Horizon Organic Posts Tripled Profit for FY01

BOULDER, Colo.--Because of a booming milk business--including an increased demand in ultra-pasteurized milk--sales and the bottom line improved for Horizon Organic Holding Corp. (NASDAQ:HCOW) for both its fourth quarter and fiscal year (4Q01, FY01), ended Dec. 31. Net profit for the quarter was up 15.5 percent to $43.7 million, while gross margin inched up to 30.4 percent of sales from 30.1 percent recorded for 4Q00. Operating expenses remained flat, at around $10 million. Earnings were $.9 million, or $.09 per share earned, compared to a net loss in the same period last year of $.6 million, or $.06 per share lost.

For the year, earnings were up 24.9 percent to $158.9 million from $127.2 million logged in the year prior. Gross margin dipped slightly to 30.9 percent of sales from 31.7 percent, and operating expenses increased to $39.4 million from $34.4 million. Income for the year was $1.7 million, or $.17 per share earned, up almost three-fold from FY00's $.5 million, or $.05 per share earned.

"Once again we have demonstrated our ability to achieve sales and earnings growth at the same time," reported Chuck Marcy, president and chief executive officer. He added that the company's distribution growth exceeded its expectations in the United States, and for the first time, Horizon Organic products are now available in more than half of all conventional grocery stores.

Additionally, milk sales increased 20 percent during 4Q01, and for the first time, its ultra-pasteurized milk accounted for more than 50 percent of milk sales. (Ultra-pasteurized milk, also known as ultra-high-temperature (UHT), is heated at a high temperature for a short length of time ensuring an extended refrigerated shelf-life of 50 days, unopened.) Also, the company stated that new packaging and varieties of cheese drove cheese sales up 79 percent compared to the same quarter last year. The continued efforts of integrating Rachel's Organic in the United Kingdom proved fruitful this year, as the company expects to make a profit from the brand for FY01 rather than the loss it had in FY00.

The company has positioned itself to continue with this growth spurt through 2002. In late 2001, 2,500 Starbuck stores began carrying Horizon yogurt and single-size milk. The company has also created a corporate development department to build new business. Anthony Zolezzi, who has experience in organic foods and merger & acquisitions, will head this department. For 2002, Horizon will expand the reach of its new advertising campaign, "You are what you drink."