TurboChef( OVEN) cooled late Monday after the fast-food oven company posted a 75% drop in fourth-quarter revenue.
The Atlanta-based supplier to Subway and other chains lost $7.1 million, or 25 cents a share, reversing the year-ago profit of $7.5 million, or 27 cents a share. Revenue tumbled to $9.3 milion from $36.5 million a year earlier. TurboChef notes that the year-ago quarter "reflected an unprecedented number of oven sales attributable to the system-wide roll out of the company's Tornado oven model to Subway restaurants."
Fourth-quarter margins were below expectations, as recent price increases failed to help profits, due to the pipeline of orders at legacy prices. The company also cited year-end inventory quantity and valuation adjustments, including some related to restructuring, and a decision to increase the per-unit warranty reserve based on recent experience.
"We believe we have fixed our gross-margin problem, have a better handle on our costs and will see the benefit of price increases taking effect as we move through 2006," said CEO Richard Perlman. "We have made great strides with a broadened customer base. We have been extremely pleased with the market feedback we have received from customers who have committed to and rolled out an expanded set of hot food menu items and selected the TurboChef speed cook ovens as their ovens of choice."
Late Monday, TurboChef fell 56 cents to $11.45.