FOR IMMEDIATE RELEASE: Monday, February 7, 2000
CONTACT: Don Gaidano Amy Barr
Chief Financial Officer V.P., Communications
Horizon Organic Holding Corp. Horizon Organic Holding Corp.
(303) 530-2711, Ext. 117 (303) 530-2711, Ext. 114
HORIZON ORGANIC HOLDING CORPORATION'S 1999 SALES RISE 72%
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Company Posts Record Sales and Profits
Longmont, Colo.--- February 7, 2000: Horizon Organic Holding Corp. (Nasdaq
National Market: HCOW) today announced that its 1999 net sales were a record
$84.8 million, up 72 percent from $49.4 million in 1998. Net income for 1999
was a record $1.4 million or $.15 per basic share and $.14 per diluted share, up
from $486,000 or $.07 per basic and $.06 per diluted share in 1998. Net income
for the fourth quarter 1999 was a loss of $527,000 or $.05 per basic and diluted
share compared to net income of $586,000 or $.06 per basic and diluted share for
the comparable period in 1998. Fourth quarter sales were up 70 percent to $25.0
million in 1999 from $14.7 million in the prior year.
Don Gaidano, Horizon's chief financial officer, noted that the lower-than-
expected earnings for the fourth quarter 1999, as previously announced, were due
to increased costs to support the company's growth initiatives; higher-than-
planned payments to mandated dairy-support programs; and costs related to the
recently announced management transition at Horizon. The charges associated
with these items were approximately $2.0 million for the quarter.
Chuck Marcy, recently appointed president and chief executive officer of
Horizon, said that the company is making important progress with the five-point
strategic action plan that he outlined last month. The five initiatives were
developed to provide improved performance in the year 2000. These action plans
include expanding the retail availability of the company's product line;
introducing new products; improving partnerships with customers, processors and
distributors; enhancing consumer awareness of the Horizon OrganicTM brand; and
increasing productivity and reducing costs.
Marcy noted that the company began moving forward on the plan by hiring a
seasoned logistics consultant to evaluate the Horizon organization and to
recommend important work redesign. "The key to our future success will be our
focus on aggressive profitable growth, which will result from increasing
productivity and driving costs from our systems. Operational excellence is a
must as we move forward," he said.
Marcy also stated that the company's heightened productivity focus should begin
to accelerate profit growth, especially in the second half of the year and that
Horizon expects continued, strong revenue growth in 2000. "Specifically, we
believe that revenue will increase by approximately the same dollar amount as in
1999, which would be about $35 million, or 40 to 45
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percent. We anticipate that operating income will nearly double that of 1999;
however, because of higher interest costs due to 1999 acquisitions, the company
expects earnings per share to be in the mid-twenty-cent range."
Marcy said: "We project strong sales growth in the first quarter of 2000, with
an increase of 50 to 60 percent over first quarter 1999." Assuming this level
of sales growth, the company believes that based on its current cost trends,
first quarter operating profit is likely to be comparable to first quarter 1999
results. Again, due to higher interest expenses, earnings per share could be
about half of last year's quarterly result.
Horizon's chief executive emphasized that the company's recently introduced
ultra-pasteurized (UP) line of fluid milk, frequently requested by retailers,
already has contributed to growth in Horizon's customer base. "Our ultra-
pasteurized line of fluid milk has been very well received by the trade. In
addition to the recent gains we've registered, we are in discussions with
numerous other customers to expand our UP milk distribution to stores that will
only accept longer shelf-life products," Marcy explained.
To further build brand strength, Horizon also announced the appointment of Clark
Driftmier as Horizon's new vice president of marketing. Driftmier most recently
served as senior vice president of marketing for Small Planet Foods, parent
company of consumer brands Cascadian Farm, Muir Glen and Fantastic Foods. He
succeeds Horizon cofounder Paul Repetto, who retired in December.
Horizon management has scheduled a conference call for Tuesday, February 8, 2000
at 10 a.m. Eastern Time to discuss 1999 fourth quarter and year-end results with
financial analysts. To hear the call in a listen-only mode, participants must
dial (212) 896-6082, reservation #13898336, five minutes prior to the start of
the event, or they can visit the company's website at www.horizonorganic.com for
a simulcast and replay of the call.
Horizon Organic Dairy produces and markets the leading brand of certified
organic milk and a full line of refrigerated, certified organic dairy products.
Horizon also markets certified organic eggs and certified organic juices under
the Horizon Organic label. In addition to its company-owned farms, Horizon has
established a national network of organic milk producers, processors and
distributors that allows consumers to purchase Horizon Organic products in more
than 10,000 conventional supermarkets and natural foods stores located across
the United States. Horizon also markets The Organic Cow of VermontTM brand of
organic dairy products in the northeast region of the United States and yogurt
under the Rachel's brand in the United Kingdom. For more information, visit the
company's web site at www.horizonorganic.com.
Note on Forward-Looking Statements: This news release contains forward-looking
statements that involve risks and uncertainties. Future events may differ
materially from those discussed herein, due to a number of factors, including
uncertainties related to the company's ability to continue strong growth, to
achieve distribution efficiencies, and to expand domestically and
internationally, as well as increased milk costs, inbound and outbound freight
and distribution costs, higher costs related to new-product introductions and
increased personnel costs. These factors are more fully discussed in the
company's Annual Report on Form10-K for the year ended December 31, 1998, under
the headings "Risk Factors-Competition," "Risks Related to Difficulties of
Managing Growth," "Risks Associated with Changes in Consumer Preferences,"
"Risks Related to Internal Growth Strategy and Possible Acquisitions," Risks
Associated With Dependence on Key Personnel," and "Risk Factors-Risks Associated
with Trade and Consumer Acceptance in Distribution Channels." In addition, the
company's results could also be affected by a number of other risks and
uncertainties which are more fully discussed under the headings "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the company's Annual Report on Form 10-K for the year ended
December 31, 1998.
HORIZON ORGANIC HOLDING CORPORATION
SELECTED FINANCIAL DATA
(In thousands, except per share data)
Three Months Ended Dec 31, Twelve Months Ended Dec 31,
1999 %NS 1998 %NS 1999 %NS 1998 %NS
Net sales $ 24,960 100.0% $ 14,703 100.0% $ 84,771 100.0% $ 49,360 100.0%
% change over prior period 69.8% 62.6% 71.7% 67.0%
Cost of Sales 17,677 70.8% 9,396 63.9% 56,591 66.8% 32,615 66.1%
Gross profit 7,283 29.2% 5,307 36.1% 28,180 33.2% 16,745 33.9%
Selling expense 5,571 22.3% 3,471 23.6% 18,399 21.7% 11,007 22.3%
General and administrative 2,448 9.8% 1,063 7.2% 7,400 8.7% 3,338 6.8%
Operating income (loss) (736) -2.9% 773 5.3% 2,381 2.8% 2,400 4.9%
Interest and other, net (39) -0.2% 203 1.4% 58 0.1% (825) -1.7%
Pretax income (loss) (775) -3.1% 976 6.6% 2,439 2.9% 1,575 3.2%
Income tax (expense) benefit 248 1.0% (390) -2.7% (1,037) -1.2% (675) -1.4%
Extraordinary item, Net NA NA NA (414)
Net income (loss) (527) -2.1% 586 4.0% 1,402 1.7% 486 1.0%
Earnings (loss) per share, before
extraordinary item:
Basic ($0.05) $0.06 $0.15 $0.12
Diluted ($0.05) $0.06 $0.14 $0.11
Earnings (loss) per share after
extraordinary item:
Basic ($0.05) $0.06 $0.15 $0.07
Diluted ($0.05) $0.06 $0.14 $0.06
Weighted average shares outstanding:
Basic 9,736 9,611 9,544 7,339
Diluted 9,976 10,052 9,868 7,742
Selected Balance Sheet Data Dec 31, Dec 31,
1999 1998
Working capital $ 18,805 $ 28,298
Total assets 84,612 69,356
Current liabilities 13,855 7,192
Long term debt, less current portion 11,255 4,923
Stockholders' equity 57,887 55,970