Australian certified organic fast-food chain Oliver’s Real Food (ASX: OLI) has posted its first profitable quarter since changing management teams and launching a restructure after joining the ASX in June 2017.
The company this morning announced an earnings before interest, tax, depreciation and amortisation figure for July 2019 “in excess of $200,000”.
With the first three months of the new financial year traditionally considered to be Oliver’s “softest quarter”, the results has been considered “tremendously significant”.
“The board is now confident of exceeding our expectations for the first quarter (of 2020),” said chairman Nicholas Dower.
“It is rewarding to see our (business) strategies having a profound effect … (and) we are getting an increasingly clear picture of the direction we need to take.”
Mr Dower said the cost of restructuring and the legacies of the company’s previous management team continue to be “a drag on our cashflow” and will be for several months.
Back from the brink
Oliver’s business game started faltering just five weeks after its mid-2017 ASX debut when it was forced to announce a profit downgrade to investors.
Back then, the company blamed a series of “individual events” for conspiring to push it to a $3.2 million loss – or nearly $1 million more than the $2.4 million it forecast ahead of its listing.
With the chairman, chief executive officer and chief financial officer all tendering their resignations following the downgrade announcement, Mr Dower stepped in with founder Jason Gunn to spearhead a restructure.
At the time, Mr Gunn made an offer to the board to liquidate a portion of his shareholding and provide short-term funding by way of an unsecured drawdown facility of up to $500,000 (at 10% interest and no penalties for early repayment).
That offer helped the company finance the restructuring process and forge ahead with operational changes.
With the company now generating positive cashflows increasing with each successive quarter, Mr Dower said the board of Oliver’s is now “very confident” that profits for the 2020 financial year will be well received by the market.
“Restoring shareholder value and strengthening our share price remain amongst our top priorities,” Mr Dower said.
“(We believe) the market will continue to regain confidence in management and the board as we report continuing improvement (and) we will see further gains in shareholder value.”
At mid-afternoon, shares in Oliver’s were up 11.63% to $0.048.