | 16,958 | $ | 3,529 | $ | 2,179 | $ | (3,106 | ) | $ | 19,560 | |||||||
Interest expense, excluding amortization of financing costs | 286 | (17 | ) | — | 9,832 | 10,101 | ||||||||||||
Amortization of financing costs | — | — | — | 1,934 | 1,934 | |||||||||||||
Income tax expense (benefit) | 14,073 | (1,946 | ) | 3,417 | (4,368 | ) | 11,176 | |||||||||||
Depreciation and amortization | 12,008 | 3,529 | 1,061 | 1 | 16,599 | |||||||||||||
Equity sponsor management fee | — | — | — | 597 | 597 | |||||||||||||
Industrial revenue bonds related expenses | 246 | — | — | — | 246 | |||||||||||||
Other | 2,308 | 226 | 223 | (7,340 | ) | (4,583 | ) | |||||||||||
| 45,879 | 5,321 | 6,880 | (2,450 | ) | 55,630 | |||||||||||||
Minus: | ||||||||||||||||||
Unrealized gains on swap contracts | 1,527 | — | — | — | 1,527 | |||||||||||||
EBITDA (as defined in the credit facility) | $ | 44,352 | $ | 5,321 | $ | 6,880 | $ | (2,450 | ) | $ | 54,103 | |||||||
The following table reconciles net earnings to EBITDA for the quarter ended January 3, 2009 (unaudited, in thousands): |
| |||||||||||||||||
| Egg Products | Potato Products | Crystal Farms | Corporate | Total | ||||||||||||||
Net earnings (loss) | $ | 10,250 | $ | 1,941 | $ | 4,425 | ($3,288 | ) | $ | 13,328 | ||||||||
Interest expense, excluding amortization of financing costs | 293 | — | — | 8,462 | 8,755 | |||||||||||||
Amortization of financing costs | — | — | — | 960 | 960 | |||||||||||||
Income tax expense (benefit) | 7,539 | 1,837 | 3,320 | (7,256 | ) | 5,440 | ||||||||||||
Depreciation and amortization | 17,372 | 1,829 | 1,160 | — | 20,361 | |||||||||||||
Equity sponsor management fee | — | — | — | 610 | 610 | |||||||||||||
Industrial revenue bonds related expenses | 243 | — | — | — | 243 | |||||||||||||
Other | 2,588 | 352 | 323 | (2,784 | ) | 479 | ||||||||||||
| 38,285 | 5,959 | 9,228 | (3,296 | ) | 50,176 | |||||||||||||
Plus: | ||||||||||||||||||
Unrealized losses on swap contracts | 4,014 | — | — | — | 4,014 | |||||||||||||
EBITDA (as defined in the credit facility) | $ | 42,299 | $ | 5,959 | $ | 9,228 | ($3,296 | ) | $ | 54,190 | ||||||||
The following table reconciles net earnings to EBITDA for the year ended January 2, 2010 (unaudited, in thousands):
| Egg Products | Potato Products | Crystal Farms | Corporate | Total | |||||||||||||
Net earnings (loss) | $ | 77,940 | $ | 2,478 | $ | 20,760 | ($31,714 | ) | $ | 69,464 | |||||||
Interest expense, excluding amortization of financing costs | 1,276 | (342 | ) | — | 36,003 | 36,937 | |||||||||||
Amortization of financing costs | — | — | — | 6,145 | 6,145 | ||||||||||||
Income tax expense (benefit) | 45,295 | (2,487 | ) | 12,997 | (17,561 | ) | 38,244 | ||||||||||
Depreciation and amortization | 47,587 | 11,366 | 4,315 | 4 | 63,272 | ||||||||||||
Equity sponsor management fee | — | — | — | 2,144 | 2,144 | ||||||||||||
Industrial revenue bonds related expenses | 978 | — | — | — | 978 | ||||||||||||
Other | 8,660 | 1,063 | 1,065 | (5,151 | ) | 5,637 | |||||||||||
| 181,736 | 12,078 | 39,137 | (10,130 | ) | 222,821 | ||||||||||||
Minus: | |||||||||||||||||
Unrealized gains on swap contracts | 8,420 | — | — | — | 8,420 | ||||||||||||
EBITDA (as defined in the credit facility) | $ | 173,316 | $ | 12,078 | $ | 39,137 | ($10,130 | ) | $ | 214,401 | |||||||
The following table reconciles net earnings to EBITDA for the year ended January 3, 2009 (unaudited, in thousands): | |||||||||||||||||
| Egg Products | Potato Products | Crystal Farms | Corporate | Total | |||||||||||||
Net earnings (loss) | $ | 57,858 | $ | 7,894 | $ | 10,115 | $ | (28,989 | ) | $ | 46,878 | ||||||
Interest expense, excluding amortization of financing costs | 1,460 | — | — | 35,817 | 37,277 | ||||||||||||
Amortization of financing costs | — | — | — | 3,824 | 3,824 | ||||||||||||
Income tax expense (benefit) | 27,836 | 4,823 | 6,180 | (17,710 | ) | 21,129 | |||||||||||
Depreciation and amortization | 65,907 | 6,856 | 4,555 | 3 | 77,321 | ||||||||||||
Equity sponsor management fee | — | — | — | 2,000 | 2,000 | ||||||||||||
Industrial revenue bonds related expenses | 976 | — | — | — | 976 | ||||||||||||
Other | 8,298 | 1,002 | 972 | (7,510 | ) | 2,762 | |||||||||||
| 162,335 | 20,575 | 21,822 | (12,565 | ) | 192,167 | ||||||||||||
Plus: | |||||||||||||||||
Unrealized losses on swap contracts | 7,849 | — | — | — | 7,849 | ||||||||||||
EBITDA (as defined in the credit facility) | $ | 170,184 | $ | 20,575 | $ | 21,822 | $ | (12,565 | ) | $ | 200,016 | ||||||
Michael Foods, Inc., based in Minnetonka, MN, is a producer and distributor of food products to the foodservice, retail and food-ingredient markets. Its principal products are specialty egg products, refrigerated potato products, cheese and other dairy products.
Consolidated statements of earnings are as follows:
Michael Foods, Inc.
Consolidated Statements of Earnings
For the periods ended January 2, 2010 and January 3, 2009
(in thousands)
| Quarter | Twelve months | |||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||
Net sales | $ | 390,291 | $ | 484,303 | $ | 1,542,779 | $ | 1,804,373 | ||||
Cost of sales | 314,894 | 412,529 | 1,241,613 | 1,528,420 | ||||||||
Gross profit | 75,397 | 71,774 | 301,166 | 275,953 | ||||||||
Selling, general & administrative | 32,298 | 43,118 | 145,883 | 165,938 | ||||||||
Operating profit | 43,099 | 28,656 | 155,283 | 110,015 | ||||||||
Interest expense, net | 12,363 | 9,888 | 44,338 | 42,008 | ||||||||
Loss on early extinguishment of debt | — | — | 3,237 | — | ||||||||
Earnings before income taxes | 30,736 | 18,768 | 107,708 | 68,007 | ||||||||
Income tax expense | 11,176 | 5,440 | 38,244 | 21,129 | ||||||||
Net earnings | $ | 19,560 | $ | 13,328 | $ | 69,464 | $ | 46,878 | ||||
| January 2, 2010 | January 3, 2009 | |||||
Selected Balance Sheet Information: | ||||||
Cash and equivalents | $ | 87,061 | $ | 78,054 | ||
Accrued interest | $ | 3,062 | $ | 4,537 | ||
Total debt, including current maturities | $ | 553,037 | $ | 597,384 | ||
Certain items in this release may be forward-looking statements. Such forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, changes in domestic and international economic conditions. Also, the Company faces normal, and at times notable, variances in the supply of, and demand for, eggs, grain feed inputs, potatoes and cheese, which can result in pricing and profit margin volatility for certain egg products, potato products and cheese. As a result, the Company’s actual financial results could differ materially from the results estimated by, forecasted by, or implied by the Company in such forward-looking statements.
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3-25-10
