By M. Scott Carter
Vaughan Foods, Inc. a producer of fresh-cut vegtables and fruit products headquartered in Moore, announce a revenue increase for the first quarter of the year.
The report on the company's operating results covers its first quarter, which ended March 31, 2009.
Company officials said sales totaled $22.3 million in the first quarter of 2009, an increase of 7 percent, or $1.5 million over the comparable quarter of 2008.
Revenue growth was primarily attributable to price adjustments implemented in the fourth quarter of 2008 and the first quarter of 2009 to mitigate the effects of increased raw material and transportation costs.
Vaughan also has experienced higher revenues per pound of product sold resulting from a shift in its product mix from existing customers and due to the rationalization of certain former low margin customers.
Vaughan recorded a net loss of $266,000 or six cents per share in the first quarter of 2009 compared to a net loss of $418,000 or nine cents per share in the comparable quarter of 2008.
Although company officials said Vaughan was "unable to achieve positive earnings for the quarter," they said the improvement in bottom line performance is significant, "when compared to the second half of 2008, a period of substantial and persistent increases in raw material and transportation costs."
"We are finally beginning to see the effects of pricing adjustments that we made in the fourth quarter of 2008 and are encouraged by the positive trend in profitability witnessed in our first quarter," said Herb Grimes, Chairman and CEO. "Our margins are much improved from the second half of last year, when unprecedented increases in commodity and transportation costs in 2008 became particularly challenging to manage, and severely impaired our earnings ability. However, we are confident that we have overcome those higher costs with price adjustments while sustaining our reputation for providing a safe, quality and affordable product to our customers. Grimes said the company was experiencing "a moderation of fuel and commodity costs," and must focus on executing its business plan.
"Our new Enterprise Resource Planning system will prove to be a key component of that focus, as we respond to and fulfill high-volume customer orders quickly and efficiently. Although we are very cautious about making predictions, the results of our first quarter are a good indication that we are on track for an improving performance and stronger results in 2009," he said.
Grimes said price adjustments typically lag cost increases, and the full effects of Vaughn's adjustments have only now begun to be more in line with the 2008 increases in costs.
Gross profit amounted to $2 million or 8.7 percent of revenues in the first quarter of 2009, compared to $2 million or 9.8 percent of revenues in the first quarter of 2008.
He said stabilization of fuel and commodity food prices and price adjustments have improved gross margins, and are approaching the historical levels reported in the 2008 first quarter.
"The company expects to benefit from more adequate pricing for the remainder of 2009 and to see the return of our historical margins during the year," he said.
Selling, general and administrative expenses decreased to $2.1 million in the first quarter of 2009 compared to $2.4 million in same period of 2008.
"Our general corporate expenses and our sales and administrative salaries and commissions were reduced as a result of several internal initiatives including, aggressive cost and cash management, and a moratorium on hiring of non-core production personnel; compensation adjustments; and non-essential capital expenditures," Grimes said. "We also consolidated several internal functions, such as our sales and finance functions, resulting in headcount reductions and increased efficiencies of administration."
