Vermont Pure Loses money in ’00 But Well-Positioned for ‘01

Front Page / Jan. 11, 2001 12:00am EST

Vermont Pure Loses money in ’00 But Well-Positioned for ‘01

After three years of growing profits, Vermont Pure Holdings, Ltd., of Randolph posted a net loss of $2.1 million last year, which the company blamed primarily on the cool summer, which caused people to drink less water.

Nevertheless, the company’s sales increased 12% to $35 million, and officials said that this year’s acquisition of Crystal Rock Spring Water Co. of Connecticut left the Randolph firm well-positioned for next year.

The Crystal Rock acquisition nearly doubled the size of Vermont Pure and advanced its strategy of growing in the water cooler market rather than trying for increased share of retail water in supermarkets. The "home and office" cooler market has a higher profit margin than the retail water market, and with the Oct. 5 acquisition, Vermont Pure is now the fourth largest company in the nation in that category.

A charge of $1.2 million, resulting from consolidating systems with Crystal Rock, was part of this year’s $2.1 million loss, the company said.

The Crystal Rock merger took place Oct. 5, and so it didn’t greatly effect the sales figures for the fiscal year, which ended Oct. 31.

Vermont Pure’s chairman, Tim Fallon, predicted strong growth for the newly merged company next year. Vermont Pure and Crystal Rock combined for revenues of almost $59 million last year, and Fallon predicted that next year may exceed $65 million.

"The reëngineering of Vermont Pure from reliance on the seasonal PET retail business to the more profitable home and office segment has been completed," he said in a statement. The home and office division now accounts for 75% of Vermont Pure’s sales, he said.

The division is under the leadership of Peter Baker, formerly co-president of Crystal Rock and now President of Vermont Pure.

"We are pleased that the planned synergies of the combined operations are already on target," Fallon said.

Still, Fallon acknowledged that "financial results for the fiscal year did not maintain our historical growth rate."

After several years of startup losses, Vermont Pure began turning a profit in fiscal 1997, earning $1 million. In 1998 and 1999 the company earned $2.9 million and $3.4 million respectively.

Fast Growing

By acquiring smaller water companies, Vermont Pure has become the third-fastest growing company in Vermont over the last five years, according to Vermont Business Magazine. Sales in the five-year period increased from $8.5 million to $35.2 million, a 314% change.

Chief Financial Officer Bruce MacDonald emphasized that from his perch at the Randolph plant, the company looks very healthy, despite the losses in 2000.

"We’ve doubled the size of our building here and increased storage space," he noted.

"We had a year that was not profitable, and obviously wish we had been profitable, but there’s more activity than there’s ever been here."

MacDonald could not give exact employment figures in Randolph but said that employment has "increased." As of Sept. 1, the company as a whole employed 179 people full-time, according to the prospectus.

The assembly plant is now going full time with two shifts, MacDonald noted. Previously the second shift was just seasonal work.

Vermont Pure’s stock, which has been selling at $3-$4 a share most of the year, sank in December to $2 and has now risen somewhat to $2.69. The drop was not due to shareholder concerns about the 2000 losses, however, according to Eugene Malone of Corporate Investors Network.

Malone, who represents Vermont Pure to investors, said the drop was end-of-year selling for tax reasons, and many of the sellers have begun to buy it again.

By M. D. Drysdale

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