VPS AMEX Vermont Pure Holdings Ltd.
802.728.3600 VermontPure.com Shares Outstanding: 21,310,000
The following report and company descriptions are presented on this page as originally published and will not be updated. Therefore some time-sensitive data may no longer be accurate.
February 3, 2004.
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Highlights
VPS is the largest independent, publicly traded company in the bottled water industry
Bottled water is the fastest growing segment in the beverage industry
Sales of bottled water are projected to reach $7 billion by 2005
Between 1996 and 2000 VPS acquired 20 regional companies
VPS’s water comes from three company owned springs in Randolph, Vermont
Outlook - Vermont Pure Holdings Ltd. (VPS) is the largest independent, publicly traded company in the fastest growing segment in the beverage industry. Over the last few years, VPS's aggressive acquisition strategy, market expansion, and growing distribution base, has helped them capitalize on opportunities in existing markets, laying the foundation for future growth.
Bottled water has become a mainstream beverage as the centerpiece of consumers' healthy living lifestyles. In addition, the development and continued growth of the bottled water industry since the early 1980's reflects growing public awareness of the potential contamination and unreliability of municipal water supplies.
VPS believes that consumers perceive bottled water as a healthy and refreshing beverage alternative to beer, liquor, wine, soft drinks, coffee and tea. The company anticipates that sales of bottled water will continue to grow as consumers focus on health and fitness, alcohol moderation, and the avoidance of both caffeine and sodium.
Business Profile - VPS, based in Randolph, Vermont, is the fourth largest home and office delivery business for bottled water in the U.S. It's also the eighth largest bottled water company in the country. VPS markets and distributes natural spring water to consumers under the Vermont Pure and Hidden Spring brands, and distilled water (with minerals added) under the Crystal Rock brand.
VPS also markets and distributes brand bottled spring water to retailers, including: Shaw's Supermarkets, Stop & Shop, Shop Rite, Waldbaums and CVS Drug Stores.
Growth in the company’s retail consumer market results from well established relationships with beverage distributors throughout the Northeast, as well as brand and product extensions. Recently, VPS expanded product lines to include more sizes and features, such as sports caps on selected bottle sizes for convenient single serve, and multi-packs for the grocery and convenience store channels.
With approximately 83,000 accounts representing 65% of total sales, VPS’s home and office delivery segment has predominately been fueled by market expansion through acquisitions in New England and Northern New York. This strategy was aimed at minimizing the company’s reliance on large companies that distributed its retail consumer products.
In addition to bottled water, VPS also distributes coffee, tea, and other hot beverage products and related supplies throughout Massachusetts, Connecticut, New England, New York, and New Jersey as well as the Mid-Atlantic and Mid-Western states.
Fundamental Analysis - On January 23 VPS announced financial results for the three and twelve months ended October 31, 2003. Revenues for the quarter were up 14% to $20.5 million versus $17.9 million for the same period last year. Total sales for the year increased 6% to $76.2 million from $71.7 million the previous year.
Net income decreased 47% to $1.4 million from $2.5 million in fiscal year 2002. Softness in the local economies in the Northwest continued to be the overriding influence affecting its traditional growth rate in the home and office portion of overall business.
"In what has been an extremely challenging year, Vermont Pure continues to be a solid cash generator," stated Tim Fallon, Chairman and CEO. "In addition to using internally generated cash to fund operations, we used $3.3 million for capital expenditures, $2.2 million for acquisitions, and $3.5 million for debt service."
Commenting on the results, VPS President, Peter Baker said, "With the acquisitions that we rolled in this year, we have increased our customer base to 83,000. We are actively working to build the Home and Office segment through targeted acquisitions. We still have $8.4 million available on our acquisition line for this purpose. This focus on building density in our existing geography will help generate top line as well as bottom line growth."
Recent News - On November 4 VPS announced that it has acquired the assets of three home and office distributors through its Crystal Rock subsidiary. Effective October 31, 2003 the company has acquired the assets of Thames Valley Water Bottling Company, Inc. of Waterford, Connecticut, Aqua Pura Spring Water, Inc., of Westbury, New York, and certain assets of Garrison Natural Spring Water, Inc. in the Bronx and Westchester County, New York.
"We continue to develop our route density with these synergistic acquisitions in our existing territory and push into new markets such as Nassau County, New York," said Peter Baker President of VPS. The combined operations have approximately $1.75 million dollars in annual revenue and added 3,000 customers to the base business.
Back in June VPS announced that it has entered into a contract packing agreement with the Snapple Beverage Group, to supply Snap2O bottled spring water. VPS will supply the natural spring water to the Snapple Group in the Northeastern part of the United States.
The potential of this agreement was greatly enhanced in September 2003 when New York City mayor Michael Bloomberg announced that Snapple will be the exclusive beverage vendor for New York’s 1,200 public schools for the next five years.
Conclusion - Drinking eight glasses of water a day isn't just good for your body, it's also good for business. With $8.4 million available for additional acquisitions, a growing distribution base, and the potential for additional revenue from their supply contract with Snapple, VPS is well positioned to enhance their standing in the fastest growing segment in the beverage industry.
Between 1996 and 2000, VPS acquired 20 regional companies. At the end of fiscal year 2000, VPS consummated a merger involving the Crystal Rock Spring Water Company of Watertown, Connecticut. In terms of sales, VPS nearly doubled its size and significantly accelerated its home and office growth strategy.
"Since 2000, VPS has acquired eight home and office distributors. Over that time, we have increased the number of homes and offices we deliver to from 75,000 to 83,000," said Tim Fallon, Chairman and CEO.
He concluded, "We continue to position the company as a leading supplier of retailer branded bottled spring water as major food and drug chains increase their presence in the private label market."
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DIANA
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