Synergy Reports First Quarter Results
Revenues increase by 12% to $14.9 million.
Shareholders' Equity increases by 128% to $2.02 per share.
Melville, NY (May 16, 2005) - Synergy Brands, Inc. (NASDAQ:SYBR)
Highlights:
o Working Capital increases by 46% to $2.7 million.
o Senior Line rate reduced to 9.75% from 17%.
o Operating Income before non-cash charges increases to $.02 per share from a
loss of $.01 per share.
o $761,354 of Debt was converted to equity at an average price of $3.11 per
share.
Synergy Brands (Company) reported that revenues increased by 12% to $14.9
million for the quarter ended March 31, 2005. The net loss was reduced by 8% to
$0.21 per share vs. $.23 for the same period (see table below). The
Shareholders' equity of the Company increased by 128% to $6.7 million for the
period ended March 31, 2005 or $2.02 per share. Operating Profit before non-cash
and financing charges increased by 395% to $ 71,933.
The Company reported a record quarter for its PHS Group segment by generating
$14.4 million in revenues with an operating profit of $200,000. The Company's
Cigar operations remained flat while Proset reported lower sales. Management
expects to continue its growth in its PHS segment and believes that its
impending store opening for its Cigar business should increase the operating
results of its Cigar operations. Proset has a significant backlog of orders for
the second Quarter and expects to generate an operating profit in the period
ending June 30, 2005.
The Company's major cost centers that have grown during this period of rapid
revenue growth include financing costs, which totaled $334,230, and Operating
costs, which totaled $915,631. The Company has incurred initial expenses in
expanding its warehousing facilities in Syosset, NY. The Company added six
trucks to its warehouse as well as expanded the facility to handle its
Direct-Store-Delivery (DSD) operation. Management believes that fixed costs have
been established and should revenues continue to rise, operating margins should
also increase. The Company's warehousing operations represented approximately
30% of operating costs, while generating about 20% of sales. The Company
believes that if DSD revenue concentration matches operating expense structure,
overall margins should widen. The net loss of the Company increased to $692,147
from $457,974 predominately due to increased financing, equity based non-cash
charges and operating costs in connection with the grocery DSD warehousing
facility. Management believes that its current quarter is in conformity to its
guidance released on April 7th, 2005.
Furthermore In the 1st quarter PHS secured an exclusive distribution contract
for Fitti Brand Diapers in the Dominican Republic. The Company's Cigar operation
plans on opening Bill Rancic's Cigars Around the World Store in June of 2005.
The Cigar operation continues to develop outlets for distribution from its
operation in Miami, Florida. The Company is exploring options with PGA Clubs,
Strategic Websites and Wholesale arrangements. Synergy is committed to becoming
one of the largest Premium Cigar purveyors to PGA Clubs and Resort facilities as
well as online distribution.
The Company continues to explore strategic alternatives for its core assets.
Synergy operates in three industries, which include Wholesale distribution of
Groceries and HBA, Sale of Premium Cigars and a minority stake in a unique
Travel Agency. In its continuing review of Assets, the Company seeks to maximize
shareholder value through the distinct valuation of its properties.
Based upon independent business appraisals completed for the Company, management
believes the following valuations could be made of its various business
segments, realizing that such valuations are approximate and subject to various
uncertainties.
o The Company's Cigar Franchise based upon accepted valuation standard could be
valued at three times revenue or about $6 million.
o The Company's grocery operations could have a value equal to approximately 30%
of Revenues or Approximately $12 million.
o The Company's 21.5% ownership stake in www.perx.com (Interline Vacations)
based upon accepted valuation multiples could be valued at a 1.5 times booking
multiple, which would be in excess of $7 million for the Company's stake.
The above analysis is based upon Management's analysis of its properties in
conjunction with its independent appraiser for the purpose of testing
impairment. In connection with its mergers and/or acquisitions strategies as may
be developed by and/or for the Company and should not be considered for any
other purpose.
Bill Rancic commented at the Company's opening of the Nasdaq market that
"Synergy continues to make strides in creating sound foundations for its core
assets. With the help of our business partners we believe that Synergy can
optimize its franchise values for the benefit of its shareholders". Mair
Faibish, president of the Company added, "Synergy is proud to be a member of the
Nasdaq market and hopes that its rapid growth can be complemented with lower
rates that may enable the Company to become profitable. Although we have taken
the risk of rapid revenue growth to gain market share in our region, we believe
that our mass should eventually lead to a sound capital structure".
About Synergy Brands
Synergy Brands, Inc. (http://www.sybr.com) is a holding Company that operates in
the wholesale and online distribution of groceries and health & beauty Aid (HBA)
as well as wholesale and online distribution of premium cigars and salon
products through three specific business segments: PHS Group, which distributes
grocery and HBA products to retailers and wholesalers located in the
Northeastern US and Canada; Proset Hair Systems, which distributes Salon Hair
Care products to wholesalers and distributors in the Northeastern part of the US
and three companies within its Business to Consumer (B2C) segment, carried out
through Gran Reserve Corporation. GRC operates Cigars Around the World, a
Company that sells premium cigars to restaurants, hotels, casinos, country clubs
and other leisure related destinations; CigarGold.com and Netcigar.com, which
sell premium cigars through the Internet directly to the consumer; and
BeautyBuys.com, which sells salon hair care products directly to the consumer
via the Internet. The Company uses logistics web based programs to optimize its
distribution costs on both wholesale and retail levels.
Synergy Brands also owns 21.5 percent of the outstanding common stock of
Interline Travel and Tours, Inc., also known as PERX. PERX provides cruise and
resort hotel packages through a proprietary reservation system to airline
employees and their retirees. PERX is believed to be the largest Company in this
sector of the travel industry. More information is available at www.perx.com.
For a complete listing of the Company's public filings, please visit
www.sec.gov.
FINANCIAL RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2005:
TOTAL
CONSOLIDATED CHANGE
1st Quarter ended 3/31/05
Revenue 14,934,354 12.23%
Gross Profit 805,200 -1.51%
SG&A 915,631 8.77%
Operating Profit (loss) (235,034) 38.18%
Net loss (692,147) -51.13%
Per Share (0.21) 9.59%
Non cash Charges 306,967 110.56%
Interest Expense (net) 334,230 20.14%
Adjusted operating Income (loss) 71,933 395.95%
Per Share 0.02
1st Quarter ended 3/31/04
Revenue 13,307,183
Gross Profit 817,524
SG&A 841,830
Operating Profit (loss) (170,093)
Net Profit (loss) (457,974)
Per Share (0.23)
Non cash Charges 145,787
Interest income 278,195
Adjusted operating Income (loss) (24,306)
Per Share (0.01)
Adjusted Operating Income
excludes interest and non-cash
charges.
Liquidity and Capital Resources
1st quarter ended March 31: 2005 2004
Working Capital 2,699,587 1,843,693 46.42%
Assets 16,420,027 12,610,672 30.21%
Liabilities 9,728,614 9,674,813 0.56%
Equity 6,691,413 2,935,859 127.92%
Credit Facility 5,981,907 5,378,138 11.23%
Receivable turnover (days) 43 40
Inventory turn (days) 12 13
Current ratio 1.30 1.22
Tangible Assets 14,659,364 10,877,697 34.77%
Weighted Shares Outstanding 3,302,884 1,975,750
Book Value Per share 2.02 1.45 40.45%
FORWARD LOOKING STATEMENTS (SAFE HARBOR)
This press release and Company review and assumptions made regarding the
financial figures and other information, referenced and presented, state and
reflect assumptions, expectations, projections, intentions and/or beliefs about
past and future events that are intended as "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995. You can identify these
statements by the fact that they do not relate to historical or current facts.
They use words such as "anticipate", "estimate", "project" "forecast", "may",
"will", "should", "expect", "assume", and other deviations thereof and other
words of similar meaning. In particular these include, but are not limited to,
statements reflecting the projected revenues, earnings, profit and loss of the
Company and associated costs. Furthermore, terms such as EBITDA (earnings before
interest, taxes, depreciation & amortization) among others are not terms used
under GAAP and should not be relied upon as such. Any or all of the Company's
forward-looking statements may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties. For a
description of many of these risks and uncertainties, please refer to the
Company's filings with the U.S. Securities & Exchange Commission (www.sec.gov)
including Forms 10K and 10Q..
Contact: Beverly Jedynak
Martin E. Janis & Company, Inc.
312-943-1100 ext. 12
bjedynak@janispr.com