“As a reminder, our primary challenges over the past eighteen months included the illegal price dumping (selling below their cost of production) and mis-labeling of greenhouse grown tomatoes by Mexican growers in the US market, the calamity from the May 30, 2012 hailstorm, in Texas, which destroyed over 50% of our US greenhouse assets, the ongoing issues and delays with both our insurance carrier and one of our lenders (which no longer participates in our term loan) and the sales and ramp up of our GATES® technology in Monahans, Texas.”
“Pricing in all tomato varieties continues to remain solid with core tomato pricing returning to normal levels and 39% above 2012 pricing. Strong pricing continues into the third quarter as evidenced by the fair market value of the Company's biological asset as at June 30, 2013, which stands at an all time high for the second quarter even with fewer assets in production. If not for the continued loss of revenue and profit contribution due to the lost acreage in Marfa, Texas, our second quarter results would have yielded the best second quarter results in the Company's history. Our current pricing, yield and costs of production remain in line with our 2013 expectations.”
“The combination and successful implementation of specific strategies continue to drive increasing recovery in our business. Even with the Company's lower internal production and decrease of our supply partner production due to realignment and strategic changes, our revenues increased, for the quarter. The improvement in market pricing is a result of balance in market demand and supply in specific core tomato varieties, the positive impact of the planned changes in our product mix to meet consumers’ changing demands and tastes, growth in the market of our propriety varieties that no other grower/marketer can offer and the amended US and Mexico Suspension Agreement (curtailing the distribution of mis-labeled greenhouse grown products exported to the United States). We continue to improvise our pipeline of new and exclusive varieties by continuing to diversify our products through new product launches and evaluating new varieties, both in tomatoes as well as other vegetables that our retailers are requesting that we grow.”
Mr. DeGiglio continued, “In addition to advancing our sales and marketing strategies, and strengthening our core customer relationships, we continue cost controls, in both our cost of production and SG&A costs, and to focus on improving our working capital position. Our senior management team continues to take action, including filing a lawsuit on July 17, 2013 against Travelers, to resolve our 2012 insurance claim for losses at our Marfa, Presidio and Gates facilities after the 2012 hail storm.”
“We remain highly focused and confident in maximizing our operational results, continued implementation of our marketing and consumer strategies and advancement of our propriety technologies.”
Readers should note that our financial results for the second quarter and following periods in 2013 are not directly comparable to the prior year periods in 2012 due to non-recurring insurance proceeds and hail storm related write-offs in 2012.
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