Royal Hawaiian Orchards LP, which parted ways with CEO Dennis Simonis in June, suffered a wider second-quarter loss of $1.2 million that was partly attributable to a severance payment it made to the former executive.
The Hilo-based grower and processor of macadamia nuts said Wednesday it also blamed the loss on no revenue from nut sales during a seasonally slow quarter, and operating losses from its new retail snack product line.
Royal Hawaiian paid Simonis $280,000 in severance benefits that included $238,833 as part of a separation agreement, $28,967 to his attorney and the remainder to reimburse Simonis for health care premiums for him and his wife until June 30, 2014, the company said in a previous filing with the Securities and Exchange Commission.
Simonis was replaced on June 5 by John Kai, a Hilo financial adviser who has been on the Royal Hawaiian Orchards board since 2004.
Royal Hawaiian, formerly known as ML Macadamia Orchards, has been shifting its business from nut-in-shell bulk sales to retail sales. The company, which lost $797,000 in the year-earlier quarter, said the retail snack operation’s loss primarily was due to trade discounts, fees charged by retailers to have the company’s products placed on shelves, and selling and administrative expenses.
The company has been seeking to gain market share since beginning sales in the fourth quarter. It had $261,000 in retail snack sales last quarter.
Royal Hawaiian said poor weather conditions in the Kau region resulted in a minimal crop yield that made it uneconomic to harvest nuts last quarter. Historically, the second quarter is one of the year’s lowest harvest periods and accounts for less than 2 percent of an average year’s harvest. In the year-earlier quarter, Royal Hawaiian had $352,000 in macadamia nut sales.
Overall, the company’s revenue declined 26.6 percent to $547,000 from $745,000. Besides the $261,000 it generated from the retail snack sales, the company also took in contract farming revenue of $286,000.
Shares of the company dipped 1 cent to $3.39 Wednesday on the Over the Counter market. The financial report was issued about two hours after the market opened.
