Synergy Brands reports second quarter results
Revenues increased by 39% to $21.8 Million.
Net Profit Increased by 140% to $164,000 (2 cents per share) from a loss of
$406,000 (9 cents per share).
Operating profit increased 30 fold to $630,000.
PHS reported record sales and profits.
o Profit from operating segments increased by 153% to $642,000 (8 cents per
share)
o PHS generated record revenues of $21.3 million a 41% increase;
o PHS net profit jumped by 162% to $730,000 (9 cents per share);
Syosset, NY, August 14, 2007 - Synergy Brands, Inc. (NASDAQ:SYBR) Overall
revenues increased by 39% to $21.8 million for the quarter ended June 30, 2007,
as compared to $15.7 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 63% to $1.9 million as compared to $1.1 million for
the same period in the prior year. Operating profit increased to $630,000 as
compared to $20,000. A 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 $1,089,000 from $535,000
while net profit increased to $730,000 from $278,000. The Company has been able
to achieve profitability through increased sales and wider profit margins
generated by higher vendor rebates and gross profit generated by private label
sales. 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 reported a
net profit of $164,000 as compared to a net loss of $406,000 for the quarter
ended June 30, 2007 as compared to the quarter ended June 30, 2006.
The table at the end of this release contains relevant financial data for the
three months and six months ended June 30, 2007 as compared to the comparable
periods ended June 30, 2006.
PHS GROUP
PHS increased its revenues by 41% to $21.3 million for quarter ended June 30,
2007 as compared to $15.2 million for the similar period in the prior year. 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 markets, 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 what the Company considers 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 $730,000 for the quarter ended June 30, 2007 as
compared to a profit of $278,000 for the quarter ended June 30, 2006.
QUALITY FOOD BRANDS
On May 18, 2007 PHS acquired the assets of a baking mix manufacturing facility
that was known as Loretta Baking Mix Products (LBMP). PHS has secured and
established several national chains that have been generating substantial orders
for PHS. Baking mix facilities have to be American Baking Association (ABA)
approved. This plant is already certified for all regulatory baking mix needs
and has certifications needed to manufacture a variety of baking mixes. This
facility was already co-packing for PHS since FY 2006. PHS has started to
develop proprietary brands for its account under the County Fare, Country Value
and Rich and Moist Labels. PHS has started the process of seeking customers that
may not have their own private label brands, but are only selling baking mix
national brands such as Duncan Hines. PHS has positioned the brands that it has
developed as value brands that are expected to provide higher margins to the
retailer as national brands, but do not have the costs of development that a
private label brand would have. Synergy believes that building brand value may
enhance shareholder value. PHS plans on expanding the business in the existing
facility. Since all process approvals that have been granted are for the use of
this facility, any expansion should be modular and cost effective. The facility
already has the regulatory certifications to operate a baking mix manufacturing
plant and would therefore ease the process of future expansion. The anticipated
expansion is being ascertained for existing PHS customers that PHS has been
servicing for 12 months and expansion opportunities that PHS has been developing
internally. The information systems needed to support this operation already
existed within the manufacturing process. The IT requirements as well as
logistical requirements were already in place to support PHS customers.
Below is a summary of the full results by segment and consolidated for Synergy
Brands for the six months and three months ended June 30, 2007
GRAN RESERVE OPERATING CONSOLIDATED
PHS GROUP CORP SEGMENTS RESULTS
3months ended 6/30/07
Revenue $21,341,435 $451,968 $21,793,403 $21,793,403
Gross Profit $1,749,906 $123,550 $1,873,456 $1,873,456
SG&A $657,554 $175,187 $832,741 $1,201,841
Operating Profit (loss) $1,088,731 ($88,096) $1,000,635 $629,512
Net Profit (loss) from continuing operations $729,573 ($88,088) $641,485 $177,042
Per Share continuing operations $0.09 ($0.01) $0.08 $0.02
Non Cash Charges $3,621 $38,554 $42,175 $129,281
Financing & Dividend Charges $359,158 $359,158 $592,877
Income Tax Expense $436
EBITDA $1,092,352 ($49,534) $1,042,818 $899,636
Per Share $0.13 ($0.01) $0.12 $0.11
Net loss from discontinued operations ($12,863)
Per share discontinued operations $0.00
Net Profit (loss) attributable to shareholders $164,179
Per Share $0.02
3months ended 6/30/06
Revenue $15,153,530 $526,149 $15,679,679 $15,679,679
Gross Profit $990,509 $157,614 $1,148,123 $1,148,123
SG&A $452,526 $140,751 $593,277 $1,049,207
Operating Profit (loss) $535,015 ($22,251) $512,764 $20,496
Net Profit (loss) from continuing operations $278,128 ($25,175) $252,953 ($350,395)
Per Share continuing operations $0.07 ($0.01) $0.06 ($0.07)
Non Cash Charges $2,968 $41,196 $44,164 $182,267
Financing & Dividend Charges $254,424 $254,424 $492,685
Income Tax Expense $100
EBITDA $535,520 $16,021 $551,541 $324,657
Per Share 0.00
0.11 $0.11 $0.07
Net loss from discontinued operations ($55,519)
Per share discontinued operations ($0.02)
Net loss attributable to shareholders ($405,914)
Per Share ($0.09)
PHS GROUP GRAN RESERVE OPERATING CONSOLIDATED
CORP SEGMENTS RESULTS
6months ended 6/30/07
Revenue $38,567,319 $839,797 $39,407,116 $39,407,116
Gross Profit $3,048,551 $238,681 $3,287,232 $3,287,232
SG&A $1,281,544 $347,301 $1,628,845 $2,267,514
Operating Profit (loss) $1,759,765 ($184,193) $1,575,572 $932,857
Net Profit (loss) from continuing $988,575 ($184,389)
operations $804,186 ($112,288)
Per Share continuing operations $0.12 ($0.02) $0.10 ($0.02)
Non Cash Charges $7,242 $79,750 $86,992 $217,091
Financing & Dividend Charges $768,063 $0 $768,063 $1,263,560
Income Tax Expense $47,218
EBITDA $1,763,880 ($104,639) $1,659,241 $1,415,581
Per Share $0.22 ($0.02) $0.20 $0.18
Net loss from discontinued operations ($19,076)
Per share discontinued operations $0.00
Net loss attributable to shareholders ($131,364)
Per Share ($0.02)
6months ended 6/30/06
Revenue $29,640,533 $917,301 $30,557,834 $30,557,834
Gross Profit $1,952,028 $270,466 $2,222,494 $2,222,494
SG&A $1,023,717 $359,965 $1,383,682 $2,056,421
Operating Profit (loss) $922,139 ($167,727) $754,412 $9,019
Net Profit (loss) from continuing $371,727 ($170,624)
operations $201,103 ($815,917)
Per Share continuing operations $0.09 ($0.04) $0.05 ($0.17)
Non Cash Charges $6,172 $82,392 $88,564 $363,301
Financing & Dividend Charges $547,557 $547,557 $961,332
Income Tax Expense $37,928
EBITDA $925,456 ($88,232) $837,224 $546,644
Per Share
0.20 (0.02) $0.18 $0.12
Net loss from discontinued operations ($58,933)
Per share discontinued operations ($0.02)
Net loss attributable to shareholders ($874,850)
Per Share ($0.19)
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.
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 hair
care 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. Comparable GAAP compliant figures are
presented herein to EBITDA numbers stated. 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