LBIX - Leading Brands, Inc. (NASDAQ Stock)

[Volatile22]

Mustanggt849 brought this one up to me in chat. It made a good move today on earnings news. To make a long story short costs were reduced, net income is up, but sales are down for the year. The part about sales i can understand because people haven't been spending as much money on extras like this company offers(health beverages). Looking like this company is on the way up possibly?

As it moves up it'll be punching new 52 week highs. Today it made a new high at .85. The close was .7999 for a gain of 37.91%. Volume was up big today as well, 2.2 million and the average over the last 10 days is 480k. No insider action as far as i can tell yet. The last few minutes of trading are interesting. It was heading down trading around .70 then the last minute it banged up to .7999. Could be a good omen for tomorrow possibly? Charts are heading toward overbought, but this news it pretty sufficient id say, any opinions?

Read here for basics on LBIX

Leading Brands, Inc. is engaged in beverage bottling, distribution, sales, merchandising, brand development, brand licensing and brand management of beverage and food products. The Company has evolved into a fully integrated bottling and distribution operation with customers across North America. During the fiscal year ended February 28, 2009 (fiscal 2009), Leading Brands of Canada, Inc. was the principal operating subsidiary engaged in the Company's food and beverage business, and Leading Brands USA, Inc. was the principal sales subsidiary in the United States.

The float on this one is relative low as well, only 17 million.

Shares Outstanding 20.0 M
Institutional Ownership 3.19%
Number of Floating Shares 17.0 M
Short Interest as % of Float 0.21%

Here is the news from today:

Leading Brands, Inc. Announces Results for the Second Quarter of Its 2009 Fiscal Year

Leading Brands, Inc. (Nasdaq:LBIX), North America's only fully integrated healthy branded beverage company, announces results for the second quarter of its 2009 fiscal year, which ended August 31, 2009. All financial amounts stated in Canadian dollars.

In Q2 the Company generated after tax (non-cash) net income of $809,000 or $0.04 per share versus a net loss of ($291,000) or ($0.01) per share during Q2 of last year. The Company also recorded non-cash income taxes of $380,000 in this most recent quarter such that net income before non-cash income taxes was $1,189,000. SG&A expenses were reduced 41% from the same period last year and are now at a relatively stable and sustainable level.

Gross profit margin (before discounts and slotting fees) for the quarter was a strong 52.7%, up from 44.1% in Q1 and 43.2% in the same period of fiscal 2008. Those steady increases in gross margin percentage result most notably from a dramatic decrease in the Company's input costs combined with an enhanced product mix and overall gains from improved business practices and efficiencies.

Gross revenue for the quarter was $6,624,000, up from $5,899,000 in Q1 and down from $9,562,000 in Q2 of last year; a quarter over quarter increase of 12.3% and a year over year decrease of 30.7%. This past quarter was the first one in which the Company no longer distributed its low margin legacy food products, instead concentrating on its core healthy branded beverages.

Discounts, rebates and slotting fees fell materially from $1,452,000 in Q2 of fiscal 2008 to $511,000 this past quarter. Although some slightly higher percentage of slotting fees may ultimately be desirable, management does not believe a return to past levels is either necessary or warranted. Non-cash stock based compensation expense for the quarter was $67,000. As a consequence, EBITDA before non-cash stock based compensation for Q2 was almost $1,500,000.

Net income for the first half of the year was $1,012,000 versus a net loss of ($849,000) in the same period last year, a positive swing of $1,861,000. Year to date gross revenue was $12,523,000, down from $18,926,000 in Q2 of fiscal 2008; which decrease included the elimination of the Company's food distribution business post year end.

YTD EBITDA before non-cash stock based compensation was $2,164,000. Driven by these results the Company's liquidity has increased dramatically since fiscal year end, with debt repayments of more than $2,100,000 and cash and available credit now more than $3,000,000.

The past 18 months have been hard and frustrating ones for the Company as it moved decisively in anticipation of the global economic downturn. Management has been determined to reduce overheads, increase efficiencies, shed less profitable product lines and ultimately refine the Company's core premium beverage portfolio. As evidenced by these results that task is now complete, leaving the Company re-positioned to execute in an evolved marketplace. One lesson learned through the process is that the Company's Integrated Distribution System can stand the test of time and is perhaps even better suited to today's competitive landscape. With those travails behind, Leading Brands is now able to turn its resources and energies toward growing its business with new focus, vigor and purpose; both domestically and abroad.

The Company has not yet commenced its recently announced share re-purchase program, pending release of these results. It intends to do so in the near term.

regardless this should be an interesting play.