WLR Foods, Inc. (Nasdaq: WLRF) today reported results for its fiscal fourth quarter and full year ended July 1, 2000.
For the fourth quarter of fiscal 2000, the Company reported a net loss of $0.1 million, or $0.01 per diluted share, compared with net earnings from continuing operations in the fourth quarter of fiscal 1999 of $3.9 million, or $0.23 per diluted share, before non-recurring items. Net sales for the fiscal 2000 fourth quarter were $212.7 million, compared with $228.0 million in the same period a year ago.
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The Company’s fiscal 2000 fourth quarter results primarily reflect continued severe pricing pressures in the markets for its chicken products. Revenues were also lower in the fourth quarter because the prior fiscal fourth quarter had one extra week as compared to the current period. These factors were somewhat offset by improved pricing and operating efficiencies in the Company’s turkey business, which was profitable for the quarter.
Prior year results also included a $1.8 million after-tax gain relating to the final settlement of the gain recognized on the sale of the Company’s Cassco Ice & Cold Storage subsidiary, which was sold in the fiscal 1999 first quarter. Including the $1.8 million gain in the prior year resulted in net earnings for the fourth quarter of fiscal 1999 of $5.7 million, or $0.34 per diluted share.
James L. Keeler, President and Chief Executive Officer of WLR Foods, commented, “While our chicken operations were positively impacted by the efficiency improvements achieved at our Marshville, North Carolina facility, this was more than offset by the issues that have followed the entire chicken industry throughout fiscal 2000, as ongoing oversupply conditions in the chicken market led to extremely low pricing for our products. In the fourth quarter, whole breast market pricing was approximately 20% below last year’s levels and approximately 25% below historical averages.”
Mr. Keeler continued, “The weakness in the chicken markets was somewhat offset by continued improvements in turkey operations. Along with improved pricing for our turkey products, we continue to be pleased with our operational results, especially our Franconia, Pennsylvania facility, where we have achieved annual savings of approximately $7 million beginning in April of 1999 from consolidating all further processing operations into this location. Our results also benefited from our strong financial position, which resulted in a 55% decrease in interest expense for the year.”
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By GlobalDataFor the full year, revenues were $832.7 million, compared with $888.1 million in fiscal 1999. Lower chicken pricing resulted in decreased sales of approximately $51 million when compared to last year, accounting for the vast majority of the revenue decline. The Company reported fiscal 2000 net earnings of $2.2 million, or $0.13 per diluted share, compared with net earnings from continuing operations of $18.9 million, or $1.12 per diluted share, before unusual items in the prior year. The Company’s full-year results primarily reflect the aforementioned pricing pressures in the Company’s chicken markets partially offset by improved performance within the Company’s turkey operations. The Company’s results also reflect the impact of a 53-week period in fiscal 1999 versus a 52-week period in fiscal 2000.
For fiscal 1999, net earnings from continuing operations were $22.7 million, or $1.34 per diluted share, and included a net after-tax gain of $3.8 million, primarily related to the sale of the Company’s Goldsboro, North Carolina chicken complex. Net earnings for fiscal 1999 were $38.8 million, or $2.29 per diluted share, and included net one-time after-tax income of $16.0 million, primarily related to the sale of the Company’s Cassco Ice & Cold Storage subsidiary.
The Company also reported that through the fiscal 2000 year end, it had repurchased approximately 470,000 shares of its common stock for total consideration of approximately $2.7 million. As previously announced, the Company is authorized to repurchase up to $10 million in stock.
Mr. Keeler concluded, “While we have seen some modest improvements in chicken pricing recently, we do not believe that considerable sustained improvements will be achievable until next spring, the next seasonal up-cycle for the chicken business. We do, however, remain optimistic regarding the long-term prospects for our chicken business, particularly in light of our continued focus on increasing the overall mix of higher-valued products in our sales program. Our turkey operations continue to run well, and conditions look favorable for the upcoming holiday season. Furthermore, with expectations for large corn and soybean crops in the coming season, grain costs should be very attractive in fiscal 2001. As we move through fiscal 2001, we remain committed to taking steps that will allow WLR Foods to adapt to the changing conditions of its markets.”
WLR Foods is a fully integrated provider of high quality value-added turkey and chicken products primarily under the Wampler Foods® brand. It is nationally ranked as the seventh largest poultry food processor by sales volume and is an international leader in poultry exports. WLR Foods has processing operations in Virginia, North Carolina, West Virginia, and Pennsylvania.
Certain statements in this news release regarding future expectations and financial performance, other than historical information, may be regarded as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Except for historical information, the matters set forth in this release include forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, but are not limited to, such factors as fluctuations in the cost and availability of raw materials such as the grains used in our poultry feeds, market conditions for products and competitive proteins both domestically and abroad, weather, flock health, and changes in federal, state, local and foreign regulations and laws affecting our ability to transact business.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
13 Weeks 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
July 1, July 3, July 1, July 3,
2000 1999 2000 1999
-------- -------- -------- --------
Net sales $ 212,736 $ 227,989 $ 832,728 $ 888,086
Cost of sales 186,778 193,097 726,253 750,942
--------- --------- --------- ---------
Gross profit 25,958 34,892 106,475 137,144
Selling, general and
administrative expenses 25,659 27,969 99,958 98,478
--------- --------- --------- ---------
Operating income 299 6,923 6,517 38,666
Interest expense 1,385 1,617 4,968 10,931
Other expense (income), net (130) (303) (1,280) (8,214)
---------- --------- --------- ---------
Earnings (loss) before
income taxes (956) 5,609 2,829 35,949
Income tax expense (benefit) (832) 1,681 596 13,211
---------- -------- --------- ---------
Net earnings (loss) from
continuing operations (124) 3,928 2,233 22,738
---------- --------- --------- --------
Earnings from discontinued
operations, net of tax - - - 664
Gain on disposal of
discontinued operations,
net of tax - 1,783 - 17,927
------ ------ -------- --------
Total earnings from
discontinued operations - 1,783 - 18,591
Extraordinary charge on early
extinguishment of debt,
net of tax - - - (2,559)
------- ------ -------- --------
Net earnings (loss) $ (124) $ 5,711 $ 2,233 $ 38,770
======= ======== ======== ========
Diluted earnings (loss) per
common share, continuing
operations $(0.01) $ 0.23 $ 0.13 $ 1.34
Diluted earnings
per common share,
discontinued operations - 0.11 - 1.10
Diluted loss per common share,
extinguishment of debt - - - (0.15)
------ ------- ------ -------
Total diluted earnings (loss)
per common share $(0.01) $ 0.34 $ 0.13 $ 2.29
======= ======= ====== =======
Diluted weighted average
common shares 16,492 16,834 16,761 16,897
Capital expenditures $ 3,749 $ 2,834 $ 12,225 $ 22,072
Depreciation expense 4,386 5,180 17,844 19,653
CONSOLIDATED BALANCE SHEETS
(in thousands)
7/1/2000 7/3/1999
-------- --------
Assets
Current assets
Cash and cash equivalents $ 85 $ 210
Accounts receivable, net 59,541 59,026
Inventories 110,980 106,679
Other current assets 3,032 6,782
------- --------
Total current assets 173,638 172,697
Property, plant and equipment, net 102,070 107,945
Other assets 7,807 8,455
-------- ---------
Total Assets $ 283,515 $ 289,097
======== ==========
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 6,052 $ 5,046
Trade accounts payable 38,641 40,412
Accrued payroll and related benefits 15,148 24,729
Other current liabilities 21,384 18,494
------- -------
Total current liabilities 81,225 88,681
Long-term debt, excluding current maturities 51,036 48,845
Other liabilities and deferred credits 7,250 7,636
Shareholders' equity 144,004 143,935
------- --------
Total Liabilities and Shareholders' Equity $ 283,515 $289,097
======== ========
