G Willi-Food Intl (NASDAQ:WILC)

Third Quarter 2011 Results

• Sales increased 7.1% over third quarter of 2010 to NIS 85.3 million (US$ 23.0 million)
• Gross profit decreased 14.7% over third quarter of 2010 to NIS 21.0 million (US$ 5.7 million), or 24.7% of sales
• Operating income decreased 51.7% over third quarter of 2010 to NIS 4.0 million (US$ 1.1 million), or 4.7% of sales
• Net income decreased 71.2% over third quarter of 2010 to NIS 2.26 million (US$ 0.6 million), or 2.6% of sales
• Net income attributed to the owners of the Company decreased 67.6% over third quarter of 2010 to NIS 2.35 million (US$ 0.63 million), or 2.7% of sales
• Cash and securities balance of NIS 194.2 million (US$ 52.3 million) as of September 30, 2011

Second Quarter 2011 Results

• Sales increased 10.0% over second quarter of 2010 to NIS 90.8 million (US$ 26.6 million)
• Gross profit increased 19.4% over second quarter of 2010 to NIS 26.9 million (US$ 7.9 million), or 29.6% of sales
• Operating income increased 71.5% over second quarter of 2010 to NIS 11.7 million (US$ 3.4 million), or 12.9% of sales
• Income from continuing operations increased 21.9% over second quarter of 2010 to NIS 7.3 million (US$ 2.1 million), or 8.0% of sales
• Net income attributed to the owners of the Company increased 13.1% over second quarter of 2010 to NIS 7.0 million (US$ 2.0 million), or 7.7% of sales
• EPS for second quarter 2011 was $0.15 vs $0.13 in 2010

Business Outlook

Mr. Zwi Williger, President and COO of Willi-Food commented, "We are very pleased with overall performance and with our second quarter 2011 results, especially in the current challenging environment of increased competition resulting from customers demanding to reduce prices despite of the global food commodity purchase prices inflation. We have grown sales and gross profits while controlling SG&A expense growth. Second quarter gross profits grew nearly 20% and operating income grew nearly 72%, despite the huge pressure coming from the supermarket chains to reduce prices and despite the well-known pressures in commodity costs being felt around the world. Throughout 2010 and 2011 we have introduced great-tasting, higher margin food products which we develop together with our suppliers. We implemented our plan to increase the awareness to our newly added products, by initiating hard sale activities that we believe created broad awareness to our new and old products and broaden our customer base. That has helped us achieve our goals to strengthen our position in the market, due to our broad range of quality food products."

Fourth Quarter Highlights:

• Sales for the fourth quarter of 2010 increased by 14.2% to NIS 91.1 million (US$ 25.7 million) compared to sales of NIS 79.8 million (US$ 22.5 million) in the fourth quarter of 2009.
• Gross profit for the fourth quarter of 2010 increased by 4.8% to NIS 25.4 million (US$ 7.1 million) compared to gross profit of NIS 24.2 million (US$ 6.8 million) in the fourth quarter of 2009.
• Willi-Food's operating income for the fourth quarter of 2010 increased 28.7% to NIS 7.9 million (US$ 2.2 million) over the fourth quarter of 2009.
• Willi-Food's net income related to Company Shareholders in the fourth quarter of 2010 was NIS 7.4 million (US$ 2.1 million), or NIS 0.55 (US$ 0.15) per share, compared to NIS 7.8 million (US$ 2.2 million), or NIS 0.76 (US$ 0.21) per share, recorded in the fourth quarter of 2009.

Mr. Zwi Williger, President and COO of Willi-Food commented: "Fiscal 2010 was a very strong year for Willi Food. For six consecutive quarters, we have grown sales and gross profits while controlling SG&A expense growth. Fourth quarter operating income grew nearly 30%, despite the well-known pressures in commodity costs being felt around the world. Throughout 2010 we introduced great-tasting, higher margin food products, which we develop together with our suppliers. For instance, we recently introduced two new lines of kosher Swiss premium products: our 'KAMBLY' fine biscuit and cookie products, and a new line of fine chocolate bar products. These lines build upon categories that we introduced only a few months ago, such as 'GELATO' kosher Italian ice-cream products, and other chilled desserts.

"Looking forward, we are confident that we can deliver sales and profit growth in 2011. We believe that momentum will continue to build in recently introduced products, and several new product line introductions can further boost sales. The first quarter of 2011 is off to a good start, and the shift of Passover to the second quarter will help drive sales in that period. We are understandably cautious regarding ongoing global commodity price inflation, but are well-positioned to limit any impacts. We will sustain our flexible purchasing strategy, and are highly focused on reducing production costs and SG&A expenses."

"We believe that we can continue to benefit from a multi-channel approach and broad kosher product base that addresses a trend toward more health-conscious food choices. We intend to expand our reach to retail and wholesale markets in the U.S., and have previously discussed the potential for a distribution acquisition in the United States. In addition, several other strategic options are under active evaluation."

May 17, 2010  G Willi-Food reported first quarter EPS

• Sales increased 15.5% over first quarter of 2009 to NIS 95.0 million (US $25.6 million)
• Net income attributable to the owners of the company increased 18.7% over first quarter of 2009 to NIS 7.3 million (US $2.0 million)
• EPS increases 20.0% to $0.18.

While not spectacular, the stock's low P/E of 7.4 may attract long-term value investors. This story will be hard to get too excited about until the company completes an acquit ion or enters into a distribution deal to offset dilution from a recent secondary stock offering at what we feel were irresponsible multiples. This will be even more important as the company approaches the 2010 third quarter, when EPS comparisons become more difficult.  Investors may approach WILC with trepidation until more clarity is provided by the company or analysts.

Mr. Williger commented: "We are pleased to report significant improvement in our sales and margins in 2009 on the strength of our higher-margin product introductions. While we did see pressure on sales from the global recession in much of 2009, we are encouraged by the strong sales volumes and margins in the third and fourth quarters of 2009. We are optimistic about our start in the first quarter of 2010 and believe we can continue to benefit from a multi-channel approach and broad kosher product base that addresses a trend toward more health-conscious food choices. We will continue to focus on controlling expenses and production costs to keep our prices competive, and we will continue our efforts to expand our reach to retail and wholesale markets in the U.S."

 Source: PR Newswire (March 3, 2010)

The GeoTeam® will code G Willi-Food Intl as a GeoSpecial.  Non withstanding its consistent annual sales growth, the company's unimpressive EPS trend made this a difficult decision.

Furthermore, revenue growth has been stagnant in 2009. However, there may be reasons for optimism:

• The company is forecasting $0.33 in EPS for its fourth quarter 9$0.98 for the year), which will mark the third straight quarter of improved EPS. In  2008 WILC reported a fourth quarter loss.
  
• The company is increasing penetration in geographical markets and has introduced new product lines that may lead to a ramp up sales growth.
  
• Company comments in its third quarter release were bullish:

"We analyzed the recession and relevant economic indicators that began in our home market, as well as feedback from our customers, showing that the measures that we took are placing us in a good position for future growth. Willi-Food has taken the appropriate measures to position the Company for a stronger fiscal 2009 and 2010, and we remain focused on maximizing long-term profitability."

"We are carefully reviewing our merger and acquisition strategy. The U.S. remains a strategic region of interest for Willi-Food, and for now, we are seeking more customers to whom we can distribute our products, and specifically, customers who wish to grow their volume and diversify their line of premium kosher products. Our line of products includes over 600 products exclusively distributed by Willi-Food and Shamir Salads. The dynamics of the industry are driving demand for innovative kosher products, and we believe that Willi-Food has the infrastructure and development expertise to deliver. Our strategy is to leverage Willi-Food's global supplier relationships and expertise in product development and to capitalize on the growing demand for innovative kosher products for both kosher and health minded consumers in the U.S. We believe that the health benefits of eliminating animal fats in the 'kosherizing' process in our dairy products makes our products attractive to consumers looking for better tasting, low-cholesterol and low-fat alternatives."

" Mr. Williger concluded, "We continue to work to expand the footprint and brand recognition of Willi-Food globally while diversifying our product base in order to hedge against any single event that might impact our results. We are looking for improved results in the fourth quarter of 2009 and in 2010 as compared to our 2008 fourth quarter and as compared to our results for the first nine months of 2009."

• Red Chip is forecasting sales and earnings growth of at least 25% growth, although they weren't specific about EPS.

RedChip excerpt:

Value Proposition The consumer foods sector trades at an average P/E of 15. The Company has reported $6.7 Million in Net Income for the first nine (9) months of fiscal 2009. The Company expects net income of $9 Million for Fiscal 2009. The current Forward P/E is 6. If the stock trades at a 15 P/E based on fiscal 2009 projected earnings, the stock could trade at $15.00, based on 9.7 Million shares outstanding. With continued growth and expansion into the U.S. sector, the Company should generate revenue and earnings growth of a minimum of 25% in fiscal 2010.

The GeoTeam® has not interviewed G Willi-Food Intl and is not certain of its funding needs.