Galaxy Nutritional Continues Profit Restoration

ORLANDO—Galaxy Nutritional Foods (OTCBB: GXYF) posted net income of $726,184 or $0.03 per diluted share on net sales of approximately $6.1 million, a marked earnings improvement compared to a severe $11.8 million loss a year prior on higher sales of $9.1 million. This is the company’s third straight profitable quarter; it credited the earnings progress to an improvement in gross margin to 44.0 percent of net sales, versus a gross margin of 20.8 percent in the prior-year quarter. Galaxy (www.galaxyfoods.com) also reported a $1.6 million improvement in operating cash flow through the first three quarters of fiscal 2007 compared to a year ago.

“Lower sales during the first three quarters of fiscal 2007, when compared with prior-year levels, primarily reflected the elimination of unprofitable and marginally profitable private label and Galaxy imitation sales,” stated Michael E. Broll, chief executive officer (CEO), who noted Galaxy’s focus on brand-oriented sales and marketing strategy has allowed gross margins to improve significantly from prior-year levels.” With profitability and positive operating cash flows having been restored, our strategic initiatives going forward will include a greater emphasis on sales and marketing activities and new product introductions that are designed to increase sales to existing customers and expand overall consumer awareness of Galaxy’s ‘healthy alternative’ food product lines.”

He added while fourth quarter sales will continue to trail year-earlier levels, he expects profitability to improve when compared with results in the fourth quarter of FY2006.