Balance Bar Savors Record Sales for Quarter

Carpinteria-based Balance Bar Co., distributor of the high-protein snack bar of the same name, reported record sales Tuesday, three months after launching ambitious growth plans to broaden distribution and boost exposure among consumers.

The company posted $20.6 million in sales for the quarter ended June 30, an 86% jump over the same period last year. Net income for the quarter was $1.2 million and earnings per diluted share were 10 cents, a 2-cent increase over 1997’s second-quarter earnings.

“This obviously indicates that the product is well-received in the marketplace,” Chief Executive James Wolfe said.

Some analysts had been predicting Balance Bar would muster $16 million in sales for the quarter and a 1-cent drop in earnings.

“Clearly they had a blow-out quarter,” said analyst Bonnie Tonneson of San Francisco-based Hambrecht & Quist, primary underwriter for the company’s initial public offering June 2, which marked the first step in its current growth strategy.

“We expect them to continue strong growth in the future, particularly as they expand their distribution,” she said.

The 6-year-old company, now at 60 employees, has already seen dramatic growth.

Last year, it rang up sales of just under $40 million, a nearly 300% jump from the $10.5 million the year before.

That track record and Balance Bar’s potential for future growth have been among its most attractive features to investors, said Tom Taulli, an analyst with IPO Monitor, an Internet publication that tracks new publicly traded companies.

Of 56 companies that went public in June, Balance Bar was among the 10 most successful, posting a month-ending stock price 37% higher than its $10.50 offering price, Taulli said.

And June was a particularly bad month for IPOs. Tepid demand pushed share prices for many nascent public companies below their initial offering price, Taulli said. Prices on nearly half the month’s IPOs had to be scaled back before their first day of trading to reflect cooling interest on Wall Street.

“When you see a company go public in a very treacherous environment and pull off a very decent IPO, that’s a very good sign,” Taulli said.

Balance Bar shares closed 6 cents lower Tuesday on Nasdaq, at $16.50.

About $3.7 million, or nearly 40% of the money raised in the IPO, will go toward retiring company debt, leaving the remainder earmarked for such things as stepped-up marketing and advertising campaigns to grab consumer attention as it attempts to get its array of “complete nutritional food” bars and powdered drink mixes into more retail outlets, especially supermarkets.

In the last few years, natural foods stores have been the company’s primary channel of distribution, accounting for nearly 75% of 1997 sales. Indicating Balance Bar is reaching a broader market, the company reported Tuesday that that figure had shrunk to 52% in the most recent quarter.

Information Resources Inc., a marketing research company, reported that Balance Bar recorded sales in the highly prized supermarket sector of $9.5 million during the 12 months ended May 17.

But Berkeley-based PowerBar Inc., one of Balance Bar’s main competitors, posted $30.1 million in grocery store sales in the same survey.

PowerBar also reported total sales last year of $200 million and recently introduced a tastier version of its original energy bar to court the same market of harried young professionals that Balance Bar is targeting.

Wolfe, however, is nothing if not confident.

“Once we get distribution . . . comparable to PowerBar, we expect our sales will exceed PowerBar’s,” he said. “I expect sales will be in the range of $500 million to $1 billion in the next five years.”