Synergy Brands reports first quarter results
Revenues increased by 18% to $17.6 Million.
Operating profit increased from a loss to $303,000 gain.
Cash Flow from operations increased from a $547,000 loss to a $153,000 gain.
Grocery operations (PHS Group) achieved record sales and net profit
Loss attributable to common shareholders narrowed by 37% to $295,000.
Syosset, NY, May 15, 2007 - Synergy Brands, Inc. (NASDAQ:SYBR)
HIGHLIGHTS:
o Synergy reported net profit of $163,000 from operating segments;
o Synergy EBITDA increased by 133% to $516,000 or $0.07 per share;
o PHS generated record revenues of $17.2 million;
o PHS net profit jumped by 177% to $259,000;
o Synergy after tax income from PERX increased by 489% to $91,000;
o Book Value increased from $5.7 million to $6.6 million;
o Working capital increases by 89% to $10.7 million.
SYNERGY BRANDS CONSOLIDATED RESULTS FOR QUARTER ENDED MARCH 31, 2007 AS COMPARED
TO THE QUARTER ENDED MARCH 31, 2006.
Overall revenues increased by 18% to $17.6 million for the quarter ended March
31, 2007, as compared to $14.9 million for the same period in the prior year.
The largest percentage increase was in the Company's grocery and HBA operations
conducted through its wholly owned subsidiary PHS Group. The Company's grocery
operation continued to develop additional vendor relationships in the grocery
and HBA businesses as well as expand its Private Label programs. Other
operations including cigar operations, discontinued operations and minority
interest in travel accounted for less then 3% of the Company's overall business.
Gross profit increased by 32% to $1.4 million as compared to $1.1 million for
the prior period. Operating profit increased to $303,000 from an operating loss
of $11,000 while EBITDA increased by 133% to $517,000. The major contributing
factor to the improvement is the consistent growth of PHS Group, the Company's
Grocery, HBA and private label businesses. Operating profit for PHS Group
increased to $671,000 from $387,000 while net profit increased to $259,000 from
$94,000. The Company has been able to achieve profitability through increased
sales and wider profit margins. The wider profit margins have been achieved
through a diversification of the business from wholesale distribution to direct
store deliveries and co-packing private label baking mixes and spices. PHS has
been able to leverage its warehouse logistics into efficient distribution of
private label products, both domestic and through importation. The Company plans
to further expand into the Dominican Republic, Colombia, Israel and Canada and
continue to expand its assembly operations in China for retail spice production.
The Company narrowed its loss to $295,000 from $469,000. Although the Company
reported a net loss, its cash flow from operations improved to $153,000. A large
portion of the Company's expenses is non-cash charges, which include
depreciation & amortization, non-cash financing and general and administrative
costs. The predominant cause for the loss is the financing costs incurred in
carrying the Company's accounts receivable and inventory. In order to increase
revenues, the Company is required to carry a material amount of inventory and
extend credit terms of between 10 to 60 days to both national accounts and small
retail customers. The Company secured an $8 million senior long-term facility
with a major shareholder as it retired its high cost revolving line of credit
with IIG. The Company believes that in order to improve its operations and
achieve profitability it will require continued financing of receivables,
inventory and equipment.
PHS increased its revenues by 18% to $17.2 million for quarter ended March 31,
2007 as compared to $14.5 million prior period. The increase in PHS business is
attributable to the further development of a private label grocery program
designed to sell proprietary products, more specifically in the baking mix and
spice market, to national chains located in the United States and Canada, and
organic growth in sales to its customers in the Northeastern Section of the
United States. Several PHS vendors created special packaging with promotional
pricing that enabled PHS to widen its profit margin. As an example, special
packaging was created for Folgers, Marcal paper, Crest displays, Duracell and
Gillette among others, with unique retail display features, that PHS has been
able to strongly promote during FY 2007 as opposed to marketing those products
for normal replenishment. PHS is also developing proprietary packaging for
national chains in the baking mix and spice retail sectors to be displayed in
unique planograms. The Company believes that promotional displays allow PHS to
sell better mixes of product as well as introduce new items in combination with
regularly stocked items. As long as the Company maintains or expands its vendor
relationships, management believes that it can continue to improve its operating
results. Net profit for this segment was $259,000 for the quarter ended March
31, 2007 as compared to a profit of $94,000 for the quarter ended March 31, 2006
ABOUT SYNERGY BRANDS:
Synergy Brands Inc. is a holding company that principally operates through a
wholly owned subsidiary, PHS Group Inc. ("PHS") in the wholesale distribution of
nationally known brands and proprietary private label Groceries and Health and
Beauty Aid (HBA) products, focusing on the sale of nationally known brand name
consumer products manufactured by major U.S. manufacturers. The company has
begun focusing on the grocery private label market in FY 2006, specifically in
baking mixes and spices. The Company also owns a wholly owned subsidiary Gran
Reserve Corporation that operates in the wholesale, retail and online sales of
Premium hand made cigars and accessories.
Synergy Brands also owns 20% of the outstanding common stock of Interline Travel
and Tours, Inc. (www.perx.com). 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. Synergy believes that its capital investment in this unique
travel company could provide for material future capital appreciation relative
to the Company's current market capitalization. Synergy Brands does not manage
PERX's day-to-day operations.
GRAN RESERVE OPERATING CONSOLIDATED
PHS GROUP CORPORATION SEGMENTS RESULTS
1st Quarter ended 3/31/07
Revenue 17,225,884 387,829 17,613,713 17,613,713
Gross Profit 1,298,645 115,131 1,413,776 1,413,776
SG&A 623,990 172,114 796,104 1,065,673
Operation Profit (loss) 671,034 (96,097) 574,937 303,345
Net Profit (loss) attributable to common 259,002 (96,301)
shareholders from continuing operations 162,701 (289,330)
Per Share continuing operations 0.03 (0.01) 0.02 (0.04)
Non Cash Charges 3,621 41,196 44,817 87,808
Financing & Dividend Charges 408,905 408,905 670,683
Income Tax Expense 46,782
EBITDA 671,528 (55,105) 616,423 515,943
Per Share 0.09 (0.01) 0.08 0.07
Net loss from discontinued operations (6,213)
Per share discontinued operations (0.00)
Net loss attributable to common
shareholders (295,543)
Per Share (0.04)
1st Quarter ended 3/31/06
Revenue 14,487,003 391,152 14,878,155 14,878,155
Gross Profit 961,519 112,852 1,074,371 1,074,371
SG&A 571,191 219,214 790,405 1,007,214
Operation Profit (loss) 387,124 (145,476) 241,648 (11,477)
Net Profit (loss) attributable to common 93,599 (145,449)
shareholders from continuing operations (51,850) (465,522)
Per Share continuing operations 0.02 (0.03) (0.01) (0.10)
Non Cash Charges 3,204 41,196 44,400 181,034
Financing & Dividend Charges 293,133 293,133 468,647
Income Tax Expense 37,828
EBITDA 389,936 (104,253) 285,683 221,987
Per Share 0.09 (0.02) 0.07 0.05
Net loss from discontinued operations (3,414)
Per share discontinued operations (0.00)
Net loss attributable to shareholders (468,936)
Per Share (0.10)
Synergy Brands Related Links:
For the full 10Q filing and media presentation please visit www.sybr.com, for
Cigar sites visit www.cigargold.com and www.cigarsaroundtheworld.com; for Salon
products visit www.BeautyBuys.com; for Interline Travel visit www.perx.com.
Forward-looking statements:
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 1994. 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", "believe" and other derivations thereof
and other words of similar meaning. In particular these include, but are not
limited to, statements reflecting the projected business activities and goals,
revenues, earnings, non-GAAP measures of operations, profit and loss of the
Company and associated costs. 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 or 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 (ww.sec.gov) including Forms 10K
and 10Q that can be found at www.sybr.com .
Contact: Beverly Jedynak
Martin E. Janis & Company, Inc.
312-943-1100 ext. 12
bjedynak@janispr.com