Exhibit 99.1
Vaughan Foods, Inc. Reports Profitable 1st Quarter
Gross Profit Margin Increases to 12.7% of Revenue
Q1 EBITDA increases $900,000 to $1.1 million
MOORE, Okla., May 11, 2010 -- Vaughan Foods, Inc. (OTCBB:FOOD.OB), a regional leader in fresh-cut vegetables and fruit products, and a broad line of refrigerated prepared salads, sauces, soups, and side-dishes, today announced its operating results for the first quarter ended March 31, 2010.
Vaughan recorded net income of $0.1 million, or $0.02 per share, compared to a net loss of $0.3 million or $0.06 per share in the comparable quarter of 2009. Gross profit increased to 12.7 percent in the first quarter of 2010 from 8.7 percent in the first quarter of 2009.
Revenues were lower by 2.8% in the first quarter compared to the year-earlier quarter. The Company has been focused on operational and margin improvement and less on top line revenues over the past year. However, Vaughan has a robust sales pipeline and will increase its emphasis on top line growth during 2010.
The improved results are attributable to several factors, including efficiencies in production labor and ingredient costs partially attributable to the benefits of the Company’s implementation of its Enterprise Resource Planning (“ERP”) system in the first quarter of 2010, continued stability in commodity raw material costs, and further stabilization of the Company’s work force.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) improved to $1.1 million in the first quarter of 2010 compared with $0.2 million in the year-earlier quarter. The Company repaid long-term debt and capital leases of $0.2 million and reduced the amount outstanding on its revolving line of credit by $0.3 million to $2.0 million.
On February 24, 2010, the Company closed a private placement financing, wherein it raised $1.9 million consisting of a combination of restricted common stock and restricted warrants, strengthening its capital and liquidity position.
“Our first quarter profit reflects improvements in cost structure, systems and overall efficiencies in the operations of our company,”said Herb Grimes, Chairman and CEO of Vaughan Foods. As we enter our seasonal peak volume period, we have the ability to make informed and timely decisions that allow us to balance our pricing, costs and the needs of our customers. Accordingly, we expect that our positive trends will continue,” concluded Mr. Grimes.
Investor Conference Call
Management will host an investor conference call on Wednesday, May 12, 2010 at 10:00 a.m. ET to discuss these results.
Interested parties should call (877) 353-0040 (domestic) or (970) 315-0529 (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 4, 2010 and can be accessed by dialing (800) 642-1687 (domestic), and (706) 645-9291 (international). The conference ID is 73235977.
About Vaughan Foods, Inc.
Vaughan Foods is an integrated manufacturer and distributor of value-added, refrigerated foods. We are uniquely able to distribute fresh-cut produce items along with a full array of value-added refrigerated prepared foods multiple times per week. We sell to both food service and retail sectors. Our products consist of fresh-cut vegetables, fresh-cut fruits, salad kits, prepared salads, dips, spreads, soups, sauces and side dishes. Our primary manufacturing facility is in Moore, Oklahoma. Our soups and sauces are manufactured in our facility in Fort Worth, Texas.
Safe Harbor Statement
This press release contains forward-looking statements about the future performance of Vaughan Foods, Inc. based on Management's assumptions and beliefs in light of information currently available to it. There are a variety of factors that could cause actual and future results to differ materially from those anticipated by the statements made above. These factors are outlined in the Company's Forms 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Furthermore, Vaughan Foods, Inc. undertakes no obligation to update, amend or clarify forward-looking statements whether as a result of new information, future events, or otherwise.
Investor Relations Contact
| Cameron Associates |
| Investor Contact: |
| Paul Henning |
| 212-554-5462 |
| Paul@cameronassoc.com |
Vaughan Foods, Inc.
Consolidated Balance Sheets
(dollars in thousands)
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| March 31, | December 31, | ||||||||||||
Assets |
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Current assets: |
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Cash and cash equivalents |
| $ |
| — |
| $ |
| — | ||||||
Cash receipts subject to account control agreement |
| 433 |
| 523 | ||||||||||
Accounts receivable, net of allowance for credit losses of $157,692 at March 31, 2010 and $106,375 at December 31, 2009 |
| 6,043 |
| 5,312 | ||||||||||
Inventories |
| 2,970 |
| 3,055 | ||||||||||
Prepaid expenses and other assets |
| 217 |
| 211 | ||||||||||
Deferred tax assets |
| 351 |
| 265 | ||||||||||
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Total current assets |
| 10,014 |
| 9,366 | ||||||||||
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Restricted assets: |
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Cash |
| 528 |
| 528 | ||||||||||
Investments |
| 724 |
| 541 | ||||||||||
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Total restricted assets |
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| 1,252 |
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| 1,069 | ||||||||
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Property and equipment, net |
| 15,724 |
| 15,797 | ||||||||||
Other assets: |
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Loan origination fees, net of amortization |
| 292 |
| 422 | ||||||||||
Intangible assets |
| 69 |
| 77 | ||||||||||
Deferred tax assets, noncurrent |
| 2,455 |
| 2,656 | ||||||||||
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Total assets |
| $ |
| 29,806 |
| $ |
| 29,387 | ||||||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
| $ |
| 6,893 |
| $ |
| 8,432 | ||||||
Disbursements in transit |
| 1,392 |
| 1,270 | ||||||||||
Line of credit |
| 1,984 |
| 2,322 | ||||||||||
Note payable to former owners of Allison’s Gourmet Kitchens, LP |
| 872 |
| 876 | ||||||||||
Accrued liabilities |
| 1,945 |
| 1,393 | ||||||||||
Current portion of long-term debt |
| 1,608 |
| 1,138 | ||||||||||
Current portion of capital lease obligation |
| 41 |
| 94 | ||||||||||
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Total current liabilities |
| 14,735 |
| 15,525 | ||||||||||
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Long term liabilities: |
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Long-term debt, net of current portion |
| 6,316 |
| 6,944 | ||||||||||
Deferred gain on sale of assets |
| 35 |
| 43 | ||||||||||
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Total long-term liabilities |
| 6,351 |
| 6,987 | ||||||||||
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Total stockholders’ equity |
| 8,720 |
| 6,875 | ||||||||||
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Total liabilities and stockholders’ equity |
| $ |
| 29,806 |
| $ |
| 29,387 | ||||||
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Vaughan Foods, Inc.
Consolidated Statements of Operations
(dollars in thousands)
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| Three Months Ended | |||||||||||||
2010 | 2009 | |||||||||||||
Net sales |
| $ |
| 21,696 |
| $ |
| 22,319 | ||||||
Cost of sales |
| 18,934 |
| 20,368 | ||||||||||
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Gross profit |
| 2,762 |
| 1,951 | ||||||||||
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Selling, general and administrative |
| 2,270 |
| 2,150 | ||||||||||
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Operating income |
| 492 |
| (199 | ) |
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Interest expense |
| (269 | ) |
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| (226 | ) |
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Other income, net |
| 9 |
| (4 | ) |
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Income (loss) before income taxes |
| 232 |
| (429 | ) |
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Income tax expense (benefit) |
| 115 |
| (163 | ) |
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Net income (loss) |
| $ |
| 117 |
| $ |
| (266 | ) |
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Weighted average |
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Basic and diluted |
| 6,526,077 |
| 4,623,077 | ||||||||||
Net income (loss) per share basic and diluted |
| $ |
| 0.02 |
| $ |
| (0.06 | ) |
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Vaughan Foods, Inc.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2010 and 2009
(dollars in thousands)
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| 2010 | 2009 | ||||||||||||
Cash flows from operating activities: |
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Net (loss) |
| $ |
| 117 |
| $ |
| (266 | ) |
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Adjustments to reconcile net (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
| 727 |
| 455 | ||||||||||
Provision for credit losses |
| 51 |
| — | ||||||||||
(Gain) loss on sale of asset |
| (9 | ) |
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| 4 | ||||||||
Stock based compensation expense |
| 22 |
| 27 | ||||||||||
Deferred income taxes |
| 115 |
| (163 | ) |
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Changes in operating assets and liabilities: |
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Accounts receivable |
| (783 | ) |
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| (1,060 | ) |
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Inventories |
| 85 |
| (164 | ) |
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Prepaid expenses and other assets |
| (6 | ) |
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| (49 | ) |
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Accounts payable |
| (1,538 | ) |
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| 1,373 | ||||||||
Disbursements in transit |
| 122 |
| (235 | ) |
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Accrued liabilities |
| 552 |
| 310 | ||||||||||
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Net cash provided by operating activities |
| (545 | ) |
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| 232 | ||||||||
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Cash flows from investing activities: |
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Purchases of property and equipment |
| (516 | ) |
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| (208 | ) |
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Investments in Restricted assets |
| (182 | ) |
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| (598 | ) |
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Net cash (used in) investing activities |
| (698 | ) |
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| (806 | ) |
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Cash flows from financing activities: |
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Payments of loan origination fees |
| — |
| (176 | ) |
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Proceeds from stock issue |
| 1,706 |
| — | ||||||||||
Proceeds from line of credit |
| — |
| 2,778 | ||||||||||
Repayments of line of credit |
| (338 | ) |
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| (1,000 | ) |
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Cash receipts subject to account control agreement |
| 90 |
| (837 | ) |
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Repayment of notes payable to former owners of Allison’s Gourmet Kitchens, LP |
| (3 | ) |
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| — | ||||||||
Repayment of long-term debt and capital leases |
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| (212 | ) |
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| (191 | ) | ||||||
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Net cash (used in) financing activities |
| 1,243 |
| 574 | ||||||||||
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Net increase (decrease) in cash and cash equivalents |
| — |
| — | ||||||||||
Cash and cash equivalents at beginning of period |
| — |
| — | ||||||||||
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Cash and cash equivalents at end of period |
| $ |
| — |
| $ |
| — | ||||||
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